2014/09/02
WOWOW - WOOLWORTHS HOLDINGS LIMITED - Final terms of fully underwritten rights offer [JSE Securities Exchange - SENS]
 
Final terms of fully underwritten rights offer

WOOLWORTHS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1929/001986/06
Share code: WHL ISIN: ZAE000063863
("WHL" or "the Company" or "the Group")


NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA AND JAPAN,
OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF
APPLICABLE LAW OR REGULATION


FINAL TERMS OF A FULLY UNDERWRITTEN RIGHTS OFFER OF R9.984 BILLION ("THE
RIGHTS OFFER") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT


1. INTRODUCTION


   Shareholders of WHL ("Shareholders") are referred to the Rights Offer declaration
   announcement by WHL released on the Stock Exchange News Service ("SENS") of the JSE
   Limited ("JSE") on Friday, 29 August 2014 and published in the South African press on
   Monday, 1 September 2014, which included the declaration information relating to the
   Rights Offer (the "Declaration Announcement").


   The Company is pleased to announce that the board of directors (the "Board") has finalised
   the terms of the Rights Offer and is seeking to raise a gross total of R9.984 billion through a
   fully underwritten renounceable rights offer of 167.8 million new ordinary shares of no par
   value ("Rights Offer Shares") to WHL ordinary shareholders registered in the WHL share
   register on Friday, 12 September 2014 ("Record Date"), excluding holders of treasury
   shares and WHL's American Depositary Receipts ("Qualifying Shareholders") and their
   qualifying renouncees at a subscription price of R59.50 per Rights Offer Share
   ("Subscription Price") and in the ratio of 22 (twenty two) Rights Offer Shares for every 100
   (one hundred) WHL ordinary shares held on the Record Date (as detailed in paragraph 3
   below).
  
   The Subscription Price is at a discount of 20.0% to the theoretical ex-rights price of a WHL
  ordinary share of R74.38 on Monday, 1 September 2014, excluding the dividend of 150.5
  cents as declared by the Company on Thursday, 28 August 2014; and at a discount of
  24.8% to the closing price of WHL ordinary shares on Monday, 1 September 2014 of
  R79.16.


2. FULFILMENT OF CONDITIONS PRECEDENT


  The conditions precedent to the Rights Offer as specified in the Declaration Announcement
  have all been fulfilled. The JSE has approved the application for the listing of the Letters of
  Allocation and the Rights Offer Shares required to implement the Rights Offer.


3. SALIENT TERMS OF THE RIGHTS OFFER


  The salient terms of the Rights Offer are as follows:


  -   Qualifying Shareholders recorded in the register on the Record Date are offered, on the
      terms and conditions set out in the circular referred to in paragraph 7 below ("Rights
      Offer Circular"), 167.8 million Rights Offer Shares at a Subscription Price of R59.50 per
      Rights Offer Share and in the ratio of 22 (twenty two) Rights Offer Shares for every 100
      (one hundred) WHL ordinary shares held on the Record Date. Fractions of Rights Offer
      entitlements will not be allotted and each Qualifying Shareholder's Rights Offer
      entitlement will be rounded to the nearest whole number in this regard (unless a
      Qualifying Shareholder is entitled to less than 0.5 of a Rights Offer Share, in which case
      the entitlement will be rounded down to zero);
  -   The Subscription Price is at a discount of 20.0% to the theoretical ex-rights price of a
      WHL ordinary share of R74.38 on Monday, 1 September 2014, excluding the dividend of
      150.5 cents as declared by the Company on Thursday, 28 August 2014; and at a
      discount of 24.8% to the closing price of WHL ordinary shares on Monday, 1 September
     2014 of R79.16;
  -   upon their issue, the Rights Offer Shares will be listed on the securities exchange
      operated by the JSE and will rank, pari passu, in all respects with the existing issued
      WHL ordinary shares;
-     the latest time and date of acceptance and payment in full for the Rights Offer Shares
      will be 12:00 (South African time) on Friday, 26 September 2014 ("Rights Offer Closing
      Date");
-   certificated Qualifying Shareholders must complete the form of instruction in accordance
    with the instructions contained therein and return it to Computershare Investor Services
    Proprietary Limited ("the Transfer Secretaries") so as to be received by the Transfer
    Secretaries by no later than the Rights Offer Closing Date;
-   dematerialised Qualifying Shareholders are advised to contact their Central Securities
    Depository Participant ("CSDP") or broker as early as possible to establish the latest
    times for acceptance of the Rights Offer, as set out in the relevant custody agreement,
    as this may be earlier than the Rights Offer Closing Date;
-   Letters of Allocation will be issued in dematerialised form and an electronic record for
    certificated Qualifying Shareholders will be maintained by the Transfer Secretaries. This
    will enable both dematerialised and certificated holders of WHL Shares to sell or
    renounce some or all of their rights to Rights Offer Shares in accordance with the
    procedures set out in the Rights Offer Circular;
-   all Rights Offer Shares not subscribed for in terms of the Rights Offer will be available for
    allocation to Qualifying Shareholders that wish to apply for a greater number of Rights
    Offer Shares than those offered to them in terms of the Rights Offer. Accordingly,
    Qualifying Shareholders may also apply for additional Rights Offer Shares in excess of
    the Rights Offer Shares allocated to them in terms of the Rights Offer on the same terms
    and conditions as those applicable to their Rights Offer entitlement. The right to apply for
    additional Rights Offer Shares is transferable and will be transferred upon renunciation
    or sale together with the Rights Offer entitlement so renounced or sold; and
-   excess applications will be allowed.


An announcement will be released on SENS on or about Monday, 29 September 2014 and
published in the South African press on Tuesday, 30 September 2014 stating the results of
the Rights Offer and the basis of allocation of any additional Rights Offer Shares for which
application is made.

4. PRO FORMA FINANCIAL EFFECTS


  The summarised pro forma financial effects ("Pro Forma Financial Effects") as set out below
  have been prepared to assist Shareholders in assessing the impact on the Company's
  earnings per share ("EPS"), diluted EPS, headline EPS ("HEPS"), diluted HEPS, adjusted
  HEPS, and adjusted diluted HEPS of the following:


  -   the acquisition by WHL of David Jones Limited ("David Jones") ("the Acquisition");
  -   the R10 billion unsecured senior facilities agreement with, among others, Citibank, N.A.,
      London Branch, J.P. Morgan Chase Bank N.A. (Johannesburg Branch) and The
      Standard Bank of South Africa Limited ("Standard Bank") used to repay some of the
      WHL Group's existing indebtedness and the utilisation of A$393 million of an A$400
      million Australian senior syndicated facility entered into with, among others,
      Commonwealth Bank of Australia ("CBA"), National Australia Bank Limited ("NAB") and
      Westpac Banking Corporation ("Westpac") to be used to finance the payment of the
      consideration for the Acquisition and associated transaction costs (together, the "Debt
      Financing");
  -   the acquisition by WHL of the remaining shares in Country Road Limited as announced
      on Tuesday, 24 June 2014 ("the Country Road Offer");
  -   the utilisation of A$215.6 million of an A$220 million secured senior syndicated facility
      made available to Woolworths International (Australia) II Pty Limited and Woolworths
      International (Australia) Pty Limited by, among others, CBA, NAB and Westpac to
      finance the payment of the consideration for the Country Road Offer and associated
      transaction costs; and
  -   the Rights Offer,


  (collectively "the Transactions").


  The Pro Forma Financial Effects have been adjusted to reflect the Transactions as if the
  Transactions had occurred (a) on 1 July 2013 for purposes of the pro forma adjustments
  made to the pro forma statement of comprehensive income and (b) as at 29 June 2014 for
  purposes of the pro forma adjustments made to the pro forma statement of financial
  position.

  The Pro Forma Financial Effects are presented for illustrative purposes only and are based
  on available information and certain assumptions and estimates that the Board believe are
  reasonable. The Pro Forma Financial Effects do not necessarily represent what the
  combination of WHL's and David Jones' (the "Enlarged Group") financial position and results
  of operations actually would have been had the Transactions occurred on such date, or as
  of the beginning of such period, and are not necessarily indicative of the Enlarged Group's
  financial position or results of operations as of any future date or period nor the effect and
  impact of the Transactions going forward.


The Board is responsible for the compilation, contents, accuracy and preparation of the
summarised Pro Forma Financial Effects giving effect to the Transactions. Their
responsibility includes determining that the Pro Forma Financial Effects have been properly
compiled on the basis stated, that the basis is consistent with the accounting policies of the
Group and that the summarised pro forma adjustments are appropriate for the purposes of
the summarised Pro Forma Financial Effects disclosed pursuant to the Listings
Requirements of the JSE.


WHL's audit committee has reviewed and has satisfied itself with the compilation, contents,
accuracy and presentation of the summarised Pro Forma Financial Effects.


                                 WHL before       Acquisition     Rights     Country       Pro forma    % change
                                         the             and       Offer   Road Offer       after the
                                Transactions   consolidation    (Notes 3    (Notes 3,   Transactions
                      (Notes 3, 4        & 7)       5 & 8)
                                  (Notes 1 &
                                                         & 6)
                                        7.2)



EPS (cents)                            367.3           (35.2)     (60.2)          1.5          273.4       (25.6)

HEPS (cents)                           365.2           (34.6)     (59.9)          1.5          272.2       (25.5)

Adjusted HEPS (cents)                  398.0             5.4      (73.1)          1.5          331.8       (16.6)

Diluted EPS (cents)                    362.7           (34.8)     (58.8)          1.5          270.6       (25.4)

Diluted HEPS (cents)                   360.6           (34.1)     (58.6)          1.5          269.4       (25.3)

Adjusted diluted HEPS (cents)          393.0             5.3      (71.4)          1.5          328.4       (16.4)

Number of shares in issue              759.5                -     167.8             -          927.3        22.1
(millions)
                                                                                           (Note 7.2)

Weighted average number of             758.2       -     167.8             -          926.0        22.1
shares in issue (millions)                                                                   (Note 7.2)




Notes:
1.    The "WHL Group" financial information has been extracted from the WHL Group's audited annual financial statements
      for the financial year ended 29 June 2014.
2.    The "David Jones" financial information has been extracted from David Jones' audited annual financial statements for
      the financial year ended 26 July 2014. The results of David Jones have been converted to Rand at the average
      exchange rate for the period 1 July 2013 to 29 June 2014 of A$1: R9.51.
3.    The "Pro forma after the Transactions" financial information assumes the Transactions to be effective 1 July 2013.
4.    The Acquisition has been provisionally accounted for in terms of IFRS 3: Business Combinations.
5.    The Country Road Offer has been accounted for as an equity transaction in terms of IFRS 10: Consolidated Financial
      Statements.
6.    David Jones
     6.1 "Acquisition and consolidation" includes:
     Revenue and expenses
     6.2 Inter-company transactions totalling R164 million have been eliminated.
     6.3 Transaction costs, excluding debt commitment fees and raising costs, are estimated at R165 million and have
     been expensed. These exclude R182 million already expensed in WHL and R197 million already expensed in David
     Jones in their respective historical financial statements. All transaction costs are to be funded out of acquisition
     funding.
     6.4 An adjustment of R22 million has been made for additional depreciation on the revalued portion of property, plant
     and equipment over the remaining estimated useful life.
     6.5 An adjustment of R7 million (before tax) has been made to headline earnings for loss on disposal of property, plant
     and equipment in David Jones.
     Finance costs
     6.6 Settlement of the Acquisition purchase price consideration is assumed to be partially funded through debt, of
     which R901 million is assumed to be applied to refinance existing David Jones debt at 1 July 2013.
     6.7 Debt commitment fees and raising costs totalling R378 million are capitalised to the debt raised and amortised
     over the period of the debt, using the effective interest method. The amortised portion is included in finance costs.
     6.8 Interest on the Rand-denominated term loan facilities raised to partially settle the Acquisition purchase price is
     calculated at JIBAR linked rates as per the underlying funding agreements.
     6.9 Interest on the Australian dollar-denominated term loan facility raised to partially settle the Acquisition purchase
     price is calculated based at a BBSY linked rate as per the underlying funding agreements.
     6.10 Amounts earned and incurred in respect of investment income and finance costs before the Transactions, as a
     result of the anticipated funding structure, are eliminated.
     6.11 Debt commitment fees and raising costs on the Equity Bridge Facility totalling R124 million have been fully
     amortised and included in finance costs within "Acquisition and consolidation", on the basis that the debt is raised and
     settled on 1 July 2013 using proceeds from the Rights Offer.
     Other
     6.12 Derivative financial instrument assets and liabilities of R14 million and R68 million respectively entered into in
     respect of the Acquisition are assumed to have been settled and therefore eliminated in Other comprehensive income.
7.    Rights Offer
     7.1 Rights Offer costs totalling R435 million have been capitalised to equity.
     7.2 The impact of the Rights Offer increases the number of shares in issue and weighted number of shares in issue by
     167.8 million. The earnings per share measures disclosed for the "WHL Group" before the Transactions do not take
     this increase in shares into account.
8.    Country Road Offer
         8.1 Settlement of the Country Road Offer purchase price consideration is assumed to be funded entirely through debt
         of R1 923 million.
         8.2 Transaction costs, excluding debt commitment fees and raising costs, are estimated at R10 million and have been
         included in equity as a result of the Country Road Offer being accounted for as an equity transaction in accordance
         with IFRS 10: Consolidated Financial Statements. All transaction costs are to be funded out of acquisition funding.
         8.3 Debt commitment fees and raising costs totalling R11 million are capitalised to the debt raised and amortised over
         the period of the debt, using the effective interest method. The amortised portion is included in finance costs.
         8.4 Interest on the Australian dollar-denominated term loan facility raised to settle the Country Road Offer purchase
         price is calculated based at a BBSY linked rate as per the underlying funding agreement.
   9.    Taxation
         The tax deductibility of certain finance costs, hedging costs and additional depreciation has been calculated applying
         legislated rates of taxation of 28 per cent. in South Africa and 30 per cent. in Australia, as applicable. Transaction
         costs and finance costs on the Equity Bridge Facility are not considered to be tax deductible.
   10.   Tangible assets are depreciated over their estimated remaining useful lives based on a provisional fair value exercise
         in terms of IFRS 3: Business Combinations. Additional adjustments may arise from the final purchase price allocation,
         the nature and quantum of which are currently uncertain. Refer to note 6.4.
   11.   Consistent with previously published information, adjusted HEPS and Adjusted diluted HEPS have been presented.
         These amounts (all stated before tax) have been adjusted to exclude net unrealised foreign exchange losses of R139
         million in WHL and transaction costs of R182 million in WHL and R197 million in David Jones relating to the
         Acquisition prior to the Transactions.
   12.   All adjustments have an ongoing effect except for the transaction costs.



5. UNDERWRITING


  WHL has entered into an Underwriting Agreement with Citigroup Global Markets Limited
  ("Citi"), J.P. Morgan Securities plc ("JP Morgan") and Standard Bank (the "Joint
  Bookrunners"), pursuant to which the Joint Bookrunners have severally agreed, subject to
  customary conditions, to underwrite any Rights Offer Shares not subscribed for pursuant to
  the Rights Offer.


6. SALIENT DATES AND TIMES OF THE RIGHTS OFFER


  Shareholders are advised that there have been no changes to the salient dates and times of
  the Rights Offer as set out in the Declaration Announcement.


7. DOCUMENTATION


  The Rights Offer Circular (incorporating revised listing particulars) providing full details of the
  Rights Offer and a form of instruction will be posted to Shareholders holding WHL shares in
  certificated form, located outside of the United States, Canada and Japan, or any other
  jurisdiction where such distribution would be unlawful on Tuesday, 9 September 2014 and to
  those dematerialised Shareholders who have requested to receive copies of circulars, on
  Tuesday, 16 September 2014.


   The    Rights    Offer   Circular   will   be    available   on    WHL's      website    at
   www.woolworthsholdings.co.za on or about Monday, 8 September 2014. Copies of the
   Rights Offer Circular can be obtained during normal business hours from the opening of the
   Rights Offer to the closing of the Rights Offer at the registered office of WHL: Woolworths
   House, 93 Longmarket Street, Cape Town, 8001, at the offices of the Transaction Sponsor:
   Standard Bank, 30 Baker Street, Rosebank, 2196 and at the offices of the Transfer
   Secretaries: Computershare Investor Services Proprietary Limited, Ground Floor, 70
   Marshall Street, Johannesburg, 2001.


8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT


       As the final terms and Pro Forma Financial Effects of the Rights Offer have been
       announced, caution is no longer required to be exercised by Shareholders when dealing in
       their WHL shares.


Cape Town
2 September 2014


Investor contacts:
WHL
Ralph Buddle
Head of Corporate Finance and Investor Relations
T: +21 27 407 3250
M: + 27 83 412 4923


Joint Global Coordinators, Bookrunners and Underwriters
Citi
JP Morgan
Standard Bank
Investment Bank and Transaction Sponsor to WHL
Standard Bank


Legal advisers to WHL
Linklaters LLP
Webber Wentzel
Gilbert + Tobin


Independent Financial adviser to WHL
Rothschild (South Africa) Proprietary Limited ("Rothschild")


Legal advisers to the Joint Bookrunners
Latham & Watkins (London) LLP
Bowman Gilfillan Inc.


Independent reporting accountants and auditors of WHL
Ernst & Young Inc.


Independent reporting accountants and auditors of David Jones
Ernst & Young


Lead Independent Sponsor to WHL
Rand Merchant Bank (a division of FirstRand Bank Limited)




NOTICE TO RECIPIENTS
This announcement is not for distribution, directly or indirectly, in or into the United States of
America (including its territories and dependencies, any State of the United States of America
and the District of Columbia), Canada and Japan.


This announcement includes certain "forward-looking statements" that reflect the current views
or expectations of the Board with respect to future events and financial and operational
performance. All statements other than statements of historical fact are, or may be deemed to
be, forward-looking statements, including, without limitation, those concerning: the WHL Group's
strategy; the economic outlook for the industry; use of the proceeds of the Rights Offer; the
success of strategic initiatives and investments related to David Jones and its operations; the
Enlarged Group's ability to implement its strategy; the competitive environments in which the
Enlarged Group operates; trends in the industries and markets in which the Enlarged Group
operates; future operating results, growth prospects and outlook for the operations of the
Enlarged Group, individually or in the aggregate; and the Enlarged Group's liquidity and capital
resources and expenditure. These forward-looking statements are not based on historical facts,
but rather reflect the Enlarged Group's current plans, estimates, projections and expectations
concerning future results and events and generally may be identified by the use of forward-
looking words or phrases such as "believe", "aim", "expect", "anticipate", "intend", "foresee",
"forecast", "likely", "should", "planned", "may", "estimated", "potential" or similar words and
phrases.


This announcement does not constitute an offer of, or an invitation to purchase, any securities
of the Company in any jurisdiction. This announcement does not constitute or form a part of any
offer or solicitation to purchase or subscribe for securities in the United States. The securities
mentioned herein (the "Securities") have not been, and will not be, registered under the United
States Securities Act of 1933 (the "Securities Act"). The Securities may not be offered or sold in
the United States absent registration or an applicable exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. There will be no public offer of the
Securities in the United States, Canada and Japan.


Citi, J.P. Morgan, Standard Bank and Rothschild are acting exclusively for the Company and no
one else in connection with the Rights Offer. They will not regard any other person (whether or
not a recipient of this announcement) as their respective clients in relation to the Rights Offer
and will not be responsible to anyone other than the Company for providing the protections
afforded to their respective clients nor for giving advice in relation to the Rights Offer or any
transaction or arrangement referred to herein. No representation or warranty, express or
implied, is made by Citi, J.P. Morgan, Standard Bank and Rothschild as to the accuracy,
completeness or verification of the information set forth in this announcement, and nothing
contained in this announcement is, or shall be relied upon as, a promise or representation in this
respect, whether as to the past or the future.
Citi, J.P. Morgan, Standard Bank and Rothschild assume no responsibility for its accuracy,
completeness or verification and, accordingly, disclaim, to the fullest extent permitted by
applicable law, any and all liability which they might otherwise be found to have in respect of this
announcement or any such statement.

Date: 02/09/2014 02:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.
Source: JSE Securities Exchange - SENS
 
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