Huge Group has announced the possibility of a private equity offer to be made equally to all shareholders at a significant premium to the current share price and backed by an unnamed financial investor seeking a significant shareholding in the company.
If the transaction proceeds, it may result in the group being de-listed from the JSE, Huge said in a notice to shareholders.
The telecoms company, listed on the JSE alternative exchange AltX, said that its board was in "preliminary discussions regarding the structure, funding and outcome" of a potential offer to all shareholders.
The discussions concern a potential cash offer to all shareholders of not less than 160 cents a share, being a 60% premium over the lowest closing share price set on 25 March 2009, and a 39% premium to the 115 cents closing price on 1 April 2009.
Acceptance of the offer would be voluntary, and shareholders would have the alternatives of accepting the cash offer for some of all of their shares, or opting to remain shareholders in what would most likely become an unlisted entity after the transaction.
"The interest of the financial investor in investing in the business of the company is premised on its investment being into an unlisted company," Huge says. This investment would provide a source of funding for acceptances of the offer.
Huge further notes: "It is of paramount importance to us that all shareholders understand that they will not be forced to accept the cash offer and that a cash election is completely voluntary.
"However, we also believe that this offer would provide any current investors wanting to sell their shares with the opportunity to do so at a price higher than the current market price. Given the current absence of liquidity in AltX-listed stocks, this is a significant enhancement to the trading liquidity of a Huge share."
Holders of a significant number of the shares of Huge Group have already irrevocably undertaken to accept the proposed cash offer of not less than 160 cents a share, provided the offer is made and cash confirmation provided to the Securities Regulation Panel by 29 May 2009.
The proposed transaction would be subject to a number of conditions normal for a transaction of this nature, including a due diligence investigation into the company, and the requisite shareholder and regulatory approvals.
The company said the announcement did not reflect or constitute a firm intention to make any offer to shareholders of Huge, and no such offer may follow.
The Huge Group board has appointed a committee of independent directors to consider the proposed transaction. The committee, on behalf of the board, will obtain independent expert advice.