Finalisation announcement relating to an unbundling in respect of Textainer shares to Trencor shareholders
(Incorporated in the Republic of South Africa)
(Registration No 1955/002869/06)
Share Code: TRE
FINALISATION ANNOUNCEMENT RELATING TO AN UNBUNDLING IN RESPECT OF TEXTAINER SHARES TO TRENCOR SHAREHOLDERS
Capitalised terms (i.e. denoted by words with a capitalised first letter) used in this announcement and not expressly defined herein shall bear the same meaning as ascribed to them in the Circular (defined immediately below).
Shareholders are referred to the Circular posted on Wednesday, 18 September 2019, which contained details regarding the Unbundling to Shareholders of the Unbundling Shares (the “Circular”). Shareholders are further referred to the General Meeting that was held on Friday, 18 October 2019, and the subsequent announcement that was released on SENS on Friday, 18 October 2019, advising the voting results of the General Meeting and passing of the special resolution by Shareholders approving the Unbundling.
2. SALIENT DETAILS OF THE UNBUNDLING
Shareholders are advised that all the Unbundling Conditions have been fulfilled, and accordingly the Unbundling will be implemented on Tuesday, 17 December 2019, on the basis detailed in the Circular (available on Trencor’s website at https://trencor.net). In this regard, Shareholders are referred to the salient dates and times section in this announcement which sets out the relevant and applicable dates for the Unbundling.
No Textainer Appraisal Rights Shares are required to be withheld, but the Board, in exercising its discretion contemplated in the Circular, has decided that the retention of three million Textainer Shares (“Retained Shares”) is prudent. The number of Unbundling Shares, after taking into account the Retained Shares, has therefore been determined based on Trencor’s current issued share capital of 173 534 676, as 24 278 802 Textainer Shares which will be distributed to Shareholders in accordance with an entitlement ratio of 13,99075 Textainer Shares for every 100 Trencor Shares held on the Unbundling Record Date (“Entitlement Ratio”).
For purposes of the Unbundling, Shareholders will receive their respective Unbundling Shares in dematerialised form only. Accordingly, all Certificated Shareholders who wish to receive their Unbundling Shares must appoint a CSDP in terms of the Financial Markets Act, directly or through a Broker, to receive the Unbundling Shares on their behalf. Should a Certificated Shareholder not appoint a CSDP in terms of the Financial Markets Act, directly or through a Broker, to receive Unbundling Shares on their behalf, they will be issued with a statement of allocation representing their Unbundling Shares by the Transfer Secretaries. Such Shareholders can instruct the Transfer Secretaries to transfer their Unbundling Shares represented by the statement of allocation to their appointed CSDP.
In accordance with the Listings Requirements and the JSE rounding convention for share transfer purposes, the number of Textainer Shares to which a Shareholder would have been entitled in accordance with the Entitlement Ratio will be rounded down to the nearest whole number of Unbundling Shares, and the Fractional Share, to which a Shareholder would otherwise be entitled, will not be transferred to such Shareholder, but will be transferred to an agent to deal with for such Shareholder’s benefit as set out below.
The Fractional Shares will be aggregated and purchased by Trencor from the Shareholders’ agent for a cash value as mandated by the JSE in terms of the Listings Requirements. This cash value must be determined with reference to the VWAP of a Textainer Share traded on a recognised exchange on the first business day after the last day to trade in order to participate in the Unbundling, i.e. Wednesday, 11 December 2019 (being the day on which Shares commence trading “ex” the entitlement to participate in the Unbundling), reduced by 10%. An announcement of this cash value will be released on SENS on Thursday, 12 December 2019, by 11:00.
In relation to the Retained Shares that remain post the Unbundling, such shares may be realised, or may be held for future distribution to Shareholders as soon as circumstances permit.
3. CERTAIN SOUTH AFRICAN TAX CONSEQUENCES
The following is a general description of certain aspects of South African tax law relating to the Unbundling (other than the consequences of any of the Shareholders’ appraisal rights) as at the Last Practicable Date. It is not intended to be, nor should it be considered as, legal or taxation advice. Tax legislation is subject to frequent change and accordingly the comments as set out below may be subject to change, possibly with retrospective effect. Shareholders should consult their own professional advisors with regard to the tax implications arising in respect of the Unbundling. Trencor and its advisors make no representation and give no warranty or undertaking, express or implied, and accept no responsibility for the accuracy or completeness of the information contained in this section.
The Unbundling will constitute a distribution in specie by Trencor of the Unbundling Shares to its Shareholders in accordance with the Entitlement Ratio.
Material South African tax consequences of the Unbundling:
3.1. INCOME TAX
The distribution of the Unbundling Shares by Trencor to its Shareholders, including the distribution of any Fractional Shares, will constitute a “dividend” as defined in the Income Tax Act. Such dividend will be subject to South African income tax in the hands of each Shareholder, unless the dividend is exempt from South African income tax in terms of section 10(1)(k)(i) of the Income Tax Act. In terms of section 10(1)(k)(i) of the Income Tax Act, a “dividend” as defined in section 1 of the Income Tax Act which is received by or accrues to any Shareholder during any year of assessment is exempt from income tax, subject to certain exclusions.
To the extent that the Shares are held by Shareholders on capital account, the Unbundling Shares would typically also constitute assets held on capital account, and for purposes of the CGT provisions contained in the Eighth Schedule, Shareholders will be deemed to have acquired the Unbundling Shares for an amount of expenditure equal to the market value of such shares on the date of the Unbundling for purposes of determining the “base cost” (as such term is defined in the Eighth Schedule) of the relevant Unbundling Shares.
To the extent that the Shares are held by Shareholders on revenue account, the Unbundling Shares would typically also constitute assets held on revenue account, and accordingly, should the Unbundling Shares be held over a tax year-end, Shareholders will be deemed, in such subsequent tax year, to have acquired the Unbundling Shares, for purposes of section 22(2) of the Income Tax Act, at a cost equal to the market price of such shares on the date of the in specie distribution of such shares for purposes of the trading stock provisions (i.e. section 22(4) of the Income Tax Act).
As the Unbundling will not constitute a return of capital, the Unbundling should not have an impact on the “base cost” (as such term is defined in the Eighth Schedule) of the Shares held by Shareholders.
The sale of Fractional Shares to Trencor by Shareholders entitled to such Fractional Shares for a consideration equal to the cash value may give rise to a tax event separate to those triggered on the Unbundling. In this regard, to the extent that Fractional Shares are held by Shareholders on revenue account, the gross cash value which accrues to or is received by such Shareholders pursuant to the sale of their Fractional Shares to Trencor may be included in their gross income (subject to permissible deductions in terms of the Income Tax Act). To the extent that Fractional Shares are held by Shareholders on capital account, the sale of the Fractional Shares to Trencor will give rise to a disposal for CGT purposes and such Shareholders may be required to account for a capital gain or loss in respect of the disposal. Generally, a capital gain or loss is determined with reference to the gross “proceeds” received by or accrued to a taxpayer less the “base cost” of the “asset” (as such terms are defined in the Eighth Schedule). By way of high-level overview, in either circumstance (i.e. whether Fractional Shares are held on revenue account or capital account), the sale of the Fractional Shares to Trencor by Shareholders may give rise to tax on the difference (if any) between the gross cash value (less certain permissible costs), and the market value of the Fractional Shares on date of implementation of the Unbundling. The cash value, net of costs (if any), realised by Shareholders will be contained in the SENS announcement in respect of the cash value of Fractional Shares, to be released on Thursday, 12 December 2019, by 11:00.
Shareholders are advised to consult their own professional advisors to ascertain whether the abovementioned provisions or any other provisions of the Income Tax Act will apply in relation to the Unbundling.
Shareholders are advised to seek independent advice in relation to the potential tax implications regarding their future holding and/or disposal of their Unbundling Shares, with reference to their relevant circumstances and applicable legislation at the time.
Shareholders who are not a “resident” as defined in the Income Tax Act are advised to consult their own professional advisors to ascertain the South African tax treatment and the tax treatment of the Unbundling in their country of tax residence, having regard inter alia to any applicable DTA between South Africa and their country of tax residence.
3.2. SECURITIES TRANSFER TAX (“STT”)
STT will be payable on the transfer of any Unbundling Shares (including Fractional Shares) to Shareholders pursuant to the Unbundling in terms of the STT Act. The amount of STT to be imposed will be calculated as 0,25% of the closing price of the Unbundling Shares on the Unbundling Record Date.
The CSDP of the relevant Shareholder will be liable for the STT payable in respect of the transfer of the Unbundling Shares distributed pursuant to the Unbundling.
In terms of the STT Act, the CSDP of the relevant Shareholder is, however, entitled to recover the amount of STT payable from the Shareholder to whom Unbundling Shares are distributed pursuant to the Unbundling.
Accordingly, the STT payable on the transfer of the Unbundling Shares distributed to a Shareholder pursuant to the Unbundling, will be automatically debited by such Shareholder’s CSDP to such Shareholder’s banking account maintained with such Shareholder’s CSDP. Against such debit being made the CSDP will credit the securities account of such Shareholder with the Unbundling Shares received by such Shareholder pursuant to the Unbundling; and the CSDP will pay the STT concerned to the Transfer Secretaries who will in turn pay the STT concerned to SARS on behalf of the CSDP of the relevant Shareholder.
Should any transfer of Unbundling Shares to a Shareholder pursuant to the Unbundling qualify for an exemption from STT in terms of the STT Act, such Shareholder must contact the Transfer Secretaries or their CSDP before the Unbundling in line with the timetable outlined below to ensure that there will be no debit in respect of STT to such Shareholder’s banking account.
The sale of Fractional Shares to Trencor by Shareholders entitled to a Fractional Share for a consideration equal to the cash value will give rise to STT on the transfer of the Fractional Shares to Trencor pursuant to such sale. The CSDP of the relevant Shareholder will be liable for the STT in respect of the transfer of the Fractional Shares to Trencor. However, in terms of the STT Act, the CSDP of the relevant Shareholder is entitled to recover the amount of STT payable from Trencor as the person to whom Fractional Shares are transferred.
3.3. DIVIDENDS TAX
The distribution of the Unbundling Shares will constitute a “distribution of an asset in specie” as such term is used for purposes of the Dividends Tax provisions contained in the Income Tax Act. The Unbundling will give rise to a liability for Dividends Tax at the full rate in accordance with the Income Tax Act to the extent that any beneficial owner of Shares does not qualify for an exemption from the Dividends Tax, and to the extent that the beneficial owner of Shares does not qualify for a reduced rate of Dividends Tax in terms of an applicable DTA entered into by South Africa. In terms of section 64EA(b) of the Income Tax Act, on the basis that Trencor, a South African resident company, is declaring and paying a dividend which consists of the distribution of an asset in specie, Trencor itself will be liable for any Dividends Tax levied in respect of the distribution of the Unbundling Shares.
The distribution of the Unbundling Shares will be exempt from Dividends Tax, or subject to a reduced rate of Dividends Tax with reference to the application of an applicable DTA entered into by South Africa, in the event that the beneficial owner of Shares has, by date of distribution of the Unbundling Shares, submitted to Trencor both the required declaration and written undertaking, in such form as may be prescribed by the Commissioner for SARS.
To the extent that any beneficial owner of the Shares would not qualify for an exemption from, or reduction of, the Dividends Tax, Trencor itself will be liable for and make payment of such Dividends Tax.
4. NON-RESIDENT SHAREHOLDERS
The distribution of the Unbundling Shares to a non-resident Shareholder in terms of the Unbundling may be subject to the laws of such non-resident Shareholder’s relevant jurisdiction.
It is the responsibility of any non-resident Shareholder (including, without limitation, nominees, agents and trustees for such person) to satisfy itself as to full observance of the applicable laws of any relevant jurisdiction, including obtaining any requisite governmental or other consents, observing any other requisite formalities and paying any issue, transfer or other taxes due in such territories. A non-resident Shareholder is obliged to observe the applicable legal requirements of their relevant jurisdictions.
A non-resident Shareholder who is not entitled to receive Unbundling Shares pursuant to the Unbundling should dispose of their Shares such that they are no longer reflected as a holder of Shares on the Unbundling Record Date, or alternatively, to the extent lawful under the applicable laws of the relevant jurisdiction, require the applicable CSDP and/or nominees, agents and trustees for such persons receiving the Unbundling Shares on behalf of the non-resident Shareholder to approach the Transfer Secretaries to dispose of the Unbundling Shares on behalf of and for the benefit of the relevant non-resident Shareholder as soon as is reasonably practical after the implementation of the Unbundling.
Trencor reserves the right, but shall not be obliged, to treat as invalid any distribution of Unbundling Shares, in terms of the Unbundling, which appears to Trencor or its advisors or agents to have been executed, effected or dispatched in a manner which may involve a breach of the securities laws or regulations of any jurisdiction or if Trencor believes or its advisors or agents believe that the same may violate applicable legal or regulatory requirements.
5. SALIENT DATES AND TIMES
|Last day to trade in Shares on the JSE to participate in the Unbundling (refer to note 2 below)||Tuesday, 10 December 2019|
|Shares trade ex entitlement of Unbundling Shares||Wednesday, 11 December 2019|
|Inward Listing of Textainer (share code: TXT, ISIN: BMG8766E1093) on the JSE expected||Wednesday, 11 December 2019|
|Announcement in respect of the cash value of Fractional Shares by 11:00||Thursday, 12 December 2019|
|Record date to receive Unbundling Shares||Friday, 13 December 2019|
|Unbundling Shares distributed to Shareholders||Tuesday, 17 December 2019|
|Shareholder’s account with CSDP or Broker is updated||Tuesday, 17 December 2019|
Announcement of value of Unbundling Shares
|Tuesday, 17 December 2019|
- All dates and times indicated above are South African Standard Time.
- Shareholders who acquire Shares after the last day to trade to participate in the Unbundling will not be able to participate in the Unbundling. Furthermore, share certificates for Shares may not be dematerialised or rematerialised after the last day to trade and the record date to receive the Unbundling Shares (the record date being included).
Trencor Services Proprietary Limited
2 December 2019
Financial Advisor and Transaction Sponsor
Investec Bank Limited
Legal and Tax Advisor
Edward Nathan Sonnenbergs Inc.