The Independent Board of Directors of Vox Telecom today (14 July 2011) announced that it has received written notice from a consortium comprising the Lereko Metier Capital Growth Fund and Investec Bank, of their firm intention to make an offer to acquire the entire issued share capital of Vox Telecom by way of a scheme of arrangement.
Vox shareholders are being given the opportunity to exit their investment via an offer of 45 cents for every Vox share, or maintain their investment and receive one BidCo share for every 10 Vox shares, or a combination of both.
Following implementation of the Scheme – which currently carries the support of 40.1 percent of existing shareholders and 53.4 percent of shareholders entitled to vote (these are RMB, Mvelaphanda and the IDC) – an application will be made to the JSE Ltd to terminate the listing of Vox shares on AltX.
The offer provides an opportunity for shareholders to realise a significant premium of 23 percent to the 30 day volume weighted average price (VWAP) of ordinary shares. The total value of the deal is R499 million.
The independent board of Vox Telecom has considered the terms of the offer, and based on the information currently available to it, is unanimous in its support for the proposed transaction, subject to receiving a favourable opinion from KPMG, the independent advisor to Vox.
The offer follows the completion of a limited due diligence process by the consortium and is subject to the fulfilment of a number of conditions in respect of the Scheme.
These include, among others, shareholder approval as well as approval by the JSE, SA Reserve Bank, the Takeover Regulation Panel and the South African competition authorities.
Commenting on the offer, Vox’s independent director Douglas Wallace said: “The proposed transaction is a sign of confidence in Vox and the South African telecom sector. Current shareholders are being offered two alternatives: a cash exit opportunity at an attractive premium to the current and historical market prices of Vox shares or they can remain invested in the unlisted entity.
“We are confident that the proposed transaction will facilitate Vox’s future growth strategy, with benefits for all stakeholders. Recent responses from shareholders have been positive and with this support we hope to grow to be a more significant player in this space,” he said.
If the transaction is approved, the current management team will be strengthened with the addition of Angus MacRobert who will join the newly delisted company as joint CEO alongside Doug Reed, Vox’s current CEO.
MacRobert is a former CEO of a leading internet service provider. He has an impressive track record in the private equity and ICT sectors.
Vox’s goal of raising capital through its AltX listing has not materialised as expected, mainly due to a lack of institutional investor support for small cap firms.
With recent regulatory announcements providing more certainty for the telecom sector, Vox has started adjusting its business strategy so that it can continue to provide clients with compelling products and services.
Delivering on this strategy is best achieved in an unlisted environment where management can focus on the business without distraction, particularly as there is potential for pressure on short term profitability.
The Vox Board believes that without the costs and compliance requirements of being a listed entity, the company can realise its goals more effectively as a private entity. The private equity shareholders are long term investors who are committed to building the business by supporting it as required.
“This transaction, if approved, will see Vox benefit from the backing of strong and experienced shareholders, while the delisting frees management to focus on sustainable value creation without the short term reporting pressures of the public market,” said Vox CEO Doug Reed.
“The Vox management team, bolstered by Angus MacRobert, is well placed to revitalise the business in the private environment and to take advantage of opportunities opening up thanks to announcements from the telecom regulator.”
“The ultimate beneficiaries will be our employees and our customers,” he added.