Photo by: Duane Daws
Taste Holdings has raised about R95-million, a portion of which will be used partly to fund additional corporate-owned outlets of Domino’s Pizza and for earlier than planned capital expenditure required for a dough production facility in Cape Town, in the Western Cape.
The funds were raised through the issue of 31 073 773 Taste shares at an issue price of R3.05 a share partially by way of a general issue of shares for cash and by way of a specific issue of shares for cash.
The group explained in a statement to shareholders on Tuesday that since opening the first six Domino’s Pizza outlets between October and December 2014, positive customer reaction and sales had encouraged Taste to increase the number of corporate-owned stores planned for 2015 from six to about 25 by the end of August. This was in addition to introducing at least 30 more franchised stores by the same date.
As a result of the better-than-expected sales from both new and converted stores, the establishment of a dough production facility in Cape Town was being accelerated. The production facility in Midrand, Gauteng, started producing Domino’s Pizza dough balls in April and the group expected production to start in Cape Town by June.
The funds would also help replenish the total cash used for the acquisition of Arthur Kaplan in November 2014, which was settled from cash reserves predominantly earmarked for the Domino’s Pizza conversion and roll-out.
“Additionally, the performance of Arthur Kaplan since the acquisition has exceeded expectations to the extent that the group expects to pay an additional R10-million to R20-million in terms of the agreed ‘earn out’ as per the purchase and sale agreement,” Taste Holdings revealed.
GENERAL ISSUE
Taste had raised capital of about R69.8-million through the issue of 22 877 051 subscription shares to various new and existing public investors in terms of a general issue for cash in accordance with the general authority granted by its shareholders at its annual general meeting held on July 29, 2014.
The shares would be issued and listed on or about April 24 at the subscription price representing a discount of 5.21% to the volume weighted average traded price of Taste shares over the 30 business days up to and including April 17, the date the board of directors approved the issue of the subscription shares.
SPECIFIC ISSUE
The board of directors of Taste had agreed to issue 8 196 722 subscription shares to Brimstone Investment Corporation, or one of its wholly-owned subsidiaries, thereby raising capital of about R25-million.
As Brimstone currently held more than 10% of the issued share capital of Taste it was classified as a related party in terms of the JSE listings requirements. The specific issue, therefore, required the passing of an ordinary resolution of Taste shareholders, excluding Brimstone and its associates, by achieving a 75% majority of the votes cast at a general meeting of shareholders convened to specifically authorise the company to issue shares for cash to Brimstone. The specific issue also required any other applicable regulatory approvals, including the approval of the specific issue in terms of the JSE listings requirements.
The subscription price represented a discount of 5.21% to the volume weighted average traded price of Taste shares over the 30 business days prior to April 17, the date on which the specific issue was agreed to in writing by Taste and Brimstone.
JSE-listed Brimstone, a black-controlled and -managed investment company, currently had a market capitalisation of about R4.5-billion, employing about 3 400 employees through its subsidiaries and in excess of 24 000 employees through its associates.
Brimstone currently owned about 14.2% of the share capital of Taste. Its shareholding would increase to about 15.5% after the issue of the subscription shares, therefore, enhancing Taste’s black economic-empowerment credentials and shareholding, which was in line with Taste’s stated intent.