Mauritius sugar major Medine is about to undergo a restructuring exercise to eliminate holding companies and unlock value for existing shareholders, according to an announcement on the stock exchange.
At the meeting of the board of the Medine Group held on Wednesday June 18, 2014, the directors took the decision to restructure the Medine Group, subject to shareholder approval, in order to eliminate the holding companies.
A cautionary announcement released on the same day explained that, with this restructuring, value for the existing shareholders of the Medine Group will be unlocked as holding companies are currently trading at a discount to the value of the underlying assets, which are their respective holdings in Medine, EUDCOS and SODIA.
Moreover, such restructuring will allow the group to save on administrative costs in the medium to long term.
Medine Limited, Excelsior United Development Companies Limited (EUDCOS) and Société de Développement Industriel & Agricole Limitée (SODIA) are the main companies of the Medine Group, which are listed on the Development & Enterprise Market of the Stock Exchange of Mauritius.
Medine Ltd primarily runs sugar operations, rum distilling and property development. EUDCOS is engaged in various activities such as production and sale of alcohol and vinegar, tour operations, hotel and commercial sector operations and rental of investment properties, while SODIA primarily undertakes poultry farming.
These companies have common shareholders in the form of Medine Shares Holding Company Limited (MSH), Black River Investments Company Limited (BRI), and Alma Investments Company Limited (Alma), which form the holding companies of the Group.
The MSH also has preference shares in issue, which do not carry any voting rights but rank pari passu – that is, they carry the same rights and obligations – as ordinary shares in terms of income and asset distributions.
The restructuring is expected to convert preference shares of Medine into ordinary shares of Medine in the ratio of 1:1 and convert the preference shares of MSH into ordinary shares of MSH in the ratio of 1:1.
Further, it will remove the organizational layer of holding companies and provide for the distribution of the core investments of the holding companies – comprising Medine shares, EUDCOS shares and SODIA shares – to their shareholders.
After the conversion of the preference shares of Medine and MSH into ordinary shares, the current ordinary shareholding of Medine will be diluted by 17.20% while the current ordinary shareholders of MSH will be diluted by 6.56%.
As part of the restructuring, each MSH shareholder shall receive, against each share of MSH, 41.0483 Medine shares, 49.0728 EUDCOS shares and 82.0965 SODIA shares.
Further, each BRI shareholder shall receive 51.0426 Medine shares, 61.5749 EUDCOS shares and 102.0853 SODIA shares while each Alma shareholder shall receive 1.9220 Medine shares, 2.3141 EUDCOS shares and 3.8440 SODIA shares.
“The number of shares received by the shareholders will be rounded down to the nearest integer. Fractional shares shall be disposed on the market and remitted in cash to shareholders,” the announcement noted.
Upon implementation of the restructuring, Promotion and Development Limited (PAD), which currently counts the companies of the Medine Group as associate firms, is expected to hold 34.97% of the shares of Medine, 34.50% of the shares of SODIA and 20.97% of the shares of EUDCOS.
It may be noted that PAD is a leading investment company, more than 75% of whose assets are property related, and is an associate of the Mauritius Commercial Bank.
Founded in 1911 as a sugar estate, Medine has engaged in a major integrated property development programme over the last decade and was the pioneer in the Integrated Resort Scheme sector with the Tamarina Golf Estate.
Image (Medine Property): With this restructuring, value for the existing shareholders of the Medine Group will be unlocked as holding companies are currently trading at a discount to the value of the underlying assets, which are their respective holdings in Medine, EUDCOS and SODIA.
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