COLINA HOLDINGS LTD
Substantial Transaction Circular in relation to the acquisition of 40 per cent of the issued share capital of an insurance company, namely Unitrust Insurance Company Limited (‘Unitrust’) for a total consideration of USD 15 619 348 which will be financed by a loan facility of USD 16,000,000.
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
For a full appreciation of this Circular, the document should be read in its entirety. If you are in doubt about the action you should take, you should consult your financial adviser, your investment dealer or any other independent adviser immediately.
This Circular is not an invitation to the public to subscribe for shares in the Company. The circular has been prepared for the purpose of complying with the Listing Rules, as issued by the Stock Exchange of Mauritius Ltd, more specifically Chapter 13 of the Listing Rules.
18 August 2014
DISCLAIMER OF THE STOCK EXCHANGE OF MAURITIUS LTD
AND THE FINANCIAL SERVICES COMMISSION
Neither Stock Exchange of Mauritius Ltd (SEM) nor the Financial Services Commission (FSC) assumes any responsibility for the contents of this document. The SEM and the FSC make no representation as to the accuracy or completeness of any of the statements made or opinions expressed in this document and expressly disclaim any liability whatsoever for any loss arising from or in reliance upon the whole or any part thereof.
The SEM and the FSC do not vouch for a financial soundness of the Company or for the correctness of any statements made or opinions expressed with regards to it.
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COLINA HOLDINGS LTD
TABLE OF CONTENTS
1 DEFINITIONS 3 2 DECLARATION BY THE DIRECTORS 4 3 NATURE OF TRANSACTION 5 4 THE CURRENT GROUP STRUCTURE 5 5 THE PROPOSED GROUP STRUCTURE 6 6 RATIONALE OF THE INVESTMENT 6 7 TERMS OF THE INVESTMENT 7 8 COLINA HOLDINGS LTD 7 9 UNITRUST INSURANCE COMPANY LIMITED 11 10 ACCOUNTANT’S REPORT 14 11 FINANCIAL IMPACT ON INVESTMENT 14 12 LEGAL PROCEEDINGS 14 13 MATERIAL CONTRACTS 14 14 DIRECTOR’S INTEREST AND REMUNERATION 14 15 DIRECTORS’ RECOMMENDATION 14 16 STATEMENT OF INDEBTEDNESS 15 17 COSTS 15 18 DOCUMENTS AVAILABLE FOR INSPECTION 16
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COLINA HOLDINGS LTD
1. DEFINITIONS
CHL
SF
Colina Holdings Ltd
Saham Finances
Unitrust Unitrust Insurance Company Limited
Investment The proposed investment in Unitrust by the Company as described in this substantial transaction circular
Effective Date The effective date of the investment, namely 20 August 2014
Listing Rules
The Listing Rules of The Stock Exchange of Mauritius Ltd
FSC The Financial Services Commission
SEM The Stock Exchange of Mauritius Ltd
USD United States Dollar
NGN Nigerian Naira
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COLINA HOLDINGS LTD
3. NATURE OF TRANSACTION
The board of directors of CHL has approved the following transactions and resolved to recommend the approval of the investment by its shareholders:
i. loan facility of USD 16,000,000 granted by SF to the Company
ii. the acquisition of 40% of the issued capital of Unitrust
The terms of the contemplated transactions are provided in Section 6 and will be submitted to the shareholders of CHL for their approval by circular resolution for that purpose only.
The Effective Date of the loan facility and subscription of shares is scheduled for 18 August 2014 respectively.
4. THE CURRENT GROUP STRUCTURE
Prior to the subscription, the group structure of CHL was as follows:
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COLINA HOLDINGS LTD
All the shares held by the existing shareholders are fully vested and there are no share options within the group.
5. THE PROPOSED GROUP STRUCTURE
The post subscription and following issue of shares by Unitrust, the group structure will be as follows:
6. RATIONALE OF THE INVESTMENT
The contemplated transaction would enable CHL to strengthen its presence in Africa.
The Board of Directors of CHL is of the view that this will constitute an excellent opportunity for the Company as this expansion will enable the Company to gain substantial market share in Africa.
The contemplated transaction is also beneficial to the Company and is expected to improve, in the long term, both the Company’s financial performance and shareholders’ value.
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COLINA HOLDINGS LTD
7. TERMS OF THE INVESTMENT
CHL will finance the investment in Unitrust upon receipt of USD 16,000,000 as a loan from Saham Finances bearing interest at 6% per annum excluding taxes.
The consideration of USD 16,000,000 has been agreed by CHL and Unitrust following receipt of a due diligence report from Ernst & Young.
The stated capital of CHL after the proposed issue of shares will remain at USD 2,000,000 comprising 2,000,000 ordinary shares of USD 1.00 each.
8. CHL
8.1 Corporate Information
DIRECTORS:
Director Nationality Address
Moulay Hafid Elalamy Moroccan 16 Boucle D Anfa, BP 20170, Casablanca, Morocco
Raymond Farhat French 216 Bd Zerktouni, 20000 Casablanca, Morocco
Nousrath Begum Bhugeloo
Mauritian 56 Avenue Le Conte de Lisle, Quatre Bornes, Mauritius
Anjeelee Chinamal Mauritian Flat 9, G. Guibert Street, Residences Les Platanes, Floreal, Mauritius
BANKER: Standard Bank (Mauritius) Limited, 9th Floor, Tower A, 1 CyberCity, Ebene, Mauritius
PLACE OF INCORPORATION: Republic of Mauritius
DATE OF INCORPORATION: 10 August 2012
REGISTERED NUMBER: 111642 C1/GBL
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COLINA HOLDINGS LTD
REGISTERED OFFICE: c/o Abax Corporate Services Ltd 6th Floor, Tower A, 1 Cyber City, Ebene Mauritius
CONTACT TELEPHONE NUMBER: (230) 403 6000
AUDITORS: BDO & Co, DCDM Building 10, Frere Felix de Valois Street Port Louis, Mauritius
COMPANY SECRETARY: Abax Corporate Services Ltd, 6th Floor, Tower A1 Cyber City, Ebene, Mauritius
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COLINA HOLDINGS LTD
8.2 CHL Background
CHL is a public company limited by shares established under the laws of the Republic of Mauritius on 10 August 2012 and holds a Category 1 Global Business License from the FSC.
CHL has been formed for the purpose of providing insurance and other ancillary activities in East, Central and Southern Africa, including Uganda, Kenya, Tanzania, Rwanda and Madagascar. CHL will provide these services through investment in and partnerships with key service providers in the target markets.
CHL has invested in the following companies:
Name of Company Country of Incorporation
% holding No. of shares Business Activity
Saham Assurance Company Kenya Limited
(Formerly known as Mercantile Insurance Company Limited) Kenya 66.7
22,500,000 of KSH 20 each Insurance company
Saham Reinsurance Ltd Mauritius 100 1,000,000 shares of USD 1.00 each Professional Re-insurer
Tech Care Solutions Ltd Mauritius 50
50 Class A ordinary shares of
EUR 1,000 each
Development and design of IT solutions and
systems
Corar Assurances Generales Limited Rwanda 66
19,932 shares of RWF 100,000 Insurance Company
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COLINA HOLDINGS LTD
The principal shareholders of CHL are:
Saham Finances (“SF‟) is a leading insurance holding company registered in Morocco currently operating in 19 African countries and in the Middle East, through its ownership of over 20 insurance companies, including:
• CNIA SAADA, resulting from the merger of CNIA Insurance and Es-SAADA Insurance in 2009, is listed on the Casablanca Stock Exchange. Ranking fourth insurance company in Morocco and leader in the automobile and complementary health segments, CNIA SAADA is 51.8% owned by SF;
• Colina operates 20 companies in 14 African countries and is fully owned by Saham Finances;
• Isaaf Assistance is a premier assistance insurance provider in Morocco with a 46% market share. Saham Finances owns 67 percent of Isaaf Assistance;
• LIA Insurance (“LIA‟), incorporated in 1975, is a major insurance company in Lebanon. LIA offers a comprehensive product and services portfolio, in life and general insurance, to both individuals and companies. SF recently acquired 81% of LIA from Bank Audi, the first Lebanese financial holding, with whom LIA will continue to develop its leading bancassurance network.
Saham Finances has recently acquired 49.9% of GA Angola Seguros, the 3rd player in the insurance market in Angola.
SF’s main shareholders include Saham Group, IFC World bank arm, the Abraaj fund and Mr Moulay Hafid Elalamy.
SF became in 2012 the first African insurance group (excluding South Africa).
Colina Europe is a Company registered in France and is 100% owned by SF.
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COLINA HOLDINGS LTD
9. Unitrust
9.1 Corporate Information
DIRECTORS:
Director Nationality
General T. Y. Danjuma (Rtd) Nigerian
Mr Jihad Matani Lebanese
Mr Murchid V Allam Brazilian
Mr Anthony M Atrib Nigerian
Mrs Grace E Danjuma Nigerian
Professor Joe O Irukuwu Nigerian
Mr Chukwuemeka Nwajiuba Nigerian
Mr Joseph M Taktouk Nigerian
PLACE OF INCORPORATION: Nigeria
DATE OF REGISTRATION: 9 November 1981
REGISTERED OFFICE: Unitrust House, Plot 105B, Ajose Adeogun Street Victoria Island, Lagos, Nigeria AUDITORS: KPMG Professional Services KPMG Tower Bishop Aboyade Cole Street Lagos Nigeria COMPANY SECRETARY: Marina Nominees Limited Aret Adams House 233 Ikorodu Road, Illupju, Lagos Nigeria
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COLINA HOLDINGS LTD
9.2 Unitrust Background
Unitrust Insurance Company Limited, a private limited company, was originally incorporated on 9 November 1981 as Union Nigeria Insurance Company Limited.
The company’s name was changed to Unitrust Insurance Company Limited on 3 May 1983 and obtained a general insurance licence from National Insurance Commission on 13 August 1986.
In January 1999, Unitrust also obtained a licence to carry out life insurance business.
Following recapitalisation exercise in February 2007 ordered by NAICOM, Unitrust discontinued Life insurance business and retained solely the general insurance business.
The company also operates from two of its branches at Abuja and Port Harcourt.
The principal activity of Unitrust is that of provision of insurance risk underwriting and related financial services to its customers, both corporate and individual customers.
Unitrust has an authorised ordinary share capital of 5 billion out of which 3.3 billion has been issued and fully paid up. The nominal value of the ordinary share is NGN1 each.
Unitrust presently has a wholly owned one operating subsidiary namely Unitrust Global Assets Management Company Limited (UNIGAM). UNIGAM was incorporated on January 9, 2001.
It is principally a property management service company and currently manages only Unitrust House situated at Plot 105b Ajose Adeogun Street, Victoria Island, Lagos.
Unitrust Insurance product and services include:
. Fire and special perils
. Goods in transit
. Marine (Cargo and Hull)
. Fidelity Guarantee
Group Personal Accident
. Bond (including Credit bond)
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COLINA HOLDINGS LTD
. Aviation
. Burglary and house breaking
. Automobile Insurance
. Money Insurance
. Workmen compensation
. All risks Insurance
. Oil & Gas
The total gross premium generated by Non-life insurance companies in FY10-FY11 were NGN 157 billion, NGN 176 billion and NGN 211 billion in FY10A, FY11A and FY12A respectively.
Unitrust market share of gross premium was 2% each in FY 10A and FY11A and 1% in FY12A.
Unitrust made a profit after tax of NGN 944 million in FY10A, NGN 126 million in FY11A and NGN 696 million in FY12A.
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COLINA HOLDINGS LTD
10. ACCOUNTANT’S REPORT TO THE SHAREHOLDERS OF CHL
* annexed to this circular
11. FINANCIAL IMPACT OF THE INVESTMENT
The investment, if approved by the shareholders of CHL, will increase the net income of CHL.
Moreover, the investment will result in an increase of the Net Asset Value of CHL by USD 15,619,348. The investment will be financed by a loan facility granted to CHL. The loan facility will result in decreasing the Net Asset Value of CHL by USD 16,000,000.
12. GOVERNMENTAL, LEGAL OR ARBITRATION PROCEEDINGS
There are no government, legal or arbitration proceedings against Unitrust, which would have significant effects on CHL financial position or profitability.
13. MATERIAL CONTRACTS
As at the date of this circular, there are no material contracts or arrangement in which the directors of CHL are materially interested and which are significant in relation to the business of the group.
14. DIRECTOR’S INTEREST AND REMUNERATION
14.1 Director’s Interest
The Directors of CHL do not hold any interest in the ordinary shares of CHL.
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COLINA HOLDINGS LTD
14.2 Director’s remuneration
The Directors have not received any remuneration in respect of the last financial year and there is no remuneration payable to the directors in respect of the current financial year end.
15. DIRECTORS’ RECOMMENDATION
The Board of directors of CHL considers that the terms of the loan and subscription of shares are fair, reasonable and in the best interests of CHL and its shareholders and accordingly recommend that the loan and subscription of shares be approved by its shareholders.
16. STATEMENT OF INDEBTEDNESS
17. COSTS
The expenses incurred by CHL relating to the loan facility from Saham Finances and subscription of shares in Unitrust are as follows:
At 31 March 2014 Unsecured
Shareholder Loans USD 11,019,480
Detail Amount USD Amount MUR
Legal Fees Nil Nil
Marketing Fees Nil Nil
Listing Fees payable to SEM Nil Nil
Review of supplement to substantial transaction circular 800
20,000
Administration Fees Nil Nil
Accountant Fees 10,000 300,000
Total 10,800 320,000
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COLINA HOLDINGS LTD
18. DOCUMENTS AVAILABLE FOR INSPECTION
The following documents are available for inspection during normal business hours at the registered office of CHL as from the publication of this circular:
The Constitution of CHL;
The annual report and financial statements of CHL as at 31 December 2013;
The unaudited condensed financial statements of CHL as at 31 March 2014;
The unaudited condensed financial statements as at 30 June 2014;
Accountant Report; and
The Substantial Transaction Circular.