Wrap Text
Updated Announcement in relation to two Related Party transactions with SACTWU
Hosken Consolidated Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1973/007111/06)
(Share code: HCI & ISIN: ZAE000003257)
("HCI" or the "Company")
UPDATED ANNOUNCEMENT IN RELATION TO TWO RELATED PARTY TRANSACTIONS WITH SACTWU REGARDING:
• THE SPECIFIC REPURCHASE OF HCI ORDINARY SHARES FOR CASH FROM SACTWU; AND
• THE DISPOSAL BY HCI OF CERTAIN OF ITS PROPERTY INTERESTS TO SACTWU
1. Introduction and Rationale
1.1 Shareholders of HCI ("Shareholders") are referred to the Company's announcement published
on 4 July 2025 ("Original Announcement"), in terms of which Shareholders were advised that
HCI and its wholly-owned subsidiary, Squirewood Investments 64 Proprietary Limited
("Squirewood") concluded the following suite of agreements with its material shareholder, the
Southern African Clothing and Textile Workers' Union ("SACTWU" or the "Union"):
(a) a Share Purchase Agreement ("Squirewood Cash Purchase Agreement") in terms of
which, inter alia, Squirewood will purchase 1,100,000 ordinary shares in the capital of
HCI ("HCI Shares") beneficially owned by SACTWU for a purchase price of R131.00
per HCI Share and an aggregate consideration of R144,100,000 ("Squirewood Cash
Purchase");
(b) an Implementation Agreement ("Implementation Agreement");
(c) a Sale of Shares and Claims Agreement ("Property Company Purchase Agreement")
in terms of which, inter alia, HCI will sell its shares in and shareholder loan claims
against three wholly-owned subsidiaries in the HCI group, being Gallagher Estate
Holdings Proprietary Limited ("GEH"), HCI Rand Daily Mail Proprietary Limited
("RDM") and HCI Solly Sachs House Proprietary Limited ("SSH") (collectively, the
"Subject Companies") to SACTWU for an aggregate consideration of R549,724,863
("Property Company Purchase");
(d) a Sale of Shares Agreement ("Squirewood Share Purchase Agreement") in terms of
which, inter alia, Squirewood would purchase 4,196,373 HCI Shares beneficially
owned by SACTWU for a purchase price of R131.00 per HCI Share and an aggregate
consideration of R549,724,863 ("Squirewood Share Purchase"); and
(e) a Cession Agreement ("Cession Agreement") in terms of which, inter alia, SACTWU
shall cede and assign its rights to receipt of the purchase consideration payable to it in
terms of the Squirewood Share Purchase Agreement to HCI in settlement of HCI's
right to claim payment of the purchase price payable to its in terms of the Property
Company Purchase Agreement ("the Cession"),
(the hereinafter referred to as the "Initially Proposed Transactions").
1.2 Capitalised terms used herein shall bear the same meanings ascribed thereto in the Original
Announcement, unless otherwise defined herein.
1.3 The Initially Proposed Transactions, if implemented, would go some way to achieving the
outcomes which the parties thereto intended to achieve, including reducing the perceived
overhang of HCI Shares available for sale, which in the HCI Board's opinion, is partly the cause
of the discount on the HCI Share price experienced recently, as well as assisting SACTWU
with its desire to increase its interests in immovable property generating sustainable monthly
cashflows to service its needs.
1.4 Notwithstanding the above, HCI and SACTWU were concerned about the possible unintended
prejudicial impact that some of the Initially Proposed Transactions may have had on HCI's (and
consequently its other investee companies') ownership credentials in terms of the Broad-Based
Black Economic Empowerment ("B-BBEE") Codes of Good Practice. In this regard, it is
important to note that SACTWU has been the largest shareholder of HCI and its B-BBEE
partner for the past 28 years. SACTWU's shareholding in HCI has not only allowed HCI to
acquire and hold a number of lucrative licensed businesses over a lengthy period, generating
significant returns for its shareholders, but its B-BEEE ownership credentials have also
benefited those businesses and entities (listed and unlisted) for which HCI is the holding
company or a material shareholder of. These include Tsogo Sun Limited, which holds various
gaming licences containing various degrees of ownership requirements; Southern Sun Limited,
which benefits from HCI's ownership credentials in various respects, including the successful
procurement of business for its hotels and conferencing facilities; HCI Resources Proprietary
Limited (formerly known as HCI Coal Proprietary Limited) which is required to comply with
certain ownership requirements in procuring new licences and contracts; HCI's various oil and
platinum investments, including Impact Oil and Gas Ltd and Africa Energy Corp which benefit
from HCI's ownership credentials, and various others which have similar requirements.
1.5 The HCI Board is therefore unanimous in its opinion that the relationship between HCI and
SACTWU is fundamental to HCI's ability to hold a number of these assets in the medium to
long term, and the investee companies' ability to continue to benefit from such credentials.
1.6 Over the last few years SACTWU has been forced to sell a significant number of its HCI Shares
to fulfil certain of its financial obligations caused by external financial pressures, which were
aggravated as a result of the HCI group's inability to distribute dividends for a period of time
due to the Covid-19 pandemic. In the opinion of the HCI Board, future disposals by SACTWU
of its shareholding in HCI, having particular regard to the impact that SACTWU's B-BBEE
credentials have on HCI and its businesses, will continue to place negative pressures on HCI's
share price, and may significantly impair the ability of HCI, its subsidiaries and other investee
companies to (i) avoid serious deleterious effects on their businesses, (ii) comply with various
licencing obligations and (iii) tender for, secure and/or retain government contracts and
licenses.
1.7 Having regard to the above, the parties have agreed to amend the Initially Proposed
Transactions in certain respects to assist the Company and its investee companies to maintain
and/or improve its B-BBEE credentials, ultimately for the benefit of the Company's
Shareholders and investee companies and to assist SACTWU to improve its near term liquidity
through the receipt of immediate cash pursuant to the implementation of the Squirewood Cash
Purchase Agreement, and the opportunity to acquire high-yielding assets through the Property
Company Purchase Agreement to support its liquidity.
1.8 The revised transaction proposed will (i) achieve enhanced B-BBEE credentials for the HCI
group, (ii) in the Board's opinion have no prejudicial impact on other Shareholders interests in
HCI, (iii) be value-accretive for other Shareholders and (iv) have little to no cost implications
for HCI, notwithstanding it being customary for listed issuers to incur significant costs to
achieve improved B-BBEE ownership credentials.
1.9 In this regard, on 29 September 2025, the parties have concluded the following:
(a) addenda to each of the Squirewood Cash Purchase Agreement, the Implementation
Agreement, the Property Company Purchase Agreement and the Cession Agreement,
in terms of which, inter alia, the date for fulfilment of the conditions precedent have
been extended to 31 January 2026;
(b) a new Subscription Agreement ("Squirewood Subscription Agreement") concluded
between SACTWU, HCI and Squirewood, in terms of which, inter alia, (i) the
Squirewood Share Purchase Agreement was cancelled and (ii) SACTWU shall
subscribe for shares in the issued share capital of Squirewood resulting in SACTWU
holding 54.5% of the total issued shares of Squirewood, for an aggregate consideration
of R888,755,872 ("Squirewood Claim"), which consideration shall remain owing on
loan account ("Squirewood Subscription"); and
(c) a new option agreement ("Squirewood Option Agreement") in terms of which, inter
alia, SACTWU shall grant Squirewood an option to purchase 16,012,469 HCI Shares
beneficially owned by SACTWU for a purchase price of R131.00 per HCI Share
("Squirewood Option"), which consideration shall (to the extent the Squirewood
Option is exercised by Squirewood) be automatically set off against the Squirewood
Claim and the balance shall remain owing on loan account ("SACTWU Claim"),
("Revised Proposed Transactions").
1.10 The Revised Proposed Transactions contemplate the following:
(a) the Squirewood Cash Purchase which remains unchanged and will be implemented on
the same basis contemplated in the Original Announcement;
(b) the Property Company Purchase which remains unchanged and will be implemented
on the same basis contemplated in the Original Announcement;
(c) the Squirewood Subscription, in terms of which SACTWU shall subscribe for 54.5%
of the total issued shares of Squirewood, the subscription consideration for which
(being the Squirewood Claim) shall remain owing on loan account and be settled by
SACTWU within 4 (four) months after the effective date of the Squirewood
Subscription (as contemplated in paragraph 3.3 below). If this transaction is
implemented, Squirewood shall no longer be a subsidiary of HCI, but shall become a
subsidiary of SACTWU;
(d) the Squirewood Option, in terms of which Squirewood (which would at the time be a
subsidiary of SACTWU) will be granted an option (being the Squirewood Option) to
purchase 16,012,469 HCI Shares beneficially owned by SACTWU for a purchase price
of R131.00 per HCI Share and an aggregate consideration of R2,097,633,439. The
option only becomes exercisable after implementation of the Squirewood Subscription
(i.e. at the time when Squirewood becomes a subsidiary of SACTWU). To the extent
that Squirewood elects to exercise the Squirewood Option, the consideration payable
by Squirewood to SACTWU shall be automatically set off against the Squirewood
Claim and the balance shall remain owing by Squirewood to SACWU on loan account;
and
(e) the Cession which remains substantially unchanged from the terms set out in the
Original Announcement, save that SACTWU shall now cede its rights to receipt of:
(i) a portion of the purchase consideration payable to it in terms of the Squirewood
Option Agreement equal to R549,724,863, if the Squirewood Option is
exercised in respect of the Squirewood Option Agreement; or
(ii) a loan amount advanced by SACTWU with a face value of R549,724,863, if
the Squirewood Option is not exercised in respect of the Squirewood Option
Agreement,
in full and final settlement of HCI's right to claim payment of the purchase
consideration payable to it in terms of the Property Company Purchase Agreement.
1.11 As a result of the Squirewood Subscription Agreement, SACTWU will acquire control of
Squirewood through it subscribing for 54.5% of the issued shares of Squirewood, resulting in
Squirewood no longer being a subsidiary of HCI but rather becoming a subsidiary of SACTWU.
1.12 If all of the Revised Proposed Transactions are implemented and the Squirewood Option in
terms of the Squirewood Option Agreement is exercised, then Squirewood will hold, in
aggregate, 21,676,506 HCI Shares, comprising approximately 25.3% of the aggregate issued
HCI Shares (net of treasury shares), thereby consolidating the largest portion of SACTWU's
shareholding in HCI into a single entity and enhancing HCI's B-BBEE ownership credentials,
while still benefitting other HCI Shareholders in the manner contemplated in the Original
Announcement.
1.13 Save as disclosed herein, there has been no other significant change and no significant new
matter that has arisen since publication of the Original Announcement.
2. The Squirewood Cash Purchase
Save for the extension of the dates for fulfilment (or waiver) of the Cash Conditions Precedent
to 31 January 2026 (or such later date as the parties may determine), no material changes have
been made to the Squirewood Cash Purchase.
3. Remaining Transactions
3.1 Transaction Terms
(a) Property Company Purchase Agreement:
Save for the extension of the dates for fulfilment (or waiver) of the conditions precedent
to 31 January 2026 (or such later date as the parties may determine), the purchase
consideration payable by SACTWU will either be settled in terms of the Cession
Agreement, or if not yet settled in accordance with the Cession Agreement by the date
that is 3 (three) months after the Closing Date, then:
(i) the amounts outstanding in respect of the purchase consideration shall accrue
interest at the Prime Rate, from the date that is 3 (three) months after the
Closing Date until the date of payment in full by the Seller; and
(ii) SACTWU shall be required to settle the entire purchase consideration
(including all interest accruing in terms hereof) in cash by electronic funds
transfer into the bank account nominated by HCI for that purpose, by no later
than the first anniversary of the Closing Date.
(b) Squirewood Subscription Agreement
SACTWU shall subscribe for 54.5% of the issued shares of Squirewood, the
consideration for which shall remain owing on loan account. In accordance with
section 40(5) of the Companies Act, the shares shall be transferred to be held by an
independent third party appointed by the parties to be held in escrow for and on behalf
of SACTWU.
The Squirewood Claim shall:
(i) unless otherwise agreed upon by Squirewood:
(A) accrue no interest during the first 30 (thirty) days after the Closing
Date; and
(B) accrue interest at the Prime Rate thereafter from the 31st day after the
Closing Date until the Squirewood Claim is settled in full;
(ii) be payable upon the earlier of :
(A) the date on which Squirewood exercises the Squirewood Option
granted to it under the Squirewood Option Agreement, and the sale
triggered by the exercise of that Squirewood Option becoming
unconditional in accordance its terms; and
(B) the date that is 4 (four) months after the Closing Date,
provided that if the Squirewood Claim (including all interest accruing thereon) is not
settled by the date that is 4 (four) months after the Closing Date (or such later date as
the parties may determine), then the relevant shares subscribed for by SACTWU shall
be cancelled and Squirewood shall again become a subsidiary of HCI;
(c) Squirewood Option Agreement:
In terms of the Squirewood Option Agreement, Squirewood, which would at the time
that the Squirewood Option becomes exercisable be a subsidiary of SACTWU (and not
HCI), will obtain the Squirewood Option granting it the right and option to purchase
16,012,469 HCI Shares beneficially owned by SACTWU for a purchase price of
R131.00 per HCI Share and an aggregate consideration of R2,097,633,439. To the
extent that Squirewood elects to exercise the Squirewood Option, the consideration
payable by it to SACTWU shall be automatically set off against the Squirewood Claim
and the balance shall remain owing to SACTWU on loan account.
(d) Cession Agreement:
In terms of the Cession Agreement, SACTWU shall cede and assign its rights to receipt
of (i) the purchase consideration payable to it in terms of the Squirewood Option
Agreement or, if applicable, (ii) a loan advanced by SACTWU to Squirewood in the
interim period, to HCI in full and final settlement of HCI's right to claim payment of
the purchase price payable to it in terms of the Property Company Purchase Agreement.
Pursuant to the implementation of the Cession Agreement, Squirewood shall owe an
amount of R549,724,863 on loan account to HCI.
3.2 Conditions Precedent
The Implementation Agreement (as amended by the addendum thereto) remains subject to the
fulfilment (or waiver) of certain Conditions Precedent in order for the Property Company
Purchase Agreement, the Squirewood Subscription Agreement and the Cession Agreement to
become effective, including by no later than 31 January 2026 (or such later date as the Parties
may determine):
(a) to the extent required in terms of the lease agreements concluded in respect of the
immovable properties owned by the Subject Companies and their respective
subsidiaries, the relevant lessees of such properties have consented to the change in
shareholding of the Subject Companies pursuant to the conclusion and implementation
of the Implementation Agreement;
(b) HCI's group funders and the funders of the Subject Companies (and their respective
subsidiaries) consent to the release of any security held by each of them over the shares
in and/or claims against the Subject Companies, and any other security which the
funders have against HCI in relation to the Subject Companies or their underlying
property assets, on terms acceptable to HCI;
(c) the Shareholders have adopted the requisite resolutions to approve the Transaction
Agreements (which for the avoidance of doubt excludes the Squirewood Option
Agreement) in accordance with the requirements of its memorandum of incorporation,
the Companies Act and the Listings Requirements;
(d) the board of directors of G E Property and Marketing Proprietary Limited and GEH,
have declared the proceeds associated with the sale of certain houses in the Steenberg
Green development (which are excluded from the transaction and valuations
performed) as a dividend distribution to its sole shareholder, to be paid as and when
such proceeds are received;
(e) a restructure by HCI in respect of its interests in GEH has been implemented;
(f) the Transaction Agreements have been concluded and such agreements becoming
unconditional in accordance with its terms, save for any conditions contained therein
requiring the Implementation Agreement to become unconditional;
(g) the conclusion of an escrow agreement between SACTWU, Squirewood and a third
party escrow agent in terms of which, inter alia, the SACTWU's shares subscribed for
in terms of the Squirewood Subscription Agreement shall, after their issue to
Squirewood, be immediately transferred to, and held in trust by, the escrow agent;
(h) the transactions contemplated in the Property Sale Agreement and the Squirewood
Subscription Agreement have, each to the extent legally required, been unconditionally
approved by the Competition Authorities in terms of the Competition Act, or
conditionally approved on terms and conditions which each of SACTWU and HCI
confirms in writing to the other (by not later than the aforesaid date, and provided that
such approval shall not be unreasonably withheld or delayed) to be acceptable to them;
and
(i) the shareholder of Squirewood as at the relevant date approves the replacement of the
existing memorandum of incorporation of Squirewood by the adoption of a new
memorandum of incorporation, and the requisite special resolution approving same and
any applicable notice of amendment required in terms of the Companies Act has been
lodged for filing with the South African Companies and Intellectual Property
Commission.
The parties have undertaken to engage with each other in good faith with a view to extending
the dates for fulfilment of the Conditions Precedent, to the extent that the delay in fulfilment of
the Conditions Precedent is a result of a delay in obtaining the regulatory approvals required to
fulfil the relevant Condition/s Precedent. If the parties fail to engage with each other or are
unable to reach an agreement with regards to the period of time for which the date/s should be
extended, then the relevant date/s shall automatically be extended by a period of ninety days,
on a once-off basis and without any further action being required from any party.
3.3 Effective Date
The effective date of the Property Company Purchase Agreement and the Squirewood
Subscription Agreement shall be the fifth business day after the day on which all of the
Conditions Precedent have been fulfilled or to the extent legally permissible, waived.
The effective date of Cession Agreement shall be the first business day after the earlier of:
(a) the date on which Squirewood exercises the option in terms of the Squirewood Option
Agreement (if applicable); or
(b) the date on which SACTWU advances a loan amount in cash to Squirewood equal to
the face value of R549,724,863.
3.4 Financial Effects
As the Squirewood Share Purchase Agreement has been cancelled, the pro forma financial
effects disclosed in the Original Announcement shall no longer apply. HCI shall make the
relevant disclosures regarding the impact on financial effects in the Company's circular to be
published in due course, if and to the extent required in terms of the Listings Requirements.
3.5 Categorisation and Shareholder Approvals
(a) The Squirewood Cash Purchase Agreement constitutes a "specific repurchase" from a
related party as contemplated in section 5.69 and section 10.1(b)(i) of the Listings
Requirements and therefore requires the approval of HCI Shareholders by way of a
special resolution, excluding the votes exercisable by SACTWU.
(b) The Property Company Purchase, the Squirewood Subscription Agreement and the
Cession each constitute related party transactions in terms of sections 9 (read with
section 3.35) and 10 of the Listings Requirements, and therefore require the approval
of Shareholders by ordinary resolution, excluding the votes exercisable by SACTWU.
(c) HCI remains obliged to obtain a fairness opinion from an independent expert in
compliance with the provisions of paragraph section 10.4(f) of the Listings
Requirements.
(d) Since Squirewood will no longer be a subsidiary of HCI at the time when the
Squirewood Option becomes exercisable, the Squirewood Option does not constitute a
repurchase of shares in terms of the Listings Requirements, nor does it constitute a
categorisable transaction. Any further Listings Requirement provisions which may
apply shall be determined at the time at which the Squirewood Option is exercised by
Squirewood (if at all). The information disclosed in the announcement relating to the
Squirewood Option are disclosed voluntarily to provide Shareholders with all
necessary information to make informed decisions regarding the resolutions proposed.
3.6 Other material terms
(a) To reflect the lock-in contained in the Initially Proposed Transactions, neither HCI nor
SACTWU are entitled to dispose of or encumber any interest in Squirewood for a
period commencing on the date on which SACTWU first acquires shares in
Squirewood and expiring on the fourth anniversary thereof.
(b) HCI and SACTWU shall however be entitled to provide Squirewood with six months
written notice requiring that Squirewood unbundles (by way of a distribution in specie)
all HCI Shares and/or such other shares held by Squirewood at that time. Should HCI
or SACTWU deliver such a notice, then the parties shall take such steps as may be
legally required, subject to compliance with the Companies Act and the Listings
Requirements, to implement the unbundling of such HCI Shares and/or other shares,
pro rata to shareholding of the Squirewood shareholders at the time.
Any shares so unbundled to SACTWU will again be subject to the four-year lock-in
provisions announced in the Original Announcement.
4. Squirewood Option
4.1 As mentioned above, since Squirewood will no longer be a subsidiary of HCI at the time when
the Squirewood Option becomes exercisable, the Squirewood Option does not constitute a
repurchase of shares in terms of the Listings Requirements, nor does it constitute a categorisable
transaction. The information disclosed in the announcement relating to the Squirewood Option
are disclosed voluntarily to provide Shareholders with all necessary information to make
informed decisions regarding the resolutions proposed.
4.2 The board of directors of Squirewood shall be entitled to exercise the Squirewood Option at
any time during the period commencing on the first business day after the implementation of
the Squirewood Subscription Agreement and expiring four months thereafter.
4.3 The HCI Board intends to engage with a number of its significant Shareholders in the interim
period between the date of this announcement and the date of its shareholder meeting to
determine their views on the exercise of the Squirewood Option and shall pursuant to such
engagements, make a decision as to whether it wishes to support the exercise of the Squirewood
Option, which decision shall ultimately be made based on what the HCI Board believes to be
in the best interest of the HCI group, its Shareholders and other stakeholders.
4.4 If the Squirewood Option is not exercised, then SACTWU shall retain its 16,012,469 shares in
HCI, and unless the Squirewood Claim is otherwise settled by SACTWU, the Squirewood
shares issued to SACTWU in terms of the Squirewood Subscription Agreement shall be
cancelled, subject to the approval of Shareholders to the extent legally required, resulting in
Squirewood again becoming a subsidiary of HCI.
5. Circular to Shareholders
A circular, including a notice of general meeting, detailing the terms of the Revised Proposed
Transactions and actions required by Shareholders will be posted to Shareholders in due course.
In compliance with section 10.4(f) of the Listings Requirements, the circular will also include
a statement by the HCI Board confirming whether the Revised Proposed Transactions are fair
insofar as the Shareholders are concerned and that the HCI Board has been so advised by an
independent expert acceptable to the JSE.
Cape Town
29 September 2025
Sponsor
Investec Bank Limited
HCI Legal advisors
White and Case Inc
SACTWU Legal Advisors
ENS
Date: 29-09-2025 02:06:00
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