The bonds are to be issued by Shoprite Investments and guaranteed on a joint and several basis by Shoprite and Shoprite Checkers. The combined total proceeds will amount to approximately R8.0 billion.
The bonds are expected to carry a semi-annual coupon of between 6.125-6.625% per annum and will be convertible into shares.
The initial conversion price in respect of the bonds will be set at a premium of 32.5-37.5% above the placing price of the equity placing. The bonds will be issued at 100% of their nominal amount and, unless previously converted, repurchased or redeemed, will be redeemed at par in April 2017.
The issuer will have the option to call the bonds after the first three years, if the price of the shares exceeds 130% of the then prevailing conversion price over a specified period.
The equity and bond placing will be offered through accelerated book-building processes to qualifying institutional investors only. The books for the transaction are open.
The net proceeds of the transaction are intended to be used by Shoprite to strengthen and improve the structure and efficiency of its balance sheet, to enhance working capital management, to continue investment in organic growth initiatives and to selectively pursue acquisition opportunities.
Christo Wiese, Shoprite's Chairman and a 16.5% ordinary shareholder of Shoprite, has announced his intention to subscribe in the bond placing for up to R1.7 billion in nominal amount of bonds. As a related party to Shoprite, Wiese is restricted from participating in the equity placing under rule 5.52 of the JSE Listings Requirements.
Shoprite also confirmed that the business has performed to plan since it announced its interim results on 21 February 2012 and is on track for the first two months of 2012 ending February.
Shoprite will apply for admission of the shares to trading on the Main Board of the JSE and it is expected that listing and settlement of the shares will take place on or about Thursday, 29 March.
It is expected that settlement of the bonds will take place on or about Monday, 2 April 2012. Shoprite will apply for admission of the bonds to trading on the Main Board of the JSE within 3 months following settlement.
Goldman Sachs International, Morgan Stanley & Co. International plc and Rand Merchant Bank, a division of FirstRand Bank Limited, are acting as joint bookrunners for the transaction.
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