JWI
11/11/2014 16:36
TAKEOVER
REL: 1636 HRS Just Water International Limited
TAKEOVER: JWI: Target Company Statement
11 November 2014
Target Company Statement
The independent committee of directors has finished its review of Harvard
JV's takeover notice for Just Water International Limited (NZAX: JWI) and
unanimously recommends Just Water shareholders accept the offer.
The full Target Company Statement, including an independent adviser's report
from KordaMentha, has been delivered to Harvard JV to send with its offer,
which is expected to be dated 14 November 2014.
A copy of the Target Company Statement accompanies this announcement. While
Just Water shareholders should consider all of the material provided, a
summary of the rationale for the independent committee's recommendation
follows.
Current adverse business factors facing Just Water
Just Water is currently facing competitive trading conditions, in both the
New Zealand and Australian markets, and has, so far, been unable to arrest a
decline in revenue, particularly rental revenue. Rental unit numbers and
average revenue per unit continue to decline due to the commoditisation of
its product range and on-going discounting in the market place. Just Water
will need to continue to find on-going cost savings and productivity
improvements in order to maintain current profitability. A key disruptive
impact facing the New Zealand business is a shift away from bottled water
coolers to under-bench water dispensers.
Alternative proposals unlikely
Over the last six months, with the assistance of PricewaterhouseCoopers, the
Just Water Board has investigated potential interest in the shares and assets
of Just Water from prospective international and domestic parties.
The Board has had discussions and engagement with three different parties
during this process. A final non-binding, and conditional, offer was
received at 14.6 cents per share. The Harvard JV offer is at a higher price
and is unconditional.
Accordingly, given the outcome of this process and the significant stake
already controlled by Harvard JV, the Independent Directors consider it
unlikely that a more attractive offer will be made to shareholders in the
near future.
Offer price
Harvard JV's offer price is 15 cents per Just Water share. KordaMentha's
assessed value range is 14.7 cents to 16.8 cents per share. Although the
offer price is at the lower end of that valuation range, the Independent
Directors consider that there may be significant risk in the higher end of
that value range, particularly given the business issues facing Just Water
and that the valuation is highly sensitive to achieving revenue targets and
the terminal growth rate.
Liquidity
Harvard JV already controls 70.79% of the shares in Just Water.
Historically, Just Water has had low volumes of trading in Just Water shares
(share trading liquidity; meaning the ability to buy and sell shares in Just
Water). If Harvard JV increases its holding but does not achieve 90% control
of Just Water, then the liquidity of Just Water shares may be reduced even
further.
Post-offer
If Harvard JV achieves 90% control of Just Water through the offer, then
Harvard JV intends to compulsorily acquire the remaining shares in Just Water
in accordance with the Takeovers Code. If this occurs, Just Water will be
de-listed by NZX and its shares will cease quotation on the NZX Alternative
Market.
If Harvard JV does not achieve 90% control of Just Water, then there is no
certainty that Just Water shares will continue to trade at the recent share
price.
Conclusion
As noted above, the Independent Directors unanimously recommend shareholders
accept the offer. The Committee of Independent Directors will advise
shareholders of any material new information or changes in circumstance that
arise relevant to the offer, at first instance by announcements to NZX.
Paul Connell
Chairman
Just Water International Limited
+64 (21) 454561
About Just Water International Limited:
Just Water International Limited operates in New Zealand and Australia
supplying water-coolers, drinking water and filters for the home and office.
The Company was listed on the New Zealand Stock Exchange (Alternative Market)
in 2004.
The New Zealand business was started in 1989, and has grown to a base of over
35,000 recurring contracts, the Company deriving a recurring income from
monthly rental, water sales or maintenance agreements.
The Australian business arose through the acquisition of Clearwater Filter
Systems (Aust) Pty Limited in 2005 to take advantage of the growth of
point-of-use water-coolers in Australia. Clearwater has its Head Office in
Sydney, with branch offices in Brisbane and Melbourne.
End CA:00257496 For:JWI Type:TAKEOVER Time:2014-11-11 16:36:48
