REG - Ocean Wilsons Hldgs - Sale of interest in Wilson Sons to SAS Shipping

Ocean Wilsons HoldingsAnnouncement

21/10/2024 07:00

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RNS Number : 9229I  Ocean Wilsons Holdings Ltd  21 October 2024

21 October 2024

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

FOR IMMEDIATE RELEASE

 

Ocean Wilsons Holdings Limited

 

("Ocean Wilsons" or the "Company")

 

Sale of interest in Wilson Sons S.A. to SAS Shipping Agencies Services Sàrl

 

Ocean Wilsons is pleased to announce that its wholly-owned subsidiary, OW
Overseas (Investments) Limited ("OWOIL"), has agreed to sell its 56.47%
interest in Wilson Sons S.A. ("Wilson Sons") to SAS Shipping Agencies Services
Sàrl ("SAS"), a wholly-owned subsidiary of MSC Mediterranean Shipping Company
SA ("MSC"), for total cash consideration of R$4.352 billion (equivalent to
R$17.50 per share) (the "Transaction").

 

Transaction highlights

 

·      Sale of the Company's 56.47% interest in Wilson Sons, for cash
consideration of R$4.352 billion (the "R$ Purchase Price"). The R$ Purchase
Price, before it is paid to OWOIL, will be converted from R$ to US$ at the
exchange rate published by the Central Bank of Brazil as of the business day
immediately preceding the completion date. As at 18 October 2024, being the
latest practicable date prior to the publication of this announcement, the R$
Purchase Price was equal to US$768 million. 1 

 

·      It is anticipated that Brazilian withholding tax in respect of
capital gains, at rates of between 15.0% and 22.5%, will be applied to OWOIL's
gain on the disposal of its interest in Wilson Sons. The Company expects up to
US$142 million (calculated using the Applicable Exchange Rate) to be withheld
by SAS pursuant to the Brazilian capital gains tax regime (estimated on a
reasonable worst-case basis). The Company expects to ultimately realise net
cash proceeds of at least US$593 million (calculated using the Applicable
Exchange Rate) as a result of the Transaction, net of transaction costs and
taxes. The Company does not expect that material taxes will be payable on the
transaction proceeds in any other jurisdiction. Shareholders will be updated
when the amount of Brazilian withholding tax, and consequently, the net cash
proceeds that the Company expects to receive as a result of the Transaction,
have been ascertained.

 

·      The Transaction agreement contemplates Wilson Sons (i) paying the
dividend declared by the Wilson Sons board of directors on 11 October 2024 and
(ii) continuing to pay dividends to its shareholders of up to the R$
equivalent of US$22 million per quarter during the period prior to completion
of the Transaction ("Completion"), subject in each case to Wilson Sons
generating sufficient profits in the relevant quarter (the "Permitted
Amount"). To the extent Wilson Sons pays dividends in excess of the Permitted
Amount, the proportion received by OWOIL will result in a commensurate
reduction to the R$ Purchase Price.

 

·      The Transaction is expected to complete during the second half of
2025 and is conditional on the receipt of applicable regulatory clearances
between signing and Completion.

 

·      The Ocean Wilsons' Board of Directors (the "Board") is of the
opinion that the Transaction is in the best interests of Ocean Wilsons'
shareholders as a whole.

 

Caroline Foulger, Ocean Wilsons' Chair, commented:

 

"I am delighted to announce that, following a comprehensive strategic review
of the Company's investment in Wilson Sons, we have reached an agreement for
the sale of our holding in Wilson Sons to SAS. This transaction represents the
successful realisation of our long-term investment in Wilson Sons,
demonstrating our ability to identify opportunities to create significant
value for our shareholders.

 

"Our strategy has always been focused on delivering enhanced long-term value
to our shareholders by carefully balancing investment risks and avoiding the
distractions of short-term market cycles. This sale aligns with our purpose
and will allow us to concentrate on developing the business through
sustainable profitable growth.

 

"Since our initial investment, Wilson Sons has demonstrated significant
financial growth and is today the largest integrated port and maritime
logistics operator in Brazil. Under SAS's ownership, we are confident that
Wilson Sons will benefit from additional resources and support.

 

"The Board believes that it is a compelling time to realise its investment.
This is an exciting time for Ocean Wilsons, and we remain committed to
maximising shareholder value through strategic decision-making and disciplined
investment growth".

 

Use of net proceeds

 

The Board currently expects to return a meaningful proportion of the net
proceeds from the Transaction to shareholders (for example, by way of a
special dividend or a share buyback programme (or a combination of the two)),
and is currently reviewing a number of options with respect to the remainder,
one of which could include re-investing some or all of the remainder into the
diversified portfolio business of its wholly-owned subsidiary, Ocean Wilsons
(Investments) Limited ("OWIL").

 

In advance of concluding how the net proceeds will be allocated and deployed,
the Board wishes to consult with shareholders to canvass their views and
ensure that its decision considers the views of shareholders as a whole. The
Board will provide further detail on its intended application of the net
proceeds following completion of that consultation exercise.

 

Impact on Ocean Wilsons

Financial impacts of the transaction on Ocean Wilsons are currently estimated
(based on financial statements for the period ended 30 June 2024) to be as
follows:

·      The net proceeds from the Transaction will increase the Company's
net cash position.

·      The Company will present the 'Brazil - maritime services' segment
assets and liabilities as held-for-sale until the Completion within its future
statutory accounts.

·      As at 30 June 2024, the net assets of the 'Brazil - maritime
services' segment totalled US$458 million and the Company's equity included
US$203 million for non-controlling interests related to this segment.

·      The Company would present the 'Brazil - maritime services'
segment results as discontinued operations within its future statutory
accounts and will continue to consolidate its results until Completion takes
place.

·      As a result, on Completion, the Company would recognise an
accounting gain equal to the net proceeds received by the Company adjusted for
the 'Brazil - maritime services' segment net assets, the related
non-controlling interest balance, and the realisation of the cumulative
translation reserve as at the date of Completion.

 

Were the net proceeds remaining after any return(s) to shareholders to be used
solely for investment in the diversified portfolio business of OWIL, the
remaining business of Ocean Wilsons and its subsidiaries (the "Group") would
consist only of that business. The Board is aware that, in this scenario, it
may be deemed necessary for the Company to transfer its listing from the FCA's
equity shares (commercial companies) listing category to its closed-ended
investment funds category. Any such transfer of listing category would be
subject to a shareholder vote in accordance with the UK Listing Rules. The
Board expects to consult with shareholders as to any consequential change of
listing category as part of its consultation on the use of the net proceeds.

 

Assets of Wilson Sons

As at 30 June 2024, the value of the gross assets of Wilson Sons was US$1.126
billion. In the 2023 financial year, the profit after tax attributable to the
assets the subject of the Transaction was US$81 million.

OWOIL has a 56.47% economic interest in Wilson Sons.

 

Next steps and timing

The Transaction is expected to complete during the second half of 2025. The
Transaction is conditional upon the satisfaction of the Conditions (as defined
in Appendix V (Material Contracts) to this announcement).

 

Additional information

 

The Transaction is a significant transaction for the purposes of Chapter 7 of
the UK Listing Rules due to the agreed total consideration exceeding 25% of
Ocean Wilson's market capitalisation. As such, this announcement is made in
accordance with Ocean Wilsons' disclosure obligations pursuant to Chapter 7 of
the UK Listing Rules.

 

Unless otherwise stated, all financial information relating to Ocean Wilsons
and Wilson Sons disclosed in the announcement has been extracted from the
Ocean Wilsons' published audited Consolidated Financial Statements for the
year ended 31 December 2023 and 2022 or from the Ocean Wilsons' published
unaudited Interim Consolidated Financial Statements for the period ended 30
June 2024, which were all prepared in accordance with International Financial
Reporting Standards.

 

Certain figures included in this announcement have been rounded. Accordingly,
figures shown as totals may not be an arithmetic aggregation of the figures
that precede them.

 

The Company is being advised by BTG Pactual (financial adviser), Slaughter and
May (English law legal advisers), Pinheiro Guimarães Advogados (Brazilian law
legal advisers) and Peel Hunt LLP (UK financial adviser and broker).

 

The person responsible for arranging for the release of this announcement on
behalf of the Company is Leslie Rans, Chief Operating and Financial Officer.

About Ocean Wilsons

 

Ocean Wilsons is a Bermuda investment holding company listed on both the
London Stock Exchange and the Bermuda Stock Exchange. The Group comprises two
primary investments, Ocean Wilsons (Investments) Limited, an entity that
holds an actively managed diversified portfolio of international investments,
and Wilson Sons.

 

LEI: 213800U1K395G8PK4I21

 

About Wilson Sons

 

Wilson Sons is listed on the B3 Brazilian stock exchange (B3 S.A. - Brasil,
Bolsa, Balcão) and is one of the largest providers of maritime services in
Brazil with activities including towage, container terminals, offshore oil and
gas support services, small vessel construction, logistics and ship agency.
Wilson Sons has a presence in most major ports in Brazil.

 

Wilson Sons is led by its CEO, Fernando Salek, and overseen by its board of
directors.

 

About SAS and MSC

 

SAS is a wholly-owned subsidiary of MSC Mediterranean Shipping Company SA. MSC
is a private global leader in transportation and logistics founded in 1970 and
headquartered in Geneva, Switzerland. It is owned and managed by the Aponte
family. MSC has evolved from a one vessel operation into a global business
with a fleet of more than 850 vessels and a team of over 200,000 employees.
SAS is, inter alia, the controlling shareholder of Log-In-Logística
Intermodal S.A.

FOR FURTHER INFORMATION PLEASE CONTACT

 

 

 Ocean Wilsons Holdings Limited                                 +1 (441) 295 1309
 Leslie Rans

 Peel Hunt LLP - Financial Adviser and Broker to Ocean Wilsons  +44 (0) 207 418 8900
 Ed Allsopp
 Charles Batten
 Tom Graham

 

IMPORTANT NOTICES

 

No statement in this announcement is intended as a profit forecast and no
statement in this announcement should be interpreted to mean that the future
earnings per share, profits, margins or cash flows of Ocean Wilsons following
the Transaction will necessarily match or be greater than the historical
published earnings per share, profits, margins or cash flows of Ocean Wilsons.

 

This announcement may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements may be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "projects", "anticipates", "expects",
"intends", "may", "will" or "should" or, in each case, their negative or other
variations or comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. Forward-looking statements may
and often do differ materially from actual results. Any forward-looking
statements reflect Ocean Wilsons' current view with respect to future events
and are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to Ocean Wilsons' business, results of
operations, financial position, liquidity, prospects, growth and strategies.
Forward-looking statements speak only as of the date they are made.

 

You are advised to read this announcement in its entirety for a further
discussion of the factors that could affect the Group's future performance. In
light of these risks, uncertainties and assumptions, the events described in
the forward-looking statements in this announcement may not occur.

 

This announcement does not constitute and should not be construed as, an offer
to purchase or sell or issue securities, or otherwise constitute an
inducement, invitation, commitment, solicitation or recommendation to any
person to purchase, subscribe for, or otherwise acquire securities in Ocean
Wilsons, or constitute an inducement to enter into any investment activity in
any jurisdiction. Nothing contained in this announcement is intended to, nor
shall it, form the basis of, or be relied on in connection with, any contract
or commitment whatsoever and, in particular, must not be used in making any
investment decision.

 

The distribution of this announcement in or from certain jurisdictions may be
restricted or prohibited by the laws of any jurisdiction other than the UK.
Recipients of this announcement are required to inform themselves of, and
comply with, all restrictions or prohibitions in such other jurisdictions. Any
failure to comply with applicable requirements may constitute a violation of
the laws and/or regulations of such other jurisdictions.

 

Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated in the United
Kingdom by the FCA, is acting exclusively as financial adviser and broker to
Ocean Wilsons and for no one else in connection with the matters referred to
in this announcement and will not be responsible to any person other than
Ocean Wilsons for providing the protections afforded to clients of Peel Hunt,
nor for providing advice in relation to the matters referred to herein.
Neither Peel Hunt nor any of its affiliates owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is not a
client of Peel Hunt in connection with the matters referred to in this
announcement, or otherwise.

 

Save as required by the Market Abuse Regulation, the Disclosure Guidance and
Transparency Rules, the UK Listing Rules or by applicable law, each of Ocean
Wilsons, Peel Hunt and their respective affiliates and representatives
expressly disclaim any intention, obligation or undertaking to update, review
or revise any of the information or the conclusions contained herein,
including forward-looking or other statements contained in this announcement,
or to correct any inaccuracies which may become apparent whether as a result
of new information, future developments or otherwise.

APPENDIX I

FINANCIAL INFORMATION

 

Key historical financial information on Wilson Sons

 

 

 Balance Sheet 2 

 expressed in thousands of US$

                                                    31-Dec-22  31-Dec-23     30-Jun-24
 Total Assets                                       1,098,393  1,191,179     1,126,396
 Total Liabilities                                  646,339    704,976       668,388
 Net Asset Value                                    452,054    486,203       458,008

 Income Statement 3 

 expressed in thousands of US$
                                                    FY 2022    FY 2023       30-Jun-24
 Sale of services                                   440,107    486,646       262,363
 Operating expenses                                 (257,834)  (284,502)     (154,356)
 Depreciation and Amortisation                      (64,435)   (71,768)      (37,052)
 Operating Profit                                   117,838    130,376       70,955
 Share of results of joint ventures and associates  3,165      6,447         103
 Other income                                       6,631      7,593         4,701
 Finance costs                                      (34,509)   (35,425)      (18,512)
 Profit before tax                                  93,125     108,991       57,247
 Income tax expense                                 (26,656)   (27,609)      (27,231)
 Profit for the period                              66,469     81,382        30,016

 

 

APPENDIX II

RELATED PARTY TRANSACTIONS

 

Save as set out immediately below and other than those matters disclosed in
the Company's previously published Annual Reports and Financial Statements,
Ocean Wilsons has not entered into any related party transactions (within the
meaning ascribed to that term in UK-adopted international accounting
standards) during any of the financial years ended 31 December 2022, 31
December 2023 and otherwise up to the date of this announcement.

 

In connection with the Transaction, Wilson Sons has entered into retention and
non-compete arrangements (the "Retention and Non-Compete Arrangements") with
certain members of Wilson Sons' senior management who are treated as related
parties of the Company pursuant to IAS 24 (Related Party Disclosures) (the
"Recipients"). As part of the Retention and Non-Compete Arrangements, and
conditional on Completion taking place, a maximum aggregate amount of R$133
million (or US$23 million, for illustrative purposes, calculated using the
Applicable Exchange Rate) (the "Retention and Non-Compete Payments") will be
paid to the Recipients in consideration for the Recipients' agreement to
remain in their respective positions at Wilson Sons and the provision by the
Recipients of certain non-compete and non-solicitation covenants. Subject to
Completion taking place, the Retention and Non-Compete Payments will be paid
in cash as follows: (i) a portion of between 84-90% (depending on the
Recipient) on Completion; and (ii) the remainder of between 10-16% (depending
on the Recipient) (the "Second Payment") on the 36-month anniversary of
Completion (the "Second Payment Date"). The Second Payment is conditional upon
the Recipients being in the continuous employment of Wilson Sons from the date
of Completion to (and including) the Second Payment Date.

 

The cost of the Retention and Non-Compete Arrangements will be borne by Wilson
Sons and will not result in any adjustment to the R$ Purchase Price.

APPENDIX III

SIGNIFICANT CHANGE IN THE ISSUER'S FINANCIAL POSITION

 

1.   Ocean Wilsons - There has been no significant change in the financial
performance or financial position of Ocean Wilsons since 30 June 2024, being
the end of the last financial period for which financial information of Ocean
Wilsons has been published.

 

2.   Wilson Sons - There has been no significant change in the financial
performance or financial position of Wilson Sons since 30 June 2024, being the
end of the last financial period for which financial information of Wilson
Sons has been published.

 

 

 

APPENDIX IV

LEGAL AND ARBITRATION PROCEEDINGS

 

1.   Ocean Wilsons - There are no legal or arbitration proceedings
(including any such proceedings which are pending or threatened of which Ocean
Wilsons is aware) during a period covering the 12 months prior to the date of
this announcement which may have, or have had in the recent past, a
significant effect on Ocean Wilsons' financial position or profitability.

 

2.   Wilson Sons - There are no legal or arbitration proceedings (including
any such proceedings which are pending or threatened of which Ocean Wilsons is
aware) during a period covering the 12 months prior to the date of this
announcement which may have, or have had in the recent past, a significant
effect on Wilson Sons and/or Wilson Sons' financial position or profitability.

 

 

 

APPENDIX V

MATERIAL CONTRACTS

 

1.   Ocean Wilsons

 

Share purchase agreement

 

Parties and structure

 

The Transaction is governed by a share purchase agreement ("Share Purchase
Agreement") entered into between Ocean Wilsons, OWOIL and SAS. Pursuant to the
Share Purchase Agreement and subject to the Conditions (as defined below),
OWOIL has agreed to sell, and SAS has agreed to purchase, the shares owned by
OWOIL in the capital of Wilson Sons (being 248,664,000 shares and representing
56.47% of Wilson Sons). The Company has agreed to guarantee OWOIL's
obligations, commitments and undertakings arising under or in connection with
the Share Purchase Agreement

 

Consideration

 

The consideration for the Transaction comprises R$4.352 billion in cash (the
"Consideration"), representing the agreed share price of R$17.50/share
multiplied by the number of Wilson Sons shares held by OWOIL at Completion. To
the extent that Wilson Sons has paid or pays dividends which are not permitted
dividends (being dividends in excess of those permitted under the Share
Purchase Agreement, including those described in the section titled
'Transaction Highlights') during the period from (and excluding) 31 December
2023 to Completion, OWOIL's portion of such dividends shall be deducted from
the Consideration payable at Completion.

 

Conditions

 

The Transaction conditional upon SAS obtaining final approval for the
Transaction under the applicable merger control laws from the Brazilian
Administrative Council for Economic Defense (Conselho Administrativo de Defesa
Econômica - CADE) (the "Antitrust Condition"), obtaining final approval under
the applicable regulatory laws from the Brazilian National Waterway
Transportation Agency (Agência Nacional de Transportes Aquaviários - ANTAQ)
(the "ANTAQ Condition") and obtaining certain consents and/or waivers from
certain of Wilson Sons' lenders in relation to the Transaction (the "Bank
Consents Condition" and, together with the Antitrust Condition and the ANTAQ
Condition, the "Conditions"). The Antitrust Condition and the ANTAQ Condition
may not be waived by any party. The Bank Consents Condition may be waived by
SAS or, following the satisfaction of the Antitrust Condition and the ANTAQ
Condition, by OWOIL.

 

SAS will be required, amongst other obligations, to use its best endeavours to
satisfy the Conditions as soon as reasonably practicable and in any event by
21 January 2026 (the "Long Stop Date"), by which time, if any of the
Conditions have not been satisfied or (where applicable) waived, then (subject
to the  parties' rights to extend the Long Stop Date by up to 20 business
days), the Share Purchase Agreement will automatically terminate.

 

Break fee

 

If the Antitrust Condition or the ANTAQ Condition have not been satisfied on
or before 5.00pm on the Long Stop Date (including, if applicable, as extended
by the parties), the Share Purchase Agreement shall automatically terminate
and a break fee of US$80 million in cash (the "Break Fee") shall be payable by
SAS to OWOIL.

 

The Break Fee will not be payable where the failure to satisfy the Antitrust
Condition or the ANTAQ Condition is due to the material breach by OWOIL of its
obligations under the Share Purchase Agreement in relation to the satisfaction
of such Conditions, or where such material breach materially contributes to
the failure to satisfy such Conditions.

 

 

Warranties

 

OWOIL has given to SAS customary fundamental warranties as well as warranties
relating to anti-bribery, anti-corruption and sanctions matters.

 

Termination rights

 

SAS may terminate the Share Purchase Agreement if (i) an event occurs in
relation to anti-bribery, anti-corruption or sanctions matters which is
publicly disclosable by Wilson Sons and gives rise to a material adverse
effect on Wilson Sons and its subsidiaries (an "ABC Material Adverse Change")
or (ii) a material inaccuracy in certain of Wilson Sons' public disclosures is
identified. OWOIL will also be entitled to terminate the Share Purchase
Agreement if an ABC Material Adverse Change occurs.

 

Governing law and jurisdiction

 

The Share Purchase Agreement is governed by English law. The English courts
will have exclusive jurisdiction to settle any dispute arising out of or in
connection with the agreement.

 

 

ENDS

 1  R$:US$ exchange rate of 5.6672:1 (the "Applicable Exchange Rate").

 2  Unaudited historical financial information extracted from the underlying
internal financial accounting records that support Ocean Wilsons': (i) annual
audited consolidated financial statements for the last two fiscal years; and
(ii) 30 June 2024 unaudited interim consolidated financial statements
(together, the "Consolidated Financial Statements"). The financial information
is prepared on a basis which is consistent with the Consolidated Financial
Statements.

 3  Unaudited historical financial information extracted from the underlying
internal financial accounting records that support Ocean Wilsons': (i) annual
audited consolidated statement of profit or loss for the last two fiscal
years; and (ii) 30 June 2024 unaudited interim consolidated statement of
profit or loss (together, the "Consolidated Statements of Profit and Loss").
The financial information is prepared on a basis which is consistent with the
Consolidated Statements of Profit and Loss.

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