Italtile: Extends Outstanding Loan Repayment Date



Incorporated in the Republic of South Africa (Registration Number: 1955/000558/06) Share Code: ITE ISIN: ZAE000099123 (“Italtile” or “the Group”)


Pursuant to a loan agreement entered into between Italtile and Italtile and Ceramic Foundation Trust (“Trust”) on or about May 28, 2012 (“Loan Agreement”), Italtile lent and advanced an interest-free loan in the amount of R120,600,000.00 (“Loan”), to the Trust, which loan constituted the provision of financial assistance (“Italtile Loan Transaction”). Unless otherwise agreed in writing by Italtile, the Loan is repayable in full on the tenth anniversary of the advance date, being August 14, 2022 (“Redemption Date”).

The Trust used the loan to acquire 26,400,000 shares (“Original Italtile Shares”) held by Arrow Creek Investments 74 Proprietary Limited in Italtile for aggregate purchase consideration of R120,600,000.00 (“Arrow Creek Sale Transaction”). “).

Shareholders are referred to the circular dated Friday July 13, 2012, including all annexes, the notice of general meeting and the form of proxy contained therein, which defines the main terms and mechanisms , among others, the Italtile loan transaction and the Arrow Stream sale transaction. All shareholder approvals necessary to implement the above transactions were obtained at Italtile’s general meeting of shareholders held on Tuesday, August 14, 2012.

As of the date of this SENS announcement, the Trust has repaid part of the loan in the amount of R30,000,000.00. The Trust will not have sufficient cash to repay the Loan balance in the amount of R90,600,000.00 (“Loan Outstanding”) on or before the Repayment Date.

Under the terms of the amended and restated trust indenture in respect of the Trust, the Trust has the right to dispose of all or part of the Original Italtile Shares in order to repay the Loan in full, provided that the Trust has followed the pre-emptive agreement procedure of law set out in clause 19 thereof (which grants Italtile or its agent pre-emptive rights to acquire any of the Original Italtile Shares which the Trust wishes to dispose of).

For the reasons set out below, Italtile does not wish the Trust to dispose of any of the Initial Italtile Shares in order to repay the Loan Outstanding.

The Trust is a broad-based black ownership program, the purpose of which is to carry out public benefit activities (PBO ref no: 930044728) in a not-for-profit manner with altruistic and philanthropic intent, working to transform and uplift of previously disadvantaged communities. Distributions received by the Trust are used for public benefit activities primarily related to education, sport and conservation.

It is expected that, for the year ending 30 June 2022, the Trust will have made distributions (arising from the dividend income actually received by the Trust on the shares it holds in Italtile) of approximately 32 R.5 million, in the aggregate, to beneficiaries solely in pursuit of public interest activities relating to educational projects and/or causes, the promotion of sport and projects relating to sport, conservation and to other activities of public interest. A report from the Trust describing the activities in the public interest that were undertaken during the financial year ended June 30, 2022 will be included in the Italtile 2022 integrated annual report.

The Trust currently holds 48,706,708 Italtile shares constituting 3.69% of the issued ordinary shares of Italtile (“Italtile Shares”). The Trust contributes to Italtile’s ownership credentials under the Broad-Based Black Economic Empowerment (“B-BBEE”).

An assignment of any portion of Italtile Shares by the Trust may result in a dilution of Italtile’s B-BBEE ownership credentials. Conversely, the Trust’s retention of its Italtile Shares will allow Italtile, in turn, to retain the recognition of B-BBEE ownership that it derives from the Trust.

In pursuit of the Trust’s objectives, the Trust acquired 1,000,000 Italtile shares on the open market during the financial year ended June 30, 2022. Based on discussions held between Italtile and the Trustees of the Trust, as well that with the recent acquisition of additional shares of Italtile by the Trust, it is understood by Italtile that the Trust intends over time to increase, rather than decrease, its ownership interest in Italtile. This acquisition strategy aligns with Italtile’s corporate social investment and transformation strategy and objectives.

In addition, repayment of outstanding loan from excess trust funds and dividends and other distributions received by the Trust, as opposed to repayment of outstanding loan from proceeds received under an assignment of Italtile Shares, will strengthen the ability of the Trust to pursue its activities in the public interest and benefit the beneficiaries, as it will preserve the number and value of Italtile Shares which will be used to generate additional income for the Trust, which in turn will be used to achieve the objects of the Trust.

In view of the above considerations, Italtile exercised its right under clause 8 of the loan agreement, to extend the repayment date of the outstanding loan for an additional 10 years from August 14, 2022 and in had notified the Trust in writing. May 25, 2022.

Accordingly, Italtile’s Board of Directors hereby notifies Italtile’s shareholders that the outstanding amount of the loan will be fully repayable by the Trust to Italtile no later than August 14, 2032.


May 26, 2022


Merchantec Capital


Comments are closed.