AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
FIRST SOUTH AFRICA CORP., LTD.
(Exact name of registrant as specified in its charter)
Bermuda Not Applicable
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Clarendon House
Church Street
Hamilton HM CX
Bermuda
(441) 295-1422
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
Clive Kabatznik
President
First South Africa Management Corp.
2665 South Bayshore, Suite 702
Coconut Grove, Florida 33133
(305) 857-5009
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copy to:
Henry I. Rothman, Esq.
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Tel: (212) 704-6000
Fax: (212) 704-6288
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration number of the earlier effective registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE(2)
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<S> <C> <C> <C> <C>
Share of Common Stock par
value $.01 per share 1,344,894 $6.8125 $9,162,090.38 $2,702.82
- ----------------------------------------------------------------------------------------------------------------------------
Share of Common Stock par
value $.01 per share 729,979(3) $6.8125 $4,972,981.94 $1,467.03
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TOTAL $14,135,072.32 $4,169.85
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</TABLE>
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(1) Estimated solely for purposes of calculating the registration fee.
(2) Estimated solely for the purpose of calculating the registration fee,
pursuant to Rule 457(c). (3) Issuable as described in this Registration
Statement upon the sale of 729,979 Shares of Class B Common Stock
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
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<PAGE>
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
================================================================================
Subject to Completion Dated May 22, 1998
PROSPECTUS
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1,344,894 Shares of Common Stock
(par value $.01 per share)
729,979 Shares of Common Stock
(Issuable upon the Conversion of Shares of Class B Common Stock)
FIRST SOUTH AFRICA CORP., LTD.
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This Prospectus relates to (i) 1,344,894 shares of Common Stock, par
value $.01 per share ("Common Stock") of First South Africa Corp., Ltd., a
Bermuda Corporation (the "Company"), and (ii) 729,979 shares of Common Stock,
par value $.01 per share, which shares shall be issuable upon the sale thereof
by the holder of the same amount of Class B Common Stock named herein (the
"Selling Shareholder"), (collectively, the "Shares") provided that the purchaser
of such shares of Class B Common Stock is not a Designated Transferee, as
defined in this Prospectus. See "Description of Securities - Class B Common
Stock" and "Selling Shareholder". Such shares of Class B Common Stock shall be
automatically converted to 729,979 shares of Common Stock which are offered
pursuant to this Prospectus upon the sale thereof by the Selling Shareholder to
any person other than a Designated Transferee. See "Plan of Distribution." The
Shares were issued to the Selling Shareholder pursuant to certain escrow
agreements entered into by and among the Selling Shareholder as Escrow Agent,
the Company and other parties (certain principal shareholders of the Company's
subsidiaries which were acquired by the Company) as described in such
Agreements. See "Selling Shareholder." The Shares may be offered and sold from
time to time by the Selling Shareholder. The Company will not receive any of the
proceeds from the sale of the Shares being sold by the Selling Shareholder.
The Common Stock of the Company is traded on The Nasdaq National
Market ("Nasdaq") under the symbol FSACF. On May 18, 1998, the closing price of
the Common Stock on the Nasdaq was $6.8125 per share.
The Shares may be offered for sale by the Selling Shareholder from
time to time in the over-the-counter market, in privately negotiated
transactions or otherwise at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Shares may be sold directly by the Selling Shareholder or through brokers or
dealers. In connection with any such sales, the Selling Shareholder and brokers
or dealers participating in such sales may be deemed "underwriters" within the
meaning of the Securities Act or 1933, as amended ("Securities Act"), and any
discounts, commissions, concessions and any profits realized by them on the sale
of the Shares may be deemed to be underwriting compensation under the Securities
Act.
AN INVESTMENT IN THE COMPANY'S SECURITIES INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" ON PAGE 7.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------
The date of this Prospectus is May ___, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules
and regulations promulgated thereunder, and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at 7 World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material may be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a Web site (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants that file electronically.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated into this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended
June 30, 1997 (File No. 0-27494);
2. The Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1997 (File No. 0-27494);
3. The Company's Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1997 (File No. 0-27494);
4. The Company's Quarterly Report on Form 10-Q for the Quarterly
period March 31, 1998 (File No. 0-27494);
5. The Company's Current Report on Form 8-K (filed on May 8,
1997) as amended on Form 8-K/A (filed on July 3, 1997);
6. The Company's Current Report on Form 8-K (filed on September
10, 1997); and
7. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, which was filed on January
1, 1996 (File No. 0-24624 ) as amended on Form 8-A/A (filed on
January 16, 1996).
All documents or reports subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part of this Prospectus from the date of filing
of such document. Any statement contained herein, or in a document all or a
portion of which is incorporated or deemed to be incorporated by reference
herein, shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
This Prospectus does not contain all the information set forth in
the Registration Statement (No. 333- _____) on Form S-3 (the "Registration
Statement") of which this Prospectus is a part, including exhibits relating
thereto, which has been filed with the Commission in Washington, D.C. Copies of
the Registration Statement
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<PAGE>
and the exhibits thereto may be obtained, upon payment of the fee prescribed by
the Commission, or may be examined, without charge, at the office of the
Commission.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON (INCLUDING
ANY BENEFICIAL OWNER) TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, UPON THE
WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY AND ALL OF THE
INFORMATION THAT HAS BEEN INCORPORATED BY REFERENCE IN THIS PROSPECTUS (OTHER
THAN EXHIBITS UNLESS SUCH EXHIBITS ARE EXPRESSLY INCORPORATED BY REFERENCE IN
SUCH DOCUMENTS). REQUESTS SHOULD BE DIRECTED TO FIRST SOUTH AFRICA MANAGEMENT
CORP., 2665 SOUTH BAYSHORE, SUITE 702, COCONUT GROVE, FLORIDA 33133, ATTENTION:
MR. CLIVE KABATZNIK, (305) 857-5009.
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and financial statements
and notes thereto appearing elsewhere or incorporated by reference in this
Prospectus. References to a fiscal year are to the Company's fiscal year ended
June 30 of that year (e.g., references to "fiscal 1997" are to the Company's
fiscal year ended June 30, 1997).
THE COMPANY
First South Africa Corp., Ltd., (the "Company") was organized to
acquire, own and operate seasoned, closely-held companies in South Africa with
annual sales in the range of approximately $5 to $50 million. The Company has
acquired through its wholly-owned subsidiary, First South African Holdings (Pty)
Ltd. ("FSAH"), seventeen businesses based in South Africa ("the Acquisitions")
that are as a group engaged in the following industry segments:
1. Processed foods.
2. Lifestyle Products.
3. Plastic packaging materials and machinery.
4. Industrial Manufacturing.
In June 1997, FSAH transferred all of the shares of four of the
Acquisitions to First S.A. Food Holdings Ltd ("FSA Food") and completed (i) the
initial public offering, effected only in South Africa, of 5,000,000 ordinary
shares of common stock of FSA Food, which shares are listed on the Johannesburg
Stock Exchange, (ii) an institutional private placement in South Africa of
20,000,000 ordinary shares of common stock of FSA Food, and (iii) a private
placement of 12,500,000 ordinary shares of common stock to management and staff.
As of December 2, 1997, FSAH owned 70% of the issued and outstanding shares of
FSA Food.
In the quarter ended December 31, 1997, the Company, through its
subsidiary First SA Life Style Holdings, completed a number of acquisitions,
which expanded the scope of the Company's operations into the lifestyle products
industry, including:
(i) SA Leisure, a manufacturer of a broad range of injection
molded plastic furniture, household, luggage and do-it-yourself products (the
terms of the acquisition call for a payment of approximately $5.36 million in
cash and 142,918 shares of common stock as well as an additional $2 million in
shares of First SA Lifestyle Holdings);
(ii) Republic Umbrella Manufacturers, an assembler and distributor
of a wide variety of umbrellas and other related outdoor products (the terms of
the acquisition call for a payment of approximately $4.33 million in cash as
well as an additional $640,000 in shares of First SA Lifestyle Holdings; an
additional payment, the value of which is contingent on future performances,
shall be made over the next year);
(iii) Galactex Outdoor (Pty) Ltd., the sole distributor of the
Weber-Stephens range of outdoor products in South Africa as well as a broad
range of other barbecue products (the terms of the acquisition call for a
payment of approximately $2.3 million in cash as well as an additional $1.1
million in shares of First SA Lifestyle Holdings).
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<PAGE>
In the quarter ended December 31, 1997, the Company also acquired
Pacforce, a company specializing in the production and sale of plastic packaging
materials. The terms of the acquisition call for an initial payment of
approximately $205,000 in cash, and approximately 34,000 shares of stock.
Additional payments contingent upon future performance shall be made over the
next three and a half years.
FSAH manages the Company's business interests in South Africa. FSAH
monitors the operational performance of its subsidiaries and seeks out
prospective acquisition candidates in businesses that complement or are
otherwise related to the Company's existing businesses, and in other businesses
that may be identified by the Company's management.
The Company was formed in September 1995. The Company's principal
executive offices are located at Clarendon House, Church Street, Hamilton HM II
Bermuda, and its telephone number at such location is: (441) 295-1422. Certain
management, shareholder relations and administrative services are provided to
the Company by First South Africa Management Corp., a Delaware corporation that
is a wholly-owned subsidiary of the Company ("FSAM"). FSAM's principal executive
offices are located at 2665 South Bayshore, Suite 702, Coconut Grove, Florida
33133, and its telephone number at such location is (305) 857-5009.
THE OFFERING
Securities Registered...................(i) 1,344,894 shares of Common Stock and
(ii) 729,979 shares of Common Stock
which shares shall be issuable upon the
sale thereof by the holder of the same
amount of Class B Common Stock named
herein (the "Selling Shareholder")
provided that the purchaser of such
shares is not a Designated Transferee.
See "Description of Securities - Class B
Common Stock" and "Selling Shareholder".
Such shares of Class B Common stock
shall be automatically converted to
729,979 shares of Common Stock which are
offered pursuant to this Prospectus upon
the sale thereof by the Selling
Shareholder to any person other than a
Designated Transferee. See "Plan of
Distribution."
Common Stock outstanding
prior to the offering hereby............5,275,392 shares of Stock
Class B Common Stock outstanding
prior to the offering hereby............1,822,500 shares of Class B Common Stock
Common Stock trading symbol
on the Nasdaq National Market...........FSAC
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<PAGE>
RISK FACTORS
An investment in the securities offered hereby is speculative in
nature and involves a high degree of risk. In addition to the other information
contained in this Prospectus, prospective investors should carefully consider
the following risk factors before purchasing the securities offered hereby.
Certain information incorporated by reference into this Prospectus include
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, and is subject to the safe harbor created by that
act. There are several important factors that could cause actual results to
differ materially from those anticipated by the forward-looking statements
contained in such discussions. Additional information on the risk factors which
could effect the Company's financial results is included in this Prospectus and
in the Company's Annual Report for the fiscal year ended June 30, 1997 on Form
10-K and the Company's Quarterly Reports for the first and second quarters of
fiscal year 1998 on Form 10-Q and in other comments incorporated by reference
herein.
RISKS RELATING TO OPERATIONS IN SOUTH AFRICA
The Company's operations are conducted through its direct and
indirect subsidiaries located in South Africa. For the foreseeable future, the
Company expects to continue to focus all of its efforts in South Africa. The
conduct of the Company's business in South Africa exposes the Company to certain
risks, including the following:
POLITICAL RISKS. Historically, the social structure of South Africa
was governed according to the apartheid system. Racial tensions in South Africa
have from time to time resulted in social unrest, strikes, riots and other
sporadic localized violence. The apartheid system also resulted in the
imposition of international financial and trade sanctions against South Africa.
Although a new interim constitution was adopted providing for universal suffrage
and the first national election under the new constitution took place in April
1994, there can be no assurance that social unrest, which could range in
magnitude from civil disobedience to civil war, will not occur. The Company's
businesses in South Africa have experienced politically-related work stoppages
in the past, although since 1994 no such disturbance has been material. In
addition, certain other countries in the region are currently engaged in or have
had civil war with the corresponding severe adverse economic and social
conditions and effects. Moreover, there can be no assurance as to the economic
and tax policies which the South African government may pursue and whether those
policies may include nationalization, expropriation and confiscatory taxation.
Nationalization, expropriation or confiscatory taxation, as well as currency
blockage, political changes, government regulation, strikes, political or social
instability or diplomatic developments could adversely affect the economy of
South Africa and could have a material adverse effect on the Company.
RISKS RELATED TO CURRENCY EXCHANGE. All of the Company's operating
subsidiaries do business in South African Rand and the Company's revenues are
generally received in such currency. Historically, there has been significant
inflation in South Africa (averaging 10-15% per annum in recent years) and
significant fluctuations in the exchange rate of the South African Rand. Because
South Africa's inflation rate would impact its economy both domestically and
internationally, and higher levels of inflation have frequently reduced the real
return on capital and investment (thereby lowering the demand for capital goods
including the types that the Company produces), South Africa's level of
inflation may increase the Company's risk related to currency fluctuation. The
U.S. Dollar equivalent of the Company's net assets and results of operations
will be adversely affected by reductions in the value of the Rand relative to
the U.S. Dollar. Similarly, if the exchange rate declines between the time the
Company incurs expenses in other currencies and the time cash expenses are paid,
the amount of South African Rand required to be converted into such other
currencies in order to pay such expenses
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<PAGE>
could be greater than the equivalent amount of such expenses in South African
Rand at the time they were incurred. The exchange rate for South African Rand
against the U.S. dollar declined during fiscal year 1997 during which period the
average rate of exchange for the Rand against the dollar was $1.00 to Rand 4.53
as compared with an average rate of $1.00 to Rand 3.85 for fiscal year 1996. As
of May 13, 1998, the Rand was trading at approximately 5.08 Rand to the Dollar.
ECONOMIC RISKS. The economy of South Africa may differ unfavorably
from the U.S. economy in such respects as growth of gross domestic product or
gross national product, rate of inflation, taxation, capital reinvestment,
resource self-sufficiency and balance of payments position. South Africa may be
particularly susceptible to changes in the world price of gold and other primary
commodities as these represent a majority of South Africa's exports. Any such
unfavorable aspects of the South African economy may materially adversely affect
the financial condition of the Company.
GOVERNMENT REGULATORY CONSIDERATIONS. Generally, the making of loans
by the Company to its subsidiaries, the ability of those subsidiaries to borrow
from South African sources and the repatriation of dividends, interest and
royalties by those subsidiaries is regulated by the Exchange Control Department
of the South African Reserve Bank (the "Reserve Bank"). South Africa formerly
operated a dual currency system comprising the commercial rand and the financial
rand, which was abolished in 1995. The financial rand was the investment
currency, which traded at a discount to the commercial rand. No guarantee can be
given that the financial rand will not be reintroduced in the future with
possible adverse consequences on the U.S. dollar value of the Company's
investments in South Africa. Current South African Exchange Control Regulations
provide that, subject to any exemption which may be granted by the South African
Treasury (the "Treasury"), no non-resident of South Africa and no "affected
person" (which includes any entity (i) that may distribute 50% or more of its
capital, assets or earnings to a non-resident of South Africa or (ii) 50% or
more of the voting power of which is controlled by a non-resident of South
Africa) may provide any "financial assistance" to any South African resident.
"Financial assistance" is broadly defined to include any loans, guarantees,
sale/leasebacks, etc. Because FSAH will be deemed to be an "affected person,"
the Company is generally required to obtain the permission of the Treasury prior
to loaning money to, providing guarantees on behalf of, or otherwise providing
"financial assistance" to FSAH. Notwithstanding the above, a South African
company such as FSAH is permitted a certain level of local borrowing without
reference to the exchange control authorities and without prior consent. The
amount which any affected person may borrow is calculated in accordance with the
following formula:
100% + (PERCENTAGE SOUTH AFRICAN INTEREST X 100%)
-----------------------------------------
(percentage non-resident interest).
In addition, the terms of repayment of any such loan and the interest rate
(which is generally market-related) will be regulated.
Under other regulations, no person may, without permission, acquire
any security from a non-resident or make any entry in a security register which
involves the transfer of a security into or out of the name of a non-resident.
The control is exercised by placing the endorsement "non-resident" on all
securities owned by non-residents or in which non-residents have an interest.
The non-resident endorsement is placed on the share certificates by a bank and
is in practice easy to obtain.
Certain other regulations impact the remittance of dividends and
interest from South Africa, including any potential dividends to the Company
from a South African subsidiary. In practice, the South African Reserve
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Bank does not restrict the remittance of genuine dividends from income earned by
South African companies although approval must be obtained. As a result, there
can be no assurance that a South African subsidiary would be permitted to
declare and pay a dividend to the Company.
ABSENCE OF SUBSTANTIVE DISCLOSURE RELATING TO ACQUISITIONS
Although management of the Company will endeavor to evaluate the
risks inherent in any particular acquisition, there can be no assurance that the
Company will properly ascertain all such risks. Management of the Company will
have virtually unrestricted flexibility in identifying and selecting prospective
acquisition candidates. The Company does not intend to seek stockholder approval
for any acquisitions unless required by applicable law or regulations and
stockholders will most likely not have an opportunity to review financial
information on an acquisition candidate prior to consummation of an acquisition.
See "Description of Securities "
South African companies that may be acquired by the Company are
subject to South African GAAP which, in certain instances, may differ from U.S.
GAAP. Although the Company intends to prepare financial statements in accordance
with U.S. GAAP, the Company can provide no assurance that it will be able to do
so. Although the Company is unaware of any South African GAAP requirement that
would adversely affect it, there can be no assurance that the Company's
financial condition or the ability of the Company to consummate future
acquisitions will not be adversely affected by differences between South African
GAAP and U.S. GAAP.
RISKS RELATED TO MANAGING NEWLY ACQUIRED BUSINESSES
Acquisitions may involve difficulties related to the integration of
acquired businesses, some of which may have different cultures, operating
methodologies, margins or business risks. The failure to timely integrate the
Company's business with that of an acquired entity may result in a material
adverse effect on the Company's results of operations and financial condition.
Further, acquisitions may involve a number of special risks, including diversion
of management's attention, failure to retain key acquired personnel and clients,
unanticipated events or circumstances, legal liabilities and amortization of
acquired intangible assets, some or all of which could have a material adverse
effect on the Company's results of operations and financial condition. Client
satisfaction or performance problems at a single acquired firm could have a
material adverse impact on the reputation of the Company as a whole.
HOLDING COMPANY STRUCTURE
The Company is a holding company with no operations or significant
assets other than its ownership of equity interests in direct and indirect
subsidiaries as described in this Prospectus (and cash on hand in the amount of
$4.7 million as at March 31, 1998). The Company will rely on cash dividends and
other permitted payments from its subsidiaries, as well as its cash holdings, to
make principal and interest payments on outstanding indebtedness of the Company.
See "--Risks Relating to Operations in South Africa."
RISKS RELATED TO OPERATIONS OF FSA FOODS
Two of the operating subsidiaries of FSA Foods each rely on a single
major customer for a substantial portion of their respective revenues. The loss
of any such major customer may have a material adverse effect on the financial
condition of the Company. There can be no assurance that such major customers
will continue to purchase the products of such FSA Foods subsidiaries.
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POSSIBLE FLUCTUATIONS IN OPERATING RESULTS
There can be no assurance that the Company's operating subsidiaries
will continue to operate profitably, or that prior trends will be indicative of
future results of operations. Future results of operations may fluctuate
significantly based upon factors such as increases in competition, losses
incurred by new businesses that may be acquired in the future, currency
fluctuations, political changes, macroeconomic factors, the continued
availability of new materials and other circumstances that may not be reasonably
foreseeable at this time.
COMPETITION
The Company competes with a number of companies, from South Africa
and from other countries, offering similar products and services, some of whom
may have substantially greater financial, management, technical and other
resources than the Company. As a result of South Africa's recent political
transformation, some South African businesses may be adversely affected by
increased competition from foreign firms doing business in South Africa. In
addition, South Africa has historically imposed significant tariffs against a
number of industrial products. To the extent such tariffs are reduced or removed
to comply with international treaty requirements or otherwise, the Company would
face much greater pressure from globally competitive firms. There can be no
assurance that the Company will compete effectively with such other companies or
that other companies will not develop products which are superior to the
Company's or which achieve greater market penetration. In addition, the Company
may experience competition from other companies seeking to identify and
consummate acquisitions of South African companies. Such competition may result
in the loss of an acquisition candidate or an increase in the price the Company
would be required to pay for any such acquisition.
LABOR RELATIONS
A significant number of South Africa's workers belong to either
registered or unregistered trade unions, and most of the major industries are
unionized. A number of the trade unions have close links to various political
parties. In the past, trade unions have had a significant influence in South
Africa as vehicles for social and political reform as well as the collective
bargaining process. It is uncertain whether labor disruptions will be used to
advocate political causes in the future. Significant labor disruptions could
have a material adverse effect on the financial condition of the Company.
South Africa has also recently enacted a new Labour Relations Act.
The Act entrenches the rights of employees to belong to trade unions and the
rights of representative trade unions to have access to the workplace. The right
to strike is guaranteed, as is the right to participate in secondary strikes, in
certain prescribed circumstances. The right to picket has also been entrenched.
The Act recognizes the rights of employers to belong to employers' associations.
Importantly, the Act envisages an increased role for employees in the decision
making of companies by providing, where a majority trade union so requests, for
the compulsory establishment of workplace forums to represent the interests of
employees where a company employs more than 100 employees. The range of issues
on which the workplace forum must be consulted include restructuring of the
workplace, partial or total plant closures, mergers and transfers of ownership
insofar as these affect employees, and retrenchments. The implementation of the
Labour Relations Act's provisions may have a material adverse effect on the
Company's cost of labor and consequently on its financial condition. New
legislation is currently being proposed regarding minimum conditions of labor.
Such legislation, if enacted, is expected to increase South African labor costs.
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DEPENDENCE ON KEY PERSONNEL
The Company's success depends upon the continued contributions of
its executive officers, most of whom are also principal stockholders of the
Company, and the continued contributions of the management of Starpak, L.S.
Pressings, Europair, FSA Foods and the FSA Foods Subsidiaries. The Company has
obtained key man insurance in the amounts of $2,000,000 on the lives of each of
Michael Levy and Clive Kabatznik. The business of the Company could be adversely
affected by the loss of services of, or a material reduction in the amount of
time devoted to the Company by, its executive officers.
CONTROL BY INSIDERS; OWNERSHIP OF SHARES HAVING DISPROPORTIONATE VOTING RIGHTS;
POSSIBLE DEPRESSIVE EFFECT ON THE PRICE OF THE COMPANY'S SECURITIES
The Company's founders and certain other shareholders own 1,822,500
shares of Class B Common Stock (excluding certain shares of Common Stock and
options), representing approximately 25.7% of the Company's outstanding capital
stock and approximately 63.3% of the total voting power (assuming no conversion
of the outstanding debentures and the increasing rate debentures and no exercise
of the other outstanding warrants and options) and are able to elect all of the
Company's directors and otherwise control the Company's operations. Furthermore,
the disproportionate vote afforded the Class B Common Stock could also serve to
impede or prevent a change of control of the Company. As a result, potential
acquirees may be discouraged from seeking to acquire control of the Company
through the purchase of Common Stock, which could have a depressive effect on
the price of the Company's securities and will make it less likely that
shareholders receive a premium for their shares as a result of any such attempt.
See "Description of Securities."
DIVIDENDS UNLIKELY
The Company has not paid any cash dividends and does not anticipate
paying any such cash dividends in the foreseeable future. Earnings, if any, will
be retained to finance future growth.
SHARES ELIGIBLE FOR FUTURE SALES; POSSIBLE DEPRESSIVE EFFECT OF FUTURE SALES
OF COMMON STOCK; REGISTRATION RIGHTS
Future sales of Common Stock by existing stockholders pursuant to
Rule 144 under the Securities Act, or otherwise, including with respect to
outstanding Redeemable Class A Warrants and Redeemable Class B Warrants (the
"Warrants"), or the possibility of such sales in the public market, could have a
material adverse effect on the market price of the securities offered hereby. As
of May 8, 1998, there was an aggregate of 5,275,392 shares of Common Stock and
1,822,500 Class B Common Stock outstanding (assuming no conversion of the
Company's outstanding debentures and increasing rate debentures and no exercise
of the other outstanding warrants and options). In addition, an aggregate of
2,591,301 shares of Common Stock are issuable upon exercise of the Warrants
issued by the Company and upon exercise of the Warrants included in the Units
sold in connection with the Initial Public Offering of the Company in January
1996 (the "Initial Public Offering"). The 2,300,000 shares of Common Stock
included as part of the Units sold in the Initial Public Offering were freely
tradeable without restriction under the Securities Act immediately following the
Initial Public Offering. All other shares of Common Stock and the shares of
Class B Common Stock (other than the Shares being offered hereby), are
"restricted securities" as that term is defined under the Securities Act, and in
the future may be sold in compliance with Rule 144 under the Securities Act or
pursuant to a Registration Statement filed under the Securities Act. Of the
5,275,392 shares of Common Stock issued and outstanding as of the date of this
Prospectus, 1,344,894 shares were issued to the FSAH Escrow Agent pursuant to
the terms of the FSAC Escrow
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<PAGE>
Agreements between American Stock Transfer and Trust Company ("Escrow Agent"),
FSAH, holders of FSAH Class B Stock and the Company, respectively (all of which
are being offered pursuant to this Prospectus). In addition the Company has
issued 142,918 shares of Common Stock to the prior shareholders of SA Leisure
subject to a two-year lock-up period. Of the 1,822,500 shares of Class B Common
Stock issued and outstanding upon the date of this Prospectus, 729,979 shares
were issued to the FSAH Escrow Agent pursuant to the terms of the FSAH Escrow
Agreement (all of which are being offered pursuant to this Prospectus). All of
the remaining shares of Class B Common Stock (which are not being offered
hereby) are currently eligible for sale under Rule 144. Rule 144 generally
provides that a person holding restricted securities for a period of one year
may sell every three months in brokerage transactions and/or market-maker
transactions an amount not to exceed the greater of (a) one percent (1%) of the
Company's issued and outstanding Common Stock, or (b) the average weekly trading
volume of the Common Stock during the four calendar weeks prior to such sale.
Rule 144 also permits, under certain circumstances, the sale of shares without
any quantity limitation by a person who is not an affiliate of the Company and
who has satisfied a two-year holding period.
POTENTIAL ANTI-TAKEOVER EFFECTS OF PREFERRED STOCK
The Company's Memorandum of Association authorizes the issuance of
5,000,000 shares of preferred stock with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without shareholder approval
(but subject to applicable government regulatory restrictions), to issue
preferred stock with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or other rights of the holders of
the Company's Common Stock. In the event of issuance, the preferred stock could
be utilized, under certain circumstances, as a method of discouraging, delaying
or preventing a change in control of the Company. Although the Company has no
present intention to issue any shares of its preferred stock, there can be no
assurance that the Company will not do so in the future.
LIMITED RIGHTS OF SHAREHOLDERS UNDER BERMUDA LAW AND BYE-LAWS OF THE COMPANY
The Company's corporate affairs are governed by its Memorandum of
Association and bye-laws, as well as the common law of Bermuda relating to
companies and the Companies Act 1981. The Company's bye-laws limit the right of
securityholders to bring an action against officers and directors of the
Company. The laws of Bermuda relating to shareholder rights, protection of
minorities, fiduciary duties of directors and officers, matters of corporate
governance, corporate restructuring, mergers and similar arrangements,
takeovers, shareholder suits, indemnification of directors and inspection of
corporate records, may differ from those that would apply if the Company were
incorporated in a jurisdiction within the United States. The rights of
shareholders in a Bermuda company may not be as extensive as the rights of a
shareholder of a United States company and, accordingly, the holders of the
Company's shares of Common Stock may be more limited in their ability to protect
their interests in the Company. In addition, there is uncertainty whether the
courts of Bermuda would enforce judgements of the courts of the United States
and of other foreign jurisdictions. There is also uncertainty whether the courts
of Bermuda would enforce actions brought in Bermuda which are predicated upon
the securities laws of the United States.
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<PAGE>
SELLING SHAREHOLDER
An aggregate of up to 2,074,873 shares of Common Stock may be
offered for resale by the Selling Shareholder.
The following table sets forth certain information with respect to
each Selling Shareholder for whom the Company is registering securities for
resale to the public. The Company will not receive any of the proceeds from the
sale of such securities. To the Company's knowledge, there are no material
relationships between any of the Selling Shareholders and the Company (except
that the Selling Shareholder is the Company's Transfer Agent, the Trustee
pursuant to certain Indentures executed with respect to certain convertible
debentures issued by the Company, and except as otherwise described below), nor
have any such material relationships existed within the past three years.
<TABLE>
<CAPTION>
Shares of Shares of
Common Stock Shares of Common Stock
Beneficially Common Stock Beneficially
Owned Prior to be Offered Owned After
Name of Selling Shareholder to Offering hereunder Offering
- --------------------------- ----------- --------- --------
<S> <C> <C> <C>
American Stock Transfer & Trust Company
(as escrow agent) 0 2,074,873 0
----- --------- -----
Total 0 2,074,873 0
</TABLE>
The Selling Shareholder holds the Shares as escrow agent pursuant to
certain escrow agreements described below.
FSAH ESCROW AGREEMENT
The FSAH Escrow Agreement, executed in January 1996, provided for
the concurrent issuance and delivery by the Company of 729,979 shares of Class B
Common Stock to the FSAH Escrow Agent. The FSAH Escrow Agreement is intended to
provide security for certain holders of FSAH Class B Stock, who are residents of
South Africa and were prohibited by South African law from holding shares in a
foreign company. The FSAH Escrow Agreement provides that the parties to such
Agreement that are holders of FSAH Class B Stock will not sell such shares of
stock except as provided in such Agreement. Specifically, the FSAH Escrow
Agreement provides that the FSAH Class B Stock may be tendered to the FSAH
Escrow Agent against payment therefor by the FSAH Escrow Agent, which payment
may consist of the proceeds obtained from the sale by the FSAH Escrow Agent of
an equal number of shares of Class B Common Stock of the Company, provided that
the proceeds of such sale shall be delivered to the holder in exchange for his
or her shares of FSAH Class B Stock. Upon the sale by the FSAH Escrow Agent of
any shares of Class B Common Stock of the Company pursuant to the FSAH Escrow
Agreement, the FSAH Escrow Agent will deliver to the Company the equivalent
number of shares of FSAH Class B Stock tendered in connection therewith. Such
shares of FSAH Class B Stock will then automatically convert into shares of FSAH
Class A Stock and will be held by the Company together with the other shares of
FSAH Class A Stock owned by the Company. The Company has granted certain
piggyback registration rights to the FSAH Escrow Agent on behalf of the holders
of the shares of FSAH Class B Stock held pursuant to the FSAH Escrow Agreement.
Such shares of Class B Common Stock will be automatically converted to Common
Stock of the Company upon the sale of such shares by the FSAH Escrow Agent
pursuant
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<PAGE>
to the terms of the FSAH Escrow Agreement. Such shares of Class B Common Stock
will be controlled by the terms of the FSAH Escrow Agreement. Michael Levy has
paid the purchase price of $.01 per share for each of the shares of Class B
Common Stock held pursuant to the FSAH Escrow Agreement and the FSAH Escrow
Agent has granted to Michael Levy an irrevocable proxy to vote each of such
shares of Class B Common Stock prior to the sale or forfeiture of such shares,
as the case may be. The Company owns 25,000,000 shares of FSAH Class A Stock and
the remaining shares are held by the following persons in the amounts set forth
below and under "FSAC Escrow Agreements."
FSAH CLASS B STOCK
FSA Stock Trust 383,523 shares
Global Capital 50,000 shares
Bruce Thomas 80,000 shares
Samuel Smith 58,766 shares
Raymond Shaftoe 58,766 shares
Rhona Kabatznik 62,472 shares
Michael Levy 36,452 shares
--------------
Total: 729,979 shares
FSAC ESCROW AGREEMENTS
Since the consummation of the Company's initial public offering in
January 1996, the Company has entered into a number of escrow agreements (the
"FSAC Escrow Agreements") which are comprised of a number of additional
agreements with the FSAH Escrow Agent, FSAH and certain principal shareholders
of the Company's subsidiaries which were acquired since January 1996. The terms
of the FSAC Escrow Agreements are substantially similar to the terms of the FSAH
Escrow Agreement, except that only the FSAH Escrow Agreement provided for the
issuance of shares of Class B Common stock to the FSAH Escrow Agent while each
of the FSAC Escrow Agreements provided for the issuance of shares of Common
Stock to the FSAH Escrow Agent which correspond to the following issuances of
FSAH Class B Stock by FSAH:
SHARES ISSUED IN CONNECTION WITH THE PIEMANS PANTRY ACQUISITION(1)
- ------------------------------------------------------------------
Heinz Andreas 220,262 shares
John Welch 220,262 shares
Michael Morgan 48,950 shares
--------------
Total: 489,474 shares
SHARES ISSUED IN CONNECTION WITH THE ASTORIA ACQUISITION(2)
- -----------------------------------------------------------
Wolfgang Burre 186,407 shares
SHARES ISSUED IN CONNECTION WITH THE SEEMANNS ACQUISITION(3)
- ------------------------------------------------------------
Mark Jericevich 157,596 shares
Ivan Jericevich 157,597 shares
---------------
Total: 315,193 shares
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<PAGE>
SHARES ISSUED IN CONNECTION WITH GULL FOODS ACQUISITION(4)
- ----------------------------------------------------------
Trek Biltong 238,660 shares
SHARES ISSUED IN CONNECTION WITH THE ACQUISITION OF FIRST STRUT (PTY) LTD.(5)
The Coch Family Trust 19,230 shares
SHARES ISSUED IN CONNECTION WITH THE ACQUISITION OF FIFERS BAKERY (PROPRIETARY)
- --------------------------------------------------------------------------------
LIMITED(6)
- ----------
Eddie Hinde 27,624 shares
SHARES ISSUED IN CONNECTION WITH THE PAKFORCE ACQUISITION(7)
- ------------------------------------------------------------
Garth Remington 30,737 shares
Michael Risley 30,737 shares
Stanley Watson 6,832 shares
- --------------------
(1) The Company has issued 489,474 shares of Common Stock to the FSAH Escrow
Agent pursuant to the terms of a certain FSAC Escrow Agreement by and
among FSAH, the Company, the FSAH Escrow Agent, and each of Mr. Andreas,
Mr. Morgan and Mr. Welch respectively, in connection with the Piemans
acquisition.
(2) The Company has issued 186,407 shares of Common Stock to the FSAH Escrow
Agent pursuant to the terms of a certain FSAC Escrow Agreement by and
among FSAH, the Company, the FSAH Escrow Agent and Mr. Burre in connection
with the Astoria acquisition.
(3) The Company has issued 315,194 shares of Common Stock to the FSAH Escrow
Agent pursuant to the terms of a certain FSAC Escrow Agreement by and
among FSAH, the Company, the FSAH Escrow Agent, and each of Mr. Mark
Jericevich and Mr. Ivan Jericevich respectively, in connection with the
Seemanns acquisition.
(4) The Company has issued 238,660 shares of Common Stock to the FSAH Escrow
Agent pursuant to the terms of a certain FSAC Escrow Agreement by and
among FSAH, the Company, the FSAH Escrow Agent and Mr. Biltong in
connection with the Gull acquisition.
(5) The Company has issued 19,230 shares of Common Stock to the FSAH Escrow
Agent pursuant to the terms of a certain FSAC Escrow Agreement by and
among FSAH, the Company, the FSAH Escrow Agent and The Coch Family Trust
in connection with the First Strut acquisition.
(6) The Company has issued 27,624 shares of Common Stock to the FSAH Escrow
Agent pursuant to the terms of a certain FSAC Escrow Agreement by and
among FSAH, the Company, the FSAH Escrow Agent and Mr. Hinde in connection
with the Fifers acquisition.
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<PAGE>
(7) The Company has issued 68,306 shares of Common Stock to the FSAH Escrow
Agent pursuant to the terms of a certain FSAC Escrow Agreement by and
among the Company, FSAH, the FSAH Escrow Agent and each of Mr. Remington,
Risely and Watson in connection with the Pakforce Acquisition.
The rights and preferences accruing to holders of FSAH Class A Stock
and holders of FSAH Class B Stock are substantially identical except that (i)
FSAH is required to pay dividends to holders of FSAH Class B Stock equivalent,
on a pro rata basis, to the dividends paid by the Company to holders of its
Common Stock, (ii) payment of the above dividends on FSAH Class B Stock must be
made no later than three business days subsequent to payment of dividends by the
Company on its Common Stock, (iii) accrued dividends on FSAH Class B Stock must
be paid prior to payment of any declared dividends on FSAH Class A Stock and
(iv) any shares of FSAH Class B Stock acquired by the Company will automatically
converted to shares of FSAH Class A Stock upon such acquisition.
PLAN OF DISTRIBUTION
The sale of the Shares by the Selling Shareholder may be effected
from time to time in transactions (which may include block transactions by or
for the amount of the Selling Shareholder) in the over-the counter market or in
negotiated transactions, through the writing of options on the securities, a
combination of such methods of sale or otherwise. Sales may be made at fixed
prices which may be changed, at market prices prevailing at the time of sale, or
at negotiated prices.
The Selling Shareholder may effect such transactions by selling its
securities directly to purchasers, through broker-dealers acting as agents for
the Selling Shareholder or to broker-dealers who may purchase shares as
principals and thereafter sell the securities from time to time in the
over-the-counter market in negotiated transactions or otherwise. Such
broker-dealers, if any, may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholder or the purchasers for
whom such broker-dealers may act as agents or to whom they may sell as
principals or otherwise (which compensation as to a particular broker-dealer may
exceed customary commissions).
The SEC adopted Regulation M on March 4, 1997, which replaced Rule
10b-6 and certain other rules and regulations under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Regulation M prohibits any person
engaged in the distribution of the securities to be sold by the Selling
Shareholder from simultaneously engaging in market-making activities with
respect to any securities of the Company during the applicable "cooling-off"
period (one to five business days) prior to the commencement of such
distribution. In addition, the Selling Shareholder will be subject to the
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including without limitation, Regulation M, which provisions may
limit the timing of the purchases and sales of shares of the Company's
securities by the Selling Shareholder.
The Selling Shareholder and broker-dealers, if any, acting in
connection with such sale might be deemed to be underwriters within the meaning
of Section 2(11) of the Securities Act and any commission received by them and
any profit on the resale of the securities might be deemed to be underwriting
discounts and commissions under the Securities Act.
-16-
<PAGE>
DESCRIPTION OF SECURITIES
GENERAL
The authorized capital stock of the Company consists of an aggregate
of 23,000,000 shares of Common Stock, par value $.01 per share, 2,000,000 shares
of Class B Common Stock, par value $.01 per share, and 5,000,000 shares of
Preferred Stock, par value $.01 per share. As of the date hereof, 1,822,500
shares of Class B Common Stock are outstanding. The following statements
describe the material provisions of the securities being registered hereby and
certain other securities of the Company. See "Antitakeover Protections" and
"Differences in Corporate Law" for a description of the Company's Memorandum of
Association, bye-laws and The Companies Act 1981 of Bermuda, regarding
anti-takeover provisions and related matters affecting the Company. Such
statements and disclosure do not purport to be complete and are qualified in
their entirety by reference to the full Memorandum of Association and bye-laws
which are exhibits to the Company's Registration Statement of which this
Prospectus is a part.
COMMON STOCK
Holders of Common Stock have one vote per share on each matter
submitted to a vote of the shareholders and a ratable right to the net assets of
the Company upon liquidation. Holders of the Common Stock do not have preemptive
rights to purchase additional shares of Common Stock or other subscription
rights. The Common Stock carries no conversion rights and is not subject to
redemption or to any sinking fund provisions. All shares of Common Stock are
entitled to share equally in dividends from legally available sources as
determined by the Board of Directors, subject to any preferential dividend
rights of the Preferred Stock (described below). Upon dissolution or liquidation
of the Company, whether voluntary or involuntary, holders of the Common Stock
are entitled to receive assets of the Company available for distribution to the
shareholders, subject to the preferential rights of the Preferred Stock. All of
the shares of Common Stock offered hereby are validly authorized and issued,
fully paid and non-assessable.
CLASS B COMMON STOCK
The Class B Common Stock and the Common Stock are substantially
identical on a share-for-share basis, except that the holders of Class B Common
Stock have five votes per share on each matter considered by shareholders and
the holders of the Common Stock have one vote per share on each matter
considered by shareholders, and except that the holders of each class will vote
as a separate class with respect to any matter requiring class voting by The
Companies Act 1981 of Bermuda.
Each share of Class B Common Stock is automatically converted into
one share of Common Stock upon (i) the death of the original holder thereof, or,
if such shares are subject to a shareholders agreement or voting trust granting
the power to vote such shares to another original holder of Class B Common
Stock, then upon the death of such other original holder, or (ii) the sale or
transfer to any person other than the following transferees: (a) the spouse of a
holder of Class B Common Stock; (b) any lineal descendants of a holder of Class
B Common Stock, including adopted children (said descendants, together with the
holder of Class B Common Stock and his or her spouse are hereinafter referred to
as "Family Members"); (c) a trust for the sole benefit of a Class B Common
shareholder's Family Members; (d) a partnership made up exclusively of Class B
Common shareholders and their Family Members or a corporation wholly-owned by a
holder of Class B Common Stock and their Family Members, and (e) any other
holder of Class B Common Stock thereof. Presently, there are 1,822,500 shares of
Class B Common Stock issued and outstanding ("Designated
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<PAGE>
Transferees"). The difference in voting rights increases the voting power of the
holders of Class B Common Stock and accordingly has an anti-takeover effect. The
existence of the Class B Common Stock may make the Company a less attractive
target for a hostile takeover bid or render more difficult or discourage a
merger proposal, an unfriendly tender offer, a proxy contest, or the removal of
incumbent management, even if such transactions were favored by the shareholders
of the Company other than the holders of Class B Common Stock. Thus, the
shareholders may be deprived of an opportunity to sell their shares at a premium
over prevailing market prices in the event of a hostile takeover bid. Those
seeking to acquire the Company through a business combination will be compelled
to consult first with the holders of Class B Common Stock in order to negotiate
the terms of such business combination. Any such proposed business combination
will have to be approved by the Board of Directors, which may be under the
control of the holders of Class B Common Stock, and if shareholder approval were
required, the approval of the holders of Class B Common Stock will be necessary
before any such business combination can be consummated.
ANTI-TAKEOVER PROTECTIONS
The voting provisions of the Common Stock and Class B Common Stock
and the broad discretion conferred upon the Board of Directors with respect to
the issuance of series of Preferred Stock (including with respect to voting
rights) could substantially impede the ability of one or more shareholders
(acting in concert) to acquire sufficient influence over the election of
directors and other matters to effect a change in control or management of the
Company, and the Board of Directors' ability to issue Preferred Stock could also
be utilized to change the economic and control structure of the Company. As a
result, such provisions, together with certain other provisions of the bye-laws
summarized in the succeeding paragraph, may be deemed to have an anti-takeover
effect and may delay, defer or prevent a tender offer or takeover attempt that a
shareholder might consider in such shareholder's best interest, including
attempts that might result in a premium over the market price for the Common
Stock held by shareholders.
The bye-laws establish an advance notice procedure for the
nomination, other than by or at the direction of the Board of Directors, of
candidates for election as directors at annual general meetings of shareholders.
In general, notice of intent to nominate a director at such meeting must be
received by the Company not less than 90 days prior to the meeting and must
contain certain specified information concerning the person to be nominated or
the matter to be brought before the meeting and concerning the shareholder
submitting the proposal.
DIFFERENCES IN CORPORATE LAW
The Companies Act 1981 of Bermuda differs in material respects from
laws generally applicable to United States corporations and their shareholders.
Set forth below is a summary of significant provisions of The Companies Act
(including any modifications adopted pursuant to the Company's bye-laws)
applicable to the Company, which differ in general material respects from
provisions of Delaware corporate law. The following statements are summaries,
and do not purport to deal with all aspects of Bermuda law that may be relevant
to the Company and its shareholders.
Interested Directors. The bye-laws provide that any transaction
entered into by the Company in which a director has an interest is not voidable
by the Company nor can such director be liable to the Company for any profit
realized pursuant to such transaction provided the nature of the interest is
disclosed at the first opportunity at a meeting of directors, or in writing to
the directors. Under Delaware law no such transaction would be voidable if (i)
the material facts as to such interested directors' relationship or interests
are disclosed or are known to the board of directors and the board in good faith
authorizes the transaction by the affirmative vote of a majority of
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<PAGE>
the disinterested directors, (ii) such material facts are disclosed or are known
to the stockholders entitled to vote on such transaction and the transaction is
specifically approved in good faith by vote of the stockholders or (iii) the
transaction is fair as to the corporation as of the time it is authorized,
approved or ratified. Under Delaware law, such interested director could be held
liable for any transaction for which such director derived an improper personal
benefit.
Merger and Similar Arrangements. The Company may amalgamate (merge)
with another Bermuda exempted company or a company incorporated outside Bermuda
and carry on such business when it is within the objects of the Company's
Memorandum of Association. See "Description of Securities - Certain Provisions
of Bermuda Law." A shareholder may apply to a Bermuda court for a proper
valuation of such shareholder's shares if such shareholder is not satisfied that
fair value has been paid for such shares. The court ordinarily would not
disapprove the transaction on that ground absent evidence of fraud or bad faith.
Under Delaware law, with certain exceptions, any merger, consolidation or sale
of all or substantially all the assets of a corporation must be approved by the
board of directors and a majority of the outstanding shares entitled to vote.
Under Delaware law, a stockholder of a corporation participating in certain
major corporate transactions may, under varying circumstances, be entitled to
appraisal rights pursuant to which such stockholder may receive cash in the
amount of the fair market value of the shares held by such stockholder (as
determined by a court or by agreement of the corporation and the stockholder) in
lieu of the consideration such stockholder would otherwise receive in the
transaction. Delaware law does not provide stockholders of a corporation with
voting or appraisal rights when the corporation acquires another business
through the issuance of its stock or other consideration (i) in exchange for the
assets of the business to be acquired, (ii) in exchange for the outstanding
stock of the corporation to be acquired or (iii) in a merger of the corporation
to be acquired with a subsidiary of the acquiring corporation. Under Bermuda
law, the Company's shareholders have the right to vote on (i) any compromise or
arrangement between the Company and its shareholders, (ii) a take-over scheme
for 100% of the Company's shares enabling the compulsory acquisition of a 10%
minority interest (iii) an amalgamation (merger) of the Company and (iv) the
discontinuance of the Company from Bermuda.
Takeover. Bermuda law provides that where an offer is made for
shares of another Company and, within four months of the offer the holders of
not less than 90% of the shares which are the subject of the offer accept, the
offeror may by notice require the nontendering shareholders to transfer their
shares on the terms of the offer. Dissenting shareholders may apply to the court
within one month of the notice objecting to the transfer. The burden is on the
dissenting shareholders to show that the court should exercise its discretion to
enjoin the required transfer, which the court will be unlikely to do unless
there is evidence of fraud or bad faith or collusion as between the offeror and
the holders of the shares who have accepted the offer as a means of unfairly
forcing out minority shareholders. Delaware law provides that a parent
corporation, by resolution of its board of directors and without any shareholder
vote, may merge with any 90% or more owned subsidiary. Upon any such merger,
dissenting stockholders of the subsidiary would have appraisal rights.
Shareholder's Suit. The rights of shareholders under Bermuda law are
not as extensive as the right of shareholders under legislation or judicial
precedent in many United States jurisdictions. Class actions and derivative
actions are generally not available to shareholders under the laws of Bermuda.
However, the Bermuda courts ordinarily would be expected to follow English case
law precedent, which would permit a shareholder to commence an action in the
name of the Company to remedy a wrong done to the Company where the act
complained of is alleged to be beyond the corporate power of the Company or is
illegal or would result in the violation of the Memorandum of Association and
bye-laws. (The Company's bye-laws limit the right of securityholders to bring an
action against officers and directors of the Company.) Furthermore,
consideration would be given by the court to acts that are alleged to constitute
a fraud against the minority shareholders or
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<PAGE>
where an act requires the approval of a greater percentage of the Company's
shareholders than actually approved it. The winning party in such an action
generally would be able to recover a portion of attorneys fees incurred in
connection with such action. Class actions and derivative actions generally are
available to stockholders under Delaware law for, among other things, breach of
fiduciary duty, corporate waste and actions not taken in accordance with
applicable law. In such actions, the court has discretion to permit the winning
party to recover attorney fees incurred in connection with such action.
Indemnification of Directors. The Company may indemnify its
directors or officers in their capacity as such in respect of any loss arising
or liability attaching to them by virtue of any rule of law in respect of any
negligence, default, breach of duty or breach of trust of which a director or
officer may be guilty in relation to the Company other than in respect of his
own fraud or dishonesty. Under Delaware law, a corporation may adopt a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for breaches of the director's duty of loyalty, for acts or
omission not in good faith or which involve intentional misconduct or knowing
violations of law, for improper payment of dividends or for any transaction from
which the director derived an improper personal benefit. Delaware law has
provisions and limitations similar to Bermuda regarding indemnification by a
corporation of its directors or officers, except that under Delaware law the
statutory rights to indemnification may not be as limited.
Inspection of Corporate Records. Members of the general public have
the right to inspect the public documents of the Company available at the office
of the Registrar of Companies in Bermuda which will include the Memorandum of
Association (including its objects and powers) and any alteration to the
Memorandum of Association and documents relating to an increase, reduction or
other alteration of the Company's share capital. The shareholders have the
additional right to inspect the bye-laws, minutes of general meetings and
audited financial statements of the Company, which must be presented to the
annual general meeting of shareholders. The register of shareholders of the
Company is also open to inspection by shareholders without charge, and to
members of the public for a fee. The Company is required to maintain its share
register in Bermuda but may establish a branch register outside Bermuda. The
Company is required to keep at its registered office a register of its directors
and officers which is open for inspection by members of the public without
charge. Bermuda law does not, however, provide a general right for shareholders
to inspect or obtain copies of any other corporate records. Delaware law permits
any shareholder to inspect or obtain copies of a corporation's shareholder list
and its other books and records for any purpose reasonably related to such
person's interest as a shareholder.
CERTAIN PROVISIONS OF BERMUDA LAW
In a September 1, 1995 letter to the Company's Bermuda counsel, the
Bermuda Monetary Authority approved the Company's application for "non-resident"
status in Bermuda for exchange control purposes.
The transfer of securities between persons regarded as resident
outside Bermuda for exchange control purposes may be effected without specific
consent under the Exchange Control Act 1972 and regulations thereunder. Issues
and transfers of securities involving any person regarded as resident in Bermuda
for exchange control purposes require specific prior approval under the Exchange
Control Act 1972.
Consequently, owners of the Company's shares of Common Stock who are
non-residents of Bermuda for Bermuda exchange control purposes are not
restricted in the exercise of the rights to hold or vote their shares. Because
the Company has been designated as a non-resident for Bermuda exchange control
purposes there are
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<PAGE>
no restrictions on its ability to transfer funds in and out of Bermuda or to pay
dividends to United States residents who are holders of the Company's Common
Stock, other than in respect of local Bermuda currency.
In accordance with Bermuda law, securities certificates are only
issued in the names of corporations, partnerships or individuals. In the case of
an applicant acting in a special capacity (for example as a trustee),
certificates may, at the request of the applicant, record the capacity, in which
the applicant is acting. Notwithstanding the recording of any such special
capacity the Company is not bound to investigate or incur any responsibility in
respect of the proper administration of any such trust.
The Company will take no notice of any trust applicable to any of
its securities whether or not it had notice of such trust. Specifically, the
Company has no obligation under Bermuda law to ensure that a Trustee who is
holding shares of the Company subject to a trust is properly carrying out the
terms of such trust.
As an "exempted Company", the Company is exempt from Bermuda laws
which restrict the percentage of share capital that may be held by
non-Bermudians, but as an exempted Company the Company may not participate in
certain business transactions including: (1) the acquisition or holding of land
in Bermuda (except that required for its business and held by way of lease or
tenancy for terms of not more than 21 years); (2) the taking of mortgages on
land in Bermuda to secure an amount in excess of $50,000 without the consent of
the Minister of Finance of Bermuda; or (3) the carrying on of business of any
kind in Bermuda, except in furtherance of the business of the Company carried on
outside Bermuda or under a license granted by the Minister of Finance of
Bermuda.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon by
Conyers, Dill & Pearman, Clarendon House, Church Street, Hamilton HM CX Bermuda.
EXPERTS
The financial statements incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K for the years ended June
30, 1997 and June 30, 1996 have been audited by Price Waterhouse, independent
auditors, as stated in their reports, which are incorporated by reference, and
have been so incorporated herein in reliance upon such firm, its reports and
upon the authority of such firm as an expert in accounting and auditing.
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<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS OR A SUPPLEMENT TO THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. NEITHER THIS PROSPECTUS NOR ANY
SUPPLEMENT TO THIS PROSPECTUS CONSTITUTES AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES
OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN
ANY JURISDICTIONS WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR A SUPPLEMENT
TO THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION
CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
--------------------------
TABLE OF CONTENTS
PAGE
Available Information ..................................................... 3
Incorporation of Certain Documents......................................... 3
Prospectus Summary......................................................... 4
Risk Factors............................................................... 7
Selling Shareholder........................................................ 13
Plan of Distribution....................................................... 16
Description of Securities.................................................. 17
Legal Matters.............................................................. 21
Experts.................................................................... 21
FIRST SOUTH AFRICA CORP., LTD.
1,344,894 Shares of Common Stock
and
729,979 Shares of Common Stock
(Issuable upon conversion of shares
of Class B Common Stock)
May __, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
It is estimated that the following expenses will be incurred in
connection with the proposed offering hereunder. All of such expenses will be
borne by the registrant.
Registration fee - Securities and Exchange Commission .......... $ 4,032.57
Legal fees and expenses ........................................ 10,000.00
Accounting fees and expenses ................................... 5,000.00
Miscellaneous .................................................. 967.43
-------------
Total .................................. $ 20,000.00
-------------
Item 15. Indemnification of Directors and Officers.
Under Bermuda law and the registrant's Memorandum of Association and
bye-laws, the directors, officers, liquidators and auditors or the registrant
and their heirs, executors and administrators are indemnified and held harmless
out of the assets of the Company from and against all actions, costs, charges,
losses and expenses which they or any of them, their heirs, executors or
administrators, shall or may incur or sustain by or by reason of any net done,
concurred in or omitted in or about the execution of their duty, or supposed
duty, or in their respective offices or trusts, and none of them shall be
answerable for the sets, receipts, neglects or defaults of the others of them or
for joining in any receipts for the sake of conformity or for any loss,
misfortune or damage which may happen in the execution of their respective
offices or trusts, or in rotation thereto, provided that, they are not entitled
to indemnification in respect of any willful negligence, willful default, fraud
or dishonesty which may attach to them.
Item 16. Exhibits and Financial Statement Schedules:
(a) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
3.1 Memorandum of Association of the Registrant
3.2 Bye-laws of the Registrant
5.1(1) Opinion of Conyers, Dill & Pearman
10.1 FSAH Escrow Agreement
23.1(1) Consent of Price Waterhouse
23.2(1) Consent of Conyers, Dill & Pearman (included in Exhibit 5.1)
24.1(1) Power of Attorney of certain officers and directors of the Company
(included on the Signature Page)
- -----------------
(1) Filed herewith.
II-1
<PAGE>
All other Exhibits have been previously filed with the Registrant's
Registration Statement on Form S-1 (No. 33-99180), which is incorporated by
reference.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes;
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent,
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information, set forth
in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price present
no more than 20 percent change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement.
(iii) to include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change in such information in the
registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment and of the securities being registered which remain unsold at the
terminatio of the offering.
(b) insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 14
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claims for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by
II-2
<PAGE>
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such Indemnification by it is against public policy an
expressed in the Act an will be governed by the final adjudication of such
issue.
(c) The undersigned registrant hereby undertakes that for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Coconut Grove, State of Florida, on the 22nd day of
May, 1998.
FIRST SOUTH AFRICA CORP., LTD.
By: /s/ Clive Kabatznik
------------------------------
Clive Kabatznik, Vice Chairman
of the Board and President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Clive Kabatznik with powers of
substitution, as his attorney-in-fact, in all capacities, to sign any amendments
to this registration statement (including post-effective amendments) and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the date indicated.
SIGNATURE TITLE DATE
/s/ Michael Levy Chairman of the Board May 22, 1998
- ----------------------
Michael Levy
/s/ Clive Kabatznik Vice Chairman of the Board, May 22, 1998
- ---------------------- President, Chief Executive
Clive Kabatznik Officer, Chief Financial Officer,
Controller and Director
/s/ Cornelius J. Roodt Director May 22, 1998
- ----------------------
Cornelius J. Roodt
/s/ Charles S. Goodwin Director May 22, 1998
- ----------------------
Charles S. Goodwin
/s/ Mfundiso J. Njeke Director May 22, 1998
- ----------------------
Mfundiso J. Njeke
II-4
[Conyers, Dill & Pearman Letterhead]
May 22, 1998
First South Africa Corp., Ltd.
Clarendon House
Church Street
Hamilton HM CX
Bermuda
Re: First South Africa Corp. Ltd.
Gentlemen:
We have acted as counsel to First South Africa Corp., Ltd. (the
"Company") in connection with its filing of a Registration Statement on Form S-3
(the "Registration Statement") covering 2,074,873 shares of Common Stock (the
"Shares") as more particularly described in the Registration Statement.
In our capacity as counsel to the Company we have examined the
Registration Statement, the Company's Certificate of Incorporation and By-Laws
as amended to date, and the minutes and other Corporate proceedings
of the Company.
With respect to factual matters, we have relied upon statements and
certificates of officers of the Company. We have also reviewed such other
matters of law and examined and relied upon such other documents, records and
certificates as we have deemed relevant hereto. In all such examinations we have
assumed conformity with the original documents of all documents submitted to us
as conformed or photostatic copies, the authenticity of all documents as
originals and the genuineness of all signatures on all documents submitted to
us.
On the basis of the foregoing, we are of the opinion that the Shares
have been validly authorized and legally issued and are fully paid and
non-assessable.
We hereby consent to the use of our name under the caption "Legal
Opinions" in the prospectus constituting a part of the Registration Statement
and to the filing of a copy of this opinion as an Exhibit thereto.
Very truly yours,
/s/ Conyers, Dill & Pearman
Conyers, Dill & Pearman
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this
registration statement of First South Africa Corp., Ltd., on Form S-3 and
related prospectus, for the registration of 2,006,567 shares of Common Stock, of
our report dated September 19, 1997 in the Annual Report on Form 10-K filed on
September 29, 1997 (File No. 0-27494) and on our audits of the consolidated
financial statements of First South Africa Corp., Ltd. and subsidiaries as of
June 30, 1997 and 1996 and for each of the three years in the period ended June
30, 1997.
/s/ PRICE WATERHOUSE
PRICE WATERHOUSE
Chartered Accountants (SA)
Sandton, South Africa
May 22, 1998
