Dividends Tax liability of Trencor in respect of the Unbundling of Textainer shares to Trencor Shareholders
(Incorporated in the Republic of South Africa)
(Registration No 1955/002869/06)
Share Code: TRE ISIN: ZAE000007506
DIVIDENDS TAX LIABILITY OF TRENCOR IN RESPECT OF THE UNBUNDLING OF TEXTAINER SHARES TO TRENCOR SHAREHOLDERS
Shareholders are referred to the Circular dated 18 September 2019 which contained details regarding the Unbundling to Shareholders of the Unbundling Shares, as well as subsequent SENS announcements relating to the finalisation of the Unbundling on 2 December 2019 and the value of an Unbundling Share on 13 December 2019. Capitalised terms (i.e. denoted by words with a capitalised first letter) used herein shall bear the same meaning as ascribed to them in the Circular.
As disclosed in 220.127.116.11 of the Circular:
- The distribution of the Unbundling Shares (i.e. the Textainer shares) constituted a “distribution of an asset in specie” as such term is used for purposes of the Dividends Tax provisions contained in the Income Tax Act. Thus, as distinct from an ordinary cash dividend declared by a company, pursuant to the Income Tax Act, Trencor is liable for any Dividends Tax levied in respect of the distribution of the Unbundling Shares; and
- Trencor’s liability for Dividends Tax on the in specie distribution of the Unbundling Shares may only be reduced to the extent that it has timeously received the requisite Forms of Declaration and Undertaking from the beneficial owners of Shares who qualify for an exemption from Dividends Tax, or a reduced rate of Dividends Tax in terms of an applicable agreement for the avoidance of double taxation entered into by South Africa.
The determination of Trencor’s liability for Dividends Tax has been a complex and time-consuming process, which has necessitated numerous engagements with Shareholders, their representatives and other relevant role players in order to resolve challenges posed by the applicable tax legislation. Based on the requisite Forms of Declaration and Undertaking received by Trencor, Trencor’s net liability for Dividends Tax at 31 January 2020 on the in specie distribution of the Unbundling Shares has now been determined at approximately R174 million, amounting to 4,8% relative to the R3 597 million in specie distribution to Shareholders in terms of the value disclosed in the SENS announcement on 13 December 2019.
In an effort to secure any refund of the above Dividends Tax, to the extent that Trencor receives further Forms of Declaration and Undertaking from continuing efforts post the implementation date of the Unbundling, Trencor will continue the Dividends Tax refund process for as long as practicable.
Trencor Services Proprietary Limited
31 January 2020
Financial Advisor and Transaction Sponsor
Investec Bank Limited
Legal and Tax Advisor
Edward Nathan Sonnenbergs Inc.