| Mon 11 Jun 2007, 13:11 | | CAE - Cape Empowerment Trust Limited - Detailed Ca |
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CAE
CAE
CAE - Cape Empowerment Trust Limited - Detailed Cautionary Announcement
Cape Empowerment Trust Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/014606/06)
("CET" or "the company")
Share Code: CAE
ISIN: ZAE000016952
DETAILED CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders are referred to the cautionary announcement dated 19 April
2007 and are advised that CET, which is a 25% limited partner in a series
of five en commandite partnerships, collectively known as African Alliance,
each of which owns or has an interest in an office building, has on 8 June
2007 entered into an agreement with Ambit Properties Limited ("Ambit") to
dispose of its undivided share in each of the five office buildings the
details of which are set out below ("the properties"), for a consideration
of R 364 197 623 ("the disposal") to be discharged by way of the issue of
linked units in Ambit at a price of R3.70 per unit. As part of the
transaction CET will prior to disposal of the properties, discharge the
approximately R322 million worth of debt over the properties, and CET will
raise bank funding in order to do so.
2. African Alliance
The partners in African Alliance have through a series of en commandite
partnerships ("the partnerships") acquired a portfolio of properties. The
partnerships are the owners of each of the properties and operate the
business rental enterprises thereto. Each of the partners in the
partnerships are separate and independent investors and have entered into
separate disposal agreements with Ambit, so that Ambit will acquire 100%
ownership of each of the properties. CET holds a 25% interest in each of
the partnerships.
3. Ambit
Ambit is a property loan stock company whose linked units are listed on the
JSE Limited ("JSE"). Its stated strategy is to increase its property
portfolio to more than R1.5 billion and its market capitalisation to more
than R1 billion during 2007 and to improve its Black Economic Empowerment
status.
The property fund manager of the Ambit property portfolio is Ambit
Management Services (Proprietary) Limited ("AMS"), a wholly owned
subsidiary of ABSA Commercial Property Finance (a division of ABSA Bank
Limited) ("ABSA"), which provides asset and investment management services
to Ambit.
4. Details of the properties
The properties are five office buildings. The total rentable area ("RA") of
the properties amounts to 83 611m2 with an expected net forward yield of
9%.
The salient features of the respective properties are as follows:
Physical Address RA Ambit`s
m2 estimated
value
Erf 4763, Corner of De Korte and De Beer 13 391 91.0
Streets, Braamfontein
Erf 1165 and 1266, Corner of Marshall 9 315 63.5
and Sauer Streets, Johannesburg
including the parking garage off
Anderson Street, Johannesburg
Portion 10 of erf 623, 1006 Lenchen 6 394 35.5
Avenue, North Centurian
Erf 172, 15 Martin Hammerschlag Way, 26 561 280.0
Roggebaai
Erf, 1117, Corner of Eloff, Main and Fox 27 950 220.0
Streets, Johannesburg
83 611 690.0
The properties have been valued on behalf of Ambit by independent valuers
CB Richard Ellis and Africa Corporate Real Estate Solutions.
5. Rationale for the disposal
African Alliance intended to list its property portfolio as an independent
black owned and managed property fund. The disposal of the properties to
Ambit for a consideration to be discharged in linked units in Ambit results
in African Alliance and CET becoming part of a significantly enlarged and
empowered listed property fund while remaining invested in the property
portfolio which it accumulated.
As result of the acquisition, Cape Empowerment Trust Limited will become a
23.8% unitholder in Ambit.
It is the intention of CET to also acquire an interest in AMS as set out
hereinbelow.
6. Terms of the disposal
In terms of the disposal agreement CET will dispose of its interests in the
properties to Ambit and is obliged to discharge approximately R322 million
in debt relating to the properties.
7. Consideration for the disposal
The consideration payable for CET`s interest is R 364 197 623 to be settled
by way of an issue of 98 431 790 linked units in Ambit to CET at an issue
price of 370 cents per linked unit ("the consideration units"). This price
was derived from the 30 day volume weighted average traded price to 20
April 2007, being the date on which certain high-level terms of the
acquisition were established, less an allowance for the half year
distribution paid in June 2007 and less a discount of 7.5% in recognition
of the BEE status of CET and the other African Alliance partners, who are
black people. The market price of Ambit`s linked units has subsequently
increased. Consequently, CET and the other African Alliance partners have
agreed not to trade 75% of the consideration units they will receive, for a
period of at least three years.
8. Funding
CET intends to obtain a 5 year loan from ABSA to fund the payment of R322
million of debt relating to the properties, which it has undertaken to
discharge.
9. Conditions precedent
The acquisition of the acquired assets will be subject to, inter alia:
- the conclusion of agreements with all the partners in African Alliance
as well as certain outside parties to acquire the balance of the
interests in the properties;
- the approval of the JSE Limited of the disposal and the listing of the
consideration units;
- the approval of the disposal by the requiste majority of CET`s
shareholders in general meeting;
- the approval of the disposal by the requiste majority of Ambit`s
linked unitholders in general meeting and, to the extent necessary,
their waiver of any rights to receive an offer to minorities;
- the approval of the competition authorities; and
- the finalisation of the funding arrangements relating to the
obligation to extinguish the debt relating to the properties referred
to at 6 above.
11. Effective dates
The effective date of the disposal is the date of transfer of the
respective properties into the name of Ambit, which is expected to be
completed during the third quarter of 2007.
12. Acquisition of interest in AMS
CET and ABSA have in principle agreed that, in terms of a separate
transaction, CET will acquire a 22% interest in AMS for a nominal
consideration. ABSA will retain the remaining 78% interest in AMS but will
grant CET an option to acquire an additional 4% interest in AMS for the
amount of R4,5 million. It is anticipated that CET and ABSA will enter
into a shareholders agreement containing terms and conditions typically
provided for in such agreements.
13. Financial information and renewal of cautionary
A further announcement will be made in due course providing the financial
effects of the disposal on CET`s financial results.
Accordingly, shareholders are advised to continue to exercise caution when
dealing in the shares of CET until such announcement is made.
12. Documentation
The disposal is a Category 1 transaction in terms of the Listings
Requirements of the JSE. Accordingly, CET will, within 28 days, post a
circular to shareholders incorporating a notice convening a general
meeting.
Cape Town
11 June 2007
Corporate Advisor and Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Attorneys
Hofmeyr Herbstein Gihwala Incorporated
Date: 11/06/2007 13:11:59 Produced by the JSE SENS Department.
