| Tue 17 Jul 2007, 12:09 | | SYA - Siyathenga - The Introduction of Black Econo |
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SYA
SYA
SYA - Siyathenga - The Introduction of Black Economic Empowerment Partners and
Cautionary Announcements
Siyathenga Property Fund Limited
(Incorporated in the Republic of South Africa)
Registration number 2004/005198/06
Share code: SYA & ISIN: ZAE000069530
("Siyathenga" or "the Company")
THE INTRODUCTION OF BLACK ECONOMIC EMPOWERMENT PARTNERS AND CAUTIONARY
ANNOUNCEMENTS
1. INTRODUCTION
Further to the cautionary announcement dated Monday, 26 February
2007 and subsequent renewals, Siyathenga linked unitholders
("unitholders") are advised that the Company has entered into
agreements in terms of which an effective 15% holding of
Siyathenga`s linked units ("linked units") will be issued to special
purpose vehicles ("SPVs") to be held by black economic empowerment
partners ("BEE Partners").
The BEE Partners consist of the Meago and the Tokoloho consortia,
details of which are set out in paragraph 6 below.
2. RATIONALE
Siyathenga is committed to the principles of black economic
empowerment as embodied in the Department of Trade and Industry
Codes of Good Practice and its sector specific charter. Siyathenga
believes that meaningful participation by black people in the
property sector is a vital contributor to sustaining the ongoing
economic growth of South Africa. In implementing these principles,
Siyathenga has concluded agreements with experienced entrepreneurial
BEE Partners and broad based entities that benefit specific
previously disadvantaged communities.
The Siyathenga board of directors ("the Board") is of the opinion
that these transactions should enhance distributions to unitholders.
3. THE TRANSACTIONS
The Company will allot and issue an aggregate of
22 300 000 new linked units ("subscription units") to Siyam
Investments (Proprietary) Limited ("Meago SPV") and Siyat
Investments (Proprietary) Limited ("Tokoloho SPV") (i.e. 11 150 000
subscription units each) for a combined subscription price of R183
975 000 ("the subscription"). The subscription price of R8.25 per
linked unit represents an 8.6% discount to the 30-day volume
weighted average price per linked unit prior to the date of approval
of the transactions by the Board on 22 May 2007. The subscription
price of R8.25 per linked unit includes an amount of approximately
44 cents per linked unit in respect of the distribution periods
commencing 1 January 2007 to 31 December 2007, which the BEE
Partners will receive the benefit of in the course of the normal
distribution cycle of Siyathenga.
The subscription price of the subscription units will be settled by
way of loans granted by Rand Merchant Bank, a division of FirstRand
Bank Limited ("RMB") to Meago SPV and Tokoloho SPV, respectively
("the RMB loans").
As security for the RMB loans, each of Meago SPV and Tokoloho SPV
will pledge their respective subscription units to RMB. Siyathenga
will also provide RMB with a guarantee in respect of the obligations
of both Meago SPV and Tokoloho SPV. In addition, Siyathenga
Properties Two (Proprietary) Limited ("Siyathenga Two") and
Siyathenga Guarantee SPV (Proprietary) Limited will directly and
indirectly guarantee the obligations of each of Meago SPV and
Tokoloho SPV to RMB to a maximum value of R125 million, secured by a
mortgage bond over a 75% undivided share in The Willowbridge
Shopping Centre, Tyger Valley, Cape Town.
At the time of subscription by Meago SPV and Tokoloho SPV, the SPVs
will be wholly owned subsidiaries of Siyathenga. Following the
respective subscriptions, the issued shares in the SPVs will be sold
to the respective BEE Partners for a nominal price ("the
implementation").
Each of the RMB loans is to be serviced and repaid by Meago SPV and
Tokoloho SPV, respectively, from distributions received in respect
of their subscription units. The interest rate on 85% of the RMB
debt will be provided at a fixed rate.
In the event of default of the RMB loan by either Meago SPV or
Tokoloho SPV, and Siyathenga and/or Siyathenga Two being obliged to
make payment in terms of the security granted to RMB, or in the
event of a material breach by the relevant BEE Partners of their
respective Relationship Agreements which govern the ongoing
relationships between Siyathenga and certain of the respective BEE
Partners, Siyathenga and/or Siyathenga Two shall be entitled,
subject to obtaining statutory and regulatory approvals, to either
buy back the linked units held by the relevant SPV, or to nominate a
third party to purchase such linked units.
4. RELATED PARTY
Mr. Lizwi Mtumtum is a related party as he is a non-executive
director of Siyathenga and a shareholder in the Meago consortium.
Accordingly, the issue of linked units for cash to a related party
requires a fair reasonable opinion in terms of section of 5.51(f) of
the Listing Requirements of the JSE Limited.
KPMG Services (Proprietary) Limited has been appointed to provide
this opinion which will be included in the circular.
5. CONDITIONS PRECEDENT
The transactions are conditional upon, inter alia, the following:
5.1 the approvals of all regulatory authorities required
to implement the transactions, to the extent
necessary; and
5.2 unitholders passing all the necessary resolutions,
approving the implementation of the transactions, in
general meeting.
6. BEE PARTNERS
6.1 Meago SPV
The shareholders and the respective shareholding in
Meago SPV that they will have on implementation, are
set out below:
6.1.1 Meago Trading (Proprietary) Limited ("Meago")- 64.8%
Meago was established in 2005 by former Stanlib and
RMB black executives. Meago is a Sotho word meaning
"to build". The Meago team comprises experienced
individuals with a proven track record in property
investment management, corporate finance advisory and
investment partnerships.
The Meago board comprises Messrs Sharif Hoosen, Thabo
Ramushu, Jayndra Padayatchi and Ms Polo Radebe.
6.1.2 Ikamva Lethu Investments (Proprietary) Limited
("Ikamva Lethu") - 23.5%
Ikamva Lethu was formed in 2002 by Mr Lizwi Mtumtum.
Ikamva Lethu is registering Ikamva Lethu Rural
Development Trust to hold a 20% beneficial interest in
Ikamva Lethu. The purpose of the Trust will be to
develop rural communities in Matatiele, Eastern Cape.
6.1.3 The National Children Rights Committee Trust ("NCRC")
- 11.7%
The NCRC is registered as a non-profit organisation.
It came into being in 1990 and is an advocate for
children`s rights in South Africa.
6.2 Tokoloho SPV
The shareholders and the respective shareholding in
Tokoloho SPV that they will have on implementation,
are set out below:
6.2.1 Sharpeville Tshwaranang Trust - 40%
The Sharpeville Tshwaranang Trust is a broad-based
empowerment scheme set up in consultation with
respected community leaders of Sharpeville for the
social upliftment of the Sharpeville community. The
trustees will include members of the Sharpeville
community.
6.2.2 The black individuals - 40%
The individuals involved in the transaction are:
- Ms Happy Masondo, a director of Prinsloo, Tindle and
Andropoulos Inc. Attorneys;
- Ms Siza Mzimela, an airline CEO;
- Mr Lebohang Mofolo, an admitted attorney and banker;
and
- Mr Thulani Nxumalo, a qualified actuary and CEO of
Worldwide Capital Solutions.
6.2.3 The Strategic group - 20%
The strategic group consists of mergers and
acquisitions and legal specialists who have advised
Tokoloho SPV on the transactions.
7. PRO FORMA FINANCIAL EFFECTS
The table below sets out the unaudited pro forma financial effects
of the transactions on Siyathenga. The unaudited pro forma
financial effects are presented for illustrative purposes only and
because of their nature they may not give a fair reflection of
Siyathenga`s results, financial position and changes in equity after
the transactions. The unaudited pro forma financial effects are the
responsibility of the directors. It has been assumed for purposes
of the unaudited pro forma financial effects that the transactions
took place on 1 July 2006 for income statement purposes and 31
December 2006 for balance sheet purposes.
Before the After the Change
transactions transactions %
(1) (cents)
(cents)
Earnings per linked unit 75.72 * 43.78 (42.17)
Diluted earnings per linked 75.72 * 43.78 (42.17)
unit
Headline earnings per linked 44.54 ** 34.60 (22.32)
unit
Net asset value per linked 647 645 (0.28)
unit
Earnings per share 46.28 * 14.35 (68.99)
Diluted earnings per share 46.28 *14.35 (68.99)
Headline earnings per share 15.11 ** 5.17 (65.80)
Diluted headline earnings 15.11 ** 5.17 (65.80)
per share
Net asset value per share 2 2 0.00
Distributable earnings per 29.43 33.98 15.44%
linked unit for the period
Notes:
1. Based on the published results for the six months ended 31 December
2006.
2. The adjustments are based on the assumption that, for the proforma
income statement, the proposed transactions were effected on 1 July 2006.
3. Issued 22,300,000 linked units to the SPVs at R8.25, which will be
loan funded.
4. 85% of SPVs loans will be hedged at a rate of 11.37% NACA.
5. The weighted average cost of funding for the SPV`s has been included
at a rate of 11.92%.
6. Approximate set-up costs amount to R2,001,000.00.
7. The share based payment option expense of R32 287 000 represents the
once off option expense relating to the BEE parties.
Unitholders are advised that the financial effects relating to the "after
the transaction" column take into account the IFRS 2 valuation cost
disclosed in point 7 of the notes above. This has had the effect of
decreasing the items marked with an * by 29 cents, and ** by 8 cents.
8. OPINION OF THE SIYATHENGA BOARD
As indicated in paragraph 2 above, the Board structured the
transactions in line with the black economic empowerment strategy of
the Company. The Board is also of the opinion that the terms and
conditions of the transactions are beneficial to unitholders.
Accordingly, the Board recommends that unitholders vote in favour of
the transactions at the general meeting referred to in paragraph 9
below.
9. GENERAL MEETING
The general meeting of unitholders will take place on Monday, 10
September 2007 at 11:30, on the 3rd Floor, Pangbourne House, 382 Jan
Smuts Avenue, Craighall, Johannesburg.
10. DOCUMENTATION
The circular outlining the full details of the transactions will be
posted to unitholders on or about 17 August 2007.
11. CAUTIONARY ANNOUNCEMENTS
The cautionary announcement issued on Monday, 26 February 2007 and
its subsequent renewals, is withdrawn.
The cautionary announcement which was released on SENS on Tuesday,
26 June 2007 and published in the press on Wednesday, 27 June 2007
is not withdrawn and accordingly unitholders are advised to continue
exercising caution in their dealings in the linked units until a
further announcement is made.
Craighall
17 July 2007
Transactional sponsor and independent expert
KPMG Services (Proprietary) Limited
Sponsor
Deloitte & Touche Sponsor Services (Proprietary) Limited
Reporting accountants
Deloitte & Touche
Attorneys to the lenders
Webber Wentzel Bowens
Lenders
RMB
Attorneys to Tokoloho consortium
Prinsloo, Tindle and Andropoulos Inc.
Attorneys to Meago Consortium
Brink Cohen Le Roux Inc.
Date: 17/07/2007 12:09:01 Produced by the JSE SENS Department.
