| Thu 18 Oct 2007, 10:34 | | SYA - Siyathenga - Acquisition of boardwalk two an |
|
SYA
SYA
SYA - Siyathenga - Acquisition of boardwalk two and renewal of cautionary
announcement
Siyathenga Property Fund Limited
(Registration number 2004/005198/06)
Share code: SYA
ISIN: ZAE00069530
("Siyathenga")
ACQUISITION OF BOARDWALK TWO AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement on 28 September 2007, holders of
Siyathenga linked units ("linked unitholders") are advised that the company,
((acting through its wholly-owned subsidiary, Siyathenga Investments
(Proprietary) Limited ("the Purchaser")) has concluded an agreement with
Pangbourne Properties Limited ("Pangbourne") in terms of which the Purchaser
will acquire a shopping centre currently being developed on land ("Boardwalk
Two"), adjacent to the existing Boardwalk Shopping Centre, in Richards Bay.
Siyathenga Properties Three (Proprietary) Limited, also a wholly owned
subsidiary of Siyathenga, bought the existing Boardwalk Shopping Centre from
Transnet Retirement Funds Property Trust via Pangbourne in 2006, as disclosed
in the revised listing particulars of Siyathenga, dated 13 February 2006.
Boardwalk Two is being acquired for a consideration consisting of the
Pangbourne development cost and the top up amount, as more fully described in
paragraph 4.1 below ("purchase consideration"). The Purchaser will also be
responsible for any additional development costs after the date of the
transfer (the effective date), required to complete Boardwalk Two. The total
development cost, including the purchase consideration, based on management`s
latest estimate of net income for the year commencing 1 May 2008, is expected
to amount to approximately R 465 million, excluding value added tax
Boardwalk Two is being developed by Keystone Investments (Proprietary) Limited
and it is anticipated that transfer of the partially completed shopping centre
to the Purchaser will take place in the first quarter of 2008 with practical
completion of the entire shopping centre expected to occur in the second
quarter of 2008.
2. RATIONALE
As the owner of the existing Boardwalk Shopping Centre, Siyathenga is aware
that the existing retail facilities in Richards Bay are insufficient to meet
the current and anticipated future demand, due to the increasing popularity of
Richards Bay as a port facility and business centre. Consequently, Siyathenga
has been cooperating with Pangbourne to increase the size of the Boardwalk
Shopping Centre by the development of Boardwalk Two thereby adding
approximately 40 000 m2 of lettable area to the existing 26 000 m2 of retail
trading space.
The expanded Boardwalk Shopping Centre will dominate its catchment area due to
its size and superior tenant mix. New tenants will include amongst others
Game, Checkers, Queenspark, First National Bank, Boardmans, Geen & Richards,
Cape Union Mart, Mugg, & Bean, The Hub, Exclusive Books, Incredible
Connection, Piatto and Ocean Basket.
This acquisition is in line with Siyathenga`s stated strategy of growing its
asset base with high quality urban retail assets.
3. BOARDWALK TWO PROPERTY DESCRIPTIONS
Boardwalk Two comprises the following properties:
- The remaining extent of Portion 5 of Erf 11161, Richards Bay Township,
uMhlatuze Municipality measuring 23,347 m2,
- Portion 38 (of 25) of Erf 11161, Richards Bay Township, uMhlatuze
Municipality measuring 7,136 m2,
- Portion 40 (of 25) of Erf 11161, Richards Bay Township, uMhlatuze
Municipality measuring 30,531 m2,
- Portion 41 (of 25) of Erf 11161, Richards Bay Township, uMhlatuze
Municipality measuring 45,462 m2, and
- a praedial skywalk servitude over portion 39 (of 25) of Erf 11161,
Richards Bay Township, uMhlatuze Municipality measuring 1,859 m2.
4. SALIENT TERMS OF THE ACQUISITION
4.1 The purchase consideration consists of:
4.1.1 A refund to Pangbourne of its development costs determined at the date
of the transfer (plus value-added tax at 14%) ("the Pangbourne
development cost") plus interest on all such amounts at 9% per annum
compounded monthly in arrears: and
4.1.2 A top up amount which is calculated as follows:
(a) the capital amount (excluding value-added tax) calculated by capitalizing
the anticipated net income in the first year of operation at a rate of
8,5618%; minus
(b) the capital amount (excluding value-added tax) calculated by capitalizing
the anticipated net income in the first year of operation at a rate of
9.3%; (subject to a minimum amount of R30 million excluding value-added
tax).
The purchase consideration is to be funded partly through borrowings and
partly through the issue of new Siyathenga linked units.
Suspensive conditions to the acquisition
The Implementation of the transaction will be subject, inter alia, to:
- the obtaining of the necessary loan funding to finance the purchase and
the completion of the development;
- the obtaining of the necessary regulatory approvals; and
- the obtaining of the requisite linked unitholders approval in general
meeting ("the General Meeting"),
by 15 February 2008 or such later date as the parties may agree in writing.
4.3 Minimum linked unitholders agreement
Siyathenga has undertaken to Pangbourne that any issue of Siyathenga linked
units to fund the purchase and completion of the development will not dilute
Pangbourne`s holding in Siyathenga to below 25.1%. Any Siyathenga linked units
issued within six months from the date on which trading at Boardwalk Two
commences will be deemed to be issued to fund the purchase and completion of
Boardwalk Two.
5. VALUATION OF THE PROPERTY
The property will be valued by an independent external valuer, registered as a
professional valuer in terms of the Property Valuers Profession Act, 47 of
2000, as defined by Section 13 of the JSE Listings Requirements. Extracts from
the valuation report will be included in the circular to shareholders.
6. FINANCIAL EFFECTS
The pro forma impact of the acquisition on net asset value ("NAV") per
Siyathenga linked unit is set out in the table below:
Before the After the Percentage
Acquisition Acquisition Change
(cents) (cents)
NAV per linked unit 710 748 5.4
Notes:
The NAV per Siyathenga linked unit, as set out in the "Before the acquisition"
column of the table, is based upon the audited balance sheet of Siyathenga at
30 June 2007, and 116 746 704 linked units in issue.
The NAV per Siyathenga linked unit, as set out in the "After the acquisition"
column of the table, is based upon 156 152 700 linked units in issue and the
assumptions that:
- the acquisition was implemented on 30 June 2007;
- the total development cost including the purchase consideration is R465
million, excluding value added tax;
- R126,108 million of the total development cost will be funded by long
term fixed rate debt at an interest rate of 11%; and
- 39 405 996 units were issued at an issue price of R8.60 per linked unit
as an issue of linked units for cash and a vendor placement on 30 June
2007. The actual number of linked units issued and the issue price per
linked unit will be determined at the time of issue depending on
prevailing market conditions.
The above pro forma financial effects have been reviewed and will be reported
on by the reporting accountants and their report in this regard will be
contained in the circular referred to in paragraph 8 below and will lie open
for inspection.
7. RELATED PARTY TRANSACTION
As Pangbourne is a related party to Siyathenga in terms of the JSE Listings
Requirements, Pangbourne will be precluded from voting at the General Meeting.
Furthermore Messrs C M Hutchison and L X Mtumtum as director and executive of
Pangbourne respectively, and as directors of Siyathenga, are precluded from
voting their Siyathenga linked units, if any, at the General Meeting.
8. DOCUMENTATION
The acquisition constitutes a Category 1 transaction in terms of the JSE
Listing Requirements. Accordingly, Siyathenga will be required to issue a
circular to linked unitholders containing full details of The Boardwalk Two
acquisition and seeking their approval to undertake the purchase and
completion of Boardwalk Two and to issue linked units for cash to partially
settle the purchase consideration. This circular and the notice of general
meeting of linked unitholders convening the General Meeting, will be posted in
due course.
9. RENEWAL OF CAUTIONARY ANNOUNCEMENT
The cautionary announcement dated 28 September 2007 is hereby renewed and
linked unitholders are advised to continue to exercise caution when dealing in
their linked units. A further announcement will be made once the forecast
financial information on Boardwalk Two and the valuation of the property are
finalised.
Craighall
18 October 2007
Sponsor
Deloitte and Touche Sponsor Services (Pty) Limited
Attorneys for Pangbourne and Siyathenga
Coetsee Van Rensburg Inc.
Date: 18/10/2007 10:34:43 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
