| Fri 19 Oct 2007, 14:47 | | ABT - Ambit - Acquisition of the Abseq Portfolio a |
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ABT
ABT
ABT - Ambit - Acquisition of the Abseq Portfolio and Withdrawal of Cautionary
AMBIT PROPERTIES LIMITED(Registration number: 2001/007003/06)Share code:
ABTISIN code: ZAE000051645("Ambit" or "the Company")
ACQUISITION OF THE ABSEQ PORTFOLIO AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the announcement dated 17 October 2007 in which linked unitholders
were advised to continue excercising caution when dealing in Ambit linked
units, linked unitholders are advised that Ambit has entered into an agreement
with various entities detailed below ("the Vendors") to acquire the entire
issued share capital in and loan accounts against Abseq Properties
(Proprietary) Limited ("Abseq"), for a total purchase consideration of R1 036
875 000 ("the Consideration") plus acquisition costs of R20 000 000 ("the
Acquisition"). The effective date of the acquisition will be 7 December 2007
or such later date when the suspensive conditions have been fulfilled. Abseq
owns a property portfolio comprised of 18 properties ("the portfolio"), the
details of which are set out below.
2. Details of the portfolio
The portfolio consists of 18 buildings with a total rentable area of 76 548m2.
All of the properties are situated in Gauteng. The portfolio is comprised
primarily of offices (87% of rentable area), more than 75% of the tenants are
rated A-grade and less than 1% of the overall rentable area of the portfolio
is currently vacant. The overall forecast yield for the portfolio is 7.8%.
Details of the properties comprising the portfolio are as follows:
No Physical address Rentable Weighted Price
Area average R`000
rental per
m2
R
1 Woodmead Office Park 18,761 92.84 334,000
1 Woodmead Drive
Woodmead
Johannesburg
2 Country Club Office Park 13,749 92.12 249,500
21 Woodlands Drive
Woodmead
Johannesburg
3 Peter Place Office Park* 8,384 71.68 58,000
54 Peter Place Road
Bryanston
Johannesburg
4 11 Ernest Oppenheimer Avenue 3,400 71.07 47,250
Bruma
Johannesburg
5 10 Riviera Road 5,869 69.90 38,250*
Houghton
Johannesburg
6 Valley Shopping Centre 3,712 98.21 46,750
Broadacres Drive
Dainfern
Johannesburg
7 19 Impala Road 2,678 72.45 37,500
Chistlehurston
Sandton
Johannesburg
8 15 Western Boulevard 6,178 36.26 30,000
City West
Johannesburg
9 23 Impala Road 1,815 78.82 27,000
Chistlehurston
Sandton
Johannesburg
10 18 Bompas Road 1,618 93.41 26,500
Dunkeld West
Johannesburg
11 1 River Street 1,351 193.48 20,625*
Houghton
Johannesburg
12 29 Impala Road 1,425 77.59 20,500
Chistlehurston
Sandton
Johannesburg
13 29 West Street 1,440 70.98 19,750
Houghton
Johannesburg
14 21 West Street 1,342 71.58 18,500
Houghton
Johannesburg
15 20 Impala Road 1,094 88.07 17,750
Chistlehurston
Sandton
Johannesburg
16 31 West Street 1,254 71.13 17,000
Houghton
Johannesburg
17 Corner of Jan Smuts and 1,048 80.83 16,500
Bompas
Roads, Dunkeld West
Johannesburg
18 19 West Street* 1,430 82.75 11,500*
Houghton
Johannesburg
76,548 1,036,875
* The purchase price represents Abseq`s 50% ownership in these properties
3 Rationale for the Acquisition
Ambit`s strategy is to increase its commercial property portfolio by investing
in quality office buildings that will provide a growing income stream from A
grade tenants.
4. The Vendors
- The Vendors of Abseq are as follows:
- ABSA Bank Limited ("Absa");
- Equity Estates (Pty) Limited ("Equity Estates");
- The Pajan Trust;
- The Richardson Trust; and
- The Regency Trust.
5. Consideration for the acquisition and structure of the transaction
Ambit has agreed to acquire the portfolio by acquiring the entire issued share
capital in and claims against Abseq and in the process affecting a
restructuring of the Abseq group whereby Ambit will directly acquire the
portfolio and Abseq will become a dormant subsidiary of Ambit.
The Acquisition of the portfolio will therefore take place as follows:
1. Ambit will acquire from two of the Abseq Vendors (ABSA and Equity
Estates) their respective share holdings in and claims against Abseq for
a total consideration of R817 269 000, to be settled by the issue of 192
298 589 Ambit linked units ("the consideration units") at an issue price
of 425 cents per linked unit. Following this Ambit will own 60% of the
shares in and claims against Abseq.
2. Ambit will thereafter subscribe for further shares in Abseq, for cash in
an amount of R219 606 000, so as to increase its ownership of the shares
in and claims against Abseq to 71.4%. The subscription for shares in
Abseq will be settled by Ambit through the payment of R219 606 000 in
cash.
3. Ambit will acquire from Abseq and its subsidiaries the portfolio on loan
account.
4. Abseq will then repurchase from the remaining Vendors, the 28.6% of Abseq
that Ambit will not already own for R219 606 000, utilising (as per step
2 above) the cash proceeds received.
5. Abseq and its subsidiaries will become dormant entities and will be
deregistered in due course.
The above stages in the implementation of the Acquisition will in effect take
place as one single indivisible transaction. Abseq is being acquired without
any debt. All new Ambit linked units issued will be issued at a price of 425
cents per linked unit, exclusive of the pro rata half year distribution from 1
October 2007 to the date the linked units are issued. Therefore, the total
consideration in respect of the Acquisition will be an amount of R1 056 875
000 comprised as follows:
- acquisition of the entire issued share capital and claims against Abseq
for R1 036 875 000; and
- acquisition costs of R20 000 000 million.
A total of 192 298 589 new Ambit linked units will be issued as a result of
the Abseq Acquisition to Abseq and Equity Estates. In terms of the Acquisition
agreement, Ambit has agreed to place, on behalf of the Vendors, 91 261 176 of
the new Ambit linked units to be issued. R219 606 000of the consideration will
be settled in cash. R20 000 000 of acquisition costs will be settled in cash.
The R219 606 000 that will be paid to the Vendors in cash and the R20 000 000
acquisition costs be financed from facilities that Ambit currently has in
place.
The portfolio has been valued by independent valuers CB Richard Ellis, details
of which will be published in the circular to linked unitholders.
6. General issue of shares for cash
It is Ambit`s intention to raise funds to replace debt via a general issue of
new Ambit linked units for cash, in terms of the JSE Limited ("JSE") Listings
Requirements. Unitholder approval will be sought from Ambit linked
unitholders for the general issue of new linked units for cash at the general
meeting to be held as detailed below.
7. Conditions precedent
The acquisition of the portfolio is subject to, inter alia, the following:
- the approval of the JSE;
- the necessary approvals of the acquisition by Ambit linked unitholders in
general meeting;
- the approval of the acquisition by the Absa`s group investment and board
finance committees respectively;
- the approval of the competition authority; and
- the placing by Ambit of 91 261 176 of the new Ambit linked units on
behalf of the Vendors.
8. Financial information
The pro forma financial effects of the acquisition on Ambit`s net asset value
per linked unit and the forecast information in respect of the portfolio for
the 10 month period ending 30 September 2008 and the year ending 30 September
2009 are set out below. This information has been prepared for illustrative
purposes only and because of its nature may not fairly present the Company`s
financial position, or give a fair reflection of the effect of the acquisition
on an Ambit linked unitholder. The financial information has not been reviewed
or reported on by the Company`s auditors and is the responsibility of the
directors.
Net asset value per Linked units in
linked unit(cents) issue
Before the Acquisition 350 218 228 868
(note 1)
Adjustments (note 2) (2) 11 428 571
Adjustments (note 3) 10 186 486 487
Adjustments (note 4) 12 71 411 765
Adjustments) (3) 248 676 472
(note 5
After the 367 736 232 163
Acquisition (note 5)
Assumptions:
1. The net asset value per Ambit linked unit and the number of linked units
in issue, as set out in the "Before the acquisition" column above, are
based on the published unaudited interim results of Ambit for the six
months ended 31 March 2007.
2. It was announced on 14 December 2006 that Ambit had, subject to certain
conditions, acquired seven properties for a total consideration of R136
million to be settled by way of the issue of new linked units. The last
property was transferred in August 2007. It has been assumed that this
transaction was effective 31 March 2007.
3. It was announced on 21 August 2007 that Ambit had, subject to certain
conditions, acquired five properties for a total consideration of R690
million to be settled by way of the issue of new linked units. These
properties are expected to transfer to Ambit in the fourth quarter of
2007. It has been assumed that this transaction was effective 31 March
2007.
4. It was announced on 17 October 2007 that Ambit had, subject to certain
conditions, acquired two properties for a total consideration of R303,5
million to be settled by way of the issue of new linked units. These
properties are expected to transfer to Ambit during December 2007. It has
been assumed that this transaction was effective 31 March 2007.
5. The net asset value per Ambit linked unit, as set out in the "After the
Acquisition" column above, is based on the assumption that the
Acquisition was implemented effective 31 March 2007. The units to be
issued comprises the 192 298 589 new linked units to be issued to the
Vendors as well as 56 377 883 new linked units that Ambit intents issuing
as part of a general issue of new linked units for cash.
10 months 12 months
ending ending
30-Sep-08 30-Sep-09
R`000 R`000
Revenue 84,949 103,056
Municipal expenses -5,966 -7,656
Operating expenses -6,020 -7,692
Property Management fees -1,678 -2,143
Operating income 71,284 85,566
Portfolio expenses -4,404 -5,284
Attributable earnings available 66,880 80,281
for distribution
to unitholders
Number of new linked units to be 248,676 248,676
issued (`000)
Attributable earnings per new
linked unit (cents) 26.9 32.3
Headline earnings per new linked
unit (cents) 26.9 32.3
Notional distribution per new
linked unit (cents) 26.9 32.3
Annualised yield based on 425
cents per issue price (%) 7.6 7.6
Assumptions:
1. The forecast has been prepared in accordance with the accounting policies
of Ambit.
2. Contracted revenue is based on existing lease agreements and the assumed
letting of vacant space in the portfolio.
3. No unforeseen economic factors that will affect the lessees` ability to
meet their commitments in terms of the existing lease agreements have
been included.
4. Operating costs have been determined based on discussions with the
property managers, historical costs and forecast costs per the
independent valuers` reports.
5. The share in and claims against Abseq are expected to transfer on 10
December 2007.
6 Net profit after interest paid (excluding any capital profits) will be
distributed to unitholders in full.
9. Documentation
The acquisition has been classified as a both a category 1 and a related party
transaction in terms of the JSE Listings Requirements. Accordingly, the
Company will in due course post a circular to linked unitholders together with
a notice convening a general meeting at which the linked unitholders approval
of the acquisition will be sought. Furthermore, as the Acquisition will result
in Ambit issuing new linked units that will constitute more than 25% of its
current issued linked unit capital, the abovementioned circular will
incorporate revised listing particulars for Ambit.
10. Withdrawal of cautionary announcement
Ambit unit holders are advised that they no longer need to exercise caution
when dealing in Ambit linked units.
Johannesburg19 October 2007
Corporate advisor:
GRINDROD BANK
Lead sponsor:EXCHANGE SPONSORS (PTY) LIMITED
Sole bookrunner and joint transactional sponsor:
BARNARD JACOBS MELLET CORPORATE FINANCE (PTY) LIMITED
Attorneys to Ambit:
CLIFFE DEKKER INC
Auditors and Reporting Accountants:
DELOITTE & TOUCHE
Attorneys to the Vendors:
WERKSMANS ATTORNEYS
Date: 19/10/2007 14:47:01 Produced by the JSE SENS Department.
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