| Fri 18 Apr 2008, 16:43 | | EMG - Emergent Properties - Acquisition And Renewa |
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EMG
EMG
EMG - Emergent Properties - Acquisition And Renewal Of Cautionary Announcement
EMERGENT PROPERTIES LIMITED
(Formerly Sizafika Investment Properties Limited)
Incorporated in the Republic of South Africa
(Registration number 1969/002908/06)
Share code: EMG & ISIN: ZAE000097754
("Emergent" or "the company")
ACQUISITION BY EMERGENT OF 80% OF THE ISSUED ORDINARY SHARE CAPITAL OF
QUEENSGATE BUSINESS DEVELOPMENT (PROPRIETARY) LIMITED ("QBD") AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Emergent linked unit holders are advised that an agreement has been concluded
between Emergent as Purchaser, and Queensgate Holdings (Proprietary) Limited
("QHPL" or the "Seller"), hereinafter referred to as the Acquisition agreement,
in terms of which Emergent will acquire from QHPL 80% (eighty percent) of the
entire issued ordinary share capital of QBD for an aggregate consideration of
R43.120 million ("the acquisition").
Further to the announcement by Emergent on 13 March 2008 on SENS, it is
announced that Marcape (Proprietary) Limited ("Marcape") as a nominee for Eagle
Fund Managers (Proprietary) Limited ("EFM"), has acquired control of Emergent in
terms of an agreement dated 15 February 2008 ("change of control agreement").
That agreement is subject, inter alia, to a waiver of an offer to minorities in
terms of the SRP Code and to the SRP agreeing to the appointment of Messrs JC
Human, S Swana and MD van Rooyen as directors of Emergent prior to the posting
of the circular containing such proposed waiver. The abovementioned agreement
also provides that the newly constituted board will procure the speedy
realisation of all assets currently held by Emergent with a view to apply the
proceeds of such disposals firstly to the redemption of the debenture component
of the linked units in issue in Emergent and thereafter to the payment of a
special dividend to holders of de-linked ordinary shares in Emergent. If there
is a shortfall in the disposal proceeds and debentures cannot be redeemed in
full, the shortfall in debenture redemption will be written off and no special
dividend will be paid. The abovementioned acquisition agreement mirrors the
abovementioned debenture redemption and special dividend provisions as a
suspensive condition.
2. BACKGROUND TO QBD
QBD is a division of QHPL specialising in developing property assets, businesses
and business opportunities in the hospitality and leisure sectors. Such
businesses, once profitable, are typically sold to investors and it is
anticipated that all hospitality business operating rights will be sold to
Queensgate Leisure Holdings Limited. Developed property assets will be realised
in the market. QBD is confident that its market segment remains attractive.
It is a condition of the Acquisition agreement that QHPL will provide management
services to QBD in terms of a management agreement to be adopted by Emergent.
Accordingly, Emergent will require very little infrastructure and related
overheads. It is proposed that such management agreement will be for an initial
5-year period, at an annual fee calculated as 5% of annual turnover of QBD
subject to a minimum monthly fee of R415 000.00 plus VAT thereon as well as a
fee to remunerate performance in excess of budget.
3. DETAILS OF THE ACQUISITION
In terms of the Acquisition agreement, Emergent shall discharge the purchase
consideration by way of the allotment and issue of new shares in Emergent as
consideration shares, at a price of 28 (twenty eight) cents per share. Such
consideration shares shall be issued after the restructuring referred to below
and in compliance with the Listings Requirements of JSE Limited (the "JSE").
The Acquisition agreement provides for the restructuring of the share capital of
Emergent, inter alia, such that the current linked units of Emergent will be de-
linked, the debenture component will be redeemed or partially redeemed and
partially written off, and that the de-linked ordinary shares will thereafter be
subdivided on a 10:1 basis ("the reconstruction").
Conditions precedent
The acquisition is subject to the suspensive conditions that by not later than
31 August 2008, or such later date as the parties may agree in writing:
- the reconstruction is implemented in all respects, including the
registration of all special resolutions of Emergent necessary to give
effect to the reconstruction;
- the JSE granting an application by Emergent to lift the suspension in
the trade of its securities as soon as permitted after the general
meeting of linked unit holders required, inter alia, for the approval
of the acquisition;
- a majority of independent Emergent linked unit holders in general
meeting agreeing to a waiver of a mandatory offer in favour of
minorities, in terms of the provisions of the SRP Code, by the Seller
pursuant to the change of control arising from the acquisition;
- the successful conclusion of a management agreement between the Seller
and the Purchaser for approval and adoption at the general meeting
required, inter alia, for the approval of the acquisition;
- the approval by the JSE of the circular to linked unit holders in
respect of the acquisition;
- all other regulatory approvals necessary to accomplish the
reconstruction including the consent of the SRP being granted.
The parties have agreed that Eagle Corporate Finance (Proprietary) Limited
("ECF") will be appointed as corporate adviser to the Purchaser until the
fulfilment of the conditions precedent and the completion of the implementation
of the acquisition in consideration for which ECF will be allotted and issued 15
million Emergent shares after the reconstruction in lieu of a fee. ECF has
agreed to fund the listing costs in relation to the acquisition.
The effective date of the Acquisition agreement is 1 March 2008. The Acquisition
agreement contains warranties and indemnities that are normal for a transaction
of this nature.
Linked unit holders holding in aggregate not less than 6,157 million linked
units in the Purchaser, representing more than 70% of the linked units in
Emergent, have given irrevocable undertakings to vote in favour of the
acquisition and all attendant restructuring matters at any general meeting of
Emergent.
The financial effects in relation to the acquisition will be published in due
course. Until such time, the company will remain under cautionary.
It is proposed that the Seller will nominate directors for appointment to the
board of Emergent. Such nominations will be put to Emergent linked unit holders
at the general meeting to be convened for the approval of the acquisition. It is
similarly in the contemplation of the parties that a majority of the directors
convening the abovementioned general meeting will resign at the general meeting
to allow operational management to take control of the company with effect from
the general meeting.
The articles of association of QBD will be amended to comply with the Listings
Requirements of the JSE.
4. RATIONALE FOR THE ACQUISITION
The rationale for the acquisition is to acquire an asset that will meet the
Listings Requirements of the JSE in respect of continued listing and that will
reposition Emergent as a viable property company.
Approval will be sought for a change of sector to the Real Estate - Holdings and
Development Sector on the Main Board of the JSE.
5. INTENTION REGARDING THE REVERSE TAKE-OVER LISTING OF EMERGENT
The acquisition will be categorised as a reverse take-over acquisition in terms
of the Listings Requirements of the JSE. Accordingly, Emergent will have to
satisfy the JSE that the company will qualify for continued listing following
the acquisition. Linked unit holders are cautioned in accordance with paragraph
9.24 of the Listings Requirements of the JSE that there is no certainty that the
JSE will allow the listing of the company to continue following the acquisition.
6. SALIENT DATES IN RESPECT OF PROPOSED DEBENTURE REDEMPTION AND SPECIAL
DIVIDEND
Last day to trade Wednesday, 30 April 2008
Linked units trade ex distribution from this date Monday, 5 May 2008
Record date Friday, 9 May 2008
Further details regarding such proposed debenture redemption (whether in full or
in part) and the proposed special dividend, if any, will be announced in due
course and is dependent upon the successful realisation of the financial assets
of the company as described in note 3 on page 20 of the audited annual financial
statements of the company for the financial year ended 30 September 2007.
7. FURTHER DOCUMENTATION
The acquisition, the reconstruction, the attendant restructuring and all
incidental matters will be detailed in a circular to Emergent linked unit
holders, which circular will incorporate revised listings particulars and
contain a notice of general meeting proposing such resolutions as may be
required for the relevant approvals. Such circular will be sent to Emergent
linked unit holders in due course.
The above circular will also include an offer to minorities holding 2 582 790
shares by Marcape at a price of 23 (twenty three) cents per share on an ex-
redemption and ex-distribution basis. The SRP has been provided with
confirmation that Marcape has the cash resources to be able to meet the offer.
8. SUSPENSION OF EMERGENT AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Linked unit holders are advised that linked units in Emergent will remain
suspended until successful implementation of the acquisition referred to above.
Furthermore, linked unit holders are advised that the Company will remain under
cautionary until publication of the financial effects of the acquisition.
Accordingly, linked unit holders are advised to continue exercising caution when
trading in Emergent linked until such financial effects are published.
18 April 2008
Lead Sponsor
Arcay Moela Sponsors (Proprietary) Limited
Transaction Sponsor
Merchant Sponsors (Proprietary) Limited
Date: 18/04/2008 16:43:01 Produced by the JSE SENS Department.
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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,
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