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FPF
FPF
FPF - Finbond Property Finance - Acquisition Of Investment Properties
Finbond Property Finance Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2001/015761/06)
Share code: FPF ISIN: ZAE000097259
("Finbond" or "the Company")
ACQUISITION OF INVESTMENT PROPERTIES
1. Introduction
Shareholders are advised that the Company has entered into an agreement to
purchase 14 one hectare stands ("the investment properties") from Moneyline 2027
(Proprietary) Limited ("Moneyline") ("the transaction").
2. Rationale for the transaction
On 6 October 2008 Finbond announced that it had signed two Rand facilities
totalling an equivalent of EUR7.5m with FMO N.V. ("FMO"), the Dutch development
bank. In order to improve on and remain within the debt to equity and debt to
total asset covenant ratios (on a 100% draw down basis) pertaining to the debt
to equity and debt to total asset covenant ratios as set out in these
facilities, and possible future facilities, Moneyline, as Finbond`s majority and
controlling shareholder agreed to sell the investment properties on loan account
to Finbond in order to strengthen the asset and equity base of Finbond`s balance
sheet.
3. Transaction consideration
The investment properties have been acquired from Moneyline for a total
consideration of R8 million ("the transaction consideration"). The transaction
consideration has been funded through a loan from Moneyline. The investment
properties have been valued at R17,5 million by an independent external
registered valuer belonging to the Council of Valuers and the Institute of
Valuers.
4. Funding from Moneyline
The transaction consideration has been funded through a loan in the amount of
R8 million from Moneyline. Moneyline will subordinate the loan in favour of all
other creditors. No repayment terms have been set for this loan which will carry
interest at the prime overdraft rate. The loan will become repayable when the
covenant ratios applicable to the facility granted by FMO have strengthened.
5. Related party transaction
Moneyline is the controlling shareholder in Finbond. The beneficial
shareholders in Moneyline are inter alia Mrs I Wilken and Dr. W van Aardt (as
Trustees and beneficiaries of the van Aardt Family Trust), both of whom are
directors of Finbond. Accordingly, the transaction is with a related party as
defined by the JSE Limited Listings Requirements. However, due to the size of
the transaction consideration no shareholder approval or fairness opinion is
required.
6. Financial effects of the transaction
Set out below are the pro forma financial effects of the transaction on the
unaudited interim results published by Finbond in respect of the six months
ended 31 August 2008. The pro forma financial effects have been prepared for
illustrative purposes only, to provide information on how the transaction would
have affected the previously published interim financial results. The pro forma
financial effects are the responsibility of the directors of Finbond.
Pro forma
before the Pro forma
transaction after the
(cents) transaction Change
(cents)
Earnings per share 7.16 9.31 30.0%
Headline earnings per 7.54 10.13 34.4%
share
Net asset value per 86.9 89.1 2.5%
share
Tangible net asset 18.6 20.8 11.8%
value per share
Notes:
The amounts set out in the "pro forma before the transaction" column
have been extracted from the interim results published in respect of
the six months ended 31 August 2008.
The investment properties acquired have been accounted for at fair
value as determined by an independent property valuer resulting in a
revaluation profit of R9,5 million. Deferred taxation was provided
for on this profit using a tax rate of 28%.
Interest on the transaction consideration that will remain owing on
loan account following the transaction has been taken into account
using the prevailing prime interest rate.
Pretoria
13 February 2009
DESIGNATED ADVISOR:
GRINDROD BANK LIMITED
Date: 13/02/2009 16:30:02 Produced by the JSE SENS Department.
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