| Thu 19 Nov 2009, 14:00 | | ING - Ingenuity - Further Announcement Regarding The Disposal A Proposed |
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ING - Ingenuity - Further Announcement Regarding The Disposal A Proposed
Specific Repurchase
INGENUITY PROPERTY INVESTMENTS LIMITED
(formerly SA REIT LIMITED)
(Incorporated in the Republic of South Africa)
(Registration number 2000/018084/06)
ISIN: ZAE 000127411 JSE share code: ING
("Ingenuity" or "the Company")
FURTHER ANNOUNCEMENT REGARDING THE DISPOSAL OF THE PROPERTY KNOWN AS 22 LONG
STREET ("THE PROPERTY") AND ANNOUNCEMENT REGARDING A PROPOSED SPECIFIC
REPURCHASE OR ALTERNATIVELY A PROPOSED PUT SHARE SALE
1. Introduction
1.1 The proposed disposal of the Property
Shareholders are referred to the announcement published on the
Securities Exchange News Service ("SENS") on Tuesday, 28 July 2009
("the Announcement`"), regarding the proposed disposal of the
Property to Phomella Property Investments (Proprietary) Limited
("the Disposal"). The conditions precedent relating to the
Disposal, save for Ingenuity shareholder approval, have now been
fulfilled. A circular incorporating a notice of general meeting to
be held on Friday, 11 December 2009 ("the General Meeting") where
such shareholder approval will be sought ("the Circular"), has been
posted today. Further details of the General Meeting are set out in
paragraph 4 below.
The unaudited pro forma financial effects ("Financial Effects")
previously disclosed in the Announcement have been updated to be
based on Ingenuity`s most recent published reviewed condensed
preliminary consolidated results for the year ended 31 August 2009
("the Preliminary Results") and are set out in paragraph 3 below.
1.2 A proposed Specific Repurchase or alternatively a proposed Put
Share sale
The Circular also contains information regarding a specific
repurchase of 20 000 000 Ingenuity ordinary shares ("the Put
Shares") at a price of 60 cents per share ("the Specific
Repurchase") or alternatively, the sale of the Put Shares in the
open market at the then best market price"("the Put Share Sale") as
detailed in paragraph 2 below.
The Disposal, the Specific Repurchase and the Put Share Sale are
collectively referred to as "the Transactions".
2. The Specific Repurchase or alternatively the Put Share Sale
2.1 Background
Ingenuity acquired the Property by means of an acquisition
agreement entered into on 21 June 2007 ("the Acquisition
agreement") with the Du Toit Investment Trust ("the Trust") Further
to this, the Acquisition agreement was amended in terms of an
addendum agreement dated 4 July 2007 ("the Addendum agreement").
In terms of the Addendum agreement, the Put Shares became the
subject of a right in favour of the Trust to put up to 20 000 000
Ingenuity ordinary shares at 60 cents per share to Ingenuity or its
nominee on 8 October 2009 ("the Advance Date") ("the Put Option")
or entitling Ingenuity to a right of first refusal to purchase such
number of Ingenuity shares as the Trust wished to dispose of at the
then market price at any date prior to 8 October 2009 ("the Right
of First Refusal"), further details of which are set out in
paragraph 2.2 below. The Addendum agreement was approved by
Ingenuity shareholders in general meeting on 27 September 2007.
2.2 Details regarding the Specific Repurchase and the Put Share Sale
To date, Ingenuity has not been able to effect the Put Option or
Right of First Refusal as approval to effect a specific repurchase
as contemplated by the Companies Act, No 61 of 1973, as amended,
and the JSE Limited Listings Requirements has not been obtained. In
order to be able to effect the Put Option or the Right of First
Refusal, the Trust, Ingenuity and Withmore Investments
(Proprietary) Limited ("Whitmore Investments"), a wholly owned
subsidiary of Ingenuity, entered into a limited recourse loan
agreement ("the Limited Recourse Loan agreement") dated 6 October
2009.
In terms of the Limited Recourse Loan agreement, Ingenuity has lent
an amount of R12 million ("the Capital Sum") to the Trust and the
Acquisition agreement (as amended by the Addendum agreement) has
been amended to extend the date for exercise of the Put Option to 8
April 2010.
In terms of the Limited Recourse Loan agreement, should Ingenuity
fulfil the regulatory requirements for the Specific Repurchase by 8
April 2010 (by obtaining approval for the special resolution
relating to the Specific Repurchase at the General Meeting) and the
Trust exercises the Put Option on 8 April 2010, the Trust`s
obligation to repay the Capital Sum and Ingenuity`s obligation to
pay the purchase price of 60 cents per Ingenuity share will have
been discharged in full. If the Specific Repurchase is not approved
at the General Meeting, the Trust will be entitled to effect the
Put Share Sale and pay the net proceeds to Ingenuity, which net
proceeds with be applied to the Capital Sum. The payment of the net
proceeds shall discharge the obligation of the Trust to repay the
Capital Sum, irrespective of whether the amount of the net proceeds
is less than the amount of the Capital Sum. The Limited Recourse
Loan agreement is subject to approval by way of an ordinary
resolution at the General Meeting ("the Ordinary Resolution").
3 Financial Effects of the Transactions
- The Disposal is a stand alone transaction and is not dependent on
the approval of the Specific Repurchase or the Put Share Sale.
- The Specific Repurchase and the Put Share Sale are mutually
exclusive meaning that the occurrence of the one precludes the
occurrence of the other. Therefore, if shareholders approve the
Specific Repurchase in terms of the special resolution at the
general meeting, the Put Share Sale will not take place while if
shareholders do not approve the Specific Repurchase and approve the
Put Share Sale in terms of the Ordinary Resolution, only the Put
Share Sale will take place.
- Should neither the special resolution to effect the Specific
Repurchase nor the Ordinary Resolution be approved then, neither
the Specific Repurchase nor the Put Share Sale will be effected,
however the Company shall remain contractually liable in terms of
the Acquisition agreement, the Addendum agreement and the Limited
Recourse Loan agreement for the sum of R12 million.
- The Financial Effects to take into account the above scenarios are
set out below and have been prepared for illustrative purposes
only, and because of their nature, may not give a fair presentation
of Ingenuity`s financial position or the effect and impact of the
Transactions. The Financial Effects are the responsibility of
Ingenuity`s board of directors.
3.1 Revised Financial Effects of the Disposal
The summarised Financial Effects of the Disposal on Ingenuity`s
earnings per share ("EPS"), headline earnings per share ("HEPS"),
Diluted EPS, Diluted HEPS, net asset value per share ("NAV") and
net tangible asset value per share ("NTAV") are set out below.
Before the After the Change
Disposal(1) Disposal %
(2)
EPS (cents) 4.6 4.3 (3) (7.4)
HEPS (cents) 1.9 1.6 (13.6)
Diluted EPS 4.5 4.2 (7.4)
(cents)
Diluted HEPS 1.8 1.6 (13.6)
(cents)
NAV (cents) 56.4 56.3 (0.1)
NTAV (cents) 56.4 56.3 (0.1)
Shares in issue 658 550 658 550
000 000
Shares in issue net 631 404 631 404
of treasury shares 259 259
Shares and
weighted average
shares in issue 631 695 376 631 695
net of treasury 376
shares
Notes:
1. Based on the Preliminary Results.
2. Based on the assumption that the Disposal was effected on 1
September 2008 for income statement purposes and on 31 August
2009 for balance sheet purposes.
3. EPS, HEPS, Diluted EPS and Diluted HEPS have been adjusted to
exclude the net income attributable to the Property for the 12
months ended 31 August 2009. Further to this, an adjustment
was made to take into account a reduced after tax interest
expense of R3.7 million, based on a weighted average interest
rate of 11.49%, as the cash consideration will be utilised to
reduce interest bearing debt.
3.2 Financial Effects of the Specific Repurchase
The summarised Financial Effects of the Specific Repurchase (i.e.
on the basis that the special resolution is approved at the General
Meeting) on Ingenuity`s EPS, HEPS, NAV and NTAV are set out below.
Before the After the Change
Specific Specific %
Repurchase( Repurchase
1) (2)
EPS (cents) 4.6 4.8 (3) 5.0
HEPS (cents) 1.9 2.0 (3) 7.6
NAV (cents) 56.4 58.3 (4) 3.3
NTAV (cents) 56.4 58.3 (4) 3.3
Shares in issue 658 550 000 658 550 000
Shares in issue net 631 404 259 611 404 259
of treasury shares
Weighted average
shares in issue net 631 695 376 611 695 376
of treasury shares
Notes:
1. Based on the Preliminary results.
2. Based on the assumption that the Specific Repurchase was
effected on 1 September 2008 for income statement purposes and
31 August 2009 for balance sheet purposes.
3. EPS and HEPS has been adjusted to take into account a reduced
after tax interest income of R886 000, based on a weighted
average interest rate of 10.2%, as the Specific Repurchase
will be funded through the use of internally generated cash
resources. Further to this, the reversal of the notional
interest of R1.4 million previously expensed due to accounting
for the Put Option in terms of IAS39 "Financial Instruments:
Recognition and Measurement" has been taken into account.
4. After taking into account the increased number of treasury
shares and to take into account the reversal of the Put Option
previously accounted for in terms of IAS39 "Financial
Instruments: Recognition and Measurement".
3.3 Financial Effects of the Put Share Sale
The summarised Financial Effects of the Put Share Sale (i.e. on the
basis that the special resolution is not approved at the general
meeting having the effect that the regulatory approvals required to
effect the Specific Repurchase are not obtained while the Ordinary
Resolution is approved at the general meeting) on Ingenuity`s EPS,
HEPS, NAV and NTAV are set out below.
Before the After the Change
Put Share Put Share %
Sale(1) Sale (2)
EPS (cents) 4.6 4.8(3) 3.6
HEPS (cents) 1.9 2.0(3) 9.0
NAV (cents) 56.4 57.6 2.1
NTAV (cents) 56.4 57.6 2.1
Shares in issue 658 550 000 659 550 000
Shares in issue net 631 404 259 631 404 259
of treasury shares
Weighted average
shares in issue net 631 695 376 631 695 376
of treasury shares
Notes:
1. Based on the Preliminary results.
2. Based on the assumption that the Put Share Sale was effected
on 1 September 2008 for income statement purposes and 31
August 2009 for balance sheet purposes.
3. EPS and HEPS have been adjusted to take into account a reduced
after tax interest income of R324 403 based on a weighted
average interest rate of 10.2% applied to R4.4 million, being
the net shortfall between the Capital Sum and R7.6 million. It
has been assumed that the Put Shares were sold at the 30 day
volume weighted average traded price of Ingenuity shares on
the JSE Limited as at Thursday, 5 November 2009, being 38
cents. Further to this, the reversal of the notional interest
of R1.4 million previously expensed due to accounting for the
Put Option in terms of IAS39 "Financial Instruments:
Recognition and Measurement" has been taken into account.
4. NAV and NTAV have been adjusted to take into account the
reversal of the Put Option previously accounted for in terms
of IAS39 "Financial Instruments: Recognition and Measurement"
and the shortfall of R4.4 million as detailed in note 3 above.
4. Salient dates and times
The salient dates and times in respect of the Transactions are as
follows:
2009
Forms of proxy to be received by Thursday, 10 December
10:00 on
General meeting to be held at 10:00 Friday, 11 December
on
Results of the general meeting Friday, 11 December
released on SENS on
Results of the general meeting Monday, 14 December
published in the press on
Notes
1. These dates and times are subject to amendment. Any such
amendment will be released on SENS and in the South African
press.
19 November 2009
Cape Town
Investment bank and sponsor
Nedbank Capital
Independent reporting accountants
Mazars Moores Rowland
Property valuer
Mills Fitchet Magnus Penny (Proprietary) Limited
Date: 19/11/2009 14:00:01 Produced by the JSE SENS Department.
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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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