| Fri 30 Apr 2010, 13:01 | | IQG - Iquad - Disposal By Iquad Property Investment (Pty) Limited Of A Unit In |
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IQG
IQG
IQG - Iquad - Disposal By Iquad Property Investment (Pty) Limited Of A Unit In
Iquad Place
IQuad Group Limited
Incorporated in the Republic of South Africa
Registration number: 2004/025177/06
Share code: IQG
ISIN: ZAE000101622
("IQuad" or "the Company" or "the Group")
DISPOSAL BY IQUAD PROPERTY INVESTMENT (PTY) LIMITED OF A UNIT IN IQUAD PLACE
1 THE DISPOSAL
Shareholders are hereby advised that IQuad Property Investment (Pty)
Limited ("the Seller" or "IQuad Property"), a subsidiary of the Company,
has entered into an agreement with the Sonar Trust (Registration number IT
859/2005) ("the Purchaser"), in terms of which the Seller will dispose of a
unit in the building known as IQuad Place, situated in Mangold Street on
Erf 3253 ("IQuad Place"), Newton Park, Nelson Mandela Bay Municipality,
Port Elizabeth, to the Purchaser ("the Disposal").
The aforementioned unit comprises the following:
- A section of the 1st and 2nd Floor of IQuad Place, approximately 1 195
square meters in extent;
- An undivided share in the common property in the scheme apportioned to
the said section, in accordance with the participation quota; and
- A parking bay allocation as per the minimum municipal requirements
applicable at the time.
(hereinafter referred to as "the Property")
2. BACKGROUND INFORMATION ON THE PURCHASER
The Sonar Trust holds various property investments and is not a related
party to the Purchaser.
3. RATIONALE OF THE DISPOSAL
IQuad has a 50% interest in IQuad Property and obtained an option to
acquire the balance of the shares in IQuad Property due to the non
performance of another shareholder in terms of the Shareholders Agreement.
The investment in IQuad Property is therefore consolidated into the Group`s
results.
The intention of the property investment was never to own a majority
interest and the board of directors of IQuad made a decision to reduce it`s
exposure to this investment and actively looked for opportunities to sell a
portion of or the entire investment in IQuad Property.
4. PURCHASE CONSIDERATION
The consideration payable by the Purchaser to the Seller for the purchase
of the Property amounts to R14 000 000 and shall be payable as follows:
4.1 R11 800 000 shall be payable against registration of transfer of the
Property. The Purchaser shall furnish a bank guarantee to the Seller`s
Conveyancers for the aforesaid amount of R11 800 000;
4.2 The Purchaser has also confirmed that it has obtained a mortgage bond
from Imperial Bank and the guarantee for the amount stipulated in 4.1
above may only be requested once Imperial Bank instructs its attorneys
to register the Bond;
4.3 The balance of R2 200 000 shall be repayable by the Purchaser to the
Seller as a loan ("the IQuad Loan"). Interest shall be charged at
prime less 0.5% per annum on the IQuad Loan for the first two years
and at prime plus 2% thereafter. The said interest shall be
capitalized annually. The full IQuad Loan and all interest due thereon
shall be repayable on or before a period of 5 years from the date of
registration of transfer, although the Purchaser will attempt to
settle same as soon as possible; and
4.4 The Purchaser has consented to register a second mortgage bond
containing standard mortgage bond conditions in favour of the Seller
over the property situated at 6 Pyott Street, Port Elizabeth.
5. CONDITIONS PRECEDENT
There are no outstanding conditions precedent to the Disposal.
6. OTHER SIGNIFICANT TERMS OF THE AGREEMENT
6.1 The Purchaser has been awarded an office space tender by the
Department of Public Works. The Seller will complete the interior of
the Property in terms of the tender specifications and drawings
approved by the Department of Public Works, at its costs. The
Purchaser will take occupation and transfer of the Property only upon
production of a Certificate by the Department of Public Works that the
Property is suitable for beneficial occupation by the Department of
Public Works in terms of the tender granted to the Purchaser. The
Department of Public Work`s decision in this regard shall be binding
on both parties;
6.2 Occupational rent at the rate of R162 362.50 per month will be payable
upon receipt of rental by the Purchaser from the Department of Public
Works until date of registration of transfer;
6.3 The Seller will sectionalize IQuad Place and register a Certificate of
Registered Sectional Title in respect of the Property and register the
transfer into the name of the Purchaser by 31 August 2010. Failure to
register transfer timeously will result in the occupational rent being
reduced to R115 000 per month from 1 September 2010;
6.4 The Purchaser has agreed not to distribute any profits or re-pay loan
accounts to its beneficiaries before the IQuad Loan is settled in
full; and
6.5 The trustees of the Purchaser are required to sign limited personal
sureties for the Purchaser`s obligations in terms of the IQuad Loan.
7. APPLICATION OF THE SALE PROCEEDS
The proceeds of the Disposal will be utilised to settle current and future
commitments.
8. PRO FORMA FINANCIAL EFFECTS
The Pro Forma financial effects of the Disposal are presented for
illustrative purposes only and because of their nature may not give a fair
reflection of the Company`s financial position nor of the effect on future
earnings after the Disposal. Set out below are the unaudited pro forma
financial effects of the Disposal, based on the reviewed results for the
year ended 28 February 2010. The directors of IQuad are responsible for the
preparation of the unaudited pro forma financial information.
Reviewed Unaudited Pro Change (%)
before Forma after
disposal disposal
(cents) (cents)
Basic 50.6 52.9 4.5
earnings per
share
Basic 46.2 48.3 4.5
headline
earnings per
share
Net asset 485.9 486.1 0.0
value per
share
Net tangible 164.5 164.7 0.1
asset value
per share
Notes and assumptions:
1. The basic earnings per share and basic headline earnings per share
figures in the "Pro Forma after disposal" column have been calculated
on the basis that the Disposal was effected on 1 March 2009.
2. The net asset value per share and net tangible asset value per share
figures in the "Pro forma after disposal" column have been calculated
on the basis that the Disposal was effected on 28 February 2010.
3. The "after" financial information reflects the inclusion of a profit
on Disposal attributable to ordinary shareholders of IQuad amounting
to R57 192.
4. Interest on cash consideration received has been calculated based on
the interest rate applicable to the mortage bond over the property
from time to time. The average interest rate used was 10.2 % per
annum. Interest earned on the loan to the Sonar Trust was calculated
at the prime interest rate, applicable from time to time, minus 0.5%.
The average rate used was 11.3%.
5. Property expenses attributable to the Disposal was excluded for the
basic and headline earnings per share "after" effect.
6. The taxation rate applicable is assumed to be 28%.
7. The basic earnings per share and basic headline earnings per share
figures are calculated based on weighted average number of shares in
issue of 27 979 333 at 28 February 2010.
8. The net asset value per share and net tangible asset value per share
have been calculated based on 27 979 333 shares in issue as at 28
February 2010.
9. EFFECTIVE DATE OF DISPOSAL
In terms of the agreement the effective date of the Disposal is the date of
registration of transfer of the Property.
10. VAT
The Purchaser and Seller are both registered for VAT. The Purchaser will
endeavour with the assistance of the Seller, to obtain a ruling from the
South African Revenue Services ("SARS"), that no VAT will be payable on
this transaction by the Seller, on the basis that the Purchaser will not
claim VAT input from SARS. Should this ruling not be obtained, the Seller
will provide bridging funding for the payment of the VAT and the Purchaser
undertakes to refund the said amount within 48 hours of receipt of same
form the Receiver of Revenue.
11. COSTS
The Purchaser and Seller shall jointly pay all costs of and incidental to
registration of transfer of the Property at 70% of the conveyancing tariff
together with VAT when called upon to do so by the Seller`s conveyancers.
12. CLASSIFICATION OF THE TRANSACTION
The Disposal is classified as a Category 2 transaction in terms of the
Listings Requirements of the JSE Limited.
30 April 2010
Designated Adviser
Questco Sponsors (Pty) Limited
Date: 30/04/2010 13:01:02 Produced by the JSE SENS Department.
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