| Wed 4 Aug 2010, 16:52 | | HYP - Hyprop Investments Limited - Announcement regarding the views of the |
|
HYP
HYP
HYP - Hyprop Investments Limited - Announcement regarding the views of the
Hyprop Board in respect of a mandatory offer by Redefine Properties Limited
("Redefine")
Hyprop Investments Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1987/005284/06)
JSE code : HYP ISIN : ZAE000003430
("Hyprop" or the "Company")
Announcement regarding the views of the Hyprop Board in respect of a mandatory
offer by Redefine Properties Limited ("Redefine")
1. Introduction
Hyprop combined unitholders are referred to the announcement released by
Redefine on SENS on 4 August 2010 wherein Redefine advised of its intention
to make an offer to acquire all or any of the Hyprop combined units held by
Hyprop combined unitholders (excluding Redefine) for a cash consideration
of R50 per combined unit ("the Offer").
The Offer has been triggered by virtue of Redefine`s proposed acquisition
of 19 686 558 Hyprop combined units from Coronation Asset Management (Pty)
Limited at a price of R50 per Hyprop combined unit ("the Acquisition").
The acquisition and the Offer are subject to Redefine unit holder approval,
which approval will be sought by Redefine at a meeting of Redefine
unitholders on 12 August 2010.
Marc Wainer, in his capacity as a director and material unitholder of
Redefine, and Kevin Ellerine, in his capacity as a unitholder of Redefine,
recused themselves from all Hyprop board discussions relating to the Offer.
2. Independent opinion
In terms of rule 3.1 of the SRP Code, the Hyprop Board ("the Board") is
required to give its view on the Offer and to obtain an opinion from an
independent external advisor on how the Offer affects combined
unitholders, specifically minority combined unitholders. The Board has
appointed a sub-committee comprising non-conflicted non-executive directors
to consider and assess whether the terms of the Offer are fair.
The Sub-committee, in turn, appointed Deloitte & Touche Corporate Finance
as an independent external advisor to provide an opinion as to whether the
terms of the Offer are fair to Hyprop combined unitholders.
Deloitte & Touche Corporate Finance has considered the terms and conditions
of the offer and subject to the conditions contained in its opinion, has
determined that the Offer is not fair to Hyprop combined unitholders.
Deloitte & Touche Corporate Finance have determined, based on their
valuation procedures, a fair value range of R54 to R58 per Hyprop combined
unit.
3. Views of the Board on the Offer
The Board, having considered the terms of the Offer and opinion of the Sub-
committee and independent advisor, is of the view that the Offer is not
fair and recommends that Hyprop combined unitholders reject the offer.
The members of the Board will not be accepting the Offer in respect of the
combined units owned by them.
This view is based on the following:
- Deloitte & Touche Corporate Finance have determined a fair value range
of R54 to R58 per Hyprop combined unit;
- The Offer is priced at R50, which is only a 3.3% premium to the 30 day
VWAP at which Hyprop combined units traded prior to 24 March 2010,
being the date of Redefine`s announcement of the Acquisition;
- Unitholders who accept the Offer will not receive the Hyprop
distribution for the six months ended 30 June 2010, to be paid in
September 2010 ("the interim distribution"):
- The clean offer price is therefore R50 reduced by the interim
distribution;
- Hyprop`s distribution for the six months ended 31 December 2009,
paid in March 2010, was R1,67 per combined unit ("the final
distribution");
- Redefine acquired the Coronation units ex the entitlement to the
final distribution. The latter distribution was received by
Coronation.
Therefore, in assessing the price to be realised should they sell their
Hyprop combined units in terms of the Offer, Hyprop minority combined
unitholders should deduct an estimated amount for the interim distribution
from the R50 being offered by Redefine. This will facilitate an
approximation of a clean price comparable to the R50 that was received by
Coronation.
To the extent that Redefine acquires sufficient Hyprop combined units to
afford Redefine control of Hyprop, the Board is of the view that the price
paid should include an appropriate premium for control, which premium
should be approximately 20% above the 30 day VWAP at which Hyprop combined
units traded prior to Redefine`s announcement of the Acquisition. This
would equate to an indicative price per combined unit of approximately R58.
Hyprop combined unitholders should also be cognisant of the fact that the
listed property sector has increased 5.4% since Redefine`s announcement of
the Acquisition was made (based on the movement in the SA Listed Property
Index from 24 March to 28 July 2010).
Furthermore, any take-up by Hyprop combined unitholders of the Offer will
further increase Redefine`s stake in Hyprop, which will in turn increase
the likelihood of Redefine eventually absorbing Hyprop entirely.
In this regard, the board is of the view that:
- Hyprop is a niche retail property fund with highly sought after,
quality assets and growth potential. The nature and quality of the
Redefine and Hyprop portfolios differ quite considerably, and
combining Hyprop`s assets with Redefine`s assets will result in a
dilution of the overall quality of the underlying portfolio of assets
held by existing Hyprop combined unitholders.
- There has been a high degree of consolidation within the South African
listed property sector over the last number of years, resulting in a
significant reduction in the listed property investment universe. An
eventual merger of Hyprop with Redefine will result in a further
reduction in the number and choice of listed property counters.
- Hyprop has over a number of years built up a highly skilled management
team, -with executives who share an extensive and specialised
knowledge of regional and super- regional shopping centres. A focused
and dedicated team of retail professionals is in line with
international trends which favour the existence of specialised niche
funds.
- Hyprop has a structure that is easily understood by investors,
analysts and fund managers alike. Merging Hyprop with Redefine will
result in a loss of this structure, being that Hyprop would become
part of a much larger Redefine with a significantly more complex
structure.
- Any increase in Redefine`s interest in Hyprop will further reduce the
free float, tradability and liquidity of Hyprop combined units.
- Investors can currently access Hyprop`s high quality portfolio by
directly investing in Hyprop. The board is of the view that there is
no advantage in adding another layer by merging the assets of Hyprop
and Redefine.
4. Circular
Combined unitholders are advised that a circular, incorporating the opinion
from Deloitte & Touche Corporate Finance, as well as further details
regarding the Offer, will be posted to combined unitholders on or about 5
August 2010.
Johannesburg
4 August 2010
Independent Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
Independent advisor
Deloitte & Touche Corporate Finance
Sponsor
Java Capital (Proprietary) Limited
Date: 04/08/2010 16:52:14 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
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,
information disseminated through SENS.
