| Wed 18 Aug 2010, 17:43 | | HPA/HPB - Hospitality - Proposed acquisition of the Westin Grand Cape Town and |
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HPA HPB
HPA
HPA/HPB - Hospitality - Proposed acquisition of the Westin Grand Cape Town and
Arabella Westin Cape Hotel and Spa proposed rights offer and renewal of
cautionary announcement
Hospitality Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/014211/06)
Share code for A-linked units: HPA
ISIN for A-linked units: ZAE000076790
Share code for B-linked units: HPB
ISIN for B-linked units: ZAE000076808
("Hospitality" or "the company")
PROPOSED ACQUISITION OF THE WESTIN GRAND CAPE TOWN ("WESTIN") AND ARABELLA
WESTIN CAPE HOTEL AND SPA ("AWCHS") ("THE TRANSACTION"), PROPOSED RIGHTS OFFER
AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
TRANSACTION
Linked unitholders are referred to the cautionary announcements dated 9 June
2010 and 23 July 2010 and are advised that negotiations are at an advanced stage
for the acquisition of the five star Westin and AWCHS (collectively, "the
Arabella hotels") from Arabella South Africa Holding (Proprietary) Limited and
its subsidiaries. The Westin is located adjacent to the Cape Town International
Convention Centre ("CTICC") and AWCHS and the Arabella Golf Course on the
Arabella Country Estate near Hermanus and approximately 155km`s from Cape Town.
AWCHS includes 437 hectares of undeveloped land. Pursuant to confidentiality
undertakings, very limited information regarding the transaction can be
published prior to the successful conclusion of the transaction.
PROPOSED RIGHTS OFFER
Linked unitholders are however informed that it is the intention to fund portion
of the purchase price for the transaction by way of a partially underwritten
rights offer ("the rights offer") to Hospitality A- and B-linked unitholders to
raise an amount of R490 million on the following terms:
- Hospitality A-linked unitholders will be offered a total of 21 030 043 rights
offer A-linked units at an issue price of R12.80 each in the ratio of 31.0492
rights offer A-linked units for every 100 A-linked units held; and
- Hospitality B-linked unitholders will be offered a total of 21 030 043 rights
offer B-linked units at an issue price of R10.50 each in the ratio of 31.0492
rights offer B-linked units for every 100 B-linked units held.
The balance of the purchase price is to be funded through new debt facilities.
The transaction and the rights offer will be subject, amongst other things, to
all necessary regulatory and linked unitholder approvals.
RATIONALE FOR THE TRANSACTION AND THE RIGHTS OFFER
The Westin is a landmark hotel in the CBD of Cape Town, ideally located adjacent
to and with a long term lease and other contracts with the CTICC. Its
acquisition is expected to both enhance the security of the distributions to A-
linked unitholders and the growth in distributions to B-linked unitholders.
AWCHS is a luxury hotel and has the potential to add to growth in distributions
over time, including through the development of the land holding. On the
assumption that the Arabella hotels will be transferred to Hospitality by the
end of November 2010, the forward yields on the Arabella Hotels for the 12
months ending 30 November 2011 and the 12 months ending 30 November 2012 are
anticipated to be 10.77% and 12.11%, respectively.
These forecast amounts have not been reviewed or reported on by Hospitality`s
auditors. Should the transaction be concluded, forecasts prepared in accordance
with the JSE Listings Requirements will be disclosed and presented in the
category 1 circular which will be issued in respect of the transaction.
Linked unitholders approved the holding of a rights offer of R600 million in
October 2009. However, until the transaction, no suitable acquisition had
presented itself to justify a rights issue.
RENEWAL OF CAUTIONARY
As set out above, agreements in respect of the transaction have not been
concluded. Further announcements, containing the finalised terms of the
transaction and the details of the rights offer, will be published as soon as
agreements for the transaction have been concluded. As the transaction, if
concluded, may have a material effect on the price at which the Hospitality
linked units trade, linked unitholders are advised to continue to exercise
caution when dealing in their Hospitality linked units until a further
announcement is made.
18 August 2010
Transaction sponsor and independent advisor
Java Capital (Proprietary) Limited
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Legal advisor to Hospitality
Mkhabela Huntley Adekeye Inc.
Date: 18/08/2010 17:43:01 Produced by the JSE SENS Department.
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