| Tue 31 Aug 2010, 15:56 | | HPA / HPB - Hospitality Property Fund Limited - Signature of agreements for the |
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HPA HPB
HPA
HPA / HPB - Hospitality Property Fund Limited - Signature of agreements for the
acquisition of the Westin Grand Cape Town ("WESTIN") and Arabella Western Cape
Hotel and Spa ("AWCHS"), 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")
SIGNATURE OF AGREEMENTS FOR THE ACQUISITION OF THE WESTIN GRAND CAPE TOWN
("WESTIN") AND ARABELLA WESTERN CAPE HOTEL AND SPA ("AWCHS"), PROPOSED RIGHTS
OFFER AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Linked unitholders are referred to the cautionary announcements released on SENS
and in the press, the last of which was dated 18 August 2010, and are advised
that Hospitality and HPF Properties (Proprietary) Limited ("HPF"), a wholly-
owned subsidiary of Hospitality, have concluded agreements for the acquisition
of the Westin (including the Paulaner Brauhaus restaurant and micro brewery
situated on the V&A Waterfront, Cape Town) and the AWCHS (collectively, "the
Arabella hotels") from Arabella South Africa Holding (Proprietary) Limited
("ASAH") and its subsidiaries ("the sellers" or "the Arabella
group")(collectively, "the transaction"). The purchase consideration will be an
amount of R715.2 million and HPF in addition will assume approximately R26
million of working capital liabilities of the Arabella hotels.
HPF will fund up to R251.2 million of the purchase consideration through new
debt facilities.
The remaining balance of the purchase consideration, being R490 million, will be
funded through a rights offer to Hospitality A- and B-linked unitholders ("the
rights offer").
RATIONALE FOR THE TRANSACTION
The Westin is a landmark five star hotel in the CBD of Cape Town, ideally
located adjacent to the Cape Town International Convention Centre and with a
long term lease ("the Sub-Lease") and other contracts with Cape Town
International Convention Centre Company (Proprietary) Limited ("Convenco").
AWCHS is a five star luxury hotel and award winning golf course, located near
Hermanus in the Western Cape that has the potential to add to growth in
distributions over time, including through the development of the approximately
437 hectares of undeveloped land ("the land holding")which forms part of the
transaction.
It is expected that the acquisition of the Arabella hotels will provide an
additional underpin to the preferential distribution rights of Hospitality A-
linked unitholders and contribute to growth in distributions for Hospitality A-
and B-linked unitholders.
SALIENT TERMS OF THE TRANSACTION
Hospitality has agreed to acquire the Arabella hotels, as going concerns, with
effect from the date of registration of transfer of the tenant`s rights in
respect to the Sub-Lease and the freehold title to the AWCHS, the Arabella
Estate Golf Course land and the land holding into the name of HPF ("the
effective date"), which is expected to be during December 2010. The acquisitions
constitute one indivisible transaction.
The purchase consideration is payable in cash on the effective date.
The transaction agreements contain warranties normal for acquisitions of this
nature.
The transaction is subject to fulfilment or waiver (where applicable) of the
following conditions precedent:
- the linked unitholders of Hospitality approving the requisite resolutions
for the implementation of the transaction pursuant to the JSE Limited
Listings Requirements;
- the approval of the Competition Authorities in terms of the Competition Act
No. 89 of 1998 being obtained;
- the resolutions passed by the shareholders of each of the sellers in terms
of section 228 of the Companies Act, 1973 being registered with the
Companies and Intellectual Property Registration Office;
- Schorghuber Stiftung and Co. Holding KG, the sellers` ultimate holding
company, approving the conclusion and implementation of the transaction;
- the obtaining of all the approvals required pursuant to existing leases and
sub-leases, including the approval of Convenco to the assignment of the
tenant`s rights in terms of the Sub-Lease to HPF, as well as the conclusion
of new leases with the operators of the Arabella hotels; and
- the signature of a long term management agreement with Starwood EAM License
and Services Company BVBA for the management of the Westin.
THE ARABELLA HOTELS
Details of the Arabella hotels including property description, property address,
region, sector, number of rooms, purchase price and the valuation, effective as
at 30 September 2010, attributed to the Arabella hotels by Gensec Property
Service Limited (trading as JHI) (who are independent valuers registered as
professional associate valuers in terms of the Property Valuers Profession Act,
No. 47 of 2000), are as follows:
Property Property Region Number Purchase
descripti address of price Valuatio
on rooms n
Sector (R`000) (R`000)
Westin Convention Wester Hospitali 483 637 858 823 000
Square, Lower n Cape ty
Long Street,
Cape Town
AWCHS On the Wester Hospitali 145 103 372 110 940
Arabella n Cape ty
Country
Estate, R44
Kleinmond,
Hermanus
Total 628 741 230 933 940
THE RIGHTS OFFER
As previously announced, in terms of the rights offer:
* 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 by
them on the record date for participation in the rights offer; 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 by
them on the record date for participation in the rights offer.
Linked unitholders currently holding 34 771 142 A-linked units and 11 930 136 B-
linked units have irrevocably undertaken to follow their rights in terms of the
rights offer by subscribing for 10 796 162 rights offer A-linked units at an
aggregate subscription price of R138.2 million and by subscribing for 3 704 212
rights offer B-linked units at an aggregate subscription price of R38.9 million,
for a commitment fee of approximately R1.8 million (an amount equivalent to 1.0%
of their commitment on both the A- and B-linked units). The linked unitholders
who have provided the irrevocable undertakings are Coronation Asset Management
(Proprietary) Limited ("Coronation"), Stanlib Asset Management Limited
("Stanlib") and Catalyst Fund Managers (Proprietary) Limited ("Catalyst").
Coronation, Stanlib and Catalyst (collectively, "the underwriters") have agreed
to underwrite the balance of R312.9 million of the rights in consideration for
an underwriting fee of approximately R8.6 million (an amount equivalent to 1.0%
of their underwriting commitment on the A-linked units and 4.0% of their
underwriting commitment on the B-linked units) as follows:
* Coronation have agreed to underwrite a maximum of 2 687 726 rights offer B-
linked units;
* Stanlib have agreed to underwrite a maximum of 7 886 742 rights offer A-
linked units and a maximum of 7 524 796 rights offer B-linked units; and
* Catalyst have agreed to underwrite a maximum of 2 347 139 rights offer A-
linked units and a maximum of 7 113 309 rights offer B-linked units;
The rights offer will be subject, inter alia, to all necessary regulatory
approvals being obtained.
The salient dates for the rights offer are still in the process of being
finalised and will be announced in due course.
CIRCULAR TO LINKED UNITHOLDERS
A circular to Hospitality linked unit holders will be sent to unitholders in due
course.
FINANCIAL EFFECTS AND RENEWAL OF CAUTIONARY
The financial effects of the transaction and rights offer have not been
finalised and will be published in due course. Pending further announcements,
linked unitholders are advised to continue to exercise caution when dealing in
their linked units.
31 August 2010
Lead transaction sponsor and corporate advisor
Java Capital (Proprietary) Limited
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Legal advisor to Hospitality
Mkhabela Huntley Adekeye Inc.
Financial advisor to the Arabella group
Deutsche Bank AG
Legal advisors to the Arabella group
Cliffe Dekker Hofmeyr Inc. (South Africa)
SKW Schwarz Rechtsanwaelte (Germany)
Date: 31/08/2010 15:56:01 Produced by the JSE SENS Department.
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