| Mon 21 Feb 2011, 16:22 | | FPT - Fountainhead Property Trust - Rights offer declaration announcement |
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FPT
FPT
FPT - Fountainhead Property Trust - Rights offer declaration announcement
Fountainhead Property Trust
JSE code: FPT
ISIN: ZAE000097416
("Fountainhead")
a portfolio forming part of the Fountainhead Property Trust Scheme ("the
Scheme"), a collective investment scheme in property established in terms of the
Collective Investment Schemes Control Act, No. 45 of 2002, as amended, and
managed by
Fountainhead Property Trust Management Limited
(Registration number 1983/003324/06)
RIGHTS OFFER DECLARATION ANNOUNCEMENT
1. Introduction
Fountainhead`s investment strategy is to increase the size and overall quality
of its property portfolio, thereby enhancing the long term distribution growth
prospects for Fountainhead unitholders. This will be achieved through the
acquisition of superior properties as well as through refurbishing certain
properties in the portfolio.
In order to implement this strategy, Fountainhead intends to raise R1.0 billion
by way of a renounceable rights offer to qualifying Fountainhead unitholders
("the Rights Offer").
2. Rationale for the Rights Offer
It is envisaged that the Rights Offer proceeds, in combination with the
utilisation of Fountainhead`s debt facilities, will be used to fund property
acquisitions and refurbishments. The Rights Offer proceeds will also enhance
Fountainhead`s capability of concluding any other potentially large acquisitions
that may arise.
2.1. Property acquisitions
Purchase agreements have been signed in respect of the following property
acquisitions:
Sector Building name Purchase Expected
price initial
(Rand yield
million)
Retail Access Park 419 8.69%
Office 300 Middel Street 214 8.65%
Office CK3 (an 80% undivided 204 9.10%
share)
Office Cedarwood House 72 9.00%
Note:
1) The proposed acquisition of Access Park is subject to the fulfilment of
certain conditions precedent and unitholders are referred to the SENS
announcement released on 25 January 2011 for further details.
All of the above are high-quality properties that have been identified for their
capacity to provide a solid long-term income stream for the benefit of
unitholders.
In addition, Fountainhead is currently evaluating further possible acquisitions.
2.2. Property refurbishments
One of Fountainhead`s flagship assets, the Blue Route Mall, is currently
undergoing a major redevelopment, costing approximately R800 million. The
redeveloped mall will be a 56 000 square meter regional shopping centre,
boasting an improved tenant mix, a dedicated food court, as well as
approximately 3 000 parking bays. On completion, the Blue Route Mall will assert
its position as the dominant shopping centre in the southern suburbs of Cape
Town.
In addition, management is currently assessing the feasibility of refurbishing
two other retail assets:
Bryanston Shopping Centre has one of the highest trading densities of any
property in the Fountainhead portfolio. The centre currently faces competition
from nearby retail developments. In order to attract and retain customers and to
protect its market share, the shopping centre requires a refurbishment. The
strategic acquisition of Cedarwood House on an adjacent property provides
further opportunity and flexibility to expand the existing footprint. A
refurbished centre, together with its prime location, will contribute positively
towards the long term performance of Fountainhead.
Rosebank Mews is located directly opposite the Gautrain Station, in the rapidly
growing node of Rosebank. In order to capitalise on its favourable location, the
opportunity exists to increase the bulk of this property in order to redevelop
it with additional office and retail space.
3. Terms of the Rights Offer
In terms of the Rights Offer, 166 666 667 new Fountainhead units ("Rights Offer
Units") will be offered for subscription to Fountainhead unitholders recorded in
the register at 17h00 on the record date for the Rights Offer, being Friday, 18
March 2011 ("Qualifying Unitholders"), on the basis of 16.73288 new Fountainhead
units for every 100 Fountainhead units held by such unitholders, at 600 cents
per Rights Offer Unit.
The Rights Offer price represents a discount of 8.1% to the volume-weighted
average price of Fountainhead units on the JSE Limited ("JSE") for the five days
ended Friday, 18 February 2011.
4. Excess applications
Applications for additional Rights Offer Units will be allowed.
5. Unitholder commitments
Certain Fountainhead unitholders have provided written undertakings to follow
all of their rights in terms of the Rights Offer and to collectively subscribe
for and/or apply for 106.1 million Rights Offer Units, representing 63.6% of the
Right Offer.
In consideration for such undertakings, a commitment fee equal to 1.5% of the
committed amount, being R9.5 million in aggregate, is payable by Fountainhead to
such unitholders.
The balance of the Rights Offer has not been underwritten.
6. Unaudited pro forma financial effects
The unaudited pro forma financial effects set out below have been prepared to
assist Fountainhead unitholders to assess the impact of the Rights Offer on the
basic and diluted earnings per unit, headline earnings per unit, net asset value
("NAV") per unit and tangible NAV per unit of Fountainhead. Due to the nature of
these pro forma financial effects, they are presented for illustrative purposes
only and may not fairly present Fountainhead`s financial position or the results
of its operations after the Rights Offer.
The unaudited pro forma financial effects have been prepared in accordance with
the Listings Requirements and the Guide on Pro Forma Financial Information
issued by The South African Institute of Chartered Accountants, and are the
responsibility of the board of directors. The material assumptions on which the
pro forma financial effects are based are set out in the notes following the
table.
Pro forma financial effects for the year ended 30 September 2010
Before Pro forma After the Percenta
the adjustmen Rights ge
Rights ts Offer change
Offer
Basic earnings per 55.2 (1.9) 53.3 (3.4%)
unit (cents)
Diluted earnings 55.2 (1.9) 53.3 (3.4%)
per unit (cents)
Headline earnings 55.5 (1.9) 53.6 (3.5%)
per unit (cents)
Distribution per 54.1 (1.7) 52.4 (3.2%)
unit (cents)
NAV per unit 674 (11) 663 (2.0%)
(cents)
Tangible NAV per 674 (11) 663 (2.0%)
unit (cents)
Units in issue at 996 043 166 666 1 162 709 16.7%
30 September 2010 081 667 748
Weighted average 996 043 166 666 1 162 709 16.7%
number of units in 081 667 748
issue
Notes and assumptions:
1) The audited financial information has been extracted, without adjustment,
from the published, audited financial statements of Fountainhead for the year
ended 30 September 2010.
2) The pro forma adjustments to the statement of comprehensive income have been
calculated on the assumption that the proceeds from the Rights Offer were
received on 1 October 2009.
3) The pro forma adjustments to the statement of financial position have been
calculated on the assumption that the proceeds from the Rights Offer were
received on 30 September 2010.
4) A Rights Offer price of 600 cents per unit has been used for the pro forma
adjustments with 166 666 667 units issued for gross proceeds of R1.0 billion,
before deducting expenses.
5) The net Rights Offer proceeds has been assumed to repay floating-rate loans,
totalling R775 million. Interest paid has been adjusted to include net interest
savings of R45.6 million after the incurrence of R3.3 million breakage fees.
6) The surplus cash balance has been assumed to be invested in an access bond
facility at the Prime Rate minus 4.1%. Interest received has been adjusted to
include additional interest income of R24.6 million.
7) Estimated expenses of R13.3 million (excluding VAT), relating to the Rights
Offer, have been taken into account in determining the financial effects.
7. Salient dates and times
Subject to the fulfilment of the conditions set out in paragraph 8, the
timetable for the Rights Offer is set out below.
2011
Last day to trade in Fountainhead units in order to Friday, 11 March
participate in the Rights Offer (cum-entitlement) on
Fountainhead units commence trading ex-entitlement at Monday, 14 March
09h00 on
Listing of and trading in the letters of allocation on Monday, 14 March
the JSE commences at 09h00 on
Record date for the Rights Offer on Friday, 18 March
Rights Offer circular and form of instruction, where Tuesday, 22 March
applicable, posted to Qualifying Unitholders on
Rights Offer opens at 09h00 on Tuesday, 22 March
Letters of allocation credited to an electronic account Tuesday, 22 March
held at the transfer secretaries in respect of holders
of certificated units on
CSDP or broker accounts credited with entitlements in Tuesday, 22 March
respect of holders of dematerialised units on
Last day for trading letters of allocation on the JSE on Friday, 1 April
Listing of Rights Offer Units and trading therein on the Monday, 4 April
JSE commences at 09h00 on
Rights Offer closes at 12h00 on Friday, 8 April
Rights Offer Units issued on Monday, 11 April
CSDP or broker accounts in respect of holders of Monday, 11 April
dematerialised units debited and updated with Rights
Offer Units and unit certificates posted to certificated
unitholders by registered post on or about
Results of the Rights Offer released on SENS on Monday, 11 April
Results of the Rights Offer published in the press on Tuesday, 12 April
Rights Offer Units in respect of excess applications Wednesday, 13 April
issued on or about
CSDP or broker accounts of holders of dematerialised Wednesday, 13 April
units debited and updated with Rights Offer Units in
respect of excess applications, if applicable, and unit
certificates (in respect of excess applications, if
applicable) posted to certificated unitholders by
registered post on or about
Refund cheques, if applicable, posted to holders of Wednesday, 13 April
certificated units in respect of unsuccessful excess
applications on or about
Notes:
1) Unit certificates may not be dematerialised or rematerialised between Monday,
14 March 2011 and Friday, 18 March 2011, both days inclusive.
2) CSDPs effect payment on a delivery versus payment basis in respect of
dematerialised units.
3) Dematerialised unitholders are required to inform their CSDP or brokers of
their instructions in term of the Rights Offer in the manner and time stipulated
in the agreement governing the relationship between the unitholder and their
CSDP or broker.
4) All times are South African times.
5) The above dates and times are subject to amendment. Any amendments to the
dates and times will be released on SENS and published in the South African
press.
8. Conditions precedent
The implementation of the Rights Offer is subject to the fulfilment of the
following:
- approval of the Rights Offer being obtained from the Registrar of Collective
Investment Schemes;
- approval of the Rights Offer circular being obtained from the South African
Reserve Bank;
- approval of the Rights Offer circular being obtained from the JSE; and
- approval of the listing of the letters of allocation and the listing of the
Rights Offer Units being obtained from the JSE.
9. Finalisation announcement
It is anticipated that the finalisation announcement for the Rights Offer will
be released on SENS on Friday, 4 March 2011 and in the South African press on
Monday, 7 March 2011.
9. Rights Offer circular
The Rights Offer circular and a form of instruction in respect of a letter of
allocation, where applicable, will be posted to all Fountainhead unitholders
registered on the record date for the Rights Offer on or about Tuesday, 22 March
2011.
10. Jurisdiction
The Rights Offer does not constitute an offer in any jurisdiction in which it is
illegal to make such an offer.
The Rights Offer Units have not been and will not be registered under the
Securities Act of the United States of America (the "United States").
Accordingly, the Rights Offer Units may not be offered, sold, resold, delivered
or transferred, directly or indirectly, in or into the United States or to, or
for the account or benefit of, United States persons, except pursuant to
exemptions from the Securities Act of the United States.
The Rights Offer does not constitute an offer in the District of Columbia, the
United States, the Dominion of Canada, the Commonwealth of Australia, Japan or
in any other jurisdiction in which, or to any person to whom, it would not be
lawful to make such an offer. Unitholders resident outside the common monetary
area should consult their professional advisors to determine whether any
governmental or other consents are required or other formalities need to be
observed to allow them to take up the Rights Offer, or trade their entitlement.
Unitholders holding Fountainhead units on behalf of persons who are resident
outside the common monetary area are responsible for ensuring that taking up the
Rights Offer, or trading in their entitlements under that offer, do not breach
regulations in the relevant overseas jurisdictions.
Johannesburg
21 February 2011
Investment bank and sponsor
Standard Bank
Independent sponsor
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
Independent reporting accountants
KPMG Inc.
Legal adviser
Edward Nathan Sonnenbergs Inc.
Date: 21/02/2011 16:22:00 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.
