| Mon 1 Aug 2011, 9:00 | | MSP - MAS Plc - Abridged private placement memorandum and announcement of |
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MSP
MSP
MSP - MAS Plc - Abridged private placement memorandum and announcement of
capital raising
MAS plc
Previously Mergon Property Holdings Limited
(Incorporated in the Isle of Man)
(Registration number 2893V)
(Registered as an external company in the Republic of South Africa)
(Registration number 2010/000338/10)
JSE Share code: MSP
SEDOL: B4LFGHO
ISIN: IM00B4LFGH00
("MAS" or "the Company")
ABRIDGED PRIVATE PLACEMENT MEMORANDUM AND ANNOUNCEMENT OF CAPITAL RAISING
The information in this abridged private placement memorandum has been extracted
from the private placement memorandum ("PPM") dated 1 August 2011 and is not an
invitation to the public to subscribe for shares in MAS. It is issued in
compliance with the Luxembourg Stock Exchange`s ("LuxSE") Rules and Regulations
("LuxSE Listings Requirements"), the JSE Limited ("JSE") Listings Requirements
and the South African Companies Act for the purpose of providing information to
the public regarding MAS and to provide information to select investors with
regards to the private placement. A potential investor should consult with its
own legal, business and tax advisers to determine the appropriateness and
consequences of an investment in the Company.
The PPM relates to a third capital raising, by MAS, by way of a private
placement of up to 62 516 280 shares of no par value ("private placement
shares"), at an issue price of Euro1.00 per share, in the share capital of MAS,
thereby raising up to Euro62 516 280 or approximately R600 million (before
private placement expenses) ("the private placement"), in South Africa, Europe
and the Isle of Man ("IOM").
1. Incorporation and history
MAS was incorporated in the IOM on 3 July 2008 under the name of Mergon Property
Holdings Limited. The Company changed its name to MAS plc on 4 March 2009.
MAS listed on the Euro-MTF market of the LuxSE ("Euro-MTF market") on 12 August
2009, where it has its primary listing, and on the Alternative Exchange of the
JSE ("AltX") on 31 August 2009, where it has its secondary listing.
MAS was registered as an external company in South Africa on 8 January 2010.
2. Overview of MAS
2.1 Introduction
The Company has been established to invest primarily in the high quality office,
retail, industrial and other property sectors initially in the UK, Germany and
Switzerland. The Company`s objective is to provide shareholders with an
opportunity to invest in a long term closed-ended investment company with an
infinite life for investors seeking European investment opportunities that yield
stable returns and portfolio diversification. MAS is subject to IOM corporate
law and according to such law the Company is not required to include a specific
objects clause in its articles of association. The object of the Company can be
determined by its board of directors and the object as aforementioned in this
paragraph has been accepted by the directors as the objective of the Company.
2.2 Investment strategy
Whilst the board of directors of MAS recognises the importance of capital growth
in the Company`s investment portfolio, the principal focus will be to acquire
properties that will result in the creation of a portfolio that has good yield
qualities with strong and reliable internal cash flows. The Company`s aim is to
deliver a reliable and growing dividend return to its shareholders with the
ultimate objective of sustaining a dividend yield of no less than 7% on capital
invested.
To achieve this, the Company will aim to invest no less than 80% of its capital
by means of transactions that will enable it to accumulate a portfolio of well-
located, good quality commercial properties at attractive yields. The Company
will focus on acquiring properties with long-term lease covenants. Where
properties with shorter-term leases are acquired, such investments will be
selected so that the income reduction risk to the Company of leases terminating
without renewal is spread over time.
The Company will invest the balance of its capital in properties that stand to
benefit from active asset management, including opportunities where development
or refurbishment is required, in order to create the possibility of achieving a
better overall return for the portfolio. However, the Company is not a
speculative property developer, therefore when acquisitions are made that
require an element of active asset management, there will be a strong focus on
risk mitigation. Such risk mitigation strategies may include, but are not
limited to, securing tenancy agreements prior to conclusion of the purchase.
As part of the approach in managing its cash resources, the Company may also
consider providing mezzanine finance on property transactions where there is
ample realisable security to cover the loan.
2.3 MAS Property Advisors Limited
MAS Property Advisors Limited, the ("investment adviser") is an IOM incorporated
company set up specifically to provide dedicated investment advisory services to
the Company. The investment adviser will provide investment advisory services to
the Company in terms of an investment advisory agreement, the details of which
are set out in Annexure 3 to the PPM.
2.4 Borrowings
The terms of the Company`s bank borrowings will be determined on a project by
project basis and the Company will be advised by the investment adviser in this
regard. The final decision in each case will be subject to the approval of the
Company`s independent directors, namely J Jansen and R Spencer ("independent
directors"). It is anticipated that property acquisitions, together with the
related debt funding, will be made through special purpose vehicles. It is the
intention of the Company that acquisitions will be geared such as to achieve an
appropriate balance between the risk of carrying debt and the enhancement of
earnings through gearing and protection will be acquired against unforeseen
increases in short term interest rates. It is not intended that total gearing on
the portfolio will exceed 70% of total assets in the portfolio.
2.5 Dividend policy
The Company aims to provide an investment to shareholders that maximises
shareholder value by adopting a high income distribution policy. It is the
Company`s intention to distribute on a semi-annual basis all of its revenue
profits, subject to applicable laws and periodic repayment obligations under any
amortising loan facilities. Other than in unforeseen and exceptional
circumstances, it is not the intention to retain income for investment purposes.
Where funds are required to grow the investment portfolio, the Company will
ordinarily look to achieve this by raising fresh funds from shareholders or the
market.
2.6 Prospects
The board believes that the Company has excellent prospects on the basis of:
- the Aldi Portfolio already acquired;
- the DPD Property already acquired;
- Metchley Hall already acquired;
- the potential acquisition pipeline as detailed in the PPM;
- current market conditions; and
- access to future deal flow.
Accordingly, the directors believe MAS will achieve the dividend yield in line
with the Company`s expectations detailed above.
3. The private placement
3.1 The purpose of the private placement is to:
- raise additional capital to fund the acquisition of further properties;
- enhance the size of the free float of shareholders on both the Euro-MTF
market and the AltX, in order to create liquidity in the Company`s shares;
- enable Sanlam Investment Management ("Sanlam") and Atterbury Investment
Holdings Limited ("Atterbury") to invest their committed capital of R100
million each; and
- provide existing shareholders of MAS in South Africa, Europe and the IOM
with the opportunity to subscribe for additional shares in MAS.
It is intended that the capital raised through the private placement will be
applied to fund new property acquisitions, being those identified as the
potential acquisition pipeline in the PPM, or similar investments.
The board retains discretion to determine the final allocation of the private
placement proceeds, which will be subject to the approval of the independent
directors.
3.2 Details of the private placement
The private placement shares will be offered for subscription to existing
shareholders in proportion to their existing shareholding in MAS and in
compliance with the pre-emptive rights set out in the articles of association of
MAS. Separate documentation in this regard has been despatched to existing
shareholders. The prescribed period for the offer to existing shareholders
pursuant to the pre-emptive rights will run concurrently with the offer to third
parties from the opening date of the private placement. For the sake of clarity,
the rights of existing shareholders under the pre-emptive rights do not
constitute warrants and will not be listed or separately traded on either of the
Euro-MTF market or AltX. To the extent that the private placement is not fully
subscribed by existing shareholders, the private placement shares will be
offered to select institutions, high net worth individuals and business
associates, in South Africa, Europe and the IOM.
Existing shareholders and those select institutions, high net worth individuals
and business associates in South Africa, Europe and the IOM ("applicants") that
have been invited to apply should do so by completing the private placement
application forms which will be provided to them in accordance with the
provisions of the PPM and the instructions contained in the private placement
application forms.
No offer will be made to the public in respect of the private placement. The
private placement is open to applicants only.
Applicants should note that Rand denominated subscription consideration will be
converted from Rand to Euro at the closing spot exchange rate on the closing
date of the private placement and that the private placement shares will only be
issued on market as listed shares.
3.3 Commitments under private placement
As at the date of issue of the PPM, MAS has received binding subscription
undertakings in an aggregate amount of R200 million.
The undertakings are from Sanlam and Atterbury and each has undertaken to invest
an amount of R100 million in the share capital of MAS by way of subscription for
MAS shares in terms of the private placement.
4. Future capital raisings
It is the intention of the Company to raise additional capital in the coming
years. The expansion of the capital base will be undertaken to exploit continued
investment opportunities for the construction of the Company`s overall
portfolio. The Company will endeavour to give all MAS shareholders an equal
opportunity to subscribe for additional shares in MAS, provided that same makes
commercial sense and subject to regulatory requirements. A detailed announcement
will be made to shareholders in this regard at an appropriate date.
5. Migration of JSE ALTX listing to Main Board
The Company`s current JSE listing is on the AltX. MAS recognises the constraints
this places on potential institutional investors and is intent on migrating its
listing on the JSE`s Main Board as soon as circumstances will allow it to do so
and same may be approved by the JSE.
6. Financial information
6.1 Anticipated returns
The Company`s aim is to deliver a reliable and growing dividend return to its
shareholders with the ultimate objective of sustaining a dividend yield of no
less than 7% on capital invested. This expectation is based on the board`s
assessment of prevailing market conditions. If, in the Company`s view,
circumstances change in future to make this expectation inappropriate as a
medium to long term objective, this will be communicated to shareholders.
6.2 Financial information
The consolidated forecast statements of comprehensive income (the "forecasts")
and the consolidated forecast statements of financial position (collectively,
the "forecast financial information"), including the assumptions on which they
are based and the financial information from which they have been prepared, are
the responsibility of the board.
The forecasts have not been reviewed or reported on by the Company`s independent
auditors or an independent reporting accountant. The forecasts have been
prepared in accordance with the Company`s accounting policies and in compliance
with the International Financial Reporting Standards.
The forecast financial information of MAS is presented in section 3 of the PPM.
The unaudited consolidated pro forma statement of financial position has not
been reviewed or reported on by the Company`s independent auditors or an
independent reporting accountant.
The unaudited consolidated pro forma statement of financial position is the
responsibility of the board and has been prepared to reflect the financial
position of MAS following the private placement. The unaudited consolidated pro
forma statement of financial position has been prepared for illustrative
purposes only and because of its nature may not give a fair reflection of MAS`
financial position. The unaudited consolidated pro forma statement of financial
position has been compiled in compliance with the accounting policies of MAS.
The unaudited consolidated pro forma statement of financial position of MAS is
presented in Annexure 7 to the PPM.
Extracts of the audited historical financial information for the years 28
February 2011, 2010 and 2009 for MAS, the preparation of which is the
responsibility of the board, are presented in Annexure 8 to the PPM.
7. Important dates and times(1)
2011
Last day to trade for existing shareholders to be Thursday, 4 August
recorded on the share register to be entitled to
participate in the private placement
Record date for existing shareholders to participate Friday, 12 August
in the private placement
Opening date of the private placement at 09:00 on Monday, 15 August
Closing date of the private placement at 12:00 on Friday, 26 August
Results of the private placement released on the Monday, 29 August
LuxSE and Securities Exchange News Service ("SENS")
Notification of allotments Wednesday, 31 August
Payment of subscription amount and accounts at CSDP, Friday, 2 September
banks or broker updated on or before 12:00 on
Listing of private placement shares on Euro-MTF Friday, 2 September
market and AltX at commencement of trade on
Posting of share certificates in respect of Friday, 2 September
certificated shareholders that subscribed for shares
in terms of the private placement on or about
Accounts at CSDP, banks or broker updated in respect Friday, 2 September
of dematerialised shareholders that subscribed for
shares in terms of the private placement on (2)
Refund of any over-subscriptions for applicants Monday, 5 September
subscribing for certificated shares
(1) All references to time are Central European time (which is currently the
same as South African time). These dates and times are subject to
amendment. Any such amendment will be released on the LuxSE and SENS.
(2) Payment in respect of dematerialised shareholders will be on a delivery
versus payment basis.
8. Copies of the PPM
The PPM is available in English only. The PPM is available to applicants on the
Company`s website (www.masplc.com) and hard copies will be provided to
applicants in due course.
In the PPM an indicative exchange rate of Euro1 : R9.5975 has been used.
Applicants should note that the shares in MAS are Euro denominated shares and
therefore the Rand denominated subscription consideration raised in terms of the
private placement for shares shall be converted from Rand to Euro at the closing
spot exchange rate on the closing date of the private placement, and therefore
certain figures stated in the PPM and this announcement, including, inter alia,
the number of issued shares and the market capitalisation of MAS may vary from
the actual figures on listing of the private placement shares, dependent on
movements in the exchange rate. The board of the Company does not believe that
any such variations will be material, however in the event that they are
material MAS will announce same on the LuxSE website and SENS. In line with
exchange control approval obtained by the Company from the South African Reserve
Bank, the shares will only be allotted and issued to the applicants on the
listing date of the private placement shares and will only be issued on market
as listed shares.
Isle of Man
1 August 2011
Luxembourg legal adviser
M Partners
Corporate adviser, bookrunner and sponsor
Java Capital
Date: 01/08/2011 09:00:01 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.
