| Tue 6 Mar 2001, 0:00 | | Hyprop/kh Props - Detailed Joint Cautionary Announ |
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HYPROP INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/005284/06)
("Hyprop")
KIRCHMANN-HURRY PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1990/004210/06)
("KH Props")
DETAILED JOINT CAUTIONARY ANNOUNCEMENT
1 INTRODUCTION
Standard Corporate and Merchant Bank and Corpcapital Corporate Finance are
authorised to announce that, further to the joint cautionary announcement
published on Thursday, 7 December 2000, the Boards of Directors of Hyprop and
KH Props have agreed to merge their operations through the acquisition by
Hyprop of the business of the KH Props group as a going concern.
In terms of the heads of agreement entered into between Hyprop and KH Props and
subject to the fulfilment of the conditions precedent set out in paragraph 4
below, KH Props has undertaken to dispose of its business as a going concern to
Hyprop ("the transaction") with effect from the last day of the month in which
the last of the conditions precedent are fulfilled or waived ("the effective
date"). The effective date is anticipated to be 1 May 2001.
The aggregate transaction consideration will be discharged by Hyprop assuming
the liabilities relating to the transaction and through the issue of
renounceable letters of allotment, credited as fully paid, for 21 360 722 new
Hyprop combined units ("the Hyprop consideration units") which results in a
ratio of 57 Hyprop consideration units for every 100 KH Props combined units
held ("the distribution ratio"). In order to facilitate the transaction and
the distribution, the second bond referred to in paragraph 4 is to be realised
at less than face value. Consequently, the distribution ratio has been altered
from that previously published, being 59 Hyprop combined units for every 100 KH
Props combined units held.
The Hyprop consideration units will, upon their issue, rank pari passu in all
respects with the existing Hyprop combined units in issue, save that they will
not participate in the distribution to be made by Hyprop in respect of the
period from 1 January 2001 to the effective date. However, a distribution will
be made by KH Props to KH Props unitholders for the period from 1 October 2000
to the effective date.
Pursuant to the transaction, KH Props will distribute in specie KH Props'
interest in Hyprop to the KH Props combined unitholders, registered on a record
date which is still to be determined ("the distribution").
2 RATIONALE FOR THE TRANSACTION
The focus of the property portfolio of Hyprop is similar to that of KH Props in
terms of geographic location and quality.
The following benefits are expected to result from the transaction:
- the tradability of the Hyprop combined units is expected to improve due to
the larger market capitalisation of Hyprop, the increased number of Hyprop
combined units in issue and the enlarged pool of Hyprop combined unitholders;
- an entity with greater critical mass will be created, resulting in a greater
capability to raise capital for the acquisition of additional property, which
will, in turn, broaden the base of potential new investors;
- economies of scale will be exploited to the benefit of combined unitholders;
- the impact of earnings volatility in respect of individual properties will
be diluted as a result of the larger combined portfolio;
- after the completion of the transaction, Hyprop's market capitalisation is
expected to exceed R650 million, which substantially exceeds the level at which
sector analysts cover individual companies; and
- the addition of KH Props' property portfolio is expected to reinforce the
superior rating that Hyprop currently enjoys relative to the property loan
stock and property unit trust sectors on the JSE Securities Exchange South
Africa ("the JSE").
3 RELATED PARTY TRANSACTION
In terms of the Securities Regulation Code on Takeovers and Mergers, Coronation
Capital Property Investments Limited, The Standard Bank of South Africa
Limited, through its Standard Bank Properties Division and Redefine Income Fund
Limited are related parties to KH Props, being material combined unitholders
therein ("the related parties"). As such, they will not, as shareholders, vote
on the transaction nor be taken into account for determining the quorum at the
shareholders' meetings of KH Props.
KH Props shareholders, other than the related parties, holding a majority of
the KH Props shares and KH Props debenture holders, holding a 75% majority of
the KH Props debentures, will be required to approve the transaction in
separate meetings.
Hyprop shareholders holding a majority of the Hyprop shares and Hyprop
debenture holders, holding a 75% majority of the Hyprop debentures, will be
required to approve the transaction in separate meetings.
An independent expert has been appointed to advise the Board of Directors of KH
Props on whether the terms and conditions of the transaction are fair and
reasonable to the combined unitholders of KH Props.
4 CONDITIONS PRECEDENT
The transaction is subject to, inter alia, the fulfilment of the following
conditions precedent:
- the confirmation by KH Props to Hyprop that it has been able to place the
second bond in favour of KH Props over the properties known as The Colony,
Sturdee House, Linkview, CBC House, 2 Clamart Road, 1 Park Road, Richmond
Place, Auckland Gate and Granada Shopping Centre at a minimum value of R15,75
million;
- approval by Hyprop shareholders and Hyprop debenture holders in separate
general meetings of the resolution to implement the transaction;
- approval by KH Props shareholders and KH Props debenture holders in
separate general meetings of the resolution to implement the transaction;
- the approval by KH Props shareholders and KH Props debenture holders of
the distribution;
- the approvals of the documentation detailing the transaction and the
distribution by the JSE and the Securities Regulation Panel; and
- the approval of the transaction by the relevant competition authority in
terms of the Competition Act, 1989 (89 of 1989), as amended.
Unless specifically stated, the conditions precedent must be fulfilled or
waived by no later than 31 August 2001.
5 FURTHER JOINT CAUTIONARY ANNOUNCEMENT
The documentation relating to the transaction will be sent to Hyprop combined
unitholders and documentation relating to the transaction and the distribution
will be sent to KH Props combined unitholders within 30 days of the date of
this announcement.
Hyprop combined unitholders and KH Props combined unitholders are advised to
continue to exercise caution when dealing in their combined units until a
further announcement is made.
Johannesburg
6 March 2001
Corporate advisors and sponsor to Hyprop
CORPCAPITAL CORPORATE FINANCE
CORPORATE LAW ADVISORS AND CONSULTANTS TO HYPROP AND KH PROPS
EDWARD NATHAN & FRIEDLAND (PROPRIETARY) LIMITED
(REGISTRATION NUMBER 1999/026464/07)
MERCHANT BANK AND SPONSOR TO KH PROPS
SCMB
(A DIVISION OF THE STANDARD BANK OF SOUTH AFRICA LIMITED)
(REGISTRATION NUMBER 1962/000738/06)
