| Thu 2 Feb 2012, 16:48 | | SFN/SFNP - Sasfin Holdings Limited - Disposal by Sasfin of its head office |
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SFN SFNP
SFN
SFN/SFNP - Sasfin Holdings Limited - Disposal by Sasfin of its head office
building to Primegro Properties Limited
SASFIN HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/002097/06)
("Sasfin" or "the company")
Ordinary share code: SFN ISIN: ZAE000006565
Preference share code: SFNP ISIN: ZAE000060273
Disposal by Sasfin of its head office building to Primegro Properties Limited
Strategic relationship between Sasfin and Primegro Properties Limited effected
through the disposal by the Sasfin group of its head office building to Primegro
Properties Limited, the leaseback thereof, and the acquisition by the Sasfin
group of 25% of the issued share capital of Primegro Asset Managers Proprietary
Limited
1. Introduction
Sasfin is pleased to announce that it has agreed, subject to the fulfilment of
various conditions precedent, to enter into a strategic relationship with
Primegro Properties Limited ("Primegro"), a new property loan stock company to
be listed on the JSE Limited ("JSE"), to be effected through the disposal by
Sasfin Properties III Proprietary Limited, a wholly-owned subsidiary of Sasfin
("Sasfin Properties III"), of Sasfin`s head office building, situated at 29
Scott Street, Waverley, Johannesburg ("the Sasfin property") to Primegro, for a
consideration of R167.9 million, to be settled as to R134.32 million in cash and
R33.58 million in linked units to be issued by Primegro ("Primegro linked
units"), subject to adjustment as set out in paragraph 4.1.1 below ("the
proposed transaction"). In terms of the proposed transaction, Sasfin and its
subsidiaries ("the Sasfin group") will continue to occupy the Sasfin property
and Sasfin Bank Limited, a wholly-owned subsidiary of Sasfin ("Sasfin Bank"),
will enter into a new lease on market related terms.
Sasfin, through another wholly-owned subsidiary, Sasfin Financial Services
Proprietary Limited ("Sasfin Financial Services") will acquire, for no
additional consideration, a 25% interest in the asset management company,
Primegro Asset Managers Proprietary Limited ("Primegro Asset Managers"), formed
by the promoters of Primegro ("the promoters") to provide asset management
services to Primegro. Through this vehicle, the Sasfin group will partner with
the promoters to grow Primegro into a significant property fund in the South
African market.
Further details about Primegro are set out in paragraph 2 below.
2. Primegro
Primegro is a newly established property loan stock company founded by the
promoters, including, inter alios, Derek Greenberg, Lionel Levinsohn and Martin
Ettin, who were the founders of the original Primegro Properties Limited ("the
original Primegro Properties"). The original Primegro Properties listed on the
JSE in 1999 with a portfolio value of R600 million and, having grown its market
capitalisation to R2.2 billion, ultimately merged in 2003 with Growthpoint
Properties Limited, which at that time had a market capitalisation of R2.5
billion, to form the then largest property loan stock company on the JSE. Given
the legacy of the original Primegro Properties name, the promoters have elected
to use this name for the new entity.
Following the merger of the original Primegro Properties with Growthpoint
Properties Limited, the promoters joined CBS Properties Limited, which they
listed on the JSE in 2005, with a portfolio value of R1.1 billion, and which was
subsequently acquired by the Public Investment Corporation Limited in 2007, by
which time the company had grown to a market capitalisation of R2.3 billion.
The promoters have in-depth experience of and broad networks in the property
industry and a track record of building successful property portfolios and
generating attractive investment returns. The promoters collectively have more
than 100 years of experience in the property sector and more than 50 years of
expertise in the listed property sector.
Primegro is securing an attractive property portfolio comprising a mix of
quality commercial and retail properties and is anticipated to be listed on the
JSE in the second quarter of 2012 ("the Primegro listing").
3. Rationale for the proposed transaction
Sasfin has ongoing access to deal flow in the property sector and, through its
core banking and wealth management businesses, strong relationships with South
African institutional investors, financial institutions and high net worth
investors.
As stated in Sasfin`s 2011 integrated report, the Sasfin group has taken a
strategic decision that it will no longer make available property private equity
finance on a proprietary basis, but for the reasons above, still retains a keen
interest in participating in the property sector, and has decided to do so
through establishing a relationship with Primegro and the promoters.
The proposed transaction is value enhancing to Sasfin shareholders.
4. Terms of the proposed transaction and conditions precedent
Sasfin and various of its subsidiaries, Primegro and the promoters entered into
a sale agreement on 31 January 2012 ("the signature date"), and a co-operation
agreement on 2 February 2012, in relation to the proposed transaction, the
salient terms of which are set out below:
4.1. Sale agreement
4.1.1. Terms of the sale agreement
Sasfin Properties III, the owner of the Sasfin property, has entered into a sale
of letting enterprise agreement with Primegro in terms of which Sasfin
Properties III will dispose of the property letting enterprise in respect of the
Sasfin property, as a going concern, to Primegro, for a purchase consideration
of R167.9 million, subject to adjustment as set out below ("the purchase
consideration"). The effective date of the agreement is the date of transfer of
the Sasfin property to Primegro, which is anticipated to take place on the date
of, and is subject to, the Primegro listing.
The purchase consideration will be settled on the date of transfer of the Sasfin
property as follows:
- 20% (R33.58 million) will be settled by way of the issue of Primegro linked
units to Sasfin Properties III (or its nominee); and
- 80% (R134.32 million) will be settled in cash ("the cash portion").
In the event that the net asset value attributable to the Primegro linked units
issued to Sasfin Properties III is less than R30.2 million as at the last
practicable date set out in Primegro`s pre-listing statement, the shortfall will
be made up by Primegro, either by way of a cash payment or by way of the issue
of additional Primegro linked units to Sasfin Properties III, at Primegro`s sole
election,.
4.1.2. Conditions precedent of the sale agreement
The sale agreement is subject to the following outstanding conditions precedent,
that:
4.1.2.1. by no later than 10 business days after the signature date, Sasfin
Bank enters into a new lease agreement;
4.1.2.2. by no later than the later of i) 30 business days after the signature
date; or ii) 30 business days from the date on which all items required by
Primegro to complete its due diligence investigation are given to Primegro or
iii) any agreed extended date, but no later than 15 March 2012, Primegro has
completed a due diligence, to its satisfaction, on the Sasfin property;
4.1.2.3. by no later than 60 business days after the signature date:
4.1.2.3.1. a registered bank or financial institution grants a loan to Primegro
of not less than 60% of the cash portion, on standard terms and conditions;
4.1.2.3.2. the shareholder of Sasfin Properties III adopts a special resolution
in terms of sections 112 and 115 of the Companies Act, 71 of 2008, as amended,
approving the proposed transaction;
4.1.2.3.3. the shareholders of Primegro adopt an ordinary resolution, approving
the proposed transaction and the issue of the Primegro linked units to Sasfin
Properties III, or its nominee which will also be a subsidiary of Sasfin;
4.1.2.4. by no later than 60 business days after the signature date, Primegro
has obtained irrevocable undertakings from investors to subscribe for Primegro
linked units for an aggregate subscription price of not less than 40% of the
cash portion;
4.1.2.5. by no later than 90 calendar days after the signature date:
4.1.2.5.1. the shareholders of Primegro Asset Managers enter into a subscription
and shareholders` agreement;
4.1.2.5.2. Sasfin Financial Services, Primegro and Primegro Asset Managers enter
into a put option agreement in relation to Sasfin Financial Services` interest
in Primegro Asset Managers;
4.1.2.5.3. Primegro and Primegro Asset Managers enter into an asset management
agreement,
and such agreements become unconditional as to their terms;
4.1.2.5.4. Sasfin Properties III notifies Primegro that Primegro`s memorandum of
incorporation is acceptable to Sasfin Properties III; and
4.1.2.5.5. a new memorandum of incorporation for Primegro Asset Managers is
adopted by its shareholders;
4.1.2.6. by no later than 1 July 2012, the Primegro linked units are listed on
the JSE.
It is Sasfin`s intention to retain the Primegro linked units in the short to
medium term, and Sasfin will assess this on an ongoing basis. R100 million of
the cash proceeds received will be used to settle the mortgage bond owing to
Nedbank Limited in respect of the Sasfin property, and the balance of the cash
proceeds will be used to settle other interest bearing debt within the Sasfin
group.
4.2. Co-operation agreement
Sasfin and various of its subsidiaries have entered into a co-operation
agreement with Primegro, the promoters and Primegro Asset Managers which sets
out the material terms and conditions upon which the parties have agreed to
transact, including salient terms of various agreements entered into, or to be
entered into between the parties.
5. Pro forma financial effects of the proposed transaction
The table below sets out the unaudited pro forma financial effects of the
proposed transaction on Sasfin`s attributable earnings per ordinary share,
headline earnings per ordinary share, fully diluted attributable earnings per
ordinary share and fully diluted headline earnings per ordinary share for the
financial year ended 30 June 2011, as well as Sasfin`s net asset value per
ordinary share for the financial year ended 30 June 2011 assuming that the
proposed transaction was implemented.
These pro forma financial effects have been prepared for illustrative purposes
only and, because of their nature, may not fairly present the actual financial
effects on Sasfin.
The directors of Sasfin are responsible for the preparation of the pro forma
financial information.
Before Effects After the % Change
the of the proposed due to
proposed proposed transaction the
transact transact (cents) proposed
ion ion transacti
(cents) (cents) on
Earnings per ordinary
share 304.2 49.9 354.1 16.4%
Headline earnings per
ordinary share 296.7 4.6 301.3 1.6%
Diluted earnings per
ordinary share 304.1 49.9 354.0 16.4%
Diluted headline
earnings per ordinary
share 296.7 4.6 301.3 1.6%
Net asset value per 2,770.6 45.3 2,815.9 1.6%
ordinary share
Weighted average number
of shares in issue
(`000)
Diluted weighted average
number of ordinary
shares in issue (`000)
Number of ordinary
shares in issue (`000)
32,224 - 32,224
32,229 - 32,229
32,237 - 32,237
Notes and assumptions:
1. The Sasfin financial information reflected in the "Before the proposed
transaction" column has been extracted from the audited annual results of Sasfin
for the financial year ended 30 June 2011.
2. The pro forma adjustments to the statement of comprehensive income have been
calculated on the assumption that the proposed transaction, as set out in note 4
below, was implemented on 1 July 2010.
3. The pro forma adjustments to the statement of financial position have been
calculated on the assumption that the proposed transaction, as set out in note 4
below, was implemented on 30 June 2011.
4. The proposed transaction relates to the sale of the Sasfin property at 29
Scott Street, Waverley, Johannesburg to Primegro for a total purchase
consideration of R167.9 million. The purchase price is to be settled in R134.3
million cash and in 6,716,000 Primegro linked units at R5.00 per linked unit.
5. A profit on disposal of R16.76 million has been recognised and capital gains
taxation of R2.2 million has been paid.
6. The cash received has been used to settle long-term funding attributable to
the Sasfin property of R100 million as well as additional interest-bearing debt
of R34.3 million. Interest paid of R14.15 million has been reduced in the
statement of comprehensive income.
7. It has been assumed that the Primegro linked units will yield 9% per annum
and, accordingly, interest received on these units of R3 million has been
recognised in the statement of comprehensive income.
8. Rental expense of R15.1 million will be incurred by Sasfin and has been
recognised in the statement of comprehensive income.
9. In the statement of comprehensive income all adjustments are considered to
have a continuing effect, except for the adjustments detailed in note 5 above.
6. Categorisation of the proposed transaction
In terms of the JSE Listings Requirements, the proposed transaction is
classified as a category 2 transaction for Sasfin and is therefore not subject
to approval by Sasfin shareholders.
Johannesburg
2 February 2012
Joint sponsor to Sasfin
Sasfin Capital
(a division of Sasfin Bank Limited)
Lead sponsor to Sasfin
KPMG Services Proprietary Limited
Attorneys to Sasfin
Edward Nathan Sonnenbergs Inc
Corporate advisor to Primegro
Sasfin Capital
(a division of Sasfin Bank Limited)
Attorneys to Primegro
Glyn Marais Incorporated
Date: 02/02/2012 16:48:01 Produced by the JSE SENS Department.
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