| Thu 21 Jun 2012, 16:00 | | CAP - Cape Empowerment Limited - Proposed subscription by Cape Empowerment |
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CAP
CAP
CAP - Cape Empowerment Limited - Proposed subscription by Cape Empowerment
Trust Limited, a wholly owned subsidiary of CEL ("CET") for B-Linked units in
the capital of ascension properties limited
CAPE EMPOWERMENT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/001807/06)
JSE Code CAP
ISIN ZAE0001450066
("CEL", "the company" or "the group")
PROPOSED SUBSCRIPTION BY CAPE EMPOWERMENT TRUST LIMITED, A WHOLLY OWNED
SUBSIDIARY OF CEL ("CET") FOR B-LINKED UNITS IN THE CAPITAL OF ASCENSION
PROPERTIES LIMITED ("ASCENSION")
Shareholders are referred to the announcement dated 9 December 2012 wherein
they were advised of the terms and conditions of a subscription agreement,
dated 15 November 2011 ("the subscription agreement"), between CET and
Ascension and are advised that the subscription agreement has been replaced
with the amended and restated subscription agreement between Ascension and
CET, dated 22 March 2012 ("the restated subscription agreement"), on the
terms and conditions set out below.
1. INTRODUCTION, terms and rationale
1.1 Ascension (previously Grey Jade Trade and Invest 85 Proprietary Limited)
was established on 23 August 2006 as a black owned and managed property
loan stock company to invest in assets and opportunities within the
commercial property sector in South Africa, focussing on Government
tenanted commercial office buildings. The group is a founding
shareholder in Ascension.
1.2 Ascension`s property portfolio is comprised of quality assets with a
strong robust tenant base which, coupled with low vacancies and medium
to long-term expiry profiles, are expected to provide adequate stability
for the creation of earnings and capital growth over the long term.
1.3 Ascension is immediately well positioned to take advantage of
opportunities for acquisitive and organic growth. The initial
acquisitive growth will be achieved through the acquisition of selected
properties, whereas the organic growth is intended to be achieved
through the renovation of vacant portions of some of the existing
properties with the intention to secure further anchor tenants and
maximise earnings from existing properties.
1.4 During 2012 Ascension changed its capital structure to create A- and B-
Linked Units. Ascension has successfully listed on the JSE on 11 June
2012.
1.5 At the date of listing Ascension had an existing loan facility of
R40,500,000 with CET ("loan facility"). CET and Ascension entered into
the restated subscription agreement in terms whereof CET has agreed to
subscribe for 79 411 765 B-linked units at a subscription price of 51
cents per B-Linked Unit, in full discharge of the loan facility ("first
subscription").
1.6 In addition to the above CET, in terms of the restated subscription
agreement, agreed to subscribe for a further 38 885 210 B-Linked Units
at 51 cents per B-Linked Unit in full discharge of an existing
shareholder`s loan of CET to Ascension in the amount of R19 831 470
("second subscription").
1.7 On the assumption that CEL shareholders approve the resolutions at the
general meeting of shareholders referred to in paragraph 3 below, CET
will own 118 297 000 B-Linked Units, which represents 35.64% of the
total Linked Units in Ascension after the subscriptions.
1.8 The purpose of the subscriptions is to increase CET`s holdings of Linked
Units in Ascension. The proposed investment fits into CEL`s investment
criteria of cash generative businesses with good long term growth
potential. The Ascension Linked Units provides CEL with an immediate
cash return on its investment in the form of bi-annual distributions and
the board is confident that the Linked Units will deliver strong growth
in both income and capital values.
2. Pro forma financial effects
The pro forma financial effects of the subscriptions on CEL`s earnings
per share, headline earnings per share, net asset value and net tangible
asset value per share for the year ended 31 December 2011 are set out
below, are prepared for illustrative purposes only, and, because of
their pro forma nature, may not give a fair reflection of CEL`s
financial position or the effect and impact of the subscriptions on CEL.
The financial effects are the responsibility of the board of directors
of CEL.
CEL accounts for its investment in Ascension in line with its accounting
policy of carrying financial assets at fair value and these financial
effects have been prepared on that basis.
Before Adjustmen Adjusted Sub- Pro forma
t - GPI before scriptions After -
disposal adjust-ments
Earnings 8.7 (0.1) 8.4
per share
(cents) (0.2) 8.5
Headline
earnings (0.1) 7.8
per share 8.1
(cents)
(0.2) 7.9
NAV per 60.0 (0.1) 59.5
share
(cents) (0.4) 59.6
Tangible 60.0 (0.1) 59.5
NAV per
share (0.4) 59.6
(cents)
Weighted 520 284 520 284
number of
shares in
issue 520 284
(`000)
Number of 520 284 520 284
shares in
issue 520 284
(`000)
NOTES:
* Before column
- The Before column is extracted from the reviewed provisional results of
CEL for the year ended 31 December 2011.
* Adjustment - GPI disposal
- The GPI disposal adjustment column reflects the financial effects
of the disposal of 10 701 220 GPI shares by CET for a total
consideration of R25 147 867 as set out in the circular to
shareholders dated 5 March 2012 and approved by shareholders on 3
April 2012.
- For statement of financial position purposes the disposal proceeds
of R25 147 867 and the special GPI dividend of 60 cents per share
were received in cash on 31 December 2011.
- For statement of comprehensive income purposes:
the disposal proceeds of R25 147 867 were received in cash on
1 January 2011 and the special GPI dividend of 60 cents per
share was received in cash on 31 December 2011;
the disposal proceeds were invested in a money market
investment with an after tax return of 4,9%.
- The adjusted before column reflects the 31 December 2011 reviewed
provisional results, adjusted for the pro forma financial effects
of the GPI disposal.
* Subscription adjustments
- The pro forma financial effects are based on the CEL reviewed
consolidated provisional results to 31 December 2011.
- For statement of financial position purposes it is assumed that the
transaction took place on 31 December 2011
- For statement of comprehensive income purposes it is assumed that
the transaction took place on 1 January 2011, being the first day
of the reporting period.
- For statement of comprehensive income purposes it is assumed that
the B-Linked Units would have yielded a return equal to the
distributable income of Ascension for the 2011 financial year. The
reduction in investment income of approximately R149 000 resulted
because the distributions for the period would have been less than
the interest earned on the loan.
- There is no tax effect as CET has an assessed loss.
- Transaction costs of R368 523 have been taken into account and
credited to cash and cash equivalents.
- Other than for transactions costs, the adjustments are expected to
have a continuing effect on the results of CEL.
3. Condition
The subscriptions are subject to the shareholders of CEL passing the
necessary resolutions to approve the transaction as required in terms of
the JSE Listings Requirements at the general meeting to be held on 19
July 2012.
4. CATEGORISATION AND GENERAL MEETING
THE FIRST SUBSCRIPTION IS CATEGORISED AS A CATEGORY 1 TRANSACTION AND THE
SECOND SUBSCRIPTION IS CATEGORISED AS A CATEGORY 2 TRANSACTION. THE JSE
REGARD THE SUBSCRIPTIONS AS RELATED PARTY TRANSACTIONS BY CEL. THE
SUBSCRIPTIONS REQUIRE SHAREHOLDER APPROVAL AT A GENERAL MEETING AND THE
SUBMISSION TO THE JSE AND SHAREHOLDERS OF THE FAIRNESS OPINION OF AN
INDEPENDENT PROFESSIONAL EXPERT ACCEPTABLE TO THE JSE. CEL HAS APPOINTED
MAZARS CORPORATE FINANCE (PTY) LTD ("MAZARS") AS INDEPENDENT PROFESSIONAL
EXPERT, AND THEY HAVE DECLARED THAT THE TERMS OF THE SUBSCRIPTIONS ARE
FAIR AS FAR AS CEL SHAREHOLDERS ARE CONCERNED.
A circular containing further details of the subscriptions, a notice to
convene a general meeting of CEL shareholders to be held on 19 July 2012
to approve the subscriptions, the abridged valuation report of an
independent valuer on the Ascension property portfolio and the fairness
opinion of Mazars will be posted to shareholders today.
Cape Town
21 June 2012
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Legal advisors
Cliffe Dekker Hofmeyr Inc.
Independent professional expert
Mazars Corporate Finance (Pty) Ltd
Independent valuer
Peter Parfitt
Quadrant Properties (Pty) Ltd
Date: 21/06/2012 16:00:01 Produced by the JSE SENS Department.
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