| Fri 16 Nov 2001, 0:00 | | Acquisitions Of Additional Properties By Primegro |
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Cash
PRIMEGRO PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/018436/06)
Share code: PMG ISIN: ZAE000022620
("Primegro")
Acquisitions Of Additional Properties By Primegro And Specific Issue For
Cash
1. INTRODUCTION
Nedcor Investment Bank Limited is authorised to announce that Primegro has
entered into various agreements in terms of which it has acquired the
following properties from IPD Group ("IPD") with effect from 1 November 2001
("the IPD acquisitions"):
* Erven 24 and 25 Lyme Park township, Bryanston ("24 Peter Place"), which
has three-year leases with three tenants including ABSA Health and ABSA
Consultants and Actuaries;
* Erf 1319 Sunninghill Extension 114 township ("LTA Building"), which has a
five-year lease with LTA Process Engineering Limited; and
* Portion 182 of Erf 11 Frankenwold, Extension 3 township, Linbro Park
("Vinimark Building"), which has a four-year lease with Vinimark
(Proprietary) Limited.
2. TERMS OF THE IPD ACQUISITION
Property Location
24 Peter Place Peter Place, Sandton
LTA Building Eglin Road, Sunninghill
Vinimark Building Corner Galaxy and Gemini Streets, Linbro Park
Aggregate purchase consideration R49 633 093
Bonds raised R24 816 546
Deferred liability R4 963 309
Primegro deferred linked units to be issued to the value of R19 853 238
Notes:
(i) The deferred linked units will be held in trust by the attorneys of
Primegro and will not immediately be listed on the JSE Securities Exchange
South Africa ("JSE"), nor will they rank for any Primegro distribution until
they are converted into listed Primegro linked units. The table below sets
out the details of the deferred linked units and their conversion dates:
First six-month period
for which a distribution
Value Participation date* will be paid commencing on
R17 172 894 1 November 2001 1 November 2001
R893 448 1 November 2002 1 November 2002
R893 448 1 November 2003 1 November 2003
R893 448 1 November 2004 1 November 2004
R19 853 238
*Note: 1. The conversion date will be the fourth day after the last date to
register for the distribution in respect of the six-month period ending
prior to the participation dates.
2. The deferred linked units will be issued at the volume weighted average
price for the 30-day period preceding the transfer date.
(ii) Primegro has recently placed, mainly on behalf of vendors, R307
million deferred linked units at R6,20 per deferred linked unit. 96% of this
placement was utilised as partial funding for the property portfolio of
Richway Retail Properties Limited ("Richway") announced in the press on 20
September 2001. The balance was utilised as partial funding for the IPD
acquisition. As part of this placing 1 932 742 deferred linked units were
placed with certain of the directors of Primegro, P Fechter, 806 452, M
Ettin, 375 430, D Greenberg, 375 430 and L Levinsohn 375 430 to part fund
the IPD acquisitions.
(iii) The balance of Primegro deferred linked units held by IPD equates to
R7 870 238.
3. RATIONALE FOR THE ipd ACQUISITION AND PROSPECTS OF PRIMEGRO
As stated in the Primegro pre-listing statement, a primary long-term
objective of Primegro was to establish a portfolio of quality, well-
positioned, income-producing properties with a value in excess of R2
billion. Primegro has since its listing in November 1999 moved aggressively
to increase the quality and size of its portfolio, as evidenced by the
acquisition of nine properties in November 2000 at a cost of R436 million
and a further four properties in July 2001 for R47 million. Primegro has
also announced the conclusion of an agreement to acquire the quality retail
portfolio of Richway for a purchase price of R1 175 million.
This drive to increase the quality and size of the portfolio is continuing
and has now led to Primegro acquiring the IPD properties, further increasing
its portfolio size from R2 340 million (including the proposed Richway
acquisition) to R2 390 million. The resultant larger market capitalisation
is intended to make Primegro's linked units more liquid, tradable and
attractive to investors.
4. FINANCIAL EFFECTS OF THE IPD ACQUISITION ON PRIMEGRO LINKED UNITHOLDERS
The financial effects of the IPD acquisition are recorded in the table
below. The table has been prepared on the following bases:
* the column headed "Before" reflects Primegro's interim results for the six
months ended 30 April 2001;
* the column headed "After" incorporates the properties' results for the six
months ended 30 April 2001 based on the assumption that the properties had
been part of the Primegro portfolio for such period; and
* being newly constructed, the properties did not earn rental income for the
six months ended 30 April 2001: in calculating the impact on earnings,
current contractually agreed rentals have been used, after de-escalating
them to create an adjusted income for the period 1 November 2000 to 30 April
2001.
Per Primegro linked unit Before the After the
acquisitions acquisitions Change
(cents) (cents) (%)
Earnings 43,0 42,9 (0,2)
Net asset value 504,0 510,0 1,0
5. INDEPENDENT VALUATION OF PROPERTY PORTFOLIO
Primegro is in the process of revaluing its entire portfolio. Initial
indications are that the valuation of the current portfolio is in excess of
the current book value. This confirms the sustainable value of the
underlying portfolio.
6. SPECIFIC ISSUE FOR CASH
Subject to the fulfilment of a 75% majority of the votes cast (either
present in person or represented by proxy) by Primegro shareholders and
Class B debenture holders at a shareholder general meeting and a Class B
debenture holder general meeting, respectively, excluding controlling
shareholders, their associates, any party acting in concert, as defined in
the Listings Requirements of the JSE ("the Listings Requirements"), and any
shareholder participating in the issue, Primegro proposes to issue, for
cash, 5 095 771 deferred linked units to two financial institutions at an
issue price of R6,20 per Primegro deferred linked unit. The reason for such
issue is to fund possible further acquisitions by Primegro, as well as to
provide additional working capital and a contingency for refurbishments.
With such a large portfolio a contingency of this nature is deemed to be
prudent.
The specific issue of shares for cash is to be made to public
shareholders, as defined by the Listings Requirements, and the issue price
of R6,20 per Primegro deferred linked unit equates to a 7,5% discount to the
30-day volume weighted average price of Primegro linked units prior to the
date on which the directors authorised such issue. This is not a true
discount to the market value of the Primegro linked units as the R6,20 price
is ex-distribution whereas the R6,70 represents a cum-distribution price for
the full six-month period. The 5 095 771 deferred linked units will not rank
for Primegro's distribution for the period ended 31 October 2001. They will
be converted to linked units after the last day to register for such
distribution. After the passing of the last date to register for the
distribution for the period ended 31 October 2001, an application will be
made to the JSE for the listing of the 5 095 771 Primegro linked units.
To the knowledge of the directors of Primegro, Primegro is not the subject
of an announced or expected take-over bid.
A circular giving, inter alia, full details of the specific issue for cash
will be posted to linked unitholders shortly.
7. FINANCIAL EFFECTS OF THE SPECIFIC ISSUE FOR CASH ON PRIMEGRO LINKED
UNITHOLDERS
In order to determine the financial effects of the specific issue for cash
and in compliance with the Listings Requirements of the JSE, the published
Primegro results for the six months ended 30 April 2001 have been re-
calculated, as if the specific issue for cash had taken place with effect
from 1 November 2000.
In determining the financial effects, the following assumptions have been
made:
* the linked units were issued at R6,20 per linked unit;
* interest on cash balances was earned at 12,5% per annum, being the rate of
interest that Primegro could have effectively earned during the period from
November 2000 to April 2001 by reducing certain of its borrowings; and
* the "After" figures include the acquisition of the Richway property
portfolio and the other acquisitions made since 30 April 2001.
Based on the aforesaid assumptions, the following would have been the
financial effects:
Before the specific After the specific
issue for cash issue for cash Change
(cents) (cents) (%)
Distribution per linked unit 43,0 42,6 (0,9)
Net asset value per linked unit 504 574 13,9
8. JSE LISTING of linked units
Application will be made to the JSE to grant a listing of the Primegro
linked units on the JSE as soon as possible after the respective conversions
of the deferred linked units into Primegro linked units as mentioned in note
(i) of paragraph 2 above and paragraph 6 above
Johannesburg
15 November 2001
Investment Bank and Sponsor
Nedcor Investment Bank
Attorneys
Jowell, Glyn & Marais Inc
(Registration number 1990/000849/21)
