| Mon 19 Nov 2001, 0:00 | | Glocash - Acquisition |
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Glocash Investments Limited
(Registration number 1998/005011/06)
Share code GCH ISIN ZAE000025771
("Glocash" or "the Company")
ACQUISITION BY GLOCASH OF THE ENTIRE ISSUED SHARE CAPITAL OF AND LOAN
ACCOUNT CLAIMS AGAINST DAISY STREET INVESTMENTS 172 (PROPRIETARY) LIMITED
("DAISY") ("THE ACQUISITION")
1. Introduction
LPC Manhattan is authorised to announce that Glocash, which is currently
a cash shell, has, subject to the conditions precedent set out in paragraph
9 below, acquired, with effect from 1 October 2001 ("the effective date"),
the entire issued share capital of and loan account claims against Daisy,
together with a property portfolio, property administration business and 12
820 512 shares in Bonatla Property Holdings Limited ("Bonatla shares"), for
a total gross consideration of R344,3 million, including the assumption of
R90,9 million pertaining to existing bond finance.
The total net consideration of R253,4 million is to be settled by the
issue of 95 million linked units in Glocash at 150 cents per linked unit
(equating to R142,5 million), to the vendors of the respective properties
and property owning companies comprising the property portfolio ("the
property vendors"), 16,7 million linked units in Glocash at par to the Daisy
vendor, Nikitas Ghikas Vontas ("Vontas"), R67,4 million in cash by the
raising of new bonds over certain properties, and the raising of short and
long-term liabilities amounting to R43,2 million.
The gross purchase consideration of R344,3 million comprises the
following:
R million
- property portfolio 331,0
- property administration business 3,3
- Bonatla shares 10,0
Total gross purchase consideration 344,3
For the purposes of determining the number of linked units to be issued
to Glocash shareholders in terms of the acquisition agreement, Glocash will
be valued at twice its net asset value, which net asset value comprises cash
resources of approximately R7,450 million. It has accordingly been valued at
R14,9 million ("the deemed value").
2. New nature of business of Glocash
Glocash, which is to be renamed Fairvest Property Holdings Limited
("Fairvest"), will be a property loan stock company which will provide
investors with an opportunity to derive a regular, sustainable and growing
income stream from a high-yielding portfolio of commercial, retail and
industrial properties.
Fairvest's objective is to ensure that its property investments achieve
an appropriate balance between risk and return. To this end it intends to
maintain a geographic spread in the physical location of its investments
between the greater urban areas of Johannesburg/Pretoria, Cape Town and
Durban, together with certain selected country towns.
To ensure the sustainability and quality of the income stream, at least
65% of the income derived from the retail property investments will emanate
from major national tenants and established professional firms. In
assembling the property portfolio, Daisy (which will become a wholly-owned
subsidiary of Fairvest), acquired properties displaying a lease expiry
profile such that leases terminating in any one year would not represent
more than 24% of the gross income for that year.
3. Rationale for the acquisition
Glocash is a cash shell and was transferred to the "Cash Companies" sector
of the JSE Securities Exchange South Africa ("JSE") List with effect from 21
August 2000 and has been suspended since 2 July 2001. In order to remain
listed, the Company had been seeking the injection of suitable assets that
satisfy the conditions for listing. The directors of Glocash are of the
opinion that the property portfolio that is being acquired, will deliver
sustained growth and profitability, thereby increasing value to Glocash's
shareholders.
Glocash will remain suspended until its proposed re-listing in the "Real
Estate - Property Loan Stock" sector of the JSE List on Thursday, 20
December 2001.
4. Restructuring of the share capital of Glocash into linked units
The ordinary share capital of Glocash is to be restructured into linked
units comprising one ordinary share with a par value of 1 cent per share
("restructured shares") irrevocably linked to a variable rate unsecured
debenture with a nominal value of 1 cent per debenture ("debenture"). The
linked units are to be issued to the property vendors, at an issue price of
150 cents per linked unit.
The restructured shares arise, inter alia, from the consolidation of the
existing issued ordinary share capital of 881 251 104 shares by an effective
factor of 88,71656. After the consolidation, 9 933 333 restructured shares
will be in issue.
Glocash shareholders will accordingly be issued the same number of
debentures as the restructured shares by way of a capitalisation issue from
the share premium account which will result in 9 933 333 linked units based
on the deemed value at an effective issue price of 150 cents per linked
unit.
5. Settlement of the net purchase consideration
The net purchase consideration of R253,4 million attributable to Vontas,
the property vendors and the vendors of the Bonatla shares is to be settled
as follows:
R million
95 million linked units (to be issued at 150 cents
per linked unit)* 142,5
16,7 million linked units to be issued at par 0,3
Issue of redeemable debentures
(to be settled within 12 months from issue) 31,0
Cash (by raising bonds over certain properties) 67,4
Assumption of liabilities to be settled by the
registration of bonds over certain properties 6,5
Other short-term loans (to be settled within
12 months from raising of loan) 5,7
Total net purchase consideration 253,4
Assumption of existing bonds 90,9
Total gross value of assets acquired by Glocash 344,3
*The linked units include 18,7 million linked units issued to one of the
property vendors to secure the net cash flows (after payment of all
expenses) of the properties acquired from such vendor. These units are being
put to Vontas at 150 cents per unit in terms of an agreed schedule, over a
period of three years from the date of transfer of such properties. Glocash
is acting as surety to this claim and will be obliged to acquire such linked
units from the vendor to the extent that Vontas is unable to do so. The
Company will have recourse against Vontas for any losses suffered as a
result.
The JSE has, subject to the passing and registration, when applicable, of
the special and ordinary resolutions to be proposed at the general meeting
to be held on 10 December 2001, granted approval to list the 121,6 million
linked units (including the 9,9 million linked units to be issued to Glocash
shareholders) on the "Real Estate - Property Loan Stock" sector of the JSE
List. Of this amount, a minimum of 98,3 million linked units will be listed
on Thursday, 20 December 2001 and the balance (23,3 million linked units),
will be listed on either Thursday, 20 December 2001, or the date on which
the transfer of the underlying properties is effected, whichever is the
later.
6. Financial effects of the acquisition
The pro forma financial effects are based on the income statement of
Glocash before the acquisition for the five months ended 31 August 2001,
grossed up to a full year, the pro forma historical financial information on
the assets acquired by Daisy compiled from audited information in respect of
the year ended 28 February 2001, and the anticipated net asset value of
Glocash as at the effective date. The pro forma financial effects are
provided for illustrative purposes only to show the effect of the
acquisition by Glocash of Daisy, as if it had been effective for a 12 month
period and, because of its nature, may not give a fair reflection of the
results of Glocash after the acquisition.
Pro forma Pro forma
Notes before after Change
Description (cents) (cents) (%)
Earnings per linked unit 1, 2 9,4 10,7 13,3
Headline earnings per linked unit 1, 2 9,4 10,7 13,3
Net asset value per linked unit 3 75,0 121,9 62,6
Net tangible asset value per
linked unit 4 75,0 119,3 59,1
Number of linked units in issue 9 933 333 121 583 495
Notes:
1. In order to provide for a meaningful comparison with earnings
attributable to linked unit holders, the earnings per linked unit in the
"before" column are based on the net income before taxation of Glocash for
the five months ended 31 August 2001 which has been grossed up to a full
year amounting to R936 000 and on the number of linked units in issue after
the share capital restructure amounting to 9 933 333 linked units.
2. The earnings per linked unit in the "after" column have been based on
the pro forma adjusted earnings of Glocash referred to in paragraph 1 above,
together with the adjusted historical earnings of the assets acquired,
reflecting combined earnings before taxation of R12,9 million and is based
on 121 583 495 linked units which will be in issue after the acquisition
and share capital restructure.
3. The net asset value in the "before" column has been based on the
anticipated net asset value of Glocash as at the effective date amounting to
R7,450 million and 9 933 333 linked units in issue after the share capital
restructure. The net asset value in the "after" column has been calculated
with reference to the assets acquired in terms of the acquisition and the
121 583 495 linked units which will be in issue.
4. Included in the net asset value per linked unit in the "after" column,
is an amount of R3,3 million relating to the premium on the acquisition of
the property administration business, which has been excluded in the net
tangible asset value per linked unit calculation.
7. Profit forecast
The profit forecast in respect of the 12 month period ending 30 September
2002 is set out below.
R'000
Gross revenue 62 710
Operating expenditure (14 156)
Net operating income 48 554
Dividends received 256
Net interest paid on mortgage bonds
and redeemable debentures (25 181)
Net income 23 629
Interest distribution to linked unit holders 23 373
Net income before and after taxation 256
Dividend distribution to linked unit holders 256
Retained income -
Total forecast distribution to linked
unit holders 23 629
Number of linked units in issue
on listing (millions) 121,6
Earnings per linked unit (cents) 19,4
Forward yield per linked unit, based on
an issue price of 150 cents per linked unit 13%
8. Put option - undertakings by Glocash and Vontas in favour of Glocash
shareholders
8.1 A Glocash shareholder will have the right ("the put option"), on written
notice given to Glocash by no later than 30 November 2002 ("the sale date"),
to require the company to purchase from such shareholder up to 50% of the
linked units registered in such shareholder's name at both the record date,
being 28 December 2001 and the sale date. The repurchase price per linked
unit will be 165 cents, less the aggregate of all interest payments and
dividend distributions received by such shareholder in respect of the
relevant linked unit during the period from the effective date to the sale
date.
8.2 Every Glocash shareholder who gives written notice to Glocash, in terms
of paragraph 8.1 above, shall automatically be deemed to have sold to
Vontas, who in turn shall be deemed to have purchased from such shareholder
the same number of linked units as are the subject of the notice given to
Glocash on the same terms and conditions.
8.3 Any Glocash shareholder who disposes of all or part of his aforesaid
linked units prior to the sale date, will not be entitled to exercise the
put option in respect of the balance of his linked units in terms of the
undertakings.
9. Conditions precedent
The acquisition is subject to the fulfilment of the following conditions
precedent:
9.1 The passing of the resolutions by the Glocash shareholders in general
meeting which are required to give effect, inter alia, to the acquisition
and the share capital restructure, and the registration thereof by the
Registrar of Companies, where applicable.
The resolutions include, inter alia, approval of:
- the acquisition;
- the restructuring of the share capital of Glocash into linked units;
- the change of name from Glocash to Fairvest Property Holdings Limited; and
- the reconstitution of the board of directors of Glocash.
9.2 The approval by the JSE of the listing of the linked units which are to
be allotted and issued to Glocash shareholders, Vontas and the property
vendors.
9.3 The obtaining of any other regulatory approvals which may be required.
Should any of the conditions precedent not be fulfilled by 31 December
2001, or such later date as the parties may agree to in writing, the
agreement pertaining to the acquisition shall lapse and be of no further
force and effect.
10. Salient dates 2001
Acquisition circular incorporating revised listing
particulars posted to Glocash shareholders 16 November
Last date to lodge proxies for the general meeting of Glocash
shareholders at 10:00 8 December
General meeting of Glocash shareholders to be held at 10:00 10 December
Results of general meeting announced in the press 11 December
Last day to trade in Glocash ordinary shares 19 December
Listing of linked units in the "Real Estate - Property Loan Stock"
sector of the JSE List from the commencement of business 20 December
Publication of abridged listing particulars in the press 20 December
Change of name of company effective from the
commencement of business 20 December
Record date for the acquisition 28 December
Glocash shareholders recorded in the register at this
date will be entitled to exercise the put option discussed
in paragraph 8 above
Posting of new linked unit certificates and updating of
safe custody accounts 31 December
These dates are subject to change. Any change will be announced in the
press.
11. No change of control
There will be no change of control in Glocash as a consequence of the
acquisition as no single shareholder will own 35% or more of the linked
units in issue and accordingly an offer will not be made to Glocash
shareholders.
12. Opinions, recommendations and undertakings
The directors of Glocash are of the unanimous opinion that the terms of
the acquisition are fair and reasonable to Glocash shareholders and
recommend that Glocash shareholders vote in favour of the special and
ordinary resolutions necessary to implement the acquisition.
The directors of Glocash who have direct and indirect interests in the
issued share capital of Glocash support and intend to vote in favour of the
resolution required to implement the acquisition and all the related
resolutions pertaining thereto.
13. Circular to shareholders
A circular to Glocash shareholders providing details of the acquisition
including a revised listing particulars statement, was mailed to
shareholders on 16 November 2001 and can be viewed on www.iproxy.co.za with
effect from 19 November 2001.
Johannesburg
19 November 2001
Joint corporate advisers to Daisy
Grant Thornton Kessel Feinstein
Corporate Finance (Pty)Ltd
(Registration number 2000/002649/07)
LPC Manhattan Sponsors (Pty) Ltd
(Registration number 1999/024792/07
Sponsor
LPC Manhattan Sponsors (Pty) Ltd
(Registration number 1999/024792/07
Attorneys
Moss Morris INC.
(Registration number 1944/008751/21)
Reporting accountants
Grant Thornton Kessel Feinstein
Chartered Accountants (Pty)Ltd
Corporate advisers to Glocash
Global Capital (Pty)Ltd
(Registration number 1998/022057/07
