| Fri 31 May 2002, 0:00 | | Redefine Announcement Regarding the Acquisition of |
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Redefine Income Fund Limited
(Incorporated in the Republic of South Africa)
(Registration No.1999/018591/06)
JSE Share Code: RDF ISIN: ZAE000023503
("Redefine")
ANNOUNCEMENT REGARDING THE ACQUISITION OF PROPERTIES AND LINKED UNITS, THE
CONCLUSION OF A MANAGEMENT AGREEMENT AND THE APPOINTMENT OF DIRECTORS
1. Introduction
1.1. Redefine, through its wholly owned subsidiary Outward Investments (Pty)
Ltd ("Outward"), owns a portfolio of listed securities focused exclusively
on the property sector of the JSE Securities Exchange South Africa ("JSE")
and a portfolio of commercial properties covering the retail, office and
industrial sectors.
1.2. Further to the cautionary announcement published by Redefine on 8 May
2002, Corpcapital Corporate Finance is authorised to announce that Outward
has:
* ("Redefine")concluded an agreement (the "acquisition") with Solomon
Brothers Property Holdings (Proprietary) Limited and Kovacs Investments 238
(Proprietary) Limited (collectively "Solomon Brothers") for the acquisition
of linked units in the Arnold Property Fund Limited and a portfolio of
commercial properties;
* ("Redefine")concluded an asset management agreement (the "management
agreement") in terms of which Combined Projects (Proprietary) Limited, the
operating subsidiary of Solomon Brothers, shall asset manage all of
Outward`s Western Cape properties; and
* ("Redefine")proposed the appointment of David and Jeffrey Solomon ("the
new directors") to the board of Redefine with effect from 1 July 2002.
1.3. David, Irving and Jeffrey Solomon established Solomon Brothers in 1979.
From their first commercial property acquisition in that year, they have
grown to become one of the largest, privately owned, property groups in Cape
Town specialising in property investment, management and development (with
the emphasis on urban renewal). They hold prominent positions on various
local authority forums.
2. ("Redefine")The acquisition
2.1. In terms of the acquisition agreement, Outward will acquire as one
indivisible transaction and with effect from 1 July 2002:
* ("Redefine")the rental enterprise businesses (which businesses
comprise, inter alia, the rental earning properties known as Fountain Place,
Old Town Square, Bromgood Studios, Rodene Studios, the Chambers and Parking
on Pepper) all of which are situated in Cape Town (the "properties"); and
* ("Redefine")20 million linked units in the Arnold Property Fund Limited
(the "Arnold Property Fund linked units").
2.2. The aggregate purchase consideration in respect of the acquisition is
R133 million which is payable as follows:
* ("Redefine")R80 million in cash; and
* ("Redefine")R53 million by the issue of Redefine linked units at a
price of R2.15 per linked unit.
2.3. The acquisition is subject to warranties that are standard for a
transaction of this nature.
3. Rationale for the acquisition
("Redefine")The Board of directors of Redefine is of the view that the
following benefits should accrue to Redefine:
* ("Redefine")the acquisition of the Arnold Property Fund linked units
will be earnings enhancing, given current market conditions, and will
improve the balance of direct versus indirect property holdings within
Redefine`s total asset base. In addition to the anticipated earnings growth
in Arnold Property Fund, its underlying properties are of a complimentary
nature to those held by Redefine.
* ("Redefine")the acquisition of the properties represents the expansion
of Redefine`s geographic footprint outside Gauteng. The Western Cape
property sector offers distinct opportunities for both solid earnings growth
and capital appreciation and Redefine intends achieving an investment
profile in the region in the medium term.
* ("Redefine")("Redefine")* the proposed appointment of the new directors
to the Redefine Board as well as the conclusion of the management agreement
will supplement Redefine`s existing knowledge of the Western Cape property
market and provide the impetus to achieving its medium term objectives for
the region.
4. Conditions precedent
4.1. The acquisition is subject to, inter alia, the following conditions
precedent:
* ("Redefine")the securing, to the extent necessary, of the requisite
approvals from the JSE and the Securities Regulation Panel to the conclusion
and implementation of the acquisition agreements; and
* ("Redefine")the securing, to the extent necessary, of all approvals and
consents for the acquisition required in terms of the Competition Act, 89 of
1998.
4.2. All of the conditions precedent must be fulfilled or waived by no later
than 1 August 2002, or such later date as agreed between the parties.
5. ("Redefine")Financial Effects of the Acquisition
("Redefine")The pro forma financial effects of the acquisition on the
historical earnings, headline earnings and net asset value per Redefine
linked unit are illustrated in the table below:
Cents per Cents per
linked unit linked unit
Cents per after after Cents per
linked unit acquisition acquisition linked unit Total
before of the of linked after the %
acquisition properties units acquisition
change
Historical
earnings (28,53) (1) N/a (2) (25,81) (3) N/a (2) N/a
Historical
headline earnings 18,22 (1) N/a (2) 18,59 (3) N/a (2) N/a
Historical
net asset value 228,69 (1) 227,42 (4) 230,08 (4) 228,74 (4) -
(1) The historical earnings and headline earnings per Redefine linked unit
as set out in the "before acquisition" column of the table, are based upon
Redefine`s interim results for the six month period ended 28 February 2002.
The historical net asset value per Redefine linked unit as set out in the
"before acquisition" column of the table, is based upon Redefine`s interim
balance sheet at 28 February 2002, in which both the listed security
portfolio and the direct property portfolio are stated at their fair value.
(2) The historical earnings and headline earnings per Redefine linked unit
as set out in the "after acquisition of the properties" column of the table
cannot be meaningfully calculated as the properties were mainly vacant in
the previous financial year whilst renovations and upgrading was being
undertaken. These vacancies have either been leased to new tenants or secure
head leases have been established to ensure future yields are achievable.
Consequently, the historical earnings and headline earnings per Redefine
linked unit as set out in the "after acquisition" column of the table are
not capable of meaningful calculation.
(3) The historical earnings and headline earnings per Redefine linked unit
as set out in the "after acquisition of linked units" column of the table,
are based upon the assumption that the Arnold Property Fund linked units
were acquired on 1 September 2001 and the acquisition was settled by payment
of the requisite cash amount and issue of Redefine linked units, on that
date. The income on the Arnold Property Fund linked units was based on the
distribution from 1 September 2001 (the date of listing) to 31 December 2001
and was "grossed up" for a period of six months. This amount may not be
indicative of future distributions made by Arnold Property Fund.
(4) The historical net asset value per Redefine linked unit as set out in
the "after acquisition of the properties" column, the "after acquisition of
linked units" column and the "after acquisition" column of the table, are
based upon the assumption that the properties and Arnold Property Fund
linked units were acquired on 1 September 2001 and the acquisition was
settled by payment of the requisite cash amount and issue of Redefine linked
units, on that date.
The anticipated income from the properties as well as the distribution
on the Arnold Property Fund linked units for the year ending 31 August 2003
are projected to contribute headline earnings of 38,20 cents per Redefine
linked unit to be issued in terms of this acquisition.
6. Circular
A circular containing the details of the acquisition will be sent to
Redefine linked unit holders within 28 days of this announcement.
7. Extension of Cautionary Announcement
Redefine linked unit holders are referred to the cautionary announcement
published by Redefine on 8 May 2002 and are advised that Redefine is
involved in other negotiations which, if successfully concluded, may have a
material effect on the price of Redefine linked units. Unit holders are
therefore advised to continue to exercise caution in dealing in their linked
units.
Johannesburg
31 May 2002
Corporate advisor and sponsor
Corpcapital Corporate Finance
a sponsor registered with the
JSE Securities Exchange South Africa
Reporting accountants and auditors
Fisher Hoffman PKF (Jhb) Inc.
Chartered Accountants (SA)
Registered Accountants & Auditors
(Registration number 1994/001166/21)
Legal Advisor
Corpcapital
Transaction Support
Date: 31/05/2002 01:28:45 PM Produced by the SENS Department
