| Fri 6 Sep 2002, 0:00 | | Announcement Regarding The Restructuring Of Bonatl |
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Announcement Regarding The Restructuring Of Bonatla
Bonatla Property Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/014533/06)
Share code: BNT ISIN: ZAE000013694
("Bonatla" or "the company")
ANNOUNCEMENT REGARDING THE RESTRUCTURING OF BONATLA
1. Introduction
The board of directors of Bonatla ("the board") has been considering various
options to increase the attractiveness of Bonatla shares to potential investors
and to existing shareholders. In order to achieve this goal, the current debt
funders of Bonatla have been approached for their participation in the proposed
restructure.
In terms of the proposed restructure:
- the existing ordinary shares of Bonatla will be converted into linked
units;
- R25 million will be invested in Bonatla and applied to the reduction of
debt; and
- capital repayments to the major debt funders will be suspended,
(collectively, "the restructure").
The conversion into linked units will be effected by converting the loan to
Bonatla`s wholly-owned subsidiary Bonatla Properties (Proprietary) Limited, into
variable rate subordinated debentures, which will in turn be distributed to
Bonatla shareholders via a reduction of share premium in terms of section 90 of
the Companies Act, 1973, as amended.
Each linked unit will consist of one ordinary share linked to one debenture,
which will trade as one indivisibly linked unit on the JSE Securities Exchange
South Africa ("the JSE").
2. Rationale
Property companies with an ordinary share capital structure (those previously
listed in the "Property" sector of the JSE lists) have generally not received
the same rating as Property Loan Stock companies or Property Unit Trusts as a
result of, inter alia, the fact that property companies are not structured to
distribute all of their income.
The restructure is designed to:
- enhance existing shareholder value by way of a re-rating of Bonatla, as the
company will declare and distribute the majority of pre-tax distributable income
to linked unit holders;
- reduce the company`s debt funding ratio to a more acceptable level;
- position the company for future acquisition of properties utilising a
combination of linked units and debt.
3. Suspension of capital repayments and the issue of new unlisted debentures
Property loan stock companies typically do not repay capital on their long-
term debt and as such distribute the majority of their profit to linked unit
holders, in the form of dividends and interest. In order for Bonatla to
distribute its net income to linked unit holders, it is necessary for Bonatla to
suspend a large portion of the capital repayments on its loans. BoE Bank Limited
("BoE") and Nedcor Investment Bank Limited have agreed to restructure the
payment terms in respect of amounts owing to them by Bonatla. In terms of this
restructure, capital repayments on the loans will be suspended for periods
ranging from one to two years.
Furthermore, BoE has agreed to subscribe for 55 555 555 compulsory
convertible debentures in Bonatla ("the CCD`s") at an issue price of 45 cents
each, totalling R25 million. The CCD`s will carry an interest coupon of not less
than 15% per annum for the first 12-month period from the date of issue and
thereafter a coupon equivalent to the distribution payable in respect of each
linked unit. The CCD`s may be converted at the instance of BoE after two years,
and are compulsory convertible after three years, at a 25% discount to the 90-
day volume weighted average price, subject to a minimum conversion price of 45
cents and a maximum conversion price of 60 cents. Bonatla will utilise the
proceeds of the R25 million exclusively for the purposes of repaying existing
loans from BoE.
In terms of the JSE Listing Requirements, the issue of the CCD`s is
considered a specific issue of shares for cash.
BoE has granted Bonatla a call option in respect of the CCD`s, in terms of
which all or any of the CCD`s may be acquired by Bonatla within three years from
the date of issue of the CCD`s.
BoE has also granted Bonatla a pre-emptive right, whereby if BoE wishes at
any time to sell all or any of the CCD`s or the linked units issued to it in
terms of the restructure, such CCD`s or linked units shall first be offered to
Bonatla.
4. Conditions precedent
The restructure is subject to:
- the approval of Bonatla shareholders in general meeting;
- the approval of the JSE.
The subscription by BoE for the CCD`s is contingent upon the implementation
of the restructure.
5. Pro forma financial effects of the restructure on a Bonatla ordinary share:
Pro forma Pro forma
Before After
(ordinary share) (linked unit) Change
(cents) (cents) %
Earnings per
share (after tax) 5,11 - -
Earnings per
share/linked unit
(before tax) 6,62 (0,3)3 (104,5%)
Headline earnings
per share/linked unit
(before tax) 6,62 6,24 (6,1%)
Diluted headline
earnings per
share/linked
unit (before tax) 6,35 6,16 (3,2%)
Dividend per share 2,07 - -
Distribution per
linked unit - 6,27 -
Net asset value
per share/linked unit 93,88 85,99 (8,4%)
Net tangible
asset value per
share/linked unit 89,48 85,99 (3,9%)
Number of
shares/linked units
in issue 185 096 954 191 096 954 -
Notes:
1. The after-tax earnings per share in the "Before" column is based on the
unaudited net income after tax of Bonatla for the six months ended 31 March 2002
of R4,8 million, which has been annualised to R9,5 million and on the number of
shares in issue before the restructure amounting to 185 096 954 shares.
2. The before-tax earnings per share and headline earnings per share in the
"Before" column are based on the unaudited net income before tax of Bonatla for
the six months ended 31 March 2002 of R6,1 million, which has been annualised to
R12,1 million and on the number of shares in issue before the restructure
amounting to 185 096 954 shares.
3. The earnings per linked unit in the "After" column are based on the pro
forma adjusted earnings in note 2 above and on the number of linked units in
issue after the capital restructure amounting to 191 096 954 linked units,
together with adjustments for the following:
- an interest saving of R3,6 million resulting from the repayment of bonds
of R25 million;
- an additional interest cost of R3,8 million as a result of issuing 55
555 555 CCD`s at 45 cents each to BoE, at an initial coupon of 15% per annum;
- anticipated restructure costs of R4,2 million, of which R3 million will
be settled via the issue of 6 000 000 new linked units at 50 cents each; and
- the deferred tax asset at 31 March 2002, being R8,2 million, which will
be written back after the restructure. It has been assumed that the deferred tax
asset will be written back via the income statement.
The calculation has been done on the assumption that all income will be
distributed as interest and dividends.
4. Headline earnings per linked unit in the "After" column are based on the
pro forma adjusted earnings and linked units in note 3 above, after increasing
these earnings by the estimated restructure costs and deferred tax asset, also
referred to in note 2 above.
5. Diluted headline earnings per share in the "Before" column are based on
the pro forma adjusted earnings in note 2 above, after increasing those earnings
for the interest on convertible debentures currently in issue, amounting to R160
000, and after increasing the number of shares in issue by 9 589 192 shares,
being the total of the number of convertible debentures currently in issue and
shares to be issued in terms of acquisitions during 2000.
6. Diluted headline earnings per linked unit in the "After" column are
based on the pro forma adjusted earnings in note 4 above, after increasing these
earnings for the total interest on both classes of convertible debentures
amounting to R3,9 million and, after increasing the number of linked units in
issue by 65 144 747 linked units, being the 55 555 555 convertible CCD`s to be
issued to BoE, 8 000 000 convertible debentures currently in issue and 1 589 192
shares to be issued.
7. The dividend per share in the "Before" column is based on the dividends
paid and declared in respect of the year ended 30 September 2001, amounting to
R3,7 million and on the number of shares in issue before the capital restructure
of 185 096 954 shares. The distribution per linked unit in the "After" column is
based on the pro forma adjusted headline earnings in note 4 above, and on the
number of linked units in issue after the capital restructure amounting to 191
096 954 linked units. This calculation has also been done on the assumption that
capital repayments on all existing debt will be suspended and that all income
will be distributed as interest and dividends.
8. The net asset value per share in the "Before" column has been based on
the net asset value of Bonatla at 31 March 2002 amounting to R173,6 million and
on 185 096 954 shares in issue before the capital restructure. The net tangible
asset value per share in the "Before" column has been calculated on the same
basis, after an adjustment for the deferred tax asset amounting to R8,2 million.
9. The net asset value and net tangible asset value per linked unit in the
"After" column have been based on 191 096 954 linked units and a total net asset
value and net tangible asset value of R164,2 million, comprising the following:
- the net asset value of Bonatla as at 31 March 2002, after restructure
costs and after reversing deferred tax asset; and
- the value of the new debentures as part of the linked units.
6. Opinions, recommendations and undertakings
The board has considered the terms and conditions of the restructure and the
issue of the CCD`s and recommends that Bonatla shareholders vote in favour of
the resolutions to be proposed at the general meeting. The board members intend
voting the shares under their control in favour of the resolutions to be
proposed at the general meeting.
Irrevocable undertakings, to vote in favour of the resolutions to be proposed
at the general meeting, have been obtained from 50% of those Bonatla
shareholders entitled to vote.
7. Documentation
A circular, which is subject to the approval of the JSE, encompassing all the
details pertaining to the restructure and incorporating a notice convening a
general meeting of Bonatla shareholders, will be posted to Bonatla shareholders
within 28 days.
Cape Town
30 August 2002
Corporate advisors and sponsor
Grant Thornton
Kessel Feinstein
Corporate Finance (Pty) Ltd
(Registration number 2000/002649/07)
Sponsor
Grant Thornton
Kessel Feinstein
Corporate Sponsor (Pty) Ltd
(Registration number 2000/003541/07)
Property asset manager
Catalyst
Property Asset Managers
Attorneys
Moss-Morris
Company secretary
Corporate Governance cc
1994/023438/23
Chartered Secretaries
Date: 06/09/2002 09:47:20 AM Produced by the JSE SENS Department
