| Wed 25 Sep 2002, 17:31 | | Rentsure Holdings Limited - Announcement |
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Rentsure Holdings Limited
Registration number 1946/023539/06
Share code: RNT
ISIN code: ZAE000012811
("Rentsure")
ANNOUNCEMENT REGARDING THE DISPOSAL BY RENTSURE`S SUBSIDIARY, RENTMEESTER
ASSURANCE LIMITED ("RAL"), OF CERTAIN OF ITS PROPERTIES TO DAISY STREET
INVESTMENTS 127 (PROPRIETARY) LIMITED ("DAISY STREET")
INTRODUCTION
Shareholders are referred to the cautionary announcements dated 25 June 2002, 2
August 2002 and 17 September 2002. Quaestor Capital (Proprietary) Limited is
authorised to announce that an agreement has been concluded between RAL and
Daisy Street in terms of which RAL will dispose of certain of its properties
("the properties") to Daisy Street ("the disposal").
SALIENT TERMS OF THE DISPOSAL
The salient terms of the disposal are as follows:
the purchase consideration is R91 000 000 ("the purchase consideration"), to be
discharged as set out below;
the effective date is 1 October 2002 ("the effective date");
certain leasable portions of the property known as Rentmeesterpark, which forms
part of the properties, will be leased to RAL for a period of 10 years from the
effective date and the rental will escalate annually at a rate of 9%;
certain other leasable portions of the properties will be leased to RAL for a
period of 3 years from the effective date and rentals will escalate annually at
rates varying between 9% and 10%;
RAL has furnished Daisy Street with warranties customary to a transaction of
this nature; and
Daisy Street will pay occupational interest to RAL calculated at 10% per annum,
compounded monthly in arrears, on the purchase consideration between the
effective date and the date on which the transfer of the properties into the
name of Daisy Street takes place ("the transfer date").
RATIONALE FOR THE DISPOSAL
The board of directors of RAL has approved the disposal for the following
reasons:
to reduce RAL`s exposure to properties and thereby enhance its asset
distribution;
to realise a significant portion of RAL`s current property portfolio in cash in
order to increase future returns on its asset spread; and
to redistribute, with reference to the property-based instruments forming part
of the purchase consideration , its investment risk profile over a significantly
larger property portfolio (relative to the properties) with the possibility of
exiting the entire property portfolio sold in terms of the disposal within 3
years from the transfer date.
CONDITIONS PRECEDENT
The disposal is subject to, inter alia, the following conditions precedent:
the acquisition of Daisy Street by Fairvest Property Holdings Limited
("Fairvest") and the subsequent assumption by Fairvest of all obligations of
Daisy Street in terms of the disposal;
the relevant statutory and regulatory approvals to be obtained by not later than
23 December 2002, including approval by Rentsure and Fairvest shareholders in
general meeting in compliance with the provisions of the Listings Requirements
of the JSE Securities Exchange South Africa ("JSE") applicable to Rentsure and
Fairvest, respectively, pursuant to the disposal, as well as approval by the
Competition Commission,;
the delivery of certain guarantees by Fairvest in respect of the disposal; and
the satisfactory conclusion of a due diligence investigation by RAL in respect
of Daisy Street and Fairvest within 30 days from 20 September 2002.
Shareholders are also referred to the cautionary announcement published by
Fairvest on 13 September 2002.
DISCHARGE OF PURCHASE CONSIDERATION
The purchase consideration will be discharged as follows:
an amount of R30 300 000 will be paid to RAL in cash on the transfer date;
the balance of the purchase consideration will be discharged by the issue by
Fairvest to RAL of:
* 21 566 667 convertible redeemable debentures ("CRDs") at R1.50 each to the
value of R32 350 000; and
* 18 900 000 compulsory convertible debentures ("CCDs") at R1.50 each ("the par
value") to the value of R28 350 000;
(collectively "the debentures");
the debentures will carry a coupon rate of 9.39% per annum, compounded quarterly
in arrears, which will be payable as follows:
* 30% by the issue by Fairvest of new CRDs; and
* 70% in cash.
SALIENT TERMS AND CONDITIONS OF THE DEBENTURES
1. CCDs
RAL has the option to convert the CCDs into Fairvest Linked Units
("LUs"), on a one-for-one basis, at any time between 24 and 36 months after the
last day of the calendar month during which the transfer date occurs ("the
commencement date"), provided that:
if the market price of the LUs is less than R1.50 ("the shortfall"), then
Fairvest shall, at its election, issue so many further LUs at the market price
as will be equal to the amount of the the shortfall and settle the shortfall to
RAL in cash; or
if the market price of the LUs is more than R1,50, but not more than R1,75,
Fairvest shall issue LU`s on a 1-for-1 basis in exchange for the CCDs; or
if the market price of the LUs is more than R1,75, Fairvest shall issue a
reduced number of LUs as determined in accordance with an agreed formula.
The CCDs that have not been converted into LUs in terms of the above will be
compulsory convertible into LUs, on mutatis mutandis the same terms and
conditions as set out above, 36 months after the commencement date.
2. CRDs
The CRDs will, at the election of RAL, be redeemable in cash at the par value
thereof three years after the commencement date or convertible into LU`s on
mutatis mutandis the same conditions as applicable to the conversion of the
CCDs.
FINANCIAL EFFECTS OF THE DISPOSAL
The pro forma financial effects of the disposal on a Rentsure shareholder based
on the results of the six months ended 31 December 2001, are as follows(for
illustrative purposes only):
Unaudited Unaudited % change
(Before)1 (After)
(cents) (cents)
Loss per share (23.98) (44.96)2 (87.49)4
Headline loss per share (23.98) (21.60)2 9.92
Net asset value per share 139.00 118.353 (14.86)
Net tangible asset value per share 113.00 92.343 (18.28)
Notes:
Extracted from the unaudited financial statements for the six months ended 31
December 2001.
Based on 40 437 933 Rentsure ordinary shares in issue throughout the entire six
months period ended 31 December 2001, the disposal having been implemented on 1
July 2001 and the cash portion of the purchase consideration having been
invested at a pre-tax interest rate of 12% per annum.
Based on 40 437 933 Rentsure ordinary shares in issue on 31 December 2001 and
the disposal having been implemented on 31 December 2001.
Includes the effect of a pro forma capital loss of R9 445 928 realised pursuant
to the disposal.
CIRCULAR TO SHAREHOLDERS
A circular to Rentsure shareholders, subject to the approval of the JSE,
incorporating details of the disposal and including a notice of general meeting
of shareholders, will be posted to shareholders within 28 days of this
announcement.
Pretoria
25 September 2002
TRANSACTION ADVISOR AND TRANSACTION SPONSOR
Quaestor Capital (Pty) Ltd
Registration number 1991/007330/07
Date: 25/09/2002 04:00:00 PM Produced by the JSE SENS Department
