| Fri 5 Dec 2003, 16:53 | | ACQUISITION OF ENTIRE PROPERTY PORTFOLIO OF SHOPS |
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APEXHI PROPERTIES LIMITED - ACQUISITION OF ENTIRE PROPERTY PORTFOLIO OF SHOPS
FOR AFRICA LIMITED, GENERAL ISSUE OF UNITS FOR CASH
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
ApexHi Properties Limited
(Registration No. 1999/000238/06)
JSE Share codes: APA
ISIN codes: ZAE000033064
JSE Share codes: APB
ISIN codes: ZAE000033072
("ApexHi")
ACQUISITION OF ENTIRE PROPERTY PORTFOLIO OF SHOPS FOR AFRICA LIMITED, GENERAL
ISSUE OF UNITS FOR CASH AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Java Capital is authorised to announce that ApexHi has concluded an
agreement with Shops for Africa Limited ("Shops") for the acquisition of
its entire property portfolio(the "acquisition" or the "Shops
acquisition").
In addition, ApexHi has agreed to issue units for cash, pursuant to a
general authority granted to it.
2. The Acquisition
In terms of the acquisition agreement, ApexHi will acquire, with effect
from 1 April 2004, the entire property portfolio of Shops, comprising the
property letting businesses conducted in respect of the following shopping
centres:
Golden Walk Shopping Centre, Germiston
Maynard Mall, Cape Town.
Alberton Mall
Cleary Park Shopping Centre, Port Elizabeth
Sammy Marks Square (Portion 3), Pretoria
Kopanong Shopping Centre, Hammanskraal
Shoprite Lambton, Germiston
Meadow Point Shopping Centre, Soweto
Protea Point Shopping Centre, Soweto
Dobson Point Shopping Centre, Soweto
Pimville Shopping Centre, Soweto
Isipingo Junction, Durban
Beares, Wynberg
Woolworths, Wynberg
The acquisition is subject to various conditions precedent, including the
approval of the acquisition by all relevant regulators, including the
competition authorities, and the approval of the majority of unit holders
in Shops being obtained. In addition, the acquisitions of Golden Walk
Shopping Centre and Woolworths, Wynberg are subject to the waiver of pre-
emptive rights by certain of the tenants.
The purchase consideration payable in respect of the acquisition is
R415 311 675, to be settled as follows:
* R240 million in cash, to be utilised by Shops to settle all of Shops"
outstanding debt obligations and costs of the disposal; and
* the issue of 12 986 050 ApexHi A units ("A units") and 12 986 050
ApexHi B units ("B units") at a combined issue price (for one A unit
and one B unit)("combined unit") of R13,50 ("consideration units"),
which equates to 18 A units and 18 B units for every 100 Shops units
currently in issue.
3. Distribution Of Apexhi Units To Shops Unit Holders
Shops has undertaken to distribute all of the consideration units to its
unit holders by no later than 1 November 2004, save for 1 111 112 A units
and 1 111 112 B units which Shops is entitled to realise to settle any
additional costs not covered by the cash portion of the purchase price.
4. Nature Of ApexHi"s Business
ApexHi is a property loan stock company listed on the JSE which invests in
high-yielding properties in secondary locations with sound tenant profiles.
ApexHi currently has a portfolio of 223 properties. After the acquisition
its portfolio will comprise 237 properties.
5. Rationale For The Acquisition And Nature Of The Shops For Africa Properties
The properties being acquired from Shops are high-yielding shopping centres
with a wide geographic spread. The centres service the middle to lower-
income groups of the population in high-growth secondary locations. The
properties have been acquired with low vacancies and the tenants comprise
predominantly national or regional A-Grade tenants.
The following benefits are expected to accrue to ApexHi as a result of the
acquisition:
* The acquisition will enhance the size, diversity and geographic spread
of ApexHi"s property portfolio, thereby minimising the risks
associated with any one property.
* ApexHi"s current property portfolio comprises approximately 53%
offices, 22% industrial and 25% retail. The acquisition will increase
ApexHi"s retail exposure, resulting in a lower CBD office component.
After the acquisition the portfolio will comprise approximately 33%
retail, 47% offices and 20% industrial properties;
* The acquisition is revenue-enhancing for ApexHi;
* The distribution of the consideration units by Shops to its unit
holders will further improve the liquidity of ApexHi"s A units and B
units.
6. Irrevocable Undertakings
ApexHi has secured irrevocable undertakings to vote in favour of all
resolutions necessary to ratify the acquisition at the general meeting of
Shops unit holders from in excess of 50% of Shops unit holders.
7. General Issue Of Units For Cash
Unit holders are advised that ApexHi has agreed to issue an additional
9 680 407 A units and 9 680 407 B units to a number of public unit holders
(who are not related parties) pursuant to a general authority to issue
units for cash granted to the board by unit holders at the annual general
meeting held on 17 September 2003. Such additional units cumulatively
comprise 6.13 % of the aggregate of the A units and B units in issue as at
the date of the announcement and the A units and B units to be issued
pursuant to the acquisition set out in paragraph 2 above.
The units are to be issued at a combined price of:
* R13,85 in respect of 1 132 000 A and 1 132 000 B units; and
* R14,10 in respect of 8 548 407 A and 8 548 407 B units.
The issue prices were determined by the directors on 7 November 2003 and
11 November 2003, respectively and are at a discount of 4% and 5%,
respectively, to the weighted average traded combined price of ApexHi"s A
and B units for the 30 business day period prior to such dates. The new
units will rank pari passu with the existing units in issue from the date
of their issue, which in respect of 1 132 000 of the units was 28 November
2003 and in respect of 8 548 407 of the units is anticipated to be on or
around 10 December 2003.
8. Disposal Of CBD Properties
In addition, ApexHi has disposed of four of its Johannesburg CBD properties
to the Gauteng Provincial Government for a total consideration of R154,5
million in cash (the "disposals"). The only outstanding condition precedent
to the disposals is the approval of the Competition Commission being
obtained.
9. Utilisation Of Cash Raised
It is ApexHi"s intention to utilise the capital raised from the issue for
cash and cash proceeds of the disposals to settle the cash portions of the
purchase prices payable in respect of the Shops acquisition and the
acquisitions of Game Klerksdorp and the Public Works building, North End,
Port Elizabeth.
10. Financial Effects Of The Acquisition And The General Issue Of Units For
Cash
The pro forma historical financial effects of the general issue of units
for cash and the acquisition set out in the table below have been prepared
for illustrative purposes only to provide information on how the general
issue of units for cash and the acquisition may have impacted on ApexHi.
Because of its nature, the pro forma historical financial effects per unit
may not give a fair reflection of ApexHi"s financial position after the
general issue of units for cash and the acquisition or the effect of the
general issue of units for cash and the acquisition on future earnings.
For purposes of the table below, a "combined unit" comprises one A unit and
one B unit.
Before the After the After the
issue of general issue of %
units for issue of units for Change
cash and units for cash and
the cash the
acquisition (cents) acquisition
(cents) (cents)
Historical headline
earnings per
combined unit 208.00 (1) 206.66 (2) 200.21 (5) (3.75)
Historical headline
earnings per A unit 102.00 (1) 102.00 (2) 102.00 (5) -
Historical headline
earnings per B unit 106.00 (1) 104.66 (2) 98.21 (5) (7.35)
Historical earnings
per combined unit 2.40 (1) 2.22 (3) 11.42 (6) 375.77
Historical earnings
per A unit 1.20 (1) 1.11 (3) 5.71 (6) 375.77
Historical earnings
per B unit 1.20 (1) 1.11 (3) 5.71 (6) 375.77
Historical net
asset value and
tangible net asset
value per combined
unit 1103,52 (1) 1124.40 1143.46 (7) 3.62
(4)
Historical net
asset value and
tangible net asset
per A unit 641,76 (1) 652.20 (4) 661.73 (7) 3.11
Historical net
asset value and
tangible net asset
per B unit 461,76 (1) 472.20 (4) 481.73 (7) 4.32
The headline earnings per combined unit has decreased for the following
reasons:
* historical earnings have been utilised in the calculation of the
financial effects, whereas the purchase price has been calculated on a
forward yield;
* in calculating the financial effects, a historical weighted average
interest rate of 13,09% on the borrowings raised to partially settle
the purchase price has been utilised, whereas the current actual rate
applicable is 11,00%.
Notes:
(1) The historical earnings and headline earnings per ApexHi unit as set
out in the "Before the general issue for cash and the acquisition"
column of the table are based on ApexHi"s audited results for the year
ended 30 June 2003. The historical net asset value and tangible net
asset value per ApexHi unit as set out in the "Before the general
issue for cash and the acquisition" column of the table are based on
ApexHi"s audited results at 30 June 2003.
(2) The historical headline earnings per ApexHi unit as set out in the
"After the general issue for cash" column of the table is based on the
assumption that the general issue for cash took effect on 1 July 2002
and the requisite ApexHi units were issued on that date. The cash was
utilised to partially settle the cash component of the Game Klerksdorp
and Public Works building, North End, Port Elizabeth purchase
considerations at an average historical yield of 16% as well as
partially fund the acquisition at a historical yield of 13,3%.
(3) The historical earnings per ApexHi unit as set out in the "After the
general issue for cash" column of the table is based on the
calculation of the headline earnings per ApexHi unit as described
above and further adjusts for the capital items in ApexHi"s audited
financial statements.
(4) The historical net asset value and tangible net asset value per ApexHi
unit as set out in the "After the general issue for cash" column of
the table is based on the assumption that the general issue for cash
took effect on 30 June 2003 and the requisite ApexHi units were issued
on that date. The cash was utilised to partially settle the cash
component of the Game Klerksdorp and Public Works, North End, Port
Elizabeth purchase considerations as well as partially fund the
acquisition.
(5) The historical headline earnings per ApexHi unit as set out in the
"After the general issue for cash and the acquisition" column of the
table is based on the assumption that the general issue for cash and
the acquisition took effect on 1 July 2002 and the requisite ApexHi
units were issued on that date. The cash on the general issue of units
for cash was utilised as described above and the audited net income
before interest paid of the properties acquired for the year ended
30 April 2003 has been included. Interest on the cash portion of the
acquisition purchase consideration at a rate of 13,09% has been
raised.
(6) The historical earnings per ApexHi unit as set out in the "After the
general issue for cash and the acquisition" column of the table is
based on the calculation of the headline earnings per ApexHi unit as
described above and further adjusts for the capital items in both
ApexHi and Shops"s audited financial statements.
(7) The historical net asset value and tangible net asset value per ApexHi
unit as set out in the "After the general issue for cash and the
acquisition" column of the table is based on the assumption that the
general issue for cash and the acquisition took effect on 30 June 2003
and the requisite ApexHi units were issued on that date.
11. Withdrawal Of Cautionary Announcement
Unit holders are no longer required to exercise caution in their dealings
in ApexHi units.
Rosebank
5 December 2003
Corporate and legal advisor:
Java Capital
Sponsor:
Java Capital
Placement house:
Afrifocus Securities
Date: 05/12/2003 04:38:09 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
