| Fri 5 Dec 2003, 16:57 | | THE DISPOSAL OF SHOPS FOR AFRICA"S PROPERTY PORTFO |
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Shops for Africa Limited - Announcement
Shops for Africa Limited
(Incorporated in the Republic of South Africa)
(Company Registration Number 2000/018084/06)
Share Code : SFA ISIN Code : ZAE000031241
("Shops for Africa" or "the Company")
THE DISPOSAL OF SHOPS FOR AFRICA"S PROPERTY PORTFOLIO TO APEXHI PROPERTIES
LIMITED
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcement dated 29 October 2003 Sasfin Corporate
Finance, a division of Sasfin Bank Limited ("Sasfin") is authorised to announce
that, subject to the fulfilment of the conditions precedent set out in paragraph
2.6 below, Shops for Africa has entered into an agreement to dispose of its
entire property portfolio to ApexHi Properties Limited ("ApexHi") in terms of
section 228 of the Companies Act, Act 61 of 1973, as amended ("the Act") ("the
transaction"). The transaction constitutes an affected transaction in terms of
the Securities Regulation Panel ("SRP") Code on Mergers and Acquistions ("the
Code") and a category 1 transaction in terms of the Listings Requirements of the
JSE Securities Exchange South Africa ("JSE").
2. Terms of the disposal
2.1 Subject matter of the disposal
The board of directors of Shops for Africa ("the board") has entered into an
agreement in terms of which the company shall, subject to the fulfilment of the
conditions precedent set out in paragraph 2.6 below, dispose of all of the
property letting enterprises conducted by it, which shall comprise all of the
properties in its property portfolio together with the lease agreements entered
into by the company in respect of these properties, but shall exclude any
management agreements relating to the properties, as a going concern to ApexHi.
2.2 Disposal consideration
The aggregate disposal consideration ("the consideration") payable by ApexHi to
the company shall be R415 311 675. The consideration shall be settled as
follows:
2.2.1 An amount of R240 000 000 shall be paid in cash;
2.2.2 The balance of R175 311 675 shall be settled by the allotment and issue of
the following:
2.2.2.1 12 986 050 "A" linked units in the capital of ApexHi; and
2.2.2.2 12 986 050 "B" linked units in the capital of ApexHi,
at a combined issue price of R13.50 for 1 "A" linked unit and 1 "B" linked unit,
which linked units shall rank for income distributions from 1 April 2004 ("the
consideration units").
At the current estimated combined clean price, being the price estimated to
exclude any distribution accrued but not yet paid, of approximately R15,51 per
ApexHi combined unit the value of the consideration units amounts to R201 413
635 and the effective consideration is therefore the sum of R441 413 635.
2.3 Pre-emptive rights of tenants
One of the tenants of Shops for Africa in the Golden Walk Shopping Centre in
Germiston and the tenant of the property known as Main Road Wynberg have in
terms of their lease agreements with the company pre-emptive rights to acquire
the respective properties and letting enterprises upon the same terms and
conditions as that of the offer by ApexHi. In the event that these pre-emptive
right are duly exercised the consideration shall be adjusted accordingly and a
further announcement will be made.
2.4 Effective date
The effective date of the disposal is 1 April 2004.
2.5 Rationale
The trend in the listed property sector has been towards consolidation in order
to create critical mass within listed funds, thereby providing investors with
tradability in the listed securities. As a result, companies with large market
capitalisations have traded at a premium to those with small market
capitalisations, with many large companies trading at significant premiums to
net asset value ("NAV").
Considering the relatively small size of the Shops for Africa portfolio and
market capitalisation, which has resulted in low tradability of its linked units
and in the linked units trading at a discount to the sector and to NAV, the
board is of the opinion that the most expedient method of unlocking value for
Shops for Africa linked unit-holders ("unit-holders") is to proceed with this
transaction.
The transaction presents unit-holders with an opportunity to exit at an
attractive premium to the weighted average market price at which the linked
units of the company have traded on the JSE.
2.6 Conditions precedent
The disposal is subject to inter alia the following outstanding conditions
precedent:
2.6.1 confirmation by ApexHi that it is able to raise the requisite finance in
respect of the cash portion of the purchase price;
2.6.2 the approval of the transaction by the JSE, SRP, South African Reserve
Bank and any other regulatory bodies;
2.6.3 the approval of the transaction by Shops for Africa unit-holders at a
general meeting as required by section 228 of the Act; and
2.6.4 the approval of the transaction by the Competition Commission.
2.7 Distribution to Shops for Africa linked unit-holders ("unit-holders")
In terms of the transaction the company will distribute the consideration units,
after making provision for any costs associated therewith, to its unit-holders
within 7 months of the effective date.
The board is considering various options regarding the future of the company and
the method of distribution of the consideration units, which include effecting a
distribution by means of a capital reduction and/or the voluntary winding-up of
the company and payment of a liquidation dividend. Details of the distribution
will be contained in the circular to unit-holders referred to in 5 below.
Unit-holders will be entitled to receive the distribution in terms of their
Shops for Africa linked units for the period from 1 May 2003 until the effective
date.
3. Financial effects
The pro forma financial effects of the transaction have been prepared for
illustrative purposes only, to provide information about how the transaction
might have affected the financial information presented and, because of its
nature, may not give a true reflection of the effect of the transaction on a
Shops for Africa linked unitholder.
The "before" column of the pro forma financial effects of the transaction on a
Shops for Africa linked unitholder set out below is based on the published
audited financial results of Shops for Africa for the year ended 30 April 2003,
adjusted for the acquisition of Sammy Mark"s Square, Portion 3, as detailed in
the circular to Shops for Africa linked unitholders dated 17 July 2003.
Before After % Change
Distribution per linked 30.78 34.73 1 13
unit
Earnings per share 20.44 0.36 2 70
Headline earnings per (0.23) 0.00 2
share
Net asset value per 254.46 189.69 3 (25)
share
Market value per linked
unit (before the 250.00 4 259.16 5 4
announcement on 5
December 2003)
Number of Shops for 72 115 72 115
Africa linked units in
issue (000)
Assumptions
1. After the settlement of outstanding debt and expected transaction costs the
transaction will result in Shops for Africa linked unit holders receiving 1
ApexHi linked unit for every 5.93 Shops for Africa linked units currently held.
All of the above financial effects have been calculated based on this ratio.
2. ApexHi"s published audited financial information for the year ended 30 June
2003 has not been adjusted for any transactions subsequent to year-end which
include the acquisition of certain properties and a general issue of linked
units for cash.
3. The income attributable, up to and including the effective date, to the
properties being disposed of in terms of the transaction will be distributed in
full.
Notes
1. The distribution per linked unit that will be available to Shops for Africa
linked unit holders after the transaction has been calculated based on the
distribution available to linked unit holders per ApexHi"s published audited
results for the year ended 30 June 2003 adjusted to include the operating profit
of the properties being disposed of per Shops for Africa"s adjusted published
financial results for the year ended 30 April 2003 and the interest that will be
paid by ApexHi on the cash portion of the purchase price of R240 million at an
interest rate of 13.09%.
2. The earnings and Headline Earnings per share attributable to Shops for Africa
shareholders after the transaction has been calculated based on the capital
earnings and Headline Earnings per ApexHi"s published audited results for the
year ended 30 June 2003. No adjustment has been made in respect of the
properties being acquired in terms of the transaction as it has been assumed
that the income attributable to the properties being disposed of in terms of the
transaction will be distributed in full.
3. The net asset value per share attributable to Shops for Africa shareholders
after the transaction has been based on the net asset value of an ApexHi linked
unit per ApexHi"s published audited financial results for the year ended 30 June
2003 adjusted for the transaction.
4. Based on the closing price of Shops for Africa shares immediately prior to
the publication of the announcement on 5 December 2003.
5. Based on the closing prices of ApexHi "A" and "B" linked units immediately
prior to the publication of the announcement on 5 December 2003.
4. Opinions and recommendations
The disposal in terms of section 228 of the Act constitutes an affected
transaction in terms of the Code and an independent opinion thereon by an
appropriate external advisor is therefore required by the SRP in terms of 3.1 of
the Code. In addition the SRP and JSE require a property expert to express an
opinion on the value of the properties being disposed of.
Sasfin has been appointed by the board of directors as the external advisor and
a panel of independent valuers have been appointed to provide an opinion on the
value of the properties being disposed of. The full text of the opinion of
Sasfin and the panel of independent valuers will be included in the circular to
be posted to Shops for Africa unit-holders referred to in 5 below ("the
circular").
The board has considered the offer from ApexHi and is of the opinion, based on
their own assessment and that of the external advisor, that the terms of the
transaction are fair and reasonable to unit-holders. All the directors who are
able to vote at the general meeting referred to below intend to vote in favour
of the transaction.
5. General meeting and circular to unit-holders
A general meeting of Shops for Africa unit-holders will be convened at which
unit-holders will consider and, if deemed fit, pass the resolutions to approve
the transaction. Full details of the proposed transaction will be set out in a
circular to be posted to Shops for Africa unit-holders in due course in
accordance with the rules and regulations of the JSE and the SRP.
6. Withdrawal of cautionary announcement
Having regard to the details provided in this announcement, Shops for Africa
unit-holders are no longer required to exercise caution when dealing in their
linked units on the JSE.
Cape Town
5 December 2003
Sponsor and External Advisor
Sasfin Corporate Finance
A division of Sasfin Bank Limited
Portfolio Asset Manager
CATALYST
PROPERTY ASSET MANAGERS
Catalyst Property Asset Managers (Pty) Ltd
(Registration number 1994/010496/07)
Attorneys
Cliffedekker Inc
Auditors
kpmg
Date: 05/12/2003 04:39:11 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
