| Fri 21 May 2004, 9:43 | | eneral Issue For Cash, Rights Offer, Acquisition |
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Hyprop - General Issue For Cash, Rights Offer, Acquisition And Withdrawal Of
Release Date: 21/05/2004 09:00:01 Code(s): HYP
Hyprop - General Issue For Cash, Rights Offer, Acquisition And Withdrawal Of
Cautionary Announcement
Hyprop Investments Limited
(Registration No. 1987/005284/06)
Share code: HYP ISIN code: ZAE000003430
(the `company` or `Hyprop`)
GENERAL ISSUE FOR CASH, RIGHTS OFFER, ACQUISITION AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Java Capital is authorised to announce that the board of directors (`the board`)
has resolved to raise capital of up to R376 043 544 by the issue of nine million
Hyprop combined units for cash (the `issue for cash`) and by implementing a
rights offer (the `rights offer`).
Hyprop has also concluded an agreement for the acquisition of an additional
25,05% interest in The Glen Shopping Centre (the `acquisition`).
The terms and conditions of the issue for cash, the rights offer and the
acquisition are set out below.
2. TERMS OF ISSUE FOR CASH
Introduction
Combined unitholders are advised that Hyprop has issued an additional nine
million Hyprop combined units to three public unitholders (which are not related
parties) pursuant to a general authority to issue combined units for cash
granted to the board at the annual general meeting held on 18 June 2003.
The combined units issued for cash cumulatively comprise 10,1% of the combined
units in issue prior to the issue of the additional units.
The combined units were issued at a price of R13,85 per combined unit and listed
on Tuesday, 4 May 2004 and Thursday, 13 May 2004, pursuant to which Hyprop has
raised cash of R124 650 000. The issue price was determined by the board on 7
April 2004 and represents a discount of 0,3% to the weighted average traded
price of Hyprop combined units for the 30 trading day period prior to such date.
The new units rank pari passu with the existing units in issue from the date of
their issue, save that the holders of the new combined units have agreed to
reimburse Hyprop in an amount equivalent to 4 months` distribution.
FINANCIAL EFFECTS OF ISSUE FOR CASH
The historical financial effects of the issue for cash set out in the table
below have been prepared for illustrative purposes only to provide information
on how the issue for cash may have impacted on Hyprop. Because of their nature,
the pro forma financial effects may not give a fair reflection of Hyprop`s
financial position after the issue for cash, or the effect thereof on Hyprop`s
future earnings.
Pro forma
before issue for Pro forma
cash, rights offer after issue %
and acquisition for cash only change
Earnings per combined
unit 215.44 211.36 (1.89)
Headline earnings per
combined unit 142.44 145.06 1.84
Net asset value per
combined unit 11.69 11.89 1.67
Net tangible asset
value per combined
unit 11.69 11.89 1.67
Notes:
1 The figures set out in the `before issue for cash, rights offer and
acquisition` column above have been extracted from the audited financial
statements of Hyprop for the year ended 31 December 2003.
2 The issue for cash was implemented on 1 January 2003 for earnings and headline
earnings per combined unit purposes and on 31 December 2003 for net asset and
net tangible asset value per combined unit purposes.
3 The proceeds of the issue for cash were utilised to repay borrowings.
Borrowings incurred interest at an average rate of 12,49% per annum.
4 The costs of the issue for cash amount to approximately R457 000. R312 000
relates directly to the issue of combined units and has been set off against
debenture premium. The balance of R145 000 has been set off against income.
3. TERMS OF THE RIGHTS OFFER
Introduction
The board of directors of Hyprop has resolved to raise additional capital of up
to R251 393 544 pursuant to a rights offer, by the issue of up to an additional
18 621 744 new Hyprop combined units at a price of R13,50 per unit.
Salient terms of the rights offer
The rights offer is being made on the following bases:
Combined unitholders will be offered 19 new Hyprop combined units for every 100
Hyprop combined units held as at the record date for participation in the rights
offer, on the terms and conditions set out in a circular to be posted to
unitholders (the `circular`). Fractions of new combined units will not be
allotted, each qualifying combined unitholder`s entitlement being rounded to the
nearest whole number of new combined units.
The rights offer will not be underwritten.
Combined unitholders will be entitled to apply for additional combined units in
excess of their entitlement. To the extent that there are excess combined units
available for allocation, the pool of excess combined units will be allocated on
an equitable basis.
Upon their issue, the new combined units to be allotted pursuant to the rights
offer will be listed and will rank pari passu in all respects with the existing
issued combined units, including the right to receive in full all dividends and
other distributions thereafter declared, paid or made on the combined units,
save that the new combined units will not participate in the special
distribution, referred to below.
Conditions
The rights offer is conditional upon the approvals of the requisite regulatory
authorities being received and the rights offer circular and letters of
allocation being registered with the Registrar of Companies.
Letters of allocation
Renounceable letters of allocation will be issued in dematerialised form and an
electronic record for certificated combined unitholders will be maintained by
Computershare Nominees (Proprietary) Limited. This will enable both
dematerialised and certificated combined unitholders to sell or renounce some or
all of their rights to new Hyprop combined units in accordance with the
procedures set out in the circular.
Special Distribution
A special distribution for the seven month period ended 31 July 2004 will be
declared by Hyprop (the `special distribution`), provided that Hyprop combined
unitholders` approval therefor is obtained at the Annual General Meeting to be
held at the offices of Hyprop at 9:30 on 29 June 2004. Salient details of the
special distribution will be published in due course.
4. UTILISATION OF PROCEEDS OF CAPITAL RAISING
The additional capital raised by Hyprop pursuant to the issue for cash and the
rights offer will be utilised to fund the acquisition and to fund further
acquisitions that will complement the quality of Hyprop`s real estate portfolio.
5. THE ACQUISITION
Introduction
Hyprop has concluded an agreement with Gleneagles Retail Centre (Proprietary)
Limited (`Gleneagles`), a wholly-owned subsidiary of The Standard Bank of South
Africa Limited (`Standard Bank`), for the acquisition of an additional 25,05%
interest in The Glen Shopping Centre, located in Oakdene, Johannesburg (`The
Glen`), for a cash purchase consideration of R112 725 000. The acquisition is
effective on the date on which transfer of the additional undivided 25,05% share
is registered in the name of Hyprop.
Hyprop will increase its controlling interest in The Glen from 50,1% to 75,15%,
with Ellerine Bros. (Proprietary) Limited owning the remaining 24,85%.
Rationale
The Glen is a 45 000m(2) regional shopping centre accommodating 158 shops and
anchored by Pick `n Pay, Woolworths and Edgars, which, together with other
national tenants, occupy 72% of the gross leasable area. A 6 000m extension, due
for completion at the end of 2004 and with an expected yield of 12%, will
further enhance the centre`s dominant position.
Hyprop, through its increased interest in the centre, will be well positioned to
take advantage of the centre`s future growth prospects.
Condition Precedent
Given that Gleneagles is a wholly-owned subsidiary of Standard Bank and given
Standard Bank`s current 14,17% interest in Hyprop, Gleneagles is regarded by the
JSE as an associate of a related party. Accordingly, the acquisition is
conditional upon the approval of Hyprop combined unitholders (excluding the vote
of Standard Bank) being obtained in general meeting.
An independent valuer has been appointed to value The Glen and Grant Thornton
Corporate Finance (Pty) Limited has been appointed to report on whether the
acquisition is fair and reasonable to Hyprop unitholders. Copies of their
reports will be included in the circular.
6. PROFIT FORECAST
The historical financial effects set out in paragraph 7 below do not provide a
meaningful reflection of the effect of the rights offer and the acquisition on
Hyprop`s future earnings. In order to provide Hyprop combined unitholders with
more meaningful financial information, a forecast income statement for Hyprop
for the year ending 31 December 2004 is set out below. The forecast has been
reviewed by Grant Thornton, whose report is available for inspection at the
offices of Hyprop.
Forecast
year ending
31 December
2004
(R`000)
Turnover 488,658
Operating income 309,358
Interest paid (109,575)
Net operating income 199,783
Debenture interest paid to combined unitholders (154,315)
Income before taxation 45,468
Taxation (149)
Net income after taxation 45,319
Minority interest (44,972)
Net profit 347
Weighted average combined units in issue (`000) 102,768
Earnings and headline earnings per share (cents) 0.34
Earnings and headline earnings per combined
unit(cents) 150.50
Notes:
The forecast income statement for the year ending 31 December 2004 has been
prepared on the following bases and assumptions:
The forecast incorporates unaudited actual results for the three months ended 31
March 2004.
Turnover is based on existing lease agreements.
Vacant space has been forecast on a property by property basis and has been
assumed to remain vacant unless it is deemed probable that such space will be
let.
There will be no unforeseen economic factors that will affect the lessees`
abilities to meet their commitments in terms of existing lease agreements.
Leases expiring during the period have been forecast on a lease by lease basis
and, unless the tenant has indicated otherwise, it is assumed that these leases
will continue at the current rentals and escalations.
Operating expenditure has been determined by reference to historical costs and
by discussions with the property managers.
No account has been taken of any change in the fair value of the property
portfolio between 31 December 2003 and 31 December 2004.
The effective date of the acquisition is assumed to be 1 August 2004.
The capital raised pursuant to the issue for cash and the rights offer, after
settling the purchase consideration of the acquisition, amounting to approximate
R263 000 000, has been used to reduce existing borrowings.
7. FINANCIAL EFFECTS OF RIGHTS OFFER AND ACQUISITION
The pro forma historical financial effects of the rights offer and acquisition
on the historical earnings, headline earnings, net asset value and tangible net
asset value are set out below. The financial effects have been prepared for
illustrative purposes only to provide information on how the rights offer and
the acquisition may have impacted on Hyprop. Because of their nature, the pro
forma financial effects may not give a fair reflection of Hyprop`s financial
position after the rights offer and the acquisition, or the effect thereof on
future earnings.
Pro forma Pro forma
before rights Pro forma after rights %
offer and after rights % offer and the % change
acquisition offer only change acquisition change combined
Earnings per
combined unit 215.44 206.44 (4.18) 218.88 6.02 1.59
Headline earnings
per combined unit 142.44 146.07 2.55 140.35 (3.91) (1.47)
Net asset value per
combined unit 11.69 11.99 2.56 11.99 - 2.56
Net tangible asset
value per combined
unit 11.69 11.99 2.56 11.99 - 2.56
Notes:
1 The figures set out in the `before rights offer and acquisition` column above
have been extracted from the published audited financial statements of Hyprop
for the year ended 31 December 2003.
2 The rights offer and the acquisition were implemented on 1 January 2003 for
earnings and headline earnings per combined unit purposes and on 31 December
2003 for net asset and net tangible asset value per combined unit purposes.
3 The proceeds of the rights issue were utilised to pay the purchase price in
respect of the acquisition and the remaining balance was utilised to repay
borrowings. Borrowings incurred interest at an average rate of 12,49% per annum.
4 The 9 000 000 combined units issued in terms of the issue for cash have not
been adjusted for in these financial effects.
5 The costs of the rights offer and the acquisition amount to approximately R1
960 000. R628 000 relates directly to the issue of the combined units and has
been set off against debenture premium. The balance of R1 300 000 has been
apportioned between the rights offer and the acquisition and set off against
income.
SALIENT DATES
The salient dates of the rights offer, acquisition and special distribution will
be announced on SENS and in the press in due course.
CIRCULAR
A circular setting out full terms and conditions of the acquisition and the
rights offer, together with a letter of allocation, will be posted to combined
unitholders in due course.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Combined unitholders are no longer advised to exercise caution in their dealings
in Hyprop securities.
Johannesburg
19 May 2004
Corporate and legal advisor
Java Capital (Proprietary) Limited
Sponsor
Java Capital (Proprietary) Limited
Reporting accountants
Grant Thornton
Independent expert
Grant Thornton Corporate Finance (Pty) Limited
