| Fri 11 Mar 2005, 13:03 | | Acquisition of property letting enterprises |
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Calulo - Acquisition of property letting enterprises, Offer to minority
shareholders and abridged revised listing particulars
CALULO PROPERTY FUND LIMITED
(Formerly Annuity Property Fund Limited)
(Incorporated in the Republic of South Africa)
(Registration no. 1987/006274/06)
Share code CLO ISIN: ZAE000060711
(`Calulo` or `the company`)
ACQUISITION OF PROPERTY LETTING ENTERPRISES, OFFER TO MINORITY SHAREHOLDERS AND
ABRIDGED REVISED LISTING PARTICULARS
1. INTRODUCTION
It was announced on 3 September 2004 that Calulo Properties (Proprietary)
Limited, a company controlled by Calulo Investments (Proprietary) Limited
(`Calulo Investments`) had, subject to certain conditions, agreed to
purchase 95.5% of the issued linked units in Annuity Property Fund Limited
from Edge to Edge (Proprietary) Limited, a company controlled by Nedcor
Limited. With effect from 17 December 2004, the name of Annuity Property
Fund Limited was changed to Calulo Property Fund Limited.
Calulo Investments, the ultimate controlling company of Calulo, is the
holding company of a number of investments in the energy, resources and
services sectors of the South African economy. It is a black-empowered
group chaired by Mkhuseli Faku and managed by Mpho Diale, who are its
controlling shareholders. Control of Calulo was acquired by Calulo
Investments with a view to it being the first fully empowered property loan
stock company listed on the JSE. It will be ideally placed to take
advantage of the opportunities that are likely to flow from the
promulgation of the proposed Property Charter.
It was further announced on 17 January 2005 that agreements had been
reached for Calulo to acquire 16 property letting businesses (`the
acquisitions`).
2. THE ACQUISITIONS
Calulo has, through its wholly owned subsidiary Clidet 542 (Proprietary)
Limited (`Clidet`), agreed to acquire 16 property letting businesses for a
total purchase consideration of R365 249 650. The properties have been
acquired from various vendors and are located predominantly in Gauteng and
the Eastern and Western Cape. In terms of an internal restructure Clidet
also acquired the premises situated at 235 Albert Road, Woodstock, Cape
Town from a fellow subsidiary for R6 000 000, making Clidet`s total funding
requirement R371 249 650 before transaction costs, which amount to
approximately R12 500 000.
Relevant details of the acquisitions including location, cost and vendors
will be detailed in a circular to be sent to unitholders today, and are
available for inspection at the head office of Calulo Investments, Block B,
first floor, Sandhurst Office Park, Cnr Rivonia Road and Katherine Street,
Sandton.
3. SALIENT TERMS OF THE ACQUISITION AGREEMENTS
In terms of the acquisition agreements the aggregate purchase price of the
acquisitions of R371 249 650 is to be settled in part by the issue by
Calulo of 74 168 400 new linked units to be issued at a price of 210 cents
per linked unit, and in part by the payment of cash of R215 496 360.
Of the linked units to be allotted to the vendors, a minimum of 55 240 000
have been placed with third parties at 210 cents per linked unit on behalf
of the vendors.
The acquisition agreements are subject in the main to terms and conditions
normal for transactions of this nature, including the following conditions
precedent:
- Approval by the board of directors of the purchaser;
- Confirmation by the purchaser that it has obtained the requisite bank
funding for the cash portion of the purchase price;
- Obtaining the requisite regulatory approvals, including those of the
JSE Securities Exchange South Africa (`JSE`) and the Competition
Commission. The company has been advised that Competition Commission
approval is not required in respect of any of the acquisitions;
- Ratification of the agreements by Calulo unitholders in general
meeting, and
- Transfer of the properties and listing of the linked units to be
issued pursuant to the acquisitions by not later than 31 March 2005 or
such later date as may be agreed between the parties.
4. REASONS FOR THE ACQUISITIONS
Calulo at present has only one property. Its strategy is to build
incrementally a major portfolio under a black empowered and controlled
entity with soundly managed and well located commercial, retail and
industrial properties spread across all economically significant regions of
South Africa. The acquisitions represent the first major step in this
strategy. The successful implementation of the acquisitions will result in
Calulo substantially increasing the size of its property portfolio, which
will result in operational efficiencies and improved risk diversification
for Calulo.
The nature, type and geographical fit of the acquisitions will create a
sound platform for future growth.
5. FINANCIAL EFFECTS OF THE ACQUISITIONS
5.1 Pro forma financial effects
The pro forma financial information is the responsibility of the
directors.
The table below illustrates the financial effects per Calulo linked
unit of the acquisitions based on Calulo`s audited results for the
year ended 30 June 2004 and its audited balance sheet at 30 June 2004.
The unaudited pro forma financial effects have been prepared for
illustrative effects only to provide information on how the
acquisitions may have impacted Calulo`s results and financial
position. Due to the nature of the unaudited pro forma financial
effects, they may not give a fair reflection of Calulo`s financial
position after the acquisitions nor the effect on future earnings.
Before the After the
acquisitions acquisitions Change
(%)
Yield per Calulo linked 0(2) 7.2 (4) 100
unit (%) (Note 1; 6)
Notional distribution 0 (2) 15.0 (4) 100
per Calulo linked units
Earnings per Calulo 73.2 (2) 16.2 (4) (78)
linked unit (cents)
Headline earnings per (95.3) (2) 14.8 (4) 116
Calulo linked unit
(cents)
Net asset value and 265.1(3) 201.1(5) (24)
tangible net asset
value per Calulo linked
unit (cents)
Number of Calulo linked 317 74 485
units in issue (`000)
Weighted average number 208 74 376
of Calulo linked units
in issue (`000)
Notes:
1. The yield per Calulo linked unit has been calculated based on the
distribution per Calulo linked unit divided by the market capitalisation of
Calulo using a price of 210 cents per Calulo linked unit.
2. The earnings, headline earnings and distribution per Calulo linked unit and
yield in the `Before the acquisitions` column are based on Calulo`s audited
income statement for the year ended 30 June 2004.
3. The net asset value and tangible net asset value per Calulo linked unit in
the `Before the acquisitions` column are based on Calulo`s audited balance
sheet at 30 June 2004.
4. The earnings, headline earnings and distribution per Calulo linked unit and
yield in the `After the acquisitions` column are based on the assumption
that the acquisitions took place with effect from 1 July 2003.
5. The net asset value and tangible net asset value per linked unit in the
`After the acquisitions` column are based on the assumption that the
acquisitions took effect on 30 June 2004 and that the new Calulo linked
units to be issued in terms of the acquisitions were issued on that date
and that the acquisitions costs were either capitalised to the cost of the
properties, written off against share premium or expensed depending on
their nature.
6. In order to provide a true reflection of the yield from the Calulo property
portfolio, the results provided are based on the assumption that 100% of
the net income after interest paid (excluding any capital profits) earned
by Calulo is distributed to Calulo unitholders. In terms of Calulo`s
Debenture Trust Deed, Calulo is required to distribute a minimum of 90% of
the net rental income earned by Calulo.
5.2 Profit forecast
The directors forecast a 12% annualised yield based on the issue price
of 210 cents per linked unit. The profit forecast for the 9 months
ending 31 December 2005 is set out in paragraph 9.2 of this circular.
Calulo`s year end is 30 June. The forecast distribution to unitholders
for the 3 months ending 30 June 2005 amounts to 6.1 cents per linked
unit and for the 6 months ending 31 December 2005 amounts to 12.7
cents per linked unit.
6. THE OFFER TO MINORITY UNITHOLDERS
In consequence of the change in control referred to in paragraph 1 above,
Calulo Investments is required in terms of the Securities Regulation Code
on Takeovers and Mergers to make an offer to minority unitholders in Calulo
(`the offer`). The offer is an unconditional one to acquire for cash of 210
cents each the linked units held by minority unitholders who accept the
offer and are on the register of unitholders at the record date, which is
Friday, 1 April 2005.
7. OTHER INFORMATION ABOUT CALULO
7.1 Directors
Details of the directors of Calulo are as follows:
Name Age Address Occupation
Mkhuseli Richman Faku 41 Block B, first floor, Company
(Chairman) Sandhurst Office Park, Cnr director
Rivonia Road and Katherine
Street, Sandton
Mpho Kingston Diale 36 Block B, first floor, Company
(Non-executive) Sandhurst Office Park, Cnr director
Rivonia Road and Katherine
Street, Sandton
Richard Harman 48 Block B, first floor, Chief
(Executive) Sandhurst Office Park, Cnr Executive,
Rivonia Road and Katherine Calulo
Street, Sandton
Nyameka Madikizela 34 Block B, first floor, Chief
(Executive) Sandhurst Office Park, Cnr operating
Rivonia Road and Katherine officer,
Street, Sandton Calulo
7.2 History and nature of business
Calulo was incorporated on 8 December 1987 under the name Retco Fixed
Investments No. 10 (Pty) Ltd. It was listed on the JSE on 17 August
1998 under the name Good Cape Limited as a result of the capital
restructure of its listed parent company, Property Corporation of
South Africa Limited (`Propcor`), in terms of which shares in the
company were distributed to Propcor shareholders.
In February 2003 Edge to Edge, a company controlled by Nedcor Limited,
acquired control of the company. On 25 February 2004 the company was
restructured to constitute it as a variable loan stock company and its
name was changed to Annuity Property Fund Limited. On 3 September 2004
it was announced that Calulo Properties had, subject to certain
conditions, acquired control of the company, which was in negotiations
to acquire a number of properties. The name of the company was changed
to Calulo Property Fund Limited with effect from 17 December 2004.
Calulo is a variable loan stock property holding company listed using
the alpha code `CLO` in the `Real Estate Holding and Development`
sector of the JSE List.
7.3 Management
Calulo will be managed by an asset management company which will be
50% held by Calulo Properties and 50% by RMB Properties (Pty) Ltd.
The property portfolio will be administered and managed by Calulo
Property Management (Proprietary) Limited, which is 60% held by Calulo
Properties (Pty) Ltd and 40% by Born Free Investments 207 (Pty) Ltd
(`Born Free`). Born Free is an associate of Oakwood Property
Management (Pty) Ltd and is managed by Mark Smith. The function of
administering the financial management and reporting systems will be
handled by RMB Properties (Pty) Ltd (`RMB Properties`).
Calulo and RMB Properties have agreed that any future properties
acquired in the future by Calulo will, unless introduced by Born Free,
be managed by a joint venture company to be formed, which will be held
50% by Calulo Properties and 50% by RMB Properties.
8. SALIENT DATES AND TIMES
2005
Circular posted to Calulo unitholders on Friday, 11 March
Offer to minority unitholders opens on Friday, 11 March
Last day to trade in Calulo linked units to be Wednesday, 23
eligible to participate in the offer to minority March
unitholders on
Linked units trade ex the offer on Thursday, 24 March
Last day for receipt of forms of proxy in respect of Thursday, 24 March
the general meeting by no later than 11:00 on
General meeting to be held at 11:00 on Tuesday, 29 March
Results of general meeting released on SENS on Tuesday, 29 March
Results of general meeting published in the press on Wednesday, 30 March
Record date for the offer to minority unitholders Friday, 1 April
Offer to minority unitholders closes (see note 2) at Friday, 1 April
12:00 on
New Calulo linked units, issued in terms of the Monday,4 April
acquisitions, listed on the JSE on (or as soon as
property transfers have been registered)
Payment of cash consideration to unitholders who Monday, 4 April
accept the offer from
Notes
1. Linked unit certificates may not be dematerilaised or rematerialised
between Thursday 24 March 2005 and Friday, 1 April 2005, both days
inclusive.
2. Dematerialised unitholders who wish to accept the offer must notify their
CSDP or broker in terms of the agreement between such unitholders and their
CSDP or broker by the cut-off time stipulated in such agreement..
3. The dates and times set out above may be changed. Any changes will be
published on SENS and in the press.
9. POSTING OF CIRCULARS AND GENERAL MEETING
Circulars containing full details of the acquisitions and the offer will be
posted to unitholders today. The general meeting of unitholders to approve
the acquisitions will be held at 11:00 on Tuesday, 29 March 2005.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Unitholders are advised that caution is no longer required when dealing in
their linked units.
Cape Town
11 March 2005
Corporate adviser and sponsor
Sasfin Corporate Finance
A division of Sasfin Bank Limited
Attorneys
Cliffe Dekker
Lead reporting accountants
KPMG
Auditors and reporting accountants
PWC
Date: 11/03/2005 01:00:24 PM
Produced by the JSE SENS Department
