| Wed 20 Apr 2005, 18:18 | | Hyprop - Update on offer to Unitholders of SA Ret |
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Hyprop - Update on offer to Unitholders of SA Retail Properties Limited and
Withdrawal of Cautionary Announcement
Hyprop Investments Limited
(Registration No. 1987/005284/06)
Share code: HYP ISIN code: ZAE000003430
(`Hyprop`)
UPDATE ON OFFER TO UNITHOLDERS OF SA RETAIL PROPERTIES LIMITED (`SA RETAIL`) AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Hyprop and SA Retail unitholders are referred to the announcement dated 31 March
2005, in which Hyprop set out the terms of its firm intention to make an offer
(`the offer`) to the linked unitholders of SA Retail (`SA Retail unitholders`)
to acquire all of the linked units in SA Retail (`SA Retail units`) not already
owned by Hyprop.
The purpose of this announcement is to update Hyprop combined unitholders and SA
Retail unitholders on the status of the offer and to set out the financial
effects of the offer on Hyprop combined unitholders.
THE SA RETAIL/MARTPROP ACQUISITION
Hyprop is still awaiting rulings from the JSE Securities Exchange South Africa
(`the JSE`) and the Securities Regulation Panel (`the SRP`) in relation to its
contentions that the transaction between SA Retail and Martprop Property Fund
announced on 30 March 2005 (`the Martprop transaction`) constitutes frustrating
action as envisaged in terms of the SRP Code on Takeovers and Mergers and is a
related party and category 1 transaction for SA Retail. If the Martprop
transaction is ruled to constitute frustrating action and/or a category 1
transaction and/or a related party transaction, then it would require the
approval of SA Retail unitholders in order to be implemented.
Hyprop has canvassed SA Retail unitholders as to their opinion on the Martprop
transaction. SA Retail unitholders holding 114 625 271 SA Retail units have
confirmed in writing that they either require the Martprop transaction to be
cancelled or that the Martprop transaction should not be implemented unless a
majority of SA Retail unitholders (excluding any SA Retail unitholder/s whose
votes are to be excluded pursuant to the JSE Listings Requirements) ratify and
approve of the Martprop transaction.
The unitholders in question constitute:
- 50.8% of the holders of all SA Retail units;
more than 85% of SA Retail unitholders excluding the units owned or
controlled by Whirlprops 33 (Proprietary) Limited and Marriott Asset
Management Limited which Hyprop contends constitute related parties in
relation to the Martprop transaction.
The written objections to the Martprop transaction that have been received from
SA Retail unitholders show a significant majority consensus amongst SA Retail
unitholders that the Martprop transaction is not in the interests of SA Retail
unitholders and should not be implemented at all or should only be implemented
subject to the securing of the requisite SA Retail unitholder approval. Even in
the absence of regulatory obligations imposed on SA Retail to secure its
unitholders approval to implement the Martprop transaction, sound corporate
governance would require the SA Retail board to adhere to the requirements of
its unitholders in this regard.
FINANCIAL EFFECTS
The pro forma financial effects of the offer on the historical earnings,
headline earnings, net asset value and tangible net asset value per Hyprop
combined unit (on the assumption that the offer will be accepted in respect of
all of the remaining SA Retail units) are set out below:
Pro forma Pro forma Change
before offer after offer %
per combined per combined
unit unit
(cents) (cents)(5)
Historical headline earnings 163.81(1) 174.87(2) 6.8
Historical earnings 819.10(1) 597.66(3) (27.0)
Historical net asset value 17.91(1) 19.41(4) 8.4
Historical net tangible asset 17.91(1) 19.41(4) 8.4
value
Weighted average combined 102 818 180 964
units in issue (000`s)
Total combined units in issue 116 631 194 776
(000`s)
(1) The historical earnings and headline earnings per Hyprop combined unit as
set out in the `before offer` column of the table, are based on Hyprop`s
published audited results for the year ended 31 December 2004 (`Hyprop`s
audited results`). The historical net asset value and tangible net asset
value per Hyprop combined unit as set out in the `before offer` column of
the table are based on Hyprop`s audited balance sheet at 31 December 2004
(`Hyprop`s audited balance sheet`), in which the property portfolio is
stated at fair value.
(2) The historical headline earnings per combined unit as set out in the `after
offer` column of the table, is based on the assumption that the remaining
SA Retail units were acquired on 1 January 2004 and the offer was settled
by the issue of 78 145 253 Hyprop combined unit on that date. In addition,
the following adjustments have been made:
(a) the assumption that 100% of the SA Retail units have been acquired has
necessitated that the SA Retail unaudited interim results for the six
months ended 30 September 2004 (`SA Retail interim results`) be
consolidated with the Hyprop audited results;
(b) in order to provide comparability between the Hyprop audited results
and the SA Retail interim results, the net operating income of SA
Retail has been doubled in order to estimate their results for the
year;
(c) the fair value adjustments relating to the investment properties and
the put option have remained the same as those published in the SA
Retail results; and
(d) the number of Hyprop combined units to be issued has been based on the
number of SA Retail units currently in issue less those already owned
by Hyprop based on a conversion ratio of one Hyprop combined unit for
every 2.7 SA Retail units.
(3) The historical earnings per Hyprop combined unit as set out in the `after
offer` column of the table, has been calculated in the manner described for
the historical headline earnings per Hyprop combined unit but excludes the
headline earnings adjustments indicated in the Hyprop audited results as
well as the additional fair value adjustment relating to the investment
properties in the SA Retail interim results. The decrease in historical
earnings per Hyprop combined unit is as a result of the relative difference
between the Hyprop and SA Retail fair value adjustments on investment
properties (Hyprop - R924 000 000 and SA Retail - R91 000 000).
(4) The historical net asset value and tangible net asset value per Hyprop
combined unit as set out in the `after offer` column of the table, are
based on the assumption that the remaining SA Retail units were acquired on
31 December 2004 and the offer was settled by the issue of 78 145 253
Hyprop combined units on that date. In addition, the following adjustments
have been made:
(a) the assumption that 100% of the SA Retail units have been acquired has
necessitated that the balance sheet of SA Retail at 30 September 2004
be consolidated with the Hyprop audited balance sheet;
(b) assumed total costs of implementing the offer of R10 756 354, all of
which were written off to debenture premium and assumed to have been
incurred on 31 December 2004;
(c) the excess of the offer consideration above the net asset value of SA
Retailat 30 September 2004 has been capitalised to investment
properties; and
(d) the Hyprop combined units have been issued at R21,80 implying an offer
consideration of R8,07 per SA Retail unit.
THE OFFER
Timing of the offer
It is anticipated that the offer will open on or around 29 April 2005.
Conditions precedent to the offer
As set out in the previous announcement, the offer is conditional on:
- the securing by Hyprop of the approval of Hyprop combined unitholders
(other than Redefine which, as the holder of approximately 25% of SA Retail
units and approximately 10% of Hyprop combined units, has been ruled by the
JSE to be a related party) to the acquisition of SA Retail units pursuant
to the implementation of the offer; and
- the attainment of all the necessary approvals for the implementation of the
offer from the Competition authorities.
It is anticipated that the meeting of Hyprop combined unitholders for the
purpose of considering and, if deemed fit, approving all of the resolutions
necessary to give effect to the offer will be held on or about 31 May 2005.
Hyprop has appointed Hofmeyr, Herbstein and Gihwala (`Hofmeyr`) to prepare the
merger notification for the potential merger between Hyprop and SA Retail.
Hofmeyr has addressed a letter to SA Retail requesting certain information in
order to compile the necessary merger notification. Despite it being made clear
that all relevant costs will be borne by Hyprop and that any confidential
information pertaining to SA Retail can be submitted directly to the Competition
Commission, SA Retail has indicated that it will not provide the information
requested. There is no prejudice to SA Retail in assisting in the preparation of
the merger notification and their failure to do so prejudices their own
unitholders by delaying their ability to accept an unconditional offer. Hyprop
will make application to the Competition Commission to notify the merger
independently.
WITHDRAWAL OF CAUTIONARY
As the financial effects have now been published Hyprop combined unitholders are
in possession of all relevant information in relation to the offer and it is no
longer necessary that they exercise caution in their dealing in Hyprop combined
units.
Rosebank
20 April 2005
Corporate advisor
Legal advisor
Sponsor
Java Capital (Proprietary) Limited
