| Tue 11 Oct 2005, 13:07 | | Pangbourne - Terms Announcement |
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Pangbourne - Terms Announcement
PANGBOURNE PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/002352/06)
(Share code: PAP & ISIN: ZAE000005252)
("Pangbourne" or "the company")
INTRODUCTION OF BLACK ECONOMIC EMPOWERMENT
1. INTRODUCTION
Pangbourne is pleased to announce that, subject to the fulfilment of certain
conditions precedent set out in paragraph 4 below, it has concluded agreements
to facilitate the acquisition of an effective 6.15% interest in its issued
combined units by a black economic empowerment partner, Yard Capital
(Proprietary) Limited ("Yard Capital") ("the transaction"). The transaction, the
first stage of Pangbourne"s transformation strategy, has been structured to
ensure that it is non-earnings dilutionary for existing holders of Pangbourne
combined units.
2. RATIONALE
Pangbourne, in its commitment to transformation, has actively sought, over a
period of time, a black partner that will assist in its strategy of growth and
increasing distributions to combined unitholders on a sustainable basis.
Accordingly, Pangbourne intends to enter into a black economic empowerment
transaction with Yard Capital that would be mutually beneficial to both parties.
The relationship is based on common objectives supported by compatible business
principles and values.
Yard Capital will have a central role in the further development of Pangbourne"s
transformation strategy.
3. THE TRANSACTION
In order to facilitate the introduction of black economic empowerment at an
equity ownership level, Pangbourne will allot and issue 12 376 238 new combined
units ("the subscription units") to Panya Investments (Proprietary) Limited
("Panya"), a wholly-owned subsidiary of Pangbourne established to facilitate the
transaction, for an aggregate consideration of R125 000 000. The subscription
price represents a 5% discount to the 30-day volume-weighted average price per
combined unit from the date of approval of the transaction by the board after
deduction of the distribution payable to combined unitholders registered on 30
September 2005 in which Panya will not participate. Furthermore, to avoid
dilution of the subsequent distribution to combined unitholders, Pangbourne will
claw back from Panya the distribution for the period 1 July 2005 to the date of
issue of the subscription units calculated on a pro rata basis over the six
months ending 31 December 2005.
Following such allotment and issue, Panya will hold approximately 6.15% of
Pangbourne"s combined units in issue. The subscription price is to be funded by
Absa Bank Limited ("Absa") ("the Absa funding") and Yard Capital has undertaken
to contribute R5 000 000 ("the Yard funding").
As security for the Absa funding, Panya will pledge the subscription units to
Absa. Pangbourne will grant Absa a limited recourse suretyship and mortgage
bonds in favour of Absa will be registered over certain properties owned by
Pangbourne to the value of R148 000 000. The Absa funding is to be serviced and
repaid through the distributions received by Panya in respect of its
subscription units. The risk of interest rate increases will be hedged by
entering into interest rate fixes for various periods in respect of 80% of the
Absa funding.
Pangbourne has also entered into a sale of shares agreement in terms of which it
will dispose of all the issued ordinary shares of Panya ("the sale shares") to
Yard Capital for a consideration equal to R999, which is the par value of the
sale shares. On implementation, approximately 6.15% of the Pangbourne combined
units in issue will be under the control of Yard Capital through its interest in
Panya. Pangbourne and Yard Capital have entered into a shareholders agreement
which governs their future relationship. Yard Capital has undertaken not to
dispose of its shares in Panya for a specified period of time and has provided
non-compete undertakings to Pangbourne.
Pangbourne will remain the holder of a special preference share in Panya which
will allow it to enforce its rights against Panya and protect its interests in
respect of the security it has granted to Absa in respect of the transaction.
Pangbourne"s combined unitholders are referred to the announcement dated 31 May
2005 published on SENS and in the press, setting out information relating to the
acquisition by Pangbourne of a portfolio of properties from Paramount Properties
Limited ("the Paramount Portfolio") ("the Paramount acquisition"). In terms of
the agreement governing the Paramount acquisition, which has now become
unconditional, it was envisaged that Pangbourne may raise funds for the
settlement of the consideration payable for the Paramount acquisition through
the issue of new combined units.
The issue of the subscription units to Panya has been timed to coincide with the
transfer of the Paramount Portfolio to Pangbourne to ensure that there is no
dilution of Pangbourne"s distribution to combined unitholders. Although the
transaction and the Paramount acquisition are not inter-conditional, the cash
raised through the issue of the subscription units to Panya will be utilised to
discharge Pangbourne"s obligation to Paramount Properties Limited. This will
leave Pangbourne with favourable gearing levels to make further property
acquisitions.
4. CONDITIONS PRECEDENT TO THE TRANSACTION
The transaction is conditional upon the registration of the mortgage bonds
referred to in paragraph 3 above and the approval by Pangbourne shareholders and
debenture holders of the ordinary resolutions set out in the notices of the
general meeting of Pangbourne shareholders and the general meeting of Pangbourne
debenture holders ("the general meetings") included in the circular to
Pangbourne unitholders to be posted on or about 19 October 2005.
5. YARD CAPITAL
5.1 History and structure
Yard Capital is a black empowerment investment company which was incorporated in
September 2002. The directors and principal shareholders of Yard Capital are
prominent black business people in South Africa with extensive experience in
business, finance and senior management in government and the private sector.
The management team has strong business acumen and management experience and
combines many years of public policy, research, private equity and corporate
finance and transaction advisory skills.
RMB Private Equity ("RMBV"), a division of FirstRand Bank Limited, has a 20%
shareholding in Yard Capital as part of the empowerment strategy of RMBV, which
enhances Yard Capital"s capacity to transact. RMBV is represented on the board
of directors of Yard Capital. Leslie Maasdorp (the non-executive chairman),
Irene Charnley (a non-executive director), Lumkile Mondi (a non-executive
director), and Yogesh Narsing and Lizwi Mtumtum (both executive directors),
collectively hold 58% of Yard Capital.
The balance of Yard Capital"s shares is set aside in trust for future management
and a broad based charitable trust, the Yard Capital Development Trust.
5.2 Nature of business
Yard Capital"s vision is to create ongoing shareholder value and facilitate
greater broad based empowerment through black participation in the South African
economy by acquiring significant interests in sustainable businesses.
Yard Capital"s investment approach is to be a long-term investor. Yard
Capital"s investments must meet the following criteria:
* require the capacity and skills base of the Yard Capital team;
* be an established business with strong management;
* have a strong South African presence and a superior position in the market;
* be a cash-generative investment; and
* have strong growth potential.
Yard Capital is an active investor and works pro-actively with the management of
companies in which it invests to enhance its ability to generate above average
returns for shareholders.
Current investments include a 30% interest in Fujitsu Services (Proprietary)
Limited (an IT services company and a subsidiary of Fujitsu Services Plc, the
third largest global IT services company) and a 6.75% interest in Sani-tech
(Proprietary) Limited (a provider of portable toilet hire and hygiene sanitation
services with a dominant share of the market).
6. PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects of the transaction are not material.
7. OPINION OF THE PANGBOURNE BOARD
The board of directors of Pangbourne ("the board"), together with its advisers,
has structured the black ownership initiative in line with the black economic
empowerment strategy of Pangbourne as set out in paragraph 2 above. The
directors of the board are of the unanimous opinion that the terms of the
transaction are beneficial to Pangbourne unitholders. Accordingly, the board
recommends that Pangbourne unitholders vote in favour of the resolutions to be
proposed at the general meetings.
8. GENERAL MEETINGS AND DOCUMENTATION
A circular setting out the full details of the transaction will be posted to
Pangbourne unitholders on or about 19 October 2005.
The general meetings will take place consecutively on Tuesday, 8 November 2005
at 10:00 in the Conference Room, Pangbourne House, 2nd Floor, 382 Jan Smuts
Avenue, Craighall, Johannesburg.
Craighall
11 October 2005
Investment bank and sponsor
STANDARD BANK
Attorneys to Pangbourne
BOWMAN GILFILLAN
Attorneys
Independent sponsor
Sansara Financial Services
Attorneys to Yard Capital
Deneys Reitz Attorneys
Reg. No. 1984/003385/21
Reporting accountants
Deloitte & Touche Chartered Accountants (SA)
Registered Accountants and Auditors
Date: 11/10/2005 01:07:12 PM Produced by the JSE SENS Department
