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APA APB
APA
ApexHi Properties Limited - Creation Of C Class Linked Units ("C units")
ApexHi Properties Limited
(Registration No. 1999/000238/06)
Share codes: APA ISIN codes: ZAE000033064
APB ZAE000033072
("ApexHi")
CREATION OF C CLASS LINKED UNITS ("C units")
INTRODUCTION
ApexHi currently has a unique dual unit structure with separate A and B
units.
ApexHi"s unit structure currently comprises:
- A linked units ("A units"), being A class shares linked to A class
unsecured variable rate subordinated debentures; and
- B linked units ("B units"), being B class shares linked to B class
unsecured variable rate subordinated debentures.
The intention behind this structure was to create two different types of
units with different risk profiles: the A units with minimal risk but
minimal growth in earnings; and the B units with high growth potential but
higher risk. The growth in ApexHi"s income distributions have exceeded
expectations and income distributions have now reached the level in terms
of which future growth in income will be shared between the A and B unit
holders in the ratio of 45:55, negating the effect of the dual unit
structure.
In order to perpetuate the concept of the dual structure ApexHi proposes
amending its unit structure on the basis set out below by amending the
rights attaching to the A and B units and creating a new C unit which will
be traded separately to the A and B units and which will be entitled to all
of the income distributed annually by ApexHi in excess of R2.27 per unit.
This proposal will recreate the original distinction between low risk
secure debentures and high growth higher risk debentures.
PROPOSED CHANGES TO THE APEXHI UNIT STRUCTURE:
Currently, the holders of:
- the A units are entitled to receive the first R1.02 per unit of the
annual income distributions, or 45% of the annual income distributions,
whichever is the greater;
- the B units are entitled to the balance of the income distributions
once the A unit holders have been paid.
The income distribution to the holders of the A units for the quarter ended
30 September 2005 was 25.88 cents per unit, which for the first time
exceeded the minimum quarterly income distribution to the holders of A
units of 25.50 cents (being 25% of R1.02).
Provided that the ApexHi annual income distributions to all unit holders do
not fall below R2.27 per unit, the holders of the A and B units will share
in all income distributions in the ratio of 45:55.
If income distributions continue to grow the downside protection in the A
units will become increasingly less valuable and the A and B units should
begin to trade at similar yields negating the effect of having a dual unit
structure.
For the reasons set out above, Apexhi proposes amending its unit structure
by:
- amending the rights attaching to the current A units such that the
holders of the A units will be entitled to receive only the first R1.02 per
unit of ApexHi"s annual income distributions;
- amending the rights attaching to the current B units, such that the
holders of the B units will be entitled to receive only the next R1.25 per
unit of ApexHi"s annual income distributions; and
- creating new "C units" (comprising C class shares linked to C class
unsecured variable rate subordinated debentures) which will entitle the
holders to all of the income distributed in excess of R2.27 per unit.
The C units will be distributed to the A and B unit holders on the basis
that:
- A unit holders will receive 45 C units for every 100 A units held by
them; and
- B unit holders will receive 55 C units for every 100 B units held by
them.
The effect of the proposed amendments is that unit holders who held A or B
units immediately before the amendments will still be entitled to the same
proportion of ApexHi"s distributable income as they were entitled to before
the amendments, however this entitlement will now be derived from two units
as opposed to one: in the case of A unit holders, an A unit and a C unit
and in the case of B unit holders, a B unit and a C unit.
Over time the amended A and B units should begin to trade at similar yields
at which point ApexHi may seek to combine them into a single unit.
CAPITAL GAINS TAX ("CGT")
The South African Revenue Services have indicated that they consider the
proposed amendments to the capital structure of ApexHi to be a CGT event.
Unit holders are advised to obtain independent tax advice in this regard.
APPROVALS AND CIRCULAR TO UNIT HOLDERS
The proposed amendments to the unit structure of ApexHi are subject to the
requisite approval of the debenture trustee and the A and B shareholders
and A and B debenture holders in general meeting. A circular providing full
details of the proposed amendments and enclosing notices convening general
meetings of A and B shareholders and A and B debenture holders will be
posted to ApexHi unit holders in due course.
Rosebank
8 February 2006
Corporate advisor, legal advisor and sponsor to ApexHi
Java Capital (Proprietary) Limited
Date: 08/02/2006 05:26:32 PM Produced by the JSE SENS Department
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