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Alpina Investments Limited - Detailed Cautionary Announcement
Release Date: 16/10/2003 17:02:40 Code(s): ALA
ALPINA INVESTMENTS LIMITED - DETAILED CAUTIONARY ANNOUNCEMENT
ALPINA INVESTMENTS LIMITED
(Formerly Gold Edge Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1997/021085/06)
Share code: ALA
ISIN: ZAE000048377
("Alpina")
DETAILED CAUTIONARY ANNOUNCEMENT RELATING TO THE ACQUISITION OFAPROPERTY ASSET
PORTFOLIO
Introduction
Linked unit holders are referred to a renewal of cautionary announcement on 2
October 2003 and the announcement of Alpina"s audited financial results for the
year ended 30 June 2003 in which linked unit holders were informed that the
company was negotiating the conclusion of the acquisition of a large property
portfolio.
Acquisition Of Property Asset Portfolio
Imara Corporate Finance South Africa (Pty) Limited is authorised to announce
that agreements (inclusive of the normal warranties) have been signed between
Alpina and Daisy Street Investments 127 (Proprietary) Limited ("Daisy Street")
in terms of which Alpina has with effect from 1 September 2003 acquired the
entire issued share capital and shareholders" loan account of Daisy Street for a
net purchase consideration of R251 134 152 ("the Daisy Street acquisition"). The
vendor of Daisy Street is REIT Property (Pty) Limited.
The Daisy Street acquisition comprises a portfolio of commercial properties with
a value of R383 530 000 property related businesses in property management,
property finance and mortgage origination for a collective purchase price of R12
600 000, and the assumption of mortgage bonds and financing facilities of R177
023 889.
The Daisy Street acquisition has been assembled for onsale to Alpina. This
acquisition includes the entire issued share capital and loan accounts of
Fairvest Property (Proprietary) Limited ("Fairprop"), a wholly owned subsidiary
of Fairvest Property Holdings Limited ("Fairvest"), a company listed in the
"Financial: Real Estate" sector of the JSE Securities Exchange South Africa
("the JSE").
The other properties within the Daisy Street acquisition have been acquired from
Rentmeester Assurance Ltd, JVG Investments (Pty) Ltd, United Cold Storage (Pty)
Ltd, Intertrade Finance Ltd, Deepset Properties (Pty) Ltd, Erf 107 Industria
West CC, Worldpoise Properties (Pty) Ltd, Grimata Property Investments (Pty)
Ltd, Com-bridge Commission Solutions (Pty) Ltd, In Excess Trading 196 (Pty) Ltd,
Interplay Trading 38 (Pty) Ltd and PCP Equity (Pty) Ltd, collectively "the other
vendors".
The Daisy Street acquisition consists of a property portfolio that has been
acquired at an average 15% forward net income yield for the first year.
Settlement Of The Purchase Consideration
The purchase price of R251 134 152 for the Daisy Street acquisition will be
settled by Alpina through the issue of 125 567 076 "b-class" linked units of 200
cents each to Daisy Street, who will in turn renounce such linked units to
Fairvest and the other vendors. Each "b-class" linked unit in Alpina will
comprise one ordinary share of 1 cent and one debenture of 1 cent each issued at
a premium of 198 cents. The "b-class" linked units in Alpina will rank pari
passu with all other Alpina "b-class" linked units in issue.
Linked Unit Structure
Alpina has a capital structure comprising of linked units with the following
summarised terms and conditions:
"a-class" linked units: consist of one ordinary share with a par value of 1 cent
linked to an "a-class" debenture at a par value of 1 cent each and a premium of
198 cents; for the first twelve months after issue, these debentures will earn
interest at a nominal rate of 14% pa payable six monthly in arrear provided that
sufficient profits are available, and thereafter payable on a variable basis
after full provision has been made for the payment of interest to the "b-class"
debenture holders; and
"b-class" linked units: consist of one ordinary share with a par value of 1 cent
linked to a "b-class" debenture at a par value of 1 cent each and a premium of
198 cents; for the first twelve months after issue, these debentures will earn
interest at a variable rate after full provision has been made for the payment
of the initial 14% to the "a-class" debenture holders, and after such twelve
month period interest will escalate from a base of 14% pa by 5% every six months
on a compounded basis every six months with such debenture holders participating
in the available interest up to their appropriate rate of interest before
payments are made to "a-class" debenture holders.
Rationale For The Daisy Street Acquisition
At the time of the announcement of Alpina"s audited financial results for the
year ended 30 June 2003, the directors indicated that the short-term growth
strategy was to create a property portfolio of significant critical mass through
the acquisition of quality, high-yielding properties with strong cash flows to
support geared returns. The objective of Alpina as a property loan stock company
is to achieve net income yields in excess of 15% with a gearing ratio of
approximately 50%.
Additional Transactions Undertaken By Alpina
In addition to the Daisy Street acquisition referred to above, at a general
meeting held on 6 August 2003, Alpina"s shareholders approved the acquisition of
Ixia Trading 532 (Proprietary) Limited ("the Ixia transaction") which company
had acquired a R93 004 000 property portfolio from Bonatla Holdings Limited
("Bonatla") to be settled through the issue of "b-class" linked units and the
assumption of debt. The Ixia transaction"s property portfolios in the process of
being transferred to Ixia .
The property transfers have been delayed as a result of the municipal
authorities being unable to timeously furnish the necessary clearance
certificates required to effect the Deeds Office transfers. Once these transfers
have been completed, Alpina will issue 11 662 607 "b-class" linked units of 200
cents each in respect of the Ixia transaction in addition to the 9 116 926 "a-
class" linked units presently in issue.
Net Effect Of The Daisy Street Acquisition
Following the Daisy Street acquisition and the Ixia transaction referred to
above, Alpina will hold property and related assets to the value of R573,5
million, against which R290,7 million will be financed by mortgage bonds. Alpina
will therefore have a gearing ratio of 50,7% to assets.
On completion of the Daisy Street acquisition and the Ixia transaction, there
will be 146 346 609 Alpina "a-class" and "b-class" linked units in issue, held
by the following vendor groupings:
Daisy Street acquisition, to be
renounced to Fairvest 68 153 056 46,6%
Daisy Street acquisition, to be
renounced to other vendors 57 414 021 39,2%
Ixia transaction, to be renounced to
Bonatla 11 662 607 8,0%
Original Alpina "a-class" linked unit
holders 9 116 926 6,2%
Total Alpina "a-class" and "b-class"
linked units in issue after the Daisy
Street acquisition and the Ixia
transaction 146 346 609 100%
Fairvest will distribute the Alpina "b-class" linked units to its linked unit
holders as soon as practically possible after the conclusion of the Daisy Street
acquisition. In view of the distribution, Fairvest will apply to the Securities
Regulation Panel ("SRP") for a dispensation not to make a mandatory offer to the
Alpina linked unit holders.
Following the renunciation of Alpina"s linked units to individual shareholders,
the following parties will become the major shareholders holding more than 5% of
Alpina"s total issued linked units, viz Rentmeester (17,4%), REIT Property
(10,9%), Gorfil Brothers (7,1%) and Millenium Information and associates (7,0%).
Financial Effects
The full financial effects of the Daisy Street acquisition on an Alpina
shareholder will be announced once the relevant historic accounting information
pertaining to the various companies holding properties and businesses being
purchased has been evaluated.
Conditions Precedent
The Daisy Street acquisition is subject to the following terms and conditions:
* The approval of the Daisy Street acquisition by the linked unit holders of
Alpina in general meeting;
* The approval by Fairvest linked unit holders in general meeting of the
disposal of Fairprop in exchange for Alpinia "b class" linked units;
* The granting of the listing by the JSE of the Alpina 125 567 076 "b-class"
linked units to be issued in settlement of the Daisy Street acquisition;
* The approval of the SRP, the JSE and the Competition Commission to the
transaction.
Circular To Shareholders
Full details of the Daisy Street acquisition will be contained in a circular to
shareholders of Alpina, which will be posted within the next 28 days. In terms
of the JSE"s Listings Requirements with regard to related parties, certain
shareholders will not be permitted to participate in the vote for the approval
of the Daisy Street acquisition. As the Daisy Street acquisition will constitute
a category 1 transaction in terms of the JSE"s Listings Requirements, Alpina
will also be preparing Revised Listings Particulars.
Further Cautionary Announcement
Shareholders of Alpina are advised to exercise caution in the trading of their
linked units until such time as the financial effects of the Daisy Street
acquisition have been published.
16 October 2003
Sponsor and Corporate Finance Advisor:
Imara Corporate Finance South Africa (Pty) Limited
