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Growthpoint/Paramount - Mandatory Offer
Growthpoint Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Share code: GRT & ISIN ZAE000037669
("Growthpoint")
Paramount Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 1945/019928/06)
Share code: PRA & ISIN ZAE000028577
("Paramount")
MANDATORY OFFER BY GROWTHPOINT TO ACQUIRE ALL THE LINKED UNITS IN PARAMOUNT
1. INTRODUCTION
The holders of linked units in Paramount ("Paramount linked
unitholders") and Growthpoint ("Growthpoint linked unitholders") are
advised that Growthpoint has acquired approximately 65.5 million
Paramount linked units, in exchange for the issue of new linked units
in Growthpoint at the exchange ratio as defined in paragraph to below.
Subsequent to the forementioned transaction, Growthpoint holds 41.9%
of the Paramount linked units in issue and,in terms of the Securities
Regulation Panel ("SRP") Code and Rules of the SRP ("Code"),
Growthpoint is obliged to extend a mandatory offer to all Paramount
linked unitholders to acquire all the linked units of Paramount other
than those already held by Growthpoint ("proposed transaction").
The proposed transaction will be implemented by way of an offer
("offer") in terms of Section 440 of the Companies Act, 1973 (Act 61
of 1973), as amended (the "Act"), to be made by Growthpoint to all
Paramount linked unitholders, apart from Growthpoint, to acquire all
of the Paramount linked units held by such Paramount linked
unitholders ("offer linked units").
The offer is subject to the suspensive conditions set out in paragraph
6 below. Should the offer be accepted by Paramount linked unitholders,
holding not less than nine-tenths of the offer linked units, it is the
intention of Growthpoint to exercise its entitlement to compulsorily
acquire the remaining offer linked units in terms of Section 440K of
the Act. Should Growthpoint elect to exercise its entitlement in terms
of Section 440K, Paramount will become a wholly-owned subsidiary of
Growthpoint and the listing of the Paramount linked units on the JSE
Limited ("JSE") will be terminated.
2. THE OFFER CONSIDERATION AND DISTRIBUTIONS DURING THE OFFER PERIOD
Paramount linked unitholders who accept the offer can elect to either
receive -
* 1 new Growthpoint linked unit for every 1.44 offer linked units
held ("exchange ratio") rounded to the nearest whole number
("linked unit alternative"). Based on the volume weighted average
price of a Growthpoint linked unit of R11.44 on 19 October 2006,
being the last practical date prior to the offer being made by
Growthpoint and the exchange ratio of 1.44, the linked unit
alternative represents a premium of 10.03% to the volume weighted
average price of a Paramount linked unit of R7.22 on the same
date; or
* as Growthpoint has acquired greater than 10% of the Paramount
linked units in issue for cash, within the three month period
preceding the offer, Growthpoint will offer Paramount linked
unitholders a cash consideration of R6.71 for every offer linked
unit ("cash alternative"), being the highest price paid by
Growthpoint per Paramount linked unit in the preceding three
month period.
The linked unit alternative and the cash alternative are
hereinafter collectively referred to as the "offer
consideration".
It is anticipated that Paramount"s next distribution for the
quarter ending 31 October 2006 will be paid on or about 3 January
2007. In order to place Growthpoint linked unitholders in a
similar position, it is also the intention of Growthpoint -
* to pay an interim distribution for the four months ending 31
October 2006 at the same time; and
* thereafter, to match Paramount"s quarterly distribution
periods during the offer period.
A Paramount linked unitholder who accepts the offer early, will, until
the offer becomes unconditional and the offer consideration has been
paid by Growthpoint, still continue to participate in Paramount"s
quarterly distributions.
3. GROWTHPOINTS RATIONALE FOR THE PROPOSED TRANSACTION
Growthpoint expects the benefits of the proposed transaction to be as
follows:
3.1 Growthpoint
Growthpoint"s stated objective is to maintain an optimal balance of
well located sectorally and geographically diversified property assets
underpinned by sustainable and growing income returns. The proposed
transaction provides an opportunity for Growthpoint to acquire a
significant property portfolio that, with the expected synergistic
benefits of the proposed transaction, is expected to increase
Growthpoint"s future distributions.
The proposed transaction will continue to diversify the overall risk
within the Growthpoint property portfolio.
3.2 Paramount linked unitholders
Pursuant to the implementation of the proposed transaction, Paramount
linked unitholders who elect the linked unit alternative will benefit
as follows:
* Paramount linked unitholders will benefit from an upfront capital
premium;
* the combined Growthpoint and Paramount property portfolio
("combined portfolio") is better diversified and will provide
Paramount linked unitholders with increased exposure to a
portfolio of quality assets;
* Paramount linked unitholders will have access to the increased
liquidity and tradeability of Growthpoint linked units and will
participate in any increase in the Growthpoint linked unit price
due to any increase in future distributions available from the
combined portfolio;
* the combined portfolio is anticipated to attract better debt
funding rates than those of Paramount and increase the
competitiveness of the combined portfolio for future
transactions.
4. OPINION, RECOMMENDATIONS AND UNDERTAKINGS
The board of directors of Paramount have appointed Nedbank Capital, a
division of Nedbank Limited as the independent adviser ("the
independent adviser") to advise on whether the terms and conditions of
the offer are fair and reasonable to Paramount linked unitholders.
Details of the opinion of the independent adviser will be provided in
the circular to be posted to Paramount linked unitholders.
Certain Paramount directors and management holding directly and
indirectly approximately 9.7 million Paramount linked units,
comprising approximately 4.0 % of the Paramount linked units in issue
have irrevocably undertaken to accept the linked unit alternative.
5. SRP CONFIRMATION
The SRP has been given appropriate confirmation (complying with its
requirements) that Growthpoint has sufficient cash resources and/or
facilities available to meet its commitments in terms of the cash
alternative in respect of the offer.
6. SUSPENSIVE CONDITIONS
The offer is subject to -
* all relevant documentation to be distributed to Paramount linked
unitholders being approved by the SRP, JSE; and
* the approval of the Competition Authorities and any other
regulatory authorities, to the extent required.
7. FURTHER ANNOUNCEMENTS, DOCUMENTATION AND CAUTIONARY ANNOUNCEMENT
Announcements setting out the salient dates and the pro forma
financial effects of the offer will be made in due course. Paramount
linked unitholders are advised to continue to exercise caution in
trading their linked units until such time as this information is
released.
A circular, providing further information on the offer is expected to
be posted to Paramount linked unitholders in due course.
Johannesburg
20 October 2006
Investment bank to Growthpoint Sponsor to Growthpoint
(Investec Corporate Finance) (Investec Bank Limited)
Legal advisor to Growthpoint Independent adviser and sponsor to
Paramount
(Jowell Glyn Marais) (Nedbank Capital)
Date: 20/10/2006 01:49:07 PM Produced by the JSE SENS Department
