| Mon 18 Dec 2006, 13:35 | | GRT/PRA - Growthpoint/Paramount - Financial Effec |
|
GRT PRA
GRT PRA
GRT/PRA - Growthpoint/Paramount - Financial Effects and Salient Dates and
withdrawal of cautionary
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")
FINANCIAL EFFECTS AND SALIENT DATES OF THE OFFER AND WITHDRAWAL OF CAUTIONARY
1. INTRODUCTION
On 20 October 2006, Growthpoint announced that it acquired 41.9% of the
linked units in Paramount and that pursuant to the rules of the Securities
Regulation Panel, Growthpoint was obliged to make a mandatory offer
("offer") to Paramount linked unitholders, other than Growthpoint ("linked
unit offerees"), for all the Paramount linked units held by the Paramount
offerees ("offer linked units"). The offer is in terms of Section 440 of
the Companies Act, 1973 (Act 61 of 1973), as amended. This announcement
sets out the salient dates and financial effects of the offer to a
Growthpoint linked unitholder as well as to a Paramount linked unitholder.
As previously communicated, Paramount offerees who accept the offer can
elect to receive either -
* 1 new Growthpoint linked unit for every 1.44 offer linked units held
("exchange ratio") rounded to the nearest whole number ("linked unit
alternative"); or
* a cash consideration of R6.71 for every offer linked unit ("cash
alternative").
2. OFFER TO B DEBENTURE HOLDERS
As part of the offer, Growthpoint is also extending an offer to all holders
of Paramount B debentures ("B debenture holders"), other than Growthpoint.
Full details of this offer are disclosed in the circular to Paramount
linked unit offerees and B debenture holders ("Paramount offerees"),
referred to in Paragraph 10 below.
3. APPOINTMENT OF AN INDEPENDENT SUB-COMMITTEE
The Paramount Board of Directors ("Paramount Board") appointed an
independent sub-committee of the Paramount Board, comprising non-executive
directors of Paramount, in order to consider the terms of the offer
("independent sub-committee").
4. OPINIONS AND RECOMMENDATIONS
4.1 The opinion of the independent adviser
The Paramount Board appointed Nedbank Capital, a division of Nedbank
Limited ("Nedbank Capital") as an independent adviser to provide them
with advice as to the fairness and reasonableness of the terms and
conditions of the offer. Nedbank Capital has considered the terms and
conditions of the offer and has expressed an opinion that, based on
their assessment, the offer is fair and reasonable and has advised the
independent sub-committee accordingly.
4.2 Opinion of the independent sub-committee
The independent sub-committee has considered the terms of the offer,
and taking into account the opinion of Nedbank Capital, is of the
unanimous opinion that the terms of the offer are fair and reasonable
to the Paramount offerees.
4.3 Opinion of the Paramount Board
The Paramount Board has considered the terms of the offer and taking
into account the opinion of Nedbank Capital and the independent sub-
committee, is of the opinion that the terms of the offer are fair and
reasonable and recommend that Paramount offerees accept the offer.
Paramount offerees are referred to the opinion from Nedbank Capital
expressed in their opinion letter set out in the circular to Paramount
offerees, referred to in paragraph 10 below and are encouraged to read
it in its entirety.
5. FINANCIAL EFFECTS
5.1 Paramount
The table below sets out the unaudited pro forma financial effects of
the offer on a linked unit offeree based on the last published interim
results of Paramount for the six month period to 30 April 2006. The
financial effects on a B debenture holder are given in the circular.
The unaudited pro forma financial effects are the responsibility of
the Paramount Board and have been prepared for illustrative purposes
only, in order to provide information on how the offer might affect
the financial results and position of a linked unit offeree and
because of their nature, may not give a true reflection of the actual
financial effects of the offer.
Linked unit Cash alternative
alternative
Per Paramount Before Paramount Change Paramount Change
linked unit the linked linked
offer unit unit
(1.44 (R6.71)
swap)
Notes (cents) (cents) (%) (cents) (%)
Market value 1 722.0 794.4 10.0 671.0 (7.1)
Earnings 2 27.9 30.6 9.7 26.8 (3.9)
Headline 2 25.4 (32.6) (228.3) 26.8 5.5
earnings
/(loss)
Distributable 2 30.0 29.4 (2.0) 26.8 (10.7)
earnings and
distributions
Net asset 3 526.0 712.3 35.4 671.0 27.6
value and
tangible net
asset value
Combined 4 752.0 823.8 9.5 697.8 (7.2)
effect
(capital
growth plus
distribution)
NOTES
1. The "Before the offer" column reflects the volume weighted
average price ("VWAP") per Paramount linked unit on the JSE for
19 October 2006, being the last trading day immediately preceding
the publication of the offer to Paramount linked unitholders. The
"Paramount linked units (1.44 swap)" column reflects the value in
Growthpoint linked units to be received per Paramount linked
unitholder in terms of the 1.44 switch ratio using the VWAP per
Growthpoint linked unit on the JSE for 19 October 2006, being the
last trading day immediately preceding publication of the offer
to Paramount linked unitholders.
The "Paramount linked units (R6.71)" column reflects the cash
consideration to be received per Paramount linked unit.
2. The "Before the offer" column reflects the reviewed earnings,
headline earnings and distributions per Paramount linked unit for
the six months ended 30 April 2006. The "Paramount linked units
(1.44 swap)" column reflects the reviewed earnings, headline
earnings and distributions attributable to a Paramount linked
unit in terms of the 1.44 switch ratio by combining the reviewed
earnings, headline earning and distributions for Paramount with
the respective earnings, headline earning and distributions for
Growthpoint for the six months period which commenced on 1
January 2006.
The "Paramount linked units (R6.71)" column reflects the interest
income that a Paramount linked unit would have earned had the
cash consideration to be received per Paramount linked unit been
invested at a six-month fixed deposit compounded interest rate of
8% per annum.
3. The "Before the offer" column reflects the reviewed net asset
value per Paramount linked unit at 30 April 2006. The "Paramount
linked units (1.44 swap)" column reflects the net asset value
attributable to a Paramount linked unit in terms of the 1.44
switch ratio by combining the net asset value for Paramount with
the net asset value for Growthpoint.
The "Paramount linked units (R6.71)" column reflects the cash
consideration to be received per Paramount linked unit.
4. The "Combined effect (capital growth plus distribution)" takes
into account the combined capital effect to a Paramount linked
unit of accepting the offer together with the effect of changes
in distributions.
5. It has been assumed that 100% of the Paramount linked units have
been acquired.
6. The effect of taxation has not been taken into account in the
above calculations.
7. It has been assumed in the calculations above that the offer was
effective for the six months from 1 November 2005 for income
statement purposes and at 30 April 2006 for balance sheet
purposes.
5.2 Growthpoint
The table below sets out the unaudited pro forma financial effects of
the offer on a Growthpoint linked unitholder based on the audited
results of directors of Growthpoint for the year ended 30 June 2006.
The pro forma financial effects are the responsibility of the
Growthpoint directors and have been prepared for illustrative purposes
only, in order to provide information on how the offer might affect
the financial results and position of a Growthpoint linked unitholder
and, because of their nature, may not give a true reflection of the
actual financial effects of the offer.
Linked unit Cash
alternative alternative
Per Growthpoint Notes Before After Change After Change
linked unit the the (%) the (%)
offer offer offer
(cents) (cents) (cents)
Earnings 1 85.7 94.3 10.0 94.5 10.3
Headline earnings 1 (65.5) (46.2) 29.5 (64.0) 2.3
/(loss)
Distributable 1 81.3 81.7 0.5 77.2 (5.0)
earnings and
distributions
Net asset value and 2 1 025.8 1 025.7 0.0 1 025.7 0.0
tangible net asset
value
Notes:
1. The "Before the offer" column reflects the earnings, headline
earnings, distributable earnings and distributions per
Growthpoint linked unit for the year ended 30 June 2006,
calculated on the basis of the weighted average number of 852.7
million Growthpoint linked units in issue throughout the period.
The "After the offer" column assumes that the offer was
implemented with effect from 1 July 2005 and it incorporates the
earnings of Paramount for the twelve months ended 30 April 2006
and is based on a a total average number of 141.4 million
additional Growthpoint linked units in issue in respect of the
linked unit alternative and 45.4 million additional Growthpoint
linked units in issue in respect of the cash alternative.
2. The "Before the offer" column reflects the net asset value per
Growthpoint linked unit at 30 June 2006 based on
778.2 million Growthpoint linked units in issue. The "After the
offer" column assumes that the offer was implemented on 30 June
2006 and in respect of the linked unit alternative, incorporates
141.4 million additional Growthpoint linked units issued in terms
of the linked unit consideration at R10.51 per linked unit, being
the price paid by Growthpoint per linked unit which triggered the
offer, representing an amount of R7.30 per Paramount linked unit
at a exchange ratio of 1.44. The cash alternative incorporates
45.4 million additional Growthpoint linked units at a
consideration R10.51 per linked unit, as described above.
3. It has been assumed that 100% of the Paramount linked units
have been acquired.
4. The effect of taxation has not been taken into account in
the above calculations.
In terms of the Listings Requirements of the JSE the offer is a
category 3 transaction for Growthpoint. As such no linked unitholder
approval is required from Growthpoint`s linked unitholders.
6. SALIENT DATES
Circular posted to Paramount offerees Monday, 18 December 2006
Opening date of the offer Monday, 18 December 2006
Last day to trade to participate in the Friday, 19 January 2007
offer
Paramount linked units trade ex the right Monday, 22 January 2007
to participate in the offer
Record date on which Paramount offerees Friday, 26 January 2007
must be recorded in the register in order
to participate in the offer
Closing date of the offer (12:00) Friday, 26 January 2007
Results of the offer to be announced on Monday, 29 January 2007
SENS on or about
Results of the offer to be published in Tuesday, 30 January 2007
the press on or about
7. TRANSACTIONS WITH PARAMOUNT MANAGEMENT
Investec Property Group Limited ("IPG"), the asset and property manager to
Growthpoint has concluded agreements with Spire Property Services
(Proprietary) Limited ("Spire") in terms of which IPG will acquire 100% of
the issued share capital of Spire, for an effective purchase consideration
of R145 000 000. Spire is the appointed property manager for Paramount and
also owns 100% of Paraprop Asset Managers (Proprietary) Limited, the asset
manager to Paramount. Certain shareholders of Spire are also directors and
shareholders of Paramount.
Full details of the transactions with Paramount management are disclosed in
the circular to Paramount offerees, referred to in paragraph 10 below.
8. COMPETITION AUTHORITIES APPROVAL
Competition Authorities have unconditionally approved the acquisition of
Paramount by Growthpoint, as a result the offer is now unconditional.
9. ACCEPTANCE AND SETTLEMENT OF THE OFFER
Offer acceptances will be settled on a weekly basis during the offer
period. All offer acceptances that are received by the transfer secretaries
before the offer closing date will be settled according to the following
timetable;
Offer acceptance received by: Settlement on or about:
21 December 2006 22 December 2006
29 December 2006 02 January 2007
05 January 2007 8 January 2007
11 January 2007 12 January 2007
17 January 2007 18 January 2007
23 January 2007 24 January 2007
26 January 2007 29 January 2007
For certificated Paramount offerees the above dates represent the day on
which their elected offer consideration (linked unit certificate or cheque)
is posted to the Paramount offeree. The consideration will be posted at the
Paramount offeree`s risk.
For dematerialised Paramount offerees the above dates represent the day on
which their elected offer consideration (linked unit or cash) is credited
to their accounts with their CSDP or broker.
10. CIRCULAR TO PARAMOUNT OFFEREES
A circular, providing further information on the offer will be posted to
Paramount offerees today.
11. Withdrawal of cautionary
Paramount linked unitholders are referred to the cautionary announcement
dated 20 October 2006, and are advised that caution is no longer required
to be exercised by linked unitholders when dealing in their securities.
Sandton
18 December 2006
Investment bank to Growthpoint Sponsor to Growthpoint
(Investec Corporate Finance) (Investec Bank Limited)
Legal adviser to Growthpoint Independent adviser and sponsor to
(Jowell Glyn Marais) Paramount
(Nedbank Capital)
Legal adviser to Paramount Independent reporting accountants and
(Cliffe Dekker) auditors
(Ernst & Young)
Date: 18/12/2006 13:35:01 Produced by the JSE SENS Department.
