| Tue 16 Jan 2007, 17:01 | | SAC - SA Corp - Offer by SA Corp to acquire all th |
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SAC
SAC
SAC - SA Corp - Offer by SA Corp to acquire all the SA Retail Properties
Limited ("SA Retail") linked units in issue
SA Corporate Real Estate Fund
(formerly Martprop Property Fund)
(Incorporated in the Republic of South Africa)
Share Code: SAC & ISIN Code: ZAE000083614
A Collective Investment Scheme in property
registered in terms of the Collective Investment Schemes Control Act, No. 45 of
2002 and managed by
SA Corporate Real Estate Fund Managers Limited
(formerly Marriott Property Fund Managers Limited)
(Registration number 1994/009895/06)
("SA Corp" or "the Fund")
OFFER BY SA CORP TO ACQUIRE ALL THE SA RETAIL PROPERTIES LIMITED ("SA RETAIL")
LINKED UNITS IN ISSUE
1. INTRODUCTION
The holders of units in SA Corp ("SA Corp Unit Holders") are advised that SA
Corp has delivered an offer letter to the Board of Directors of SA Retail ("SA
Retail Board") in terms of which SA Corp is making an offer to the holders of
linked units in SA Retail ("SA Retail Linked Unit Holders") to acquire all the
SA Retail linked units ("Offer Linked Units") held by them (the "Proposed
Transaction").
The Proposed Transaction will be implemented by way of an offer ("Offer") in
terms of Section 440 of the Companies Act, No. 61 of 1973, as amended (the
"Act..
The Proposed Transaction is an affected transaction in terms of the Securities
Regulation Code and Rules of the SRP ("SRP Code") and as such is governed by the
Securities Regulation Panel ("SRP"). The SA Retail Board will appoint an
independent adviser to advise on whether the terms and conditions of the Offer
are fair and reasonable to SA Retail Linked Unit Holders.
The Proposed Transaction is subject to the suspensive conditions set out in
paragraph 5 below ("Suspensive Conditions"). One of the Suspensive Conditions of
the Offer is that SA Corp procures acceptances from those SA Retail Linked Unit
Holders holding at least nine tenths of the SA Retail linked units in issue.
Further to this, SA Corp intends invoking the provisions of section 440K of the
Act, in terms of which SA Corp will exercise its entitlement to compulsorily
acquire the remaining Offer Linked Units, with SA Retail becoming a wholly-owned
subsidiary of SA Corp. Following this, it is intended that the listing of the SA
Retail linked units on the JSE Limited ("JSE") be terminated.
2. THE OFFER CONSIDERATION AND DISTRIBUTIONS DURING THE OFFER PERIOD
SA Retail Linked Unit Holders who accept the Offer will receive 3.05 new SA Corp
units for every 1 Offer Linked Unit held rounded to the nearest whole number
("Offer Consideration"), subject to the Suspensive Conditions set out in
paragraph 5 below. Based on the intra day market price of a SA Corp unit of
R3.55 on 12 January 2007, being the business day on which the Offer was made by
SA Corp, the Offer Consideration represents a premium of 8.3% to the closing
market price of a SA Retail linked unit of R10.00 on the same date.
Should the Offer be successful and SA Corp acquires 100% of the SA Retail linked
units in issue then SA Retail Linked Unit Holders will participate in SA Corp
distributions declared in respect of the financial year commencing on 1 January
2007, with future SA Retail distributions accruing to SA Corp.
SA Retail Linked Unit Holders holding directly and indirectly approximately 163
499 303 SA Retail linked units, comprising approximately 70% of the SA Retail
linked units in issue have irrevocably undertaken to accept the terms and
conditions of the Offer.
3. DETAILS RELATING TO SA RETAIL`S PROPERTY PORTFOLIO
SA Retail is a focused portfolio comprising 26 regional and convenience retail
shopping centres located in Kwazulu Natal, Gauteng, Cape and Mpumalanga with a
market valuation of approximately R2 billion at 30 September 2006 (as valued by
Broll CB Richard Ellis), an independent valuer registered as a professional
valuer in terms of Property Valuers Profession Act, No. 47 of 2000). SA Corp
Unit Holders are referred to the SA Retail annual report at 31 March 2006 and to
the published unaudited interim results at 30 September 2006 for further
information relating to the SA Retail property portfolio.
4. RATIONALE FOR THE PROPOSED TRANSACTION
The Proposed Transaction offers meaningful benefits to SA Corp Unit Holders and
SA Retail Linked Unit Holders as follows:
4.1 From a SA Corp Unit Holder perspective
- The Proposed Transaction will meaningfully raise the profile of SA
Corp and position the Fund to attract future domestic and
international investment capital as one of South Africa`s larger
listed Real Estate Investment Trusts;
- The Proposed Transaction will substantially add to the critical mass
of SA Corp, increasing the Fund`s market capitalisation value to
approximately R5 billion, with the advantages of enhanced liquidity,
diversification, cost economies and investment demand;
- The Proposed Transaction will improve the geographic and sectoral
composition of the SA Corp portfolio with greater alignment to
Investment Property Databank benchmarks.
- The consolidated portfolio will provide SA Corp with improved buying
power with service providers and will position the Fund to pursue more
substantial property investment opportunities and will make use of
securitised debt as a more viable funding alternative; and
- The Proposed Transaction will offer SA Corp Unit Holders with the
prospect of enhanced investment returns, including appreciation in the
SA Corp unit price, on the assumption that the Fund will trade in a
similar yield range to its peer group of funds of similar size.
4.2 From a SA Retail Linked Unit Holder perspective
- SA Retail Linked Unit Holders will be invested in one of the larger
property funds listed on the JSE with the consolidated portfolio
having a market capitalisation of approximately R5 billion.
The immediate benefits of this critical mass are substantially
improved tradeability as well as diversification of risk:
- SA Retail has fewer than 300 linked unit holders with 5 linked unit
holders holding 97% of the total linked units in issue. This has
severely constrained SA Retail`s tradeabilty and resulted in SA Retail
now being excluded from the SAPY index with consequent implications
for asset managers. SA Corp has more than 4,000 unit holders and the
average tradeability of the Fund for the last three calendar years
exceeds 50% of the units in issue; and
- SA Retail is a focused portfolio comprising 26 shopping centres
whereas an investment in the consolidated portfolio offers diversified
sector, property and tenant risk.
- There is the prospect of meaningful capital appreciation on the basis
that the consolidated portfolio should trade at a firmer yield than
the individual parts and in a yield range comparable to other funds of
similar market capitalisation value. Should this relative re-rating
materialise SA Retail Linked Unit Holders will benefit from investment
value appreciation.
5. SUSPENSIVE CONDITIONS
The Offer is subject to:
- Obtaining the requisite SA Corp Unit Holders approval for the Proposed
Transaction;
- The requisite approvals being obtained from all applicable regulatory
authorities, including, without limitation, the Competition Authorities and
the Financial Services Board ("FSB");
- SA Corp procuring acceptances from those SA Retail Linked Unit Holders
holding at least nine tenths of the SA Retail linked units in issue; and
- all relevant documentation to be distributed to SA Corp Unit Holders and SA
Retail Linked Unit Holders being approved by the SRP, the JSE, the FSB and the
South African Reserve Bank, where applicable.
6. RELATED PARTY TRANSACTION
As Old Mutual Property Group is the property asset manager of both SA Corp and
SA Retail, the Proposed Transaction is regarded as a "related party transaction"
in terms of the JSE Listings Requirements.
SA Corp will therefore appoint an independent adviser to review the terms and
conditions of the Proposed Transaction to ensure that it is fair and reasonable
to SA Corp Unit Holders.
7. CATEGORISATION
The transaction is a Category 1 transaction for SA Corp in terms of Section 9.5
(c) of the JSE Listings Requirements and a requisite circular, details of which
are set out in paragraph 8 below, will be posted to SA Corp Unit Holders in due
course.
8. FURTHER ANNOUNCEMENT, DOCUMENTATION AND CAUTIONARY ANNOUNCEMENT
Further to the above:
- An announcement setting out the salient dates and times and the pro forma
financial effects of the Offer on SA Corp Unit Holders will be made in due
course;
- A circular, providing full details of the Offer will be posted in due
course to SA Retail Linked Unit Holders and SA Corp Unit Holders; and
- A further circular containing information as required in terms of the JSE
Listings Requirements and incorporating a notice convening a SA Corp Unit
Holders general meeting to approve the Proposed Transaction will be posted
in due course to SA Corp Unit Holders.
SA Corp Unit Holders are therefore advised to exercise caution in trading their
securities in SA Corp until such time as a further announcement is released.
Durban
16 January 2007
Investment bank and sponsor to SA Corp
Nedbank Capital
Legal advisor to SA Corp
Jowell Glyn Marais
Date: 16/01/2007 17:01:02 Produced by the JSE SENS Department.
