| Mon 12 Mar 2007, 17:45 | | PAP/ CLO - Pangbourne/ Calulo - Joint Terms Announ |
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CLO PAP
CLO PAP
PAP/ CLO - Pangbourne/ Calulo - Joint Terms Announcement
Pangbourne Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1987/002352/06)
Share code: PAP & ISIN: ZAE000005252
("Pangbourne")
CALULO PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/006274/06)
Share code: CLO & ISIN: ZAE000060711
("Calulo")
JOINT TERMS ANNOUNCEMENT
PROPOSED ACQUISITION BY CALULO OF A PROPERTY PORTFOLIO FROM PANGBOURNE, CHANGE
OF NAME OF CALULO TO MONYETLA PROPERTY FUND LIMITED, INTRODUCTION OF A UNIT
PURCHASE TRUST, AMENDMENTS TO THE DEBENTURE TRUST DEED AND WITHDRAWAL OF JOINT
CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the joint cautionary announcement published on SENS on 19
January 2007 ("the joint cautionary announcement"), Calulo unitholders and
Pangbourne unitholders are advised that Calulo, Calulo Property
Investments (Proprietary) Limited ("CPI"), a wholly owned subsidiary of
Calulo, and Pangbourne (collectively, "the parties") have, as of today,
being Monday, 12 March 2007, entered into an agreement ("the acquisition
agreement") in terms of which, subject to the conditions precedent
referred to in paragraph 9 below, CPI will acquire a portfolio of letting
enterprises, including the immovable properties relating thereto ("the
property portfolio") from Pangbourne for a cash consideration of R469 898
714 ("the consideration") ("the proposed transaction").
Warranties that are normal for an acquisition of this nature have been
incorporated in the acquisition agreement.
2. Calulo`s rationale for the proposed transaction
Calulo`s acquisition of the property portfolio will be a significant step
towards the achievement of its objective of establishing itself as a high
quality office fund with gross assets in excess of R2 billion and a market
capitalisation in excess of R1 billion in the medium term, subject to
market conditions being favourable.
The primary objectives of Calulo are to:
- establish a high quality office-focused portfolio of select, well-
positioned, rental income producing properties that are fully
diversified by type and location;
- increase the aggregate asset value of Calulo`s portfolio of
properties to at least R2 billion in the medium term to achieve
critical mass and economies of scale;
- to increase the tradability of the Calulo linked units;
- maximise and secure long-term earnings and capital growth; and
- facilitate the participation by Calulo unitholders in the underlying
income streams derived from its assets through the distribution of
99% of such income less deductions and provisions in accordance with
the principal Debenture Trust Deed.
3. Pangbourne`s rationale for the proposed transaction
Following the acquisition by Pangbourne of a strategic stake in Calulo, it
is Pangbourne`s intention to inject a substantial high quality office
portfolio into Calulo. This is in keeping with Pangbourne`s objective of
holding strategic stakes in specialised property funds. Investors then
have a choice of investing in the sectors of the listed property market
that they feel would optimise their returns, or be exposed to the property
sector as a whole by investing in Pangbourne.
Pangbourne will apply the proceeds from the proposed transaction against
interest bearing borrowings.
4. The property portfolio
Details of the property portfolio are set out in the table below.
Property Location Rentable Weighted Purchase Valuation
area of average price
the rental
property per
(per square
square metre
metre)
(GLA)
Acacia House Mahogany 853 R63.01 R6 698 656 R6 005 000
Court, 1
George
MacFarlane
Avenue,
Wembley
Centurion 01 1023 Bank 2 560 R45.98 R18 015 536 R16 150 000
Street,
Centurion
Centurion 02 1257 South 1 805 R67.15 R13 045 925 R11 695 000
Road,
Centurion
Chelsea 57 Wessels 2 793 R29.76 R13 073 813 R11 720 000
Office Park Road,
Woodmead
Chislehurston 33 Impala 1 321 R48.04 R10 262 720 R9 200 000
01 Road
Chislehurston
Constantia 2 Hogsback 1 347 R46.34 R10 151 169 R9 100 000
View 01 Road,
Quellerina
Constantia 2 Hogsback 1 055 R42.73 R7 975 918 R7 150 000
View 02 Road,
Quellerina
Constantia 2 Hogsback 1 065 R52.65 R10 702 983 R8 250 000
View 03 Road,
Quellerina
Constantia 2 Hogsback 963 R53.50 R9 268 329 R7 950 000
View 04 Road,
Quellerina
Constantia 2 Hogsback 685 R48.41 R5 689 117 R5 100 000
View 05 Road,
Quellerina
Culross Court 16 Culross 4 070 R74.66 R41 497 085 R37 200 000
Road,
Bryanston
Fish Eagle Kingfisher 1 405 R74.69 R12 460 281 R11 170 000
Crescent,
Meyersdal
Florida 31 Beacon 2 909 R51.57 R19 822 667 R17 770 000
Seniors Road, Florida
North
Girton Road 19 Girton 7 384 R23.46 R20 971 645 R18 800 000
Road,
Parktown
Heavenly 189 Monte 5 212 R34.78 R28 144 394 R25 230 000
Verse Carlo
Crescent,
Kyalami,
Midrand
KPMG Mahogany 1 473 R68.85 R10 932 028 R9 800 000
Court, 1
George
MacFarlance
Avenue,
Wembly
Moores 245 North 2 327 R60.39 R14 925 565 R13 380 000
Rowland Ridge Road,
Morningside
Nampak House 114 Dennis 5 736 R70.18 R51 748 650 R46 390 000
Road, Atholl
Gardens
Richmond cnr Cedar & 4 250 R32.86 R12 912 063 R11 575 000
Forum Napier Road,
Richmond
Rivonia 01 357 Rivonia 3 572 R39.72 R12 103 317 R10 850 000
Boulevard,
Edenburg
Sunninghill Inyanga 2 000 R70.80 R13 989 157 R12 000 000
02 Close,
Sunninghill,
Sandton
Sunninghill Inyanga 2 135 R72.14 R15 046 686 R13 130 000
03 Close,
Sunninghill,
Sandton
Sunninghill Inyanga 4 253 R63.71 R31 662 250 R28 025 000
04 Close,
Sunninghill,
Sandton
Wedgewood 3 Muswell 9 637 R75.64 R78 801 760 R73 600 000
Road,
Bryanston,
Sandton
Total R469 98 714 R421 240 000
The property portfolio was valued as at 1 February 2007 by The Property
Partnership cc ("the external valuer"), an external property valuer as
defined in Section 13 of the Listings Requirements of JSE Limited ("the
Listings Requirements"). A summary valuation report will be contained in
the circular to Calulo unitholders referred to in paragraph 15 below.
The external valuer has valued the property portfolio at R48 658 714 less
than the consideration. Approximately half of this difference is due to
the estimated five-month delay between valuation date and date of
transfer, being the date on which the risks and benefits of ownership will
transfer to Calulo. Furthermore, the valuation, which was prepared for
each individual property in accordance with the Listings Requirements,
takes no account of the other benefits to Calulo arising from the
transaction, in respect of which Calulo is prepared to pay a premium over
the aggregate property valuation. These benefits include, inter alia:
- the diversification of risk in respect of both tenant profile and
geographic profile of Calulo`s whole property portfolio;
- the enhancement of the lease expiry profile of Calulo`s whole
portfolio; and
- the benefits that come with the increased size of Calulo`s property
portfolio, such as the ability to implement more cost-effective
funding structures.
In addition, portfolios of this magnitude and quality are difficult to
source and, taking into account the distribution-positive effect of the
transaction on Calulo, the consideration is considered appropriate.
Pangbourne will be paid a facilitation fee of R2 million by Calulo in
order to reimburse Pangbourne for the administrative expenses incurred by
Pangbourne in the execution of the proposed transaction.
5. Proposed recapitalisation of Calulo
The consideration will initially be funded through third party debt and a
loan account with Pangbourne. Although the articles of association of
Calulo do not restrict Calulo`s borrowing powers, the directors of Calulo
have limited borrowings, excluding the debenture portion of its linked
units, to a maximum of 65% of the market value of the aggregate income-
producing assets of Calulo and its subsidiaries. In order to reduce
Calulo`s borrowings to a level in line with such policy, a rights offer
will be launched after the proposed transaction becomes unconditional, the
proceeds of which will be used to repay the outstanding loan to Pangbourne
and to partly settle other third party borrowings. The terms of the rights
offer will be announced in due course. Pangbourne has undertaken to
underwrite the rights offer on market related terms.
Calulo is also currently preparing to re-finance its existing property
portfolio through a Commercial Mortgage Backed Securities program and it
is intended that the property portfolio to be acquired in terms of the
proposed transaction will be included in this process.
6. Pro forma financial effects of the proposed transaction
The pro forma financial effects of the proposed transaction on the net
asset value ("NAV") and net tangible asset value ("NTAV") per Pangbourne
combined unit are not significant and are the responsibility of the
directors of Pangbourne.
The unaudited pro forma financial effects of the proposed transaction on
the NAV per linked unit and NTAV per linked unit of Calulo are set out in
the table below and are the responsibility of the directors of Calulo.
The unaudited pro forma financial effects of the proposed transaction on
Calulo are presented for illustrative purposes only and because of their
nature may not fairly reflect the financial position of Calulo after the
proposed transaction.
Before the After the
proposed proposed
transaction transaction Change
(cents) (cents) %
NAV per Calulo linked 210 154 -26.7
unit
NTAV per Calulo linked 210 154 -26.7
unit
Notes:
1. The NAV and NTAV per Calulo linked unit, as set out in the "Before
the proposed transaction" column of the table are based on the
unaudited balance sheet of Calulo at 31 December 2006.
2. The NAV and NTAV per Calulo linked unit, as set out in the "After the
proposed transaction" column of the table are based on the following
assumptions:
a. the proposed transaction was implemented on 31 December 2006;
b. the purchase consideration of R469 898 714 plus a facilitation
fee of R2 000 000, will be funded through interest-bearing
borrowings;
c. the property portfolio is accounted for at the market value of
the properties of R421 240 000 as determined by an independent
valuer; and
d. the difference between the purchase consideration and the market
value of the property portfolio has been accounted for as a fair
value adjustment.
7. Forecast income statement of the property portfolio
The forecast income statement of the property portfolio is set out in the
table below and is the responsibility of the directors of Calulo.
12 months ending 30 June 2008
R`000
Revenue 58 792
Straight line 1 098
operating lease
adjustment
Net building costs -12 546
Net profit 47 344
Interest received -
Finance costs -45 538
Profit before 1 806
taxation and
distribution to
unitholders
Distribution to -708
unitholders
Profit before 1 098
taxation
Taxation -318
Normal taxation -
Deferred taxation -318
Profit for the period 780
Distributable 708
earnings
Notes:
- The forecast income statement has been compiled in accordance with
Calulo`s accounting principles and International Financial Reporting
Standards, on an aggregated basis.
- Operating expenditure has been determined after taking into account
historical costs.
- Interest payable on the debt funding will be at an average pre-
taxation rate of 9.65% per annum.
- The forecast is prepared on the assumption that the net income of the
property portfolio accrues to Calulo with effect from 1 July 2007.
This forecast financial information has been reviewed by Deloitte & Touche
and should be read in conjunction with the independent reporting
accountants` report on the forecast financial information which will be
contained in the circular to Calulo linked unitholders referred to in
paragraph 15 below.
Should the net income attributable to the property portfolio within the
twelve month period from 1 July 2007 be less than the net income forecast
for such period in the acquisition agreement ("forecast net income"),
Pangbourne will pay CPI an amount equal to such shortfall in cash, subject
to a maximum of 10% of the forecast net income. Should the actual net
income exceed the forecast net income, CPI shall pay Pangbourne an amount
equal to the amount of such excess (subject to a maximum of 10% of the
excess) divided by 9.8%.
8. Related party acquisition
In terms of the Listings Requirements, as a consequence of Pangbourne`s
63.4% interest in the issued linked units of Calulo, Pangbourne is a
related party to Calulo. Accordingly, whilst Pangbourne and any of its
associates will be taken into account in determining a quorum at the
general meeting of Calulo shareholders ("the general meeting of
shareholders") to consider and, if deemed fit, approve the resolution
necessary to give effect to the proposed transaction, they will not vote
on such resolution.
9. Conditions precedent to the proposed transaction
The proposed transaction is subject, inter alia, to the fulfillment of the
following remaining conditions precedent:
- the securing, by not later than 30 April 2007, of the approval of a
simple majority of the votes exercisable in respect of the shares
held by Calulo shareholders, excluding Pangbourne and its associates,
to the conclusion and implementation of the proposed transaction; and
- the securing by not later than 15 June 2007, of the approval of the
Competition Tribunal to the conclusion and implementation of the
proposed transaction.
The last dates for the fulfilment of these conditions precedent are
capable of extension by way of written agreement between the parties to
the acquisition agreement.
10. Change of name of Calulo to Monyetla Property Fund Limited
The directors of Calulo have determined that it is appropriate to change
the name of Calulo to align the name of Calulo with its primary objective
of being a high quality office fund. Subject to the receipt of the
necessary regulatory and shareholder approvals, Calulo proposes to change
the name of Calulo to Monyetla Property Fund Limited ("the change of
name"). The resolution to effect the change of name will be proposed at
the general meeting of shareholders.
Further details regarding the change of name will be set out in the
circular to Calulo linked unitholders as detailed in paragraph 15 below
and the important dates and times with regard to the change of name are
set out in paragraph 13 below.
11. Unit Purchase Trust
Calulo wishes to introduce a Unit Purchase Trust aimed at incentivising
the executives and management of Calulo to promote its continued growth by
giving them an opportunity to acquire Calulo linked units, attracting
suitably skilled and competent personnel and aligning their interests with
those of Calulo linked unitholders.
The resolution to introduce the Unit Purchase Trust will be proposed at
the general meeting of shareholders and the salient terms thereof will be
contained in the circular to Calulo linked unitholders referred to in
paragraph 15 below.
12 Amendments to the Debenture Trust Deed
Certain amendments to the Debenture Trust Deed are to be proposed at a
general meeting of Calulo debenture holders ("the general meeting of
debenture holders"). These amendments relate to the alignment of the
interest distribution payment periods with that of Pangbourne, to make
provision for special interim distributions of interest in appropriate
circumstances and to allow for the issue of debentures in terms of the
Unit Purchase Trust.
The resolution to amend the Debenture Trust Deed will be proposed at the
general meeting of debenture holders and the salient terms thereof will be
contained in the circular to Calulo linked unitholders referred to in
paragraph 15 below.
13. Important dates and times
The important dates and times with regard to the general meeting of
shareholders, general meeting of debenture holders (collectively "the
general meetings") and the change of name are set out in the table below.
2007
Last day for submission of proxy Tuesday, 17 April
forms, by 09:00 on
General meetings to be held Thursday, 19 April
consecutively at 09:00 on
Results of general meetings Thursday, 19 April
published on SENS on
Results of general meetings Friday, 20 April
published in the press on
Publication of finalisation Wednesday, 25 April
information regarding the name
change
Last day to trade under the old Friday, 4 May
name "Calulo Property Fund Limited"
on
Change of name effective from the Friday, 4 May
close of business on
Trade under the new name "Monyetla Monday, 7 May
Property Fund Limited" from
commencement of trading on
Record date on Friday, 11 May
New linked unit certificates Monday, 14 May
reflecting the change of name
posted by registered post to Calulo
unitholders holding certificated
units who have surrendered their
documents of title before 12h00 on
the record date (see note 2) on
Safe custody accounts of Calulo Monday, 14 May
unitholders holding dematerialised
units updated with the new name by
their CSDP or broker on
Notes:
1. The dates and times in this announcement are subject to amendment.
Any such amendment will be published on SENS and in the press.
2. Calulo unitholders holding certificated units, who surrender their
existing documents of title after 12h00 on the record date, will have
their new linked unit certificates mailed within five business days
of receipt thereof by the transfer secretaries, by registered post in
South Africa, at the risk of the unitholders concerned.
14. Opinions, recommendations and undertakings
An independent sub-committee of the directors of Calulo ("the Calulo
board"), which sub-committee excludes any directors that represent
Pangbourne, is of the opinion that the terms and conditions of the
proposed transaction and the fee payable to Pangbourne in respect thereof
are fair and reasonable and that the implementation of the proposed
transaction will be to the long-term benefit of Calulo linked unitholders.
Accordingly, the Calulo board, excluding the Pangbourne representatives,
recommends that Calulo shareholders vote in favour of the resolution to be
proposed at the general meeting of shareholders to approve the proposed
acquisition. Directors representing Pangbourne recused themselves from
voting at the meeting of directors in relation to the proposed
transaction.
In addition, the Calulo board is of the view that the implementation of
the name change and the introduction of the Unit Purchase Trust will be to
the long term benefit of Calulo linked unitholders and are of the opinion
that Calulo shareholders should vote in favour of the resolutions relating
to the name change and the introduction of the Unit Purchase Trust to be
passed at the general meeting of shareholders.
The Calulo board is further of the view that the amendments to the
Debenture Trust Deed will be to the long term benefit of Calulo debenture
holders and are of the opinion that Calulo debenture holders should vote
in favour of the resolution relating to the amendments of the Debenture
Trust Deed to be proposed at the general meeting of debenture holders.
Those members of the Calulo board holding Calulo linked units intend to
vote in favour of all the resolutions proposed at the general meetings.
15. Documentation and notice of general meetings
The general meeting of shareholders will be held at 09:00 on Thursday, 19
April 2007 at the registered office of Calulo, Conference Room, 3rd floor,
Pangbourne House, 382 Jan Smuts Avenue, Craighall, 2196, to consider and,
if deemed fit, approve the resolutions necessary to give effect to the
proposed transaction, the change of name, the introduction of the Unit
Purchase Trust and the specific issue. The general meeting of debenture
holders will be held immediately thereafter at the same location, to
consider, and if deemed fit, adopting the requisite resolution to approve
and implement the amendments to the Debenture Trust Deed.
A circular containing details of the proposed transaction, the change of
name, the introduction of the Unit Purchase Trust, the amendments to the
Debenture Trust Deed, notices of the general meetings, forms of proxy and
a form of surrender will be posted to Calulo unitholders on or about 28
March 2007.
16. Withdrawal of joint cautionary announcement
Calulo unitholders are referred to the joint cautionary announcement and
are advised that as a result of this terms announcement, caution is no
longer required to be exercised by Calulo unitholders when dealing in
their securities. However, Pangbourne unitholders are advised to continue
to exercise caution when dealing in their securities in respect of the
Pangbourne cautionary announcement released on SENS on 22 February 2007.
Johannesburg
12 March 2007
Sponsor to Calulo
The Standard Bank of South Africa Limited
Sponsor to Pangbourne
The Standard Bank of South Africa Limited
Corporate law advisers to Calulo
Cliffe Dekker Inc.
Corporate law advisers and competition commission advisers to Pangbourne
Edward Nathan Sonnenbergs Inc
Reporting Accountants to Calulo
Pricewaterhouse Coopers Advisory Services (Proprietary) Limited
Reporting Accountants to Pangbourne
Deloitte & Touche
Property Valuer
The Property Partnership cc
Date: 12/03/2007 17:45:39 Produced by the JSE SENS Department.
