Wrap Text
Proposed R2.7bn investment by GEPF through acquisition of 30% shareholding in AWIC and withdrawal of cautionary
ATTACQ LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/000543/06)
JSE share code: ATT ISIN: ZAE000177218
(Approved as a REIT by the JSE)
("Attacq" or the "Company" or the "Attacq Group")
PROPOSED R2.7 BILLION INVESTMENT BY THE GOVERNMENT EMPLOYEES' PENSION FUND ("GEPF") THROUGH ITS ACQUISITION
OF A 30% SHAREHOLDING IN ATTACQ WATERFALL INVESTMENT COMPANY PROPRIETARY LIMITED ("AWIC") AND WITHDRAWAL OF
CAUTIONARY
1. INTRODUCTION
Shareholders are referred to the SENS announcement released on 13 February 2023 advising that the
Company ("Seller") and the GEPF ("Purchaser"), represented by the Public Investment Corporation
(SOC) Limited ("PIC") (together, the "Parties"), had concluded a non-binding term sheet in respect of the
proposed acquisition by the Purchaser of 30% of the ordinary shares and shareholder loans in AWIC and
a shareholder loan advancement by the Purchaser into AWIC ("Proposed Transaction").
Attacq is pleased to advise that on 5 July 2023 ("Signature Date"), the Parties concluded binding legal
agreements detailing the terms and conditions of the Proposed Transaction ("Transaction Agreements").
Should the Proposed Transaction be approved by shareholders and be implemented, the Purchaser will
acquire 30% of the ordinary shares and shareholder loans in AWIC in exchange for a maximum
consideration of R2.388 billion in cash, with an additional R300 million being injected by the Purchaser
into AWIC as a shareholder loan.
The effect of the Proposed Transaction, if implemented, is that Attacq will retain control of AWIC with a
majority shareholding of 70% with the Purchaser holding a minority shareholding of 30%, and Attacq
continuing to provide asset, property, development and fund management services to AWIC at market-
related fees.
This announcement incorporates the material agreed upon terms and conditions as set out in the Transaction
Agreements and differs in certain respects from the terms outlined in the abovementioned non-binding term
sheet. The Transaction Agreements contain warranties and guarantees which are typical of a transaction of
this nature.
2. RATIONALE AND USE OF PROCEEDS
AWIC is a wholly owned subsidiary of Attacq, holding Attacq's completed real estate portfolio and
development and leasehold rights in Waterfall City (including developments under construction and
leasehold land). Waterfall City represents an exceptional diversified investment and development
opportunity, offering a "work, play, live" lifestyle within a smart, safe, sustainable environment.
If implemented, the Proposed Transaction will make a transformative contribution to furthering Attacq's
strategic objectives, which include (i) introducing a long-term investment partner to AWIC, thereby
securing funding for its ongoing Waterfall City development rollout; (ii) optimising AWIC and the Attacq
Group's capital structure by improving debt metrics and investment capacity; and (iii) enhancing the
liquidity position of the Attacq Group.
Attacq intends on utilising the proceeds of the Proposed Transaction to settle R2.2 billion of debt in AWIC
and c.R500 million of debt in the rest of the Attacq Group. On implementation, the debt reduction will
result in a decrease in the Attacq Group's gearing from 38.0% at 31 December 2022 to c.26.3% on a pro
forma basis. Attacq is also in the process of engaging with its debt providers to refinance the remaining
debt in the Attacq Group on more beneficial terms.
A rebalanced overall capital structure consisting of a deleveraged Attacq Group balance sheet with a lower
cost of debt will afford Attacq increased investment capacity to fund future developments, whilst being
favourably positioned to optimise potential returns on capital deployed by Attacq in funding developments.
The Proposed Transaction will be accretive from an Attacq distributable income perspective, given the
impact of lower interest costs associated with the repayment of debt and the refinancing of the remaining
Attacq Group debt and the additional fee income earned by Attacq.
3. EFFECTIVE DATE
The Proposed Transaction will be required to be implemented by the 20th business day after the date on
which the last of the conditions precedent have been fulfilled or waived by written agreement
("Implementation Date").
4. TERMS OF THE TRANSACTION
4.1. Acquisition of AWIC shares and claims
Pursuant to the Proposed Transaction and in accordance with the Transaction Agreements, on the
Implementation Date, the Purchaser will acquire 30% of the ordinary shares in AWIC through a
combination of (i) a cash sale of AWIC shares held by Attacq to the Purchaser ("Sale Shares") and (ii)
a subscription for new AWIC shares for cash ("Subscription Shares"). The Sale Shares and Subscription
Shares collectively being the "Sale Equity".
The Purchaser will also acquire from Attacq a corresponding percentage of all amounts owing by AWIC
to Attacq on loan account ("Sale Claims") as at the Implementation Date.
4.2. Additional loans
The Seller and the Purchaser shall advance shareholder loans to AWIC pro rata to their post transaction
shareholding, with Attacq advancing an additional loan of R700 million and the Purchaser advancing an
additional loan of R300 million ("Purchaser's Loan").
4.3. Consideration payable
4.3.1.Preliminary purchase price
The preliminary purchase price ("Preliminary Purchase Price") payable on the Implementation Date by
the Purchaser for the Sale Equity and the Sale Claims will be an amount equal to the estimated net asset
value ("NAV") of AWIC subsequent to the implementation of the restructure of AWIC's interest in MAS
P.L.C. so that it is held elsewhere in the Attacq Group ("MAS Restructure"), based on the latest available
consolidated AWIC management accounts as at the Implementation Date, adjusted for certain agreed items,
including;
- adding back all shareholder loans as at the Implementation Date;
- adding 90% of unrecognised profits in respect of bankable residential pre-sales;
- increasing the aggregate value (as determined by external valuations as at 31 December 2022 and
contained in AWIC's reviewed financial statements for the six months ended 31 December 2022) of
all completed investment properties held as at the Implementation Date by 4.5% per annum, pro rated
accordingly to the Implementation Date;
- fair valuing properties under construction as at 31 December 2022 to their date of practical completion
or the Implementation Date, as the case may be;
- reversing any expected credit loss adjustments in respect of shareholder loans advanced by AWIC to
its investee companies;
- deducting any dividends paid or to be paid by AWIC prior to the Implementation Date; and
- providing a 15% discount to the Purchaser on the aggregate of the Sale Equity, as adjusted, and the
Sale Claims,
(the "Purchase Price Methodology").
All risk in, ownership of, and benefit attaching to the Sale Equity and Sale Claims will pass to the Purchaser
on the Implementation Date, against payment of the Preliminary Purchase Price to the Seller and AWIC,
respectively. Further, the acquisition of the Sale Equity and the Sale Claims by the Purchaser as well as the
advance of the Purchaser's Loan are indivisibly inter-related and accordingly will be implemented
simultaneously on the Implementation Date.
4.3.2.Final purchase price
The final purchase price ("Final Purchase Price") will be determined in accordance with the Purchase
Price Methodology based on the management accounts of AWIC prepared either as at the end of (i) the
preceding month (should the Implementation Date fall on or before the 15th day of the relevant month) or
(ii) the current month (should the Implementation Date fall after the 15th day of the relevant month)
("Implementation Date Accounts"). The Preliminary and Final Purchase Price will be subject to
verification procedures performed by AWIC's auditors.
The Implementation Date Accounts will be prepared and completed within 20 business days following the
date of the Implementation Date Accounts.
As soon as the Implementation Date Accounts have been prepared, AWIC shall prepare its calculation of
the Final Purchase Price and notify the Seller and the Purchaser of the calculation (the "Final Purchase
Price Determination Date").
If the Final Purchase Price is greater than the Preliminary Purchase Price, the difference will be paid by the
Purchaser to the Seller and, similarly, should the Preliminary Purchase Price be greater than the Final
Purchase Price, the difference will be refunded by the Seller to the Purchaser. Any required payment will
be made within ten business days of the Final Purchase Price Determination Date.
The maximum consideration payable by the Purchaser (including the Purchaser's Loan) is R2.688 billion.
5. CONDITIONS PRECEDENT
The Proposed Transaction is subject to certain conditions precedent, including:
- within 45 days of the Signature Date, the Seller providing confirmation to the Purchaser that the
MAS Restructure has been implemented; and
- within 150 days of the Signature Date, Attacq and AWIC obtaining all approvals required in terms of
the JSE Listings Requirements for the implementation of the Proposed Transaction, including the
approval of Attacq's shareholders in a general meeting.
It is noted that the Proposed Transaction will not require the approval of the Competition Authorities.
6. PROPERTY SPECIFIC AND FINANCIAL INFORMATION
AWIC net
profit for
AWIC's Weighted the six
share of average Valuation months
gross rental per as at 31 AWIC's ended 31
lettable m2 per December share of December
AWIC's area month 2022 valuation 2022
Name of property(1) Valuer(3) share (m2) (R) (R'000) (R'000) (R'000)
Retail experience
hubs
Mall of Africa Sterling 80% 103 361 302 5 236 071 4 188 857 203 532
Waterfall Corner Mills Fitchet 100% 9 879 202 224 444 224 444 9 234
Waterfall Lifestyle Mills Fitchet 100% 7 139 193 99 683 99 683 7 090
Collaboration hubs
Allandale Building Mills Fitchet 100% 15 476 196 295 203 295 203 13 253
Cell C Campus(2) Sterling 100% 43 890 214 751 642 751 642 38 154
Corporate Campus
Building 1 Sterling 50% 2 934 268 139 086 69 543 5 080
Corporate Campus
Building 2 Sterling 50% 3 231 227 149 116 74 558 2 597
Corporate Campus
Building 3(2) Sterling 50% 1 985 214 126 052 63 026 4 783
Corporate Campus
Building 4 Sterling 50% 2 485 219 106 554 53 277 75
Corporate Campus
Building 5(2) Sterling 50% 2 791 214 139 980 69 990 (1 931)
Corporate Campus
Building 6 Sterling 50% 1 986 216 96 884 48 442 729
Corporate Campus
Building 7 Sterling 50% 2 046 212 79 292 39 646 743
Gateway West
Building Mills Fitchet 100% 13 803 257 320 493 320 493 809
The Ingress PSG
Wealth2 Mills Fitchet 100% 4 311 214 115 069 115 069 2 142
The Ingress Building 2 Mills Fitchet 100% 4 395 168 72 630 72 630 (397)
Maxwell Office Park
Building 1(2) Mills Fitchet 50% 3 040 214 127 774 63 887 3 889
Maxwell Office Park
Building 2 Mills Fitchet 50% 2 523 182 111 630 55 815 3 002
Maxwell Office Park
Building 3 Mills Fitchet 50% 3 616 173 158 488 79 244 (275)
Maxwell Office Park
Building 4 Mills Fitchet 50% 3 182 173 133 922 66 961 797
Maxwell Office Park
Building 5(2) Mills Fitchet 50% 2 000 214 93 494 46 747 699
Maxwell Office Park
Building 6 Mills Fitchet 50% 1 986 248 82 986 41 493 1 049
Maxwell Office Park
Building 7(2) Mills Fitchet 50% 2 122 214 110 626 55 313 1 891
Nexus Waterfall -
Building 1(2) Sterling 100% 7 252 214 133 307 133 307 (1 286)
Novartis(2) Mills Fitchet 100% 7 982 214 179 986 179 986 7 301
PwC Tower and
Annex2 Mills Fitchet 75% 36 461 214 1 852 927 1 389 695 93 721
Waterfall Circle Sterling 100% 24 354 - 393 604 393 604 (11 641)
Waterfall Point
Building 2 Mills Fitchet 100% 2 585 222 59 952 59 952 11 356
Waterfall Point
Building 4(2) Mills Fitchet 100% 2 585 214 69 255 69 255 5 648
Logistics hubs
Amrod(2) Sterling 50% 18 969 105 390 362 195 181 (1 032)
BMW(2) CBRE 100% 31 987 105 318 844 318 844 45 498
Crick Clothing(2) CBRE 100% 4 710 105 53 250 53 250 1 519
Cotton On(2) Sterling 50% 10 374 105 216 506 108 253 14 839
Cummins(2) Sterling 50% 7 649 105 242 718 121 359 6 033
Dimension Data(2) CBRE 100% 8 291 105 102 490 102 490 3 150
Dischem(2) CBRE 100% 8 518 105 80 470 80 470 1 407
GloTool(2) CBRE 100% 5 262 105 56 220 56 220 3 630
Massbuild Distribution
Centre(2) CBRE 50% 25 017 105 445 030 222 515 11 759
Pirtek(2) CBRE 100% 2 816 105 32 860 32 860 2 832
Midi warehouse 4(2) CBRE 100% 4 603 105 52 680 52 680 3 460
Vantage Data Centre(2) CBRE 50% 5 781 105 586 556 293 278 50 000
Zimmer Biomet(2) CBRE 50% 2 050 105 67 640 33 820 1 433
Hotel
City Lodge(2) Mills Fitchet 100% 5 744 225 108 349 108 349 6 074
Courtyard(2) Mills Fitchet 100% 6 715 225 215 910 215 910 (5 194)
Developments under
construction
Plumblink head office
and distribution centre Sterling 50% 7 472 - 147 456 73 728 (290)
Development rights Valquest 100% - - 683 600 683 600 (13 340)
Infrastructure, IFRS
adjustments and
Head office 372 672 (188 778)
Finance costs in
respect of interest-
bearing debt (243 387)
Total 475 358 15 261 091 12 247 241 101 657
AWIC total
comprehens
ive profit
AWIC net or the six
asset value months
31 ended 31
December December
2022 2022
(R'000) (R'000)
AWIC's share of investment property valuations 12 247 241 -
Net profit - 101 657
Other comprehensive income - 110 023
Interest-bearing debt (5 023 180) -
Other net assets and IFRS-related adjustments (806 302) -
Total 6 417 759 211 680
Notes:
1. All properties are located at Waterfall, Gauteng.
2. With regard to single-tenanted properties, the weighted average rental per m2 per month provided is the average of all
single-tenanted properties in relevant sector calculated as at 31 December 2022.
3. The properties have been valued at 31 December 2022 by Sterling Valuation Specialists Close Corporation ("Sterling");
CBRE Excellerate CRES Proprietary Limited ("CBRE"), Mills Fitchet Cape Proprietary Limited ("Mills Fitchet") and
Vallun Properties Proprietary Limited ("Valquest"), all of whom are independent external valuers registered in terms of
the Property Valuers Professions Act 47 of 2000.
4. Net profit for the six months ended 31 December 2022 was extracted from the interim results of Attacq for the six months
ended 31 December 2022 which were prepared in terms of International Financial Reporting Standards. Debt funding is
done on a portfolio basis, as a result finance costs are not allocated per building and the total finance costs have been
deducted in arriving at the net profit attributable to the properties for the six months ended 31 December 2022.
7. CATEGORISATION OF THE TRANSACTION
The Proposed Transaction will constitute a Category 1 transaction with a related party in terms of the JSE
Listings Requirements given its size relative to the market capitalisation of Attacq and the fact that the
Purchaser is a material shareholder in Attacq. Accordingly, the Proposed Transaction will be subject to the
approval of a majority of Attacq's shareholders, excluding the Purchaser and its associates, in a general
meeting. A circular in this regard, containing a fairness opinion prepared by an independent expert, is in
the process of being prepared and shall be distributed to Attacq's shareholders in due course.
8. WITHDRAWAL OF CAUTIONARY
Shareholders are referred to the cautionary announcement and renewals thereof published on
13 February 2023, 28 March 2023, 15 May 2023 and 27 June 2023, respectively, and are advised that as a
result of the publication of this announcement, the cautionary is withdrawn. Accordingly, caution is no
longer required to be exercised by shareholders when dealing in their Attacq shares.
6 July 2023
Sponsor and corporate advisor
Java Capital
Date: 06-07-2023 07:05:00
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