TSOGO SUN HOTELS LIMITED - Category 2 Disposal Announcement

Category 2 Disposal Announcement

Tsogo Sun Hotels Limited
(previously known as Southern Sun Hotels Proprietary Limited)
Incorporated in the Republic of South Africa
Registration number 2002/006356/06
Share Code: TGO ISIN:ZAE000272522
(“Tsogo Sun Hotels” or “the Group” or “the Company”)



CATEGORY 2 DISPOSAL ANNOUNCEMENT



1.   INTRODUCTION

     Shareholders are advised that the Company’s wholly owned subsidiary, Southern Sun Africa Limited (“SSA”) has
     entered into a sale of shares and loans agreement (the “Sale Agreement”) with MH Limited (the “Purchaser”) part
     of the Minor Hotels Group, dated 13 July 2020 in terms of which SSA will dispose of its entire 50% beneficial interest
     comprising of shares and loan claims against United Resorts and Hotels Limited (“URH”) (collectively, the “Assets”)
     to the Purchaser for aggregate proceeds of US$27.8 million (“Disposal Consideration”) (collectively, the “Disposal”)
     being approximately R465 million.

2.   DESCRIPTION OF THE ASSETS

     URH owns hotel property and land on a leasehold basis at Anse Louis, Mahé Island in the Seychelles including 30
     luxury villas, known as Maia Luxury Resort and Spa.

3.   RATIONALE FOR THE DISPOSAL

     The stated intention of the Group since its separate listing has been to reduce its US dollar denominated interest-
     bearing debt. COVID-19 has limited the Group’s ability to apply its cash resources towards the settlement of this
     debt. The Disposal Consideration allows the Group to achieve this objective and accordingly, the Company believes
     that it is in the best interest of the Group to dispose of the Assets at this time.

4.   DISPOSAL CONSIDERATION

     The aggregate proceeds for the Assets is US$ 27.8 million and has been settled in cash.

5.   APPLICATION OF THE DISPOSAL CONSIDERATION

     The Disposal Consideration will be applied towards the settlement of the Group’s US dollar denominated net debt
     which as at the date hereof amounts to US$72 million.

6.   EFFECTIVE DATE OF THE DISPOSAL

     The Disposal is unconditional. The effective date of the Disposal is 13 July 2020.

7.   WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE SALE AGREEMENT

     The Sale Agreement provides for warranties, undertakings, indemnities and events of default that are normal for a
     transaction of this nature.
8.   FINANCIAL INFORMATION

     The Group’s investment in URH is classified as an investment in joint venture and accounted for on an equity basis.
     The carrying value of the Group’s investment in URH was R124 million as at 31 March 2020, being the date of Tsogo
     Sun Hotels’ reviewed condensed consolidated financial statements published on SENS on 29 May 2020.

     The Group’s share of URH’s profit and management fees after tax for the year ended 31 March 2020, was R13 million
     based on the reviewed condensed consolidated financial statements published on SENS on 29 May 2020, which were
     prepared in terms of IFRS.

9.   CATEGORISATION

     The Disposal constitutes a Category 2 transaction for Tsogo Sun Hotels as contemplated in the Listings Requirements
     of the JSE Limited.



Fourways

14 July 2020

Sponsor: Investec Bank Limited

Date: 14-07-2020 04:42:00
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