CALGRO M3 HOLDINGS LIMITED - Disposal of Interests in PZR Pennyville Zamimphilo Relocation Proprietary Limited

Disposal of Interests in PZR Pennyville Zamimphilo Relocation Proprietary Limited

CALGRO M3 HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2005/027663/06)
Share code: CGR
ISIN: ZAE000109203
(“Calgro M3” or “the Company”)


DISPOSAL OF INTERESTS IN PZR PENNYVILLE ZAMIMPHILO RELOCATION
PROPRIETARY LIMITED


1.   INTRODUCTION

     Shareholders are advised that on 25 February 2021 (“Signature Date”), the Company,
     through its wholly-owned subsidiaries, MS5 Pennyville Proprietary Limited (“MS5
     Pennyville”), Calgro M3 Developments Limited (“CM3 Developments”) and PZR
     Pennyville Zamamphilo Relocation Proprietary Limited (“PZR”), entered into a sale of
     shares and claim agreement (“Agreement”) with Proptec Residential Proprietary Limited
     and Lonny Enterprise Trading Proprietary Limited (“Purchasers”), in terms of which CM3
     Developments disposed of (i) 100 ordinary shares, constituting 100% of the issued share
     capital of MS5 Pennyville (“Sale Shares”) and (ii) a loan claim in the amount of
     R10 500 000 it has against PZR (“Loan Claim”), to the Purchasers, for a total
     consideration of R49 265 000 (“Disposal Consideration”) (“Disposal”).

2.   DESCRIPTION OF THE ASSETS

     PZR holds the development rights to the Vista Park Extension 3 integrated development,
     located on a proposed portion of the Farm Bloemfontein 654, Bloemfontein, Free State
     Province, which it obtained from the Mangaung Metropolitan Municipality in September
     2014.

     PZR holds no other assets.

3.   RATIONALE FOR THE DISPOSAL

     In line with the Company’s strategic decision published some time ago to focus on fewer
     Provinces and projects, Calgro M3 is negotiating the exit from, and/or entry into joint
     venture relationships, on various projects. In line with capital allocation priorities, the
     proceeds of transactions on such projects will be applied toward projects that are further
     progressed and where a better return can be achieved, and/or the reduction of debt,
     and/or possible further share buy-back transactions at levels management deem to be at
     a material discount to not only intrinsic value but also tangible asset value as illustrated
     in our financial results.

     As the Vista Park Extension 3 project in still in its infancy, the Disposal will have virtually
     no effect on revenue or profits in the short to medium term. The Company owns numerous
     concurrently running well established residential integrated developments, which are
     expected to yield good returns in the short to medium term.
4.   DISPOSAL CONSIDERATION

     The aggregate Disposal Consideration is R49 265 000 and will be paid by the Purchasers
     to CM3 Developments, jointly and severally, the one paying, the other to be absolved, as
     follows:

     -   R38 765 000 in respect of the Sale Shares on or before 31 May 2021, and

     -   R10 500 000 in respect of the Loan Claim on or before 31 January 2022.

5.   APPLICATION OF THE DISPOSAL CONSIDERATION

     The Disposal Consideration will be applied towards (i) working capital requirements on
     performing projects, (ii) debt settlement, and (iii) possible further share buy-backs at levels
     management deem a material discount to not only intrinsic value but also balance sheet
     and tangible asset value.

6.   CONDITIONS PRECEDENT

     There are no conditions precedent to the Disposal.

7.   EFFECTIVE DATE OF THE DISPOSAL

     The effective date of the Disposal is the first business day after the Signature Date.

8.   FINANCIAL INFORMATION

     The value of the net assets of MS5 Pennyville as at 29 February 2020, being the date of
     the last audited annual financial statements of the entity, was R100.

     The value of the net assets of PZR (taking into account the Loan Claim) as at
     29 February 2020, being the date of the last audited annual financial statements of the
     entity, was R10 821 316.

     The audited profits after tax attributable to the Sale Shares and Loan Claim for the year
     ended 29 February 2020, was R450 687.00, based on the audited annual financial
     statements of PZR for the year ending 29 February 2020, which were prepared in terms
     of IFRS.

9.   WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT

     The Agreement contains representations and warranties by CM3 Developments in favour
     of the Purchaser which are standard for a transaction of this nature. In addition to the
     representations and warranties, the Agreement also contains indemnities by CM3
     Developments in favour of the Purchasers which are standard for a transaction of this
     nature.

10. CLASSIFICATION OF THE DISPOSAL

     The Disposal constitutes a category 2 transaction in terms of the JSE Limited Listings
     Requirements.

Johannesburg
26 February 2021

Corporate Advisor and Sponsor
PSG Capital

Date: 26-02-2021 12:05:00
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