ONELOGIX GROUP LIMITED - Disposal of properties in a sale and leaseback transaction and renewal of cautionary

Disposal of properties in a sale and leaseback transaction and renewal of cautionary

ONELOGIX GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/004519/06)
JSE share code: OLG ISIN: ZAE000026399
(“OneLogix” or “the company”)


DISPOSAL OF PROPERTIES IN A SALE AND LEASEBACK TRANSACTION AND RENEWAL OF CAUTIONARY


1. Introduction

1.1      OneLogix shareholders are advised that OneLogix, through its wholly owned subsidiary,
         OneLogix (Proprietary) Limited (“OPL”), has entered into a number of transactions with
         Soragenix (RF) (Proprietary) Limited (“the purchaser”), in terms of which OPL will, among
         other things, sell to the purchaser and lease back Portions 854, 855 and 773 of the Farm
         Vaalkop & Dadelfontein No.885 in Kwa-Zulu Natal (“the property”) (“the transactions”).
         The purchaser is a ring-fenced special purpose vehicle which forms part of the Enigma
         Property Group, a niche property-focused developer, financier and service provider.

1.2      Pursuant to the transactions, OPL and the purchaser will enter into the following salient
         agreements:
         1.2.1  Agreement for the acquisition of a property letting business (“sale agreement”) in
                terms of which the property and rental enterprise conducted thereon will be sold to the
                purchaser as a going concern;
         1.2.2  Lease agreement in terms of which OPL will lease the property from the purchaser on
                a "triple net" basis, OPL will pay a monthly rental of R2 100 000 (excluding VAT and
                subject to an annual escalation of 9%), and certain subsidiaries of the company will
                provide a guarantee to the purchaser. OPL will lease the properties for a period of ten
                years, and secure the necessary security of tenure at the end of the lease;
         1.2.3  Lease Incentive Agreement in terms of which OPL will receive a minimum lease
                incentive payment of R 145 000 000 or a 50% share in the net asset value of the
                property, whichever is the greater, upon expiry of the lease term;
         1.2.4  Step-in-rights agreement between OPL, the purchaser, the purchaser's shareholder
                Enigma Empowerment Fund 1 (Proprietary) Limited ("Enigma Empowerment
                Fund") and the third party debt provider of the transaction in terms of which OPL will
                (i) be entitled to step into the shoes of the purchaser and to remedy the default in the
                event that the purchaser is in default of its obligations under the lease or is in default 
                of any funding agreements in respect of the properties and (ii) receive a call option to
                purchase the pledged shares in the purchaser from Enigma Empowerment Fund; and
         1.2.5  Pledge and cession agreement in terms of which the purchaser's shareholder, Enigma
                Empowerment Fund pledges and cedes its shares in the purchaser to OPL as security
                for the performance of the purchaser's obligations.

2. Rationale for the sale and leaseback transaction

      OneLogix intends to deploy the proceeds of the sale under the sale agreement into expansion
      initiatives for existing businesses, financing the acquisition of new businesses and to pay down
      debt. OPL will have the rights of first refusal in the event of a sale or lease of the property.

3. Purchase consideration and effective date

      The consideration payable for the property is R240 million in cash. It is anticipated that the
      effective date will be 1 August 2017.

4. Conditions precedent

     The sale agreement is subject to the fulfilment of the following conditions precedent:
      4.1.     approval of the board of OneLogix;
      4.2.     approval of the transaction being granted by the Competition Authorities in South
               Africa;
      4.3.     the purchaser conducting a due diligence on the property;
      4.4.     within 30 days of signing the sale agreement:
               4.4.1.  OPL procures that the Takeover Regulation Panel established in terms of the
                       Companies Act 71 of 2008, issues a compliance certificate or an exemption
                       certificate in terms of section 119(6) of the Companies Act 71 of 2008;
               4.4.2.  the purchaser and OPL signing a step-in rights agreement;
               4.4.3.  the purchaser and OPL signing the lease agreement;
               4.4.4.  the purchaser and OPL signing a loan agreement with a bank to the
                       satisfaction of the purchaser; and
               4.4.5.  the purchaser and OPL signing a power of attorney to register a second
                       mortgage bond over the property.

5. Value of net assets

    The book value of the net assets that are the subject of the transaction as at 30 April 2017 was
    R225.8 million. OPL did not derive any material profits from the property prior to the conclusion
    of the transactions.

6. Categorisation of the transaction

    The transactions together are classified as a Category 2 transaction in terms of the Listings
    Requirements of the JSE Limited and do not require OneLogix shareholder approval.

7. Renewal of cautionary

    Shareholders are referred to the cautionary announcement published on SENS on 9 May 2017 and
    are advised that OneLogix continues to progress negotiations for the disposal of an investment,
    separate from the transactions detailed in this announcement, and accordingly shareholders are
    advised to continue to exercise caution when dealing in the company’s securities until a further
    announcement is made.

22 May 2017



Corporate advisor and sponsor
Java Capital

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