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Disposal of Erf 30 Umlaas Road in a sale and leaseback transaction
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 ERF 30 UMLAAS ROAD IN A SALE AND LEASEBACK TRANSACTION
Introduction and rationale for the transaction
Shareholders are advised that on 15 September 2020 (“Signature Date”) OneLogix, through its
wholly-owned subsidiary, OneLogix Proprietary Limited (the “Seller”) entered into a sale of a
property letting business agreement (“Sale Agreement”) with Camperdown Real Estate 2 Proprietary
Limited, a company owned by Enigma Property Proprietary Limited and Emerging African Property
Holdings Proprietary Limited (the “Purchaser”), in terms of which the Purchaser agreed to acquire,
subject to the suspensive conditions set out below, the property letting business situated at
Erf 30 Umlaas Road, Mkhambathini, Registration Division FT, Kwa-Zulu Natal (“Umlaas Road Phase II”
or the “Property”) for an aggregate consideration of R310 million (including VAT at rate of zero
percent) (“Disposal”).
The proceeds from the Disposal will be utilised to settle a portion of the Company’s interest-bearing
borrowings, improve liquidity, unlock capital and enhance OneLogix’s broad-based black economic
empowerment credentials.
Terms of the Disposal
The Seller has agreed to dispose of Umlaas Road Phase II as an indivisible whole and as a going
concern with effect from the date of registration of transfer of the Property into the name of the
Purchaser.
Concurrently with the conclusion of the Sale Agreement, the parties will enter into the following
inter-related agreements:
- a lease agreement in terms of which Seller will lease the Property from the Purchaser on a
triple net basis for a lease term of 10 years commencing on the Transfer Date at an annual
rental of R31 million (excluding VAT), subject to an annual escalation of 9% (the “Property
Lease Agreement”);
- an addendum to the existing lease agreement entered into between the Seller and Camperdown
Real Estate 1 Proprietary Limited (the “Umlaas Road Phase I Lessor”) on 22 June 2017 in
respect of Portions 854, 855 and 773 of the Farm Vaalkop & Dadelfontein No.885 in Kwa-
Zulu Natal (being, “Umlaas Road Phase I”) whereby (i) the lease term shall be amended to 10
years commencing on the date of transfer of Umlaas Road Phase II, which transfer is
anticipated to occur on or about 31 October 2020 (“Transfer Date”), and (ii) the rental payable
in respect of the amended lease term will be reduced to R31 million per annum from R32,6
million per annum;
- the cancellation of the existing lease incentive agreement in respect of Umlaas Road Phase I
(the “Phase I lease incentive agreement”) in terms of which the Phase I lease incentive
agreement will be settled and cancelled, subject to the payment by the Umlaas Road Phase I
Lessor to the Seller of R61 million on the Transfer Date, as full and final settlement of all of
the Seller’s obligations in terms of the Phase I lease incentive agreement;
- a new lease incentive agreement in respect of Umlaas Road Phase I and Umlaas Road Phase II
in terms of which the Seller will receive a minimum lease incentive payment of R120 million
or 30% of the net asset value of Umlaas Road Phase I and Umlaas Road Phase II whichever is
the greater, upon either the expiry of the lease term, or the sale of Umlaas Road Phase I and
Umlaas Road Phase II;
- a guarantee entered into by OneLogix and United Bulk Proprietary Limited, a wholly-owned
subsidiary of OneLogix, in favour of the Purchaser for the obligations of the Seller in terms of
the Property Lease Agreement;
- a pledge and cession agreement in terms of which all of the issued shares of the Purchaser and
the Umlaas Road Phase I Lessor are pledged to the Seller as security for the performance of the
Purchaser's obligations in terms of the new lease incentive agreement; and
- a development agreement in terms of which the Seller will procure that the remaining
construction in respect of Umlaas Road Phase II is duly completed,
(collectively the “Transaction Agreements”).
The effective date of the Disposal is subject to the fulfilment or waiver, as the case may be of the
suspensive conditions set out below, which is expected to be within 120 days from the Signature Date.
The Seller will have the right of first refusal in the event of a sale or lease of the Property by the
Purchaser.
The Sale Agreement contains undertakings, warranties and indemnities that are customary for a
transaction of this nature.
Suspensive Conditions
In addition to the conclusion of the Transaction Agreements, the Disposal remains subject to the
fulfilment or waiver, as the case may be, of the following suspensive conditions:
- approval by the board of directors of OneLogix for the conclusion of the Sale Agreement and
the Transaction Agreements;
- the conclusion of a new inter-creditor agreement in terms of which the Seller can step-in to the
Property Lease Agreement in the event of a breach thereof by the Purchaser;
- the conclusion of a loan agreement between the Purchaser and a registered bank in respect of
the purchase consideration;
- approval from the applicable Competition Authority being obtained, to the extent required;
- the issue of a second-ranking guarantee in favour of the Seller as security for the Purchaser's
obligations in terms of the new lease incentive agreement by Bowwood and Main 272 (RF)
Proprietary Limited (a security SPV);
- the amendment of the memorandum of incorporation of the Purchaser in order to align the
provisions of the memorandum of incorporation with the Transaction Documents and to ring-
fence the Purchaser;
- the amendment of the memorandum of incorporation of the Umlaas Phase I Lessor in order to
align the memorandum of incorporation with the terms of the Transaction Documents; and
- OneLogix securing the requisite approvals in terms of the JSE Listings Requirements,
including the approval of OneLogix shareholders necessary to implement the Disposal.
Financial information
The net asset value of the Property is R253 million and the future development costs to be incurred
until completion are estimated to be R57 million. It is not expected that a profit or loss will be made
on the disposal of the Property and the Property is expected to become revenue-generating from the
Transfer Date.
The above financial information has been extracted from the unaudited management accounts for the
period ended 31 August 2020. The management accounts were prepared in terms of the Company’s
accounting policies and IFRS. OneLogix is satisfied with the quality of these management accounts for
the purposes of this announcement.
Categorisation of Disposal
The Disposal is a category 1 transaction in terms of the JSE Listings Requirements and, accordingly,
requires shareholder approval. Details of the Disposal, together with, inter alia, the pro forma financial
effects of the Disposal and the summary valuation report on the property will be included in the
circular in this regard. The salient dates and times relating to the Disposal will be released on SENS
and published in the press at the time of the posting of the circular.
15 September 2020
Sponsor
Java Capital
Legal advisor to OneLogix
Cliffe Dekker Hofmeyr
Legal advisor to the Purchaser
Andrew Bagg & Associates
Date: 15-09-2020 04:30:00
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