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REDEFINE INCOME FUND
(Incorporated in the Republic of South Africa)
(Registration number 1999/018591/06)
("Redefine")
Announcement of the Disposal of a Portfolio of Properties
and the Acquisition of Additional Apexhi Linked Units
1. Introduction
Redefine, through its wholly-owned subsidiary Outward Investments (Pty) Ltd
("Outward" or "the company"), owns a portfolio of listed securities focused
exclusively on the "Real Estate" sector of the JSE Securities Exchange South
Africa ("JSE") lists and a portfolio of commercial properties covering the
retail, office and industrial sectors (collectively "the investment
assets").
Further to the cautionary announcements published by Redefine on 27 March
2001, 9 May 2001 and 26 June 2001, Corpcapital Corporate Finance is
authorised to announce that Outward and Terminus Klerksdorp (Pty) Ltd
("Terminus"), a wholly- owned subsidiary of the company, have concluded an
agreement with ApexHi Properties Limited ("ApexHi") in terms of which they
have agreed to dispose of certain of their properties ("the disposal").
In addition, Outward has concluded an agreement with ABSA Pension Fund
("ABSA") to purchase additional ApexHi linked units for its listed property
securities portfolio ("the acquisition").
2. Rationale for the acquisition and disposal
The board of directors of Redefine is of the view that the following
benefits to Redefine should arise:
* the reduction of Redefine's holding in multi-tenanted properties,
particularly those exposed to the neighbourhood shopping centre category of
the retail sector, results in the direct property portfolio being brought
more in line with the stated goal of holding predominantly single to few
tenanted quality commercial properties with secure long-term lease profiles;
* the short-term weighting of Redefine's investment assets towards listed
property securities resulting from the acquisition of the ApexHi linked
units, will afford Redefine a sound base for further direct property
acquisitions without a long-term distortion in the split between the direct
property portfolio and the listed property securities portfolio;
* the acquisition of ApexHi linked units should enhance the overall yield of
Redefine in the medium to long term; and
* the portfolio is likely to be more attractive to institutional and other
investors, which should improve the liquidity and rating of the Redefine
linked units.
3. The disposal
In terms of the disposal the company has disposed of a rental enterprise
business (which business comprises, inter alia, 14 rental earning
properties) and Terminus has disposed of certain leasehold rights to ApexHi
with effect from 1 July 2001.
The aggregate purchase consideration payable to the company in respect of
the disposal is an amount of R164 113 000, which will be discharged by
ApexHi as follows:
* R98 467 800 by the issue by ApexHi of 16 411 300 ApexHi "A" class linked
units to be issued at a price of R6,00 per linked unit; and
* R65 645 200 by the issue by ApexHi of 16 411 300 ApexHi "B" class linked
units to be issued at a price of R4,00 per linked unit.
The disposal is subject to warranties that are standard for a transaction of
this nature.
4. The acquisition
ApexHi and ABSA have concluded an agreement ("the ABSA agreement") for the
purchase by ApexHi of a portfolio of properties from ABSA in return for cash
and by the issue of 5 800 000 "A" and "B" ApexHi linked units ("the ABSA
units"). Outward has agreed to purchase 4 000 000 of the ABSA units from
ABSA for R40 000 000, to be discharged as follows:
* R20 000 000 in cash; and
* R20 000 000 by issue of Redefine linked units at a 10 cent discount to the
30-day weighted average price of Redefine linked units prior to the date of
signature of the acquisition agreement.
The abovementioned Redefine linked units are to be issued on the transfer of
the properties from ABSA to ApexHi
5. The ApexHi linked units
Redefine intends retaining the ApexHi linked units acquired in terms of both
the acquisition and disposal as investments in its listed property
securities portfolio.
6. Conditions precedent
6.1 The disposal is subject to, inter alia, the following conditions
precedent:
* the securing of all necessary consents from ApexHi linked unitholders to
the conclusion and implementation of the disposal;
* the securing of formal approval from the Listings Division of the JSE for
listing of the "A" and "B" linked units to be issued in consideration for
the acquisitions;
* the securing, to the extent necessary, of all approvals and consents for
the acquisitions required in terms of the Competition Act, 89 of 1998.
All of the conditions precedent must be fulfilled or waived by no later than
30 September 2001.
6.2 The acquisition is subject to the condition precedent that the
conditions to which the ABSA agreement is subject are fulfilled by no later
than 30 September 2001.
7. Financial effects
The pro forma financial effects of the acquisition and disposal on the
earnings, headline earnings and net asset value per Redefine linked unit are
illustrated in the table below:
Cents
Cents Cents per
Cents per per linked
per linked linked unit
linked unit unit After
unit After After acquisition
Before acquisition disposal and disposal
Change
Earnings(1) 17,8 18,3 20,8 21,1 18,5%
Headline earnings(1) 17,0 17,5 18,5 18,9 11,2%
Historical net asset value(2) 199,7 201,4 201,2 202,8 1,5%
Notes:
(1) The earnings and headline earnings per Redefine linked unit, as set out
in the "Before" column of the table, are based upon Redefine's interim
results for the six-month period ended 28 February 2001. These interim
results do not take into account the effect on income recognition across
financial years arising from corporate activity in certain of the underlying
listed property securities subsequent to 28 February 2001.
The earnings and headline earnings per Redefine linked unit, as set out in
the "After acquisition" column of the table, are based upon assumptions that
the additional "A" and "B" linked units were acquired on 1 September 2000
and that the acquisition was settled by payment of the requisite cash amount
and issue of Redefine linked units, on that date.
The earnings and headline earnings per Redefine linked unit, as set out in
the "After disposal" column of the table, are based upon assumptions that
the properties were disposed of on 1 September 2000 and that the aggregate
purchase price was settled by ApexHi by the issue of the requisite "A" and
"B" linked units, on that date.
The earnings and headline earnings per Redefine linked unit, as set out in
the "After acquisition and disposal" column of the table, are based upon
assumptions that the properties were disposed of and the additional "A" and
"B" linked units acquired on
1 September 2000 and that the aggregate purchase price was settled by ApexHi
by the issue of the requisite "A" and "B" linked units and the acquisition
was settled by payment of the requisite cash amount and issue of Redefine
linked units, on that date.
(2) The historical net asset value per Redefine linked unit, as set out in
the "Before" column of the table, is based upon Redefine's interim balance
sheet at 28 February 2001, in which both the listed property securities
portfolio and the direct property portfolio are stated at their historical
cost.
The historical net asset value per Redefine linked unit, as set out in the
"After acquisition" column of the table, is based upon assumptions that the
additional "A" and "B" linked units were acquired on 1 September 2000 and
that the acquisition was settled by payment of the requisite cash amount and
issue of Redefine linked units, on that date.
The historical net asset value per Redefine linked unit, as set out in the
"After disposal" column of the table, is based upon assumptions that the
properties were disposed of on 1 September 2000 and that the aggregate
purchase price was settled by ApexHi by the issue of the requisite "A" and
"B" linked units, on that date.
The historical net asset value per Redefine linked unit, as set out in the
"After acquisition and disposal" column of the table, is based upon
assumptions that the properties were disposed of and the additional "A" and
"B" linked units acquired on 1 September 2000 and that the aggregate
purchase price was settled by ApexHi by the issue of the requisite "A" and
"B" linked units and the acquisition was settled by payment of the requisite
cash amount and issue of Redefine linked units, on that date.
8. Circular
A circular containing the details of the disposal will be sent to Redefine
linked unit-holders within 28 days of this announcement.
Johannesburg
24 July 2001
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Corpcapital Corporate Finance
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Fisher Hoffman PKF (Jhb) Inc.
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