REDEFINE INCOME FUND GOES TO THE MARKET WITH R136-MILLION PLACEMENT OF LINKED UNITS TO REDUCE LONG-TERM DEBT Redefine Income Fund Limited (Registration No. 1999/018591/06) (a company incorporated in South Africa) Share Code: RDF ISIN Code: ZAE000023503 ("Redefine" or "the company") REDEFINE INCOME FUND GOES TO THE MARKET WITH R136-MILLION PLACEMENT OF LINKED UNITS TO REDUCE LONG-TERM DEBT MARKET DEMAND FOR PROPERTY LOAN STOCK COMPANY`S LINKED UNITS RESULTS IN OVERWHELMING SUCCESS OF ISSUE FOR CASH HYBRID property loan stock Redefine Income Fund today announced that it had placed 54,6-million linked units for cash at R2,50 per unit to raise R136- million (net of costs) which would be applied to partially retire long-term debt, repay the bank overdraft, and thereby reduce its gearing level from 59 percent to 55,7 percent of total assets valued at R2,4-billion. B O E Personal Stockbrokers handled the placement. CEO Peter Penhall said: "We are delighted that the market demand for Redefine linked units resulted in the overwhelming success of the issue for cash. "The placement was a planned strategy determined late last year to reduce the level of debt that rose to an uncomfortable level when Redefine acquired from Rand Leases Properties (R L Props) a portfolio of 27 prime investment properties for R356-million. "Furthermore, the intended consequences have been to lower our gearing ratio down to the 55 percent mark and to attain a market capitalisation exceeding the R1-billion benchmark. We gave ourselves a deadline ended financial year August 31, 2003 to achieve these goals. Both have been reached within the first half- year, which is good news for linked unit holders." The placement will assist in reducing the effect of increased cost of finance resultant from high short-term rates. more "We said at the time of the R L Props transaction that our gearing level was too high, especially in the prevailing high interest rate environment, and that we would implement measures as quickly as possible to cut this back. Application of investor funds to reduce debt is clearly more favourable than asset disposals in correcting the level of gearing." Penhall said that the placement would also enhance the tradability of the Redefine counter once the issue of linked units to institutions and individual investors had worked its way into the market. The linked units have been taken- up by a wide spread of investors covering major financial institutions, small pension funds, fund managers, and individual clients of stockbrokers. He recalled that negotiations with R L Props had covered an extended period last year. "Through a borrowing policy that took advantage of the lower interest rate climate prior to the September 11 2001 tragedy, we had the facilities to include cash and debt assumption in settlement of the deal to acquire the R L Props portfolio at a strongly competitive price. At the same time, we assumed responsibility for debt of R252-million. The prime objective was to ensure in the interests of linked unit holders that R L Props, in which Redefine is invested, would become debt free. "In effect, taking over the R L Props debt represented a gearing of 71 percent which we incorporated into Redefine`s balance sheet in the first quarter of financial year 2003 thereby raising our own gearing ratio to 59 percent. "The issue was simple: we were required to put in place a debt reduction strategy - hence the issue for cash. " Financial Manager Bradley Salters said: "It is important to note the issue for cash enhances both market capitalisation and net asset value, with no material effect on headline earnings." Historic NAV goes up from a `before issue for cash` 244 cents per linked unit to an immediate `post issue for cash` 245,38 cents per linked unit, while current NAV, following the issue will be 259,8 cents per linked unit. Salters said that, parallel with the issue for cash, Redefine took steps by way of interest rate swaps to further hedge its overall debt position. "Our intent in the current financial year has been to re-visit the cost of finance, especially after taking over the R L Props debt. What we have done is to negotiate a series of fixes covering a further R772-million of debt at an average cost of just under 13 percent. "With total debt now standing at R1,3-billion, Redefine has protected close on 100 percent for up to seven years through hedging as part of our policy of financial management," he said. Issued by Far Out Communication cc Communication and Editorial Practitioners Email: manucomm@iafrica.com Tel: 27-11-346-2666 Fax: 27 11-346-0290 After hours; 27 11 882-4446 Date: 28/01/2003 01:22:00 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department