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GROWTHPOINT PROPERTIES LIMITED - PROPOSED SPECIFIC REPURCHASE OF GROWTHPOINT
LINKED UNITS
GROWTHPOINT PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Share code: GRT
ISIN: ZAE000037669
("Growthpoint")
PROPOSED SPECIFIC REPURCHASE OF 62 000 000 GROWTHPOINT LINKED UNITS FROM
SENTINEL MINING INDUSTRY RETIREMENT FUND AND MINE EMPLOYEES PENSION FUND
1. Introduction
Investec Bank Limited is authorised to announce that Growthpoint will, in
terms of an agreement with Sentinel Mining Industry Retirement Fund and
Mine Employees Pension Fund (collectively, "MPF"), acquire 62 000 000
Growthpoint linked units ("the repurchased units") (representing 9,2% of
the existing Growthpoint linked units in issue) from MPF ("the specific
repurchase"), subject to the conditions precedent set out in paragraph 5
below. The effective date of the specific repurchase is 1 January 2004.
2. Terms Of The Specific Repurchase
At an effective price of 605 cents per Growthpoint linked unit, the total
repurchase consideration payable by Growthpoint to MPF amounts to R375,1
million ("the repurchase consideration"), which will be settled by
Growthpoint through the delivery and transfer to MPF of the following
listed property units currently owned by Growthpoint:
Price
Name Number (cents) (R"m)
ApexHi Properties A Limited 3 600 000 852 30,7
ApexHi Properties B Limited 13 950 000 717 100,0
Allan Gray Property Trust 36 800 000 291 107,1
Metboard Properties Limited 12 825 965 337 43,2
Pangbourne Properties Limited 12 300 000 765 94,1
375,1
The listed property units listed in the table above are collectively
referred to as the "consideration units". The respective prices of the
repurchased units and the consideration units have been calculated by
reference to the 10-day trade weighted average prices at which the
respective units traded on the JSE Securities Exchange South Africa ("the
JSE") lists on 17 December 2003. The repurchase consideration will not be
adjusted for any movement in the price at which the repurchased units or
the consideration units trade on the JSE between 17 December 2003 and the
date that the specific repurchase is implemented, which date is expected to
be no later than 29 February 2004.
The repurchased units will be purchased cum-distribution and any
distributions received in respect of the repurchased units after 1 January
2004 will accrue to Growthpoint whilst the consideration units being sold
to MPF will be sold cum-distribution and any distributions received in
respect of the consideration units after 1 January 2004 will accrue to MPF.
The repurchased units will be acquired by Mordovo Investments (Proprietary)
Limited, a wholly owned subsidiary of Growthpoint, and will initially be
held as treasury stock.
3. Rationale For The Specific Repurchase
Growthpoint management believes that in terms of its current strategy of
owning both physical properties and a portfolio of listed property units,
prevailing market conditions favour a conversion of the above-mentioned
listed property units into physical property owned by Growthpoint.
By purchasing its own linked units, and by selling a portfolio of listed
property units, Growthpoint will be investing in its own physical property
portfolio at an attractive forward yield and will be increasing the
physical property component of its total assets from approximately 87% to
approximately 93%, after taking into account the recently announced
acquisition of the Waterfall Mall shopping centre in Rustenburg and the
Investec head office buildings in Sandton and Cape Town.
The specific repurchase should contribute to an overall improvement in the
quality and sustainability of the underlying income streams available to
Growthpoint linked unitholders whilst providing Growthpoint with an
opportunity to lock in certain of the gains made on the listed property
investment portfolio.
Growthpoint management has consistently indicated it intended to reduce the
combined unitholding of MPF in Growthpoint. Pursuant to the merger with
Primegro Properties Limited in July 2003, the combined unitholding of MPF
reduced from approximately 70% to approximately 38%. The specific
repurchase, together with the issue to the vendors of 50,8 million
Growthpoint linked units in terms of the acquisition of the Investec head
office buildings in Sandton and Cape Town, will result in the combined
unitholding of MPF reducing to approximately 29%.
4. Financial Effects Of The Specific Repurchase
The pro forma financial effects of the specific repurchase as set out in
the table below have been prepared for illustrative purposes only and to
provide information on how the specific repurchase may have impacted the
historic financial results of Growthpoint. Because of their nature, the pro
forma financial effects may not give a fair reflection of Growthpoint"s
financial position after the specific repurchase or the effect on future
earnings.
The table below sets out the pro forma financial effects of the specific
repurchase on earnings, headline earnings, distribution and net asset value
per Growthpoint linked unit on the published financial results of
Growthpoint for the year ended 30 June 2003:
Published Pro forma Increase/
Before After (Decrease)
Per Growthpoint linked unit (cents) (cents) (%)
Earnings 72,22 73,53 1,8
Headline earnings* 56,25 53,64 (4,6)
Distribution 66,55 66,39 (0,2)
Net asset value 524,19 506,38 (3,4)
Number of linked units
in issue 343 288 934 281 288 934 (18,1)
Weighted average number
of linked units
in issue 314 910 131 252 910 131 (19,7)
The earnings, headline earnings, distribution and net asset value per
Growthpoint linked unit have been calculated on the basis that:
4.1 the specific repurchase was concluded on 1 July 2002, notwithstanding
that Growthpoint acquired its listed property portfolio on 9 October
2002;
4.2 MPF received all distributions relating to the consideration units for
the period 1 July 2002 to 30 June 2003;
4.3 the profit on the sale of the consideration units, and any related
capital gains taxation, have not been taken into account;
4.4 no distribution was paid by Growthpoint on the repurchased units for
the distribution period 1 July 2002 to 30 June 2003; and
4.5 the acquisition by Growthpoint of the Investec buildings in Sandton
and Cape Town, as set out in a circular to Growthpoint linked
unitholders, dated 10 December 2003, has not been taken into account.
* Reported headline earnings per linked unit are considered to be
relatively meaningless in the context of a property loan stock company as
it includes profit on the sale of listed property investments, fair value
adjustments for listed property investments, fair value adjustments for
debentures as well as notional interest on non-interest bearing long term
loans, which do not effect distributable earnings.
5. Conditions Precedent
The specific repurchase is subject to the fulfilment of the following
conditions precedent:
5.1 the approval of Growthpoint linked unitholders in general meeting in
accordance with the Companies Act, 1973 (Act 61 of 1973), as amended,
and the Listings Requirements of the JSE; and
5.2 the granting of all regulatory approvals for the specific repurchase,
to the extent required, including approval by the JSE.
6. Funding For The Specific Repurchase
The repurchase consideration will be funded by the delivery and transfer to
MPF of the consideration units.
7. Related Party And Voting
In terms of the Listings Requirements of the JSE, MPF are related parties
to Growthpoint in respect of the specific repurchase. Accordingly, for JSE
purposes, MPF will not be eligible to vote in respect of their unitholdings
at the Growthpoint general meeting convened for the purpose of voting on
the specific repurchase.
Furthermore, Growthpoint has appointed Ernst & Young Corporate Finance to
issue a fair and reasonable opinion relating to the specific repurchase in
compliance with the Listings Requirements of the JSE.
8. Documentation And General Meeting
A circular containing full details of the proposed specific repurchase,
including the independent fair and reasonable opinion on the specific
repurchase, and convening a general meeting of Growthpoint linked
unitholders to pass the requisite special resolution to approve the
specific repurchase, will be sent to Growthpoint linked unitholders in due
course.
Sandton
23 December 2003
Merchant bank:
Investec Corporate Finance
Investec Bank Limited
(Registration number 1969/004763/06)
Sponsor:
Investec Bank Limited
(Registration number 1969/004763/06)
Attorney:
Bell Dewar & Hall Inc.
(Registration number 1995/004675/21)
Date: 23/12/2003 05:09:05 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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