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Growthpoint/Paramount - Mandatory Offer Growthpoint Properties Limited (Incorporated in the Republic of South Africa) (Registration number 1987/004988/06) Share code: GRT & ISIN ZAE000037669 ("Growthpoint") Paramount Property Fund Limited (Incorporated in the Republic of South Africa) (Registration number 1945/019928/06) Share code: PRA & ISIN ZAE000028577 ("Paramount") MANDATORY OFFER BY GROWTHPOINT TO ACQUIRE ALL THE LINKED UNITS IN PARAMOUNT 1. INTRODUCTION The holders of linked units in Paramount ("Paramount linked unitholders") and Growthpoint ("Growthpoint linked unitholders") are advised that Growthpoint has acquired approximately 65.5 million Paramount linked units, in exchange for the issue of new linked units in Growthpoint at the exchange ratio as defined in paragraph to below. Subsequent to the forementioned transaction, Growthpoint holds 41.9% of the Paramount linked units in issue and,in terms of the Securities Regulation Panel ("SRP") Code and Rules of the SRP ("Code"), Growthpoint is obliged to extend a mandatory offer to all Paramount linked unitholders to acquire all the linked units of Paramount other than those already held by Growthpoint ("proposed transaction"). The proposed transaction will be implemented by way of an offer ("offer") in terms of Section 440 of the Companies Act, 1973 (Act 61 of 1973), as amended (the "Act"), to be made by Growthpoint to all Paramount linked unitholders, apart from Growthpoint, to acquire all of the Paramount linked units held by such Paramount linked unitholders ("offer linked units"). The offer is subject to the suspensive conditions set out in paragraph 6 below. Should the offer be accepted by Paramount linked unitholders, holding not less than nine-tenths of the offer linked units, it is the intention of Growthpoint to exercise its entitlement to compulsorily acquire the remaining offer linked units in terms of Section 440K of the Act. Should Growthpoint elect to exercise its entitlement in terms of Section 440K, Paramount will become a wholly-owned subsidiary of Growthpoint and the listing of the Paramount linked units on the JSE Limited ("JSE") will be terminated. 2. THE OFFER CONSIDERATION AND DISTRIBUTIONS DURING THE OFFER PERIOD Paramount linked unitholders who accept the offer can elect to either receive - * 1 new Growthpoint linked unit for every 1.44 offer linked units held ("exchange ratio") rounded to the nearest whole number
("linked unit alternative"). Based on the volume weighted average price of a Growthpoint linked unit of R11.44 on 19 October 2006, being the last practical date prior to the offer being made by Growthpoint and the exchange ratio of 1.44, the linked unit
alternative represents a premium of 10.03% to the volume weighted average price of a Paramount linked unit of R7.22 on the same date; or * as Growthpoint has acquired greater than 10% of the Paramount linked units in issue for cash, within the three month period preceding the offer, Growthpoint will offer Paramount linked unitholders a cash consideration of R6.71 for every offer linked unit ("cash alternative"), being the highest price paid by
Growthpoint per Paramount linked unit in the preceding three month period. The linked unit alternative and the cash alternative are hereinafter collectively referred to as the "offer
consideration". It is anticipated that Paramount"s next distribution for the quarter ending 31 October 2006 will be paid on or about 3 January 2007. In order to place Growthpoint linked unitholders in a
similar position, it is also the intention of Growthpoint - * to pay an interim distribution for the four months ending 31 October 2006 at the same time; and * thereafter, to match Paramount"s quarterly distribution
periods during the offer period. A Paramount linked unitholder who accepts the offer early, will, until the offer becomes unconditional and the offer consideration has been paid by Growthpoint, still continue to participate in Paramount"s quarterly distributions. 3. GROWTHPOINTS RATIONALE FOR THE PROPOSED TRANSACTION Growthpoint expects the benefits of the proposed transaction to be as follows: 3.1 Growthpoint Growthpoint"s stated objective is to maintain an optimal balance of well located sectorally and geographically diversified property assets underpinned by sustainable and growing income returns. The proposed transaction provides an opportunity for Growthpoint to acquire a significant property portfolio that, with the expected synergistic benefits of the proposed transaction, is expected to increase Growthpoint"s future distributions. The proposed transaction will continue to diversify the overall risk within the Growthpoint property portfolio. 3.2 Paramount linked unitholders Pursuant to the implementation of the proposed transaction, Paramount linked unitholders who elect the linked unit alternative will benefit as follows: * Paramount linked unitholders will benefit from an upfront capital premium;
* the combined Growthpoint and Paramount property portfolio ("combined portfolio") is better diversified and will provide Paramount linked unitholders with increased exposure to a portfolio of quality assets;
* Paramount linked unitholders will have access to the increased liquidity and tradeability of Growthpoint linked units and will participate in any increase in the Growthpoint linked unit price due to any increase in future distributions available from the
combined portfolio; * the combined portfolio is anticipated to attract better debt funding rates than those of Paramount and increase the competitiveness of the combined portfolio for future
transactions. 4. OPINION, RECOMMENDATIONS AND UNDERTAKINGS The board of directors of Paramount have appointed Nedbank Capital, a division of Nedbank Limited as the independent adviser ("the independent adviser") to advise on whether the terms and conditions of the offer are fair and reasonable to Paramount linked unitholders. Details of the opinion of the independent adviser will be provided in the circular to be posted to Paramount linked unitholders. Certain Paramount directors and management holding directly and indirectly approximately 9.7 million Paramount linked units, comprising approximately 4.0 % of the Paramount linked units in issue have irrevocably undertaken to accept the linked unit alternative. 5. SRP CONFIRMATION The SRP has been given appropriate confirmation (complying with its requirements) that Growthpoint has sufficient cash resources and/or facilities available to meet its commitments in terms of the cash alternative in respect of the offer. 6. SUSPENSIVE CONDITIONS The offer is subject to - * all relevant documentation to be distributed to Paramount linked unitholders being approved by the SRP, JSE; and * the approval of the Competition Authorities and any other regulatory authorities, to the extent required. 7. FURTHER ANNOUNCEMENTS, DOCUMENTATION AND CAUTIONARY ANNOUNCEMENT Announcements setting out the salient dates and the pro forma financial effects of the offer will be made in due course. Paramount linked unitholders are advised to continue to exercise caution in trading their linked units until such time as this information is released. A circular, providing further information on the offer is expected to be posted to Paramount linked unitholders in due course. Johannesburg 20 October 2006 Investment bank to Growthpoint Sponsor to Growthpoint (Investec Corporate Finance) (Investec Bank Limited) Legal advisor to Growthpoint Independent adviser and sponsor to Paramount (Jowell Glyn Marais) (Nedbank Capital) Date: 20/10/2006 01:49:07 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
