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Growthpoint Properties Limited - Growthpoint Black Economic Empowerment
("BEE") Transaction
GROWTHPOINT PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1987/004988/06
ISIN: ZAE 000037669
Share code: GRT
("Growthpoint" or "the company")
GROWTHPOINT BLACK ECONOMIC EMPOWERMENT ("BEE") TRANSACTION
INTRODUCTION AND RATIONALE
Investec Bank Limited is authorised to announce that Growthpoint has entered
into agreements in order to facilitate the acquisition by Phatsima Properties
(Proprietary) Limited ("Phatsima") of 22 million new Growthpoint linked units
amounting to 2.3% of the total Growthpoint linked units currently in issue,
which units have a current market value of R279.4 million, based on the closing
price of a Growthpoint linked unit of R12.70 on 8 December 2006 ("BEE
transaction"). Growthpoint and its Board of Directors ("the Board") are
committed to assist in the achievement of meaningful participation by
Historically Disadvantaged South Africans ("HDSAs") in the country`s economy.
As an integral part of the transaction, Phatsima has also acquired a 2.3%
interest in the Growthpoint asset management contract from Investec Property
Group Limited. This transaction (the "BEE Manco Transaction") entitles Phatsima
to 2.3% of the asset management fee arising from the asset management agreement
concluded between Growthpoint and Growthpoint Managers (Proprietary) Limited in
respect of the management of Growthpoint`s property portfolio.
The Board believes that the implementation of the BEE Transaction and the BEE
Manco Transaction (collectively the "BEE Transactions") are major steps towards
ensuring that Growthpoint`s BEE equity ownership and control responsibilities
are addressed, as are currently required under the Department of Trade and
Industry Codes of Good Practice on Broad Based Black Economic Empowerment and
the draft Property Sector Transformation Charter.
GROWTHPOINT BEE PRINCIPALS
In structuring the BEE Transactions, Growthpoint has endeavoured to achieve its
previously adopted BEE objectives, which inter alia include:
- the BEE partners include influential role players who can add value to
Growthpoint and its linked unitholders but at the same time ensuring the BEE
Transactions benefit a broad base of HDSAs;
- the BEE partners are broad-based, and/ or black female and assist
Growthpoint, on an ongoing basis, in meeting the requirements of the Broad Based
Black Economic Empowerment Act, No. 53 of 2003, as amended (the "BBBEE Act") and
the Property Sector Transformation Charter once it becomes effective;
- economic interest and voting rights are transferred to the BEE Partner
upfront;
- the BEE partners remain an investor in, and a partner of, Growthpoint for
at least seven years (the "lock-in period");
- the BEE Transactions are sustainable and value enhancing for the BEE
partners and Growthpoint linked unitholders; and
- current Growthpoint linked unitholders are not diluted or if there were to
be a dilution, the dilution be kept to a minimum.
BACKGROUND ON PHATSIMA
Phatsima, a black controlled and managed property investment holding company,
which has been formed for the purpose of the BEE Transactions, is led by Mr
Herman Mashaba. The major shareholders of Phatsima, inter alia, include:
Shareholder Shareholding (%)
Herman and Connie Mashaba Family 40
Trust
ABM Kalla Family Investment (Pty) 12
Ltd
Selomane Maitisa 10
The Field Band Foundation 3
Jacqueline Mafumadi 2
Tim Modise 2
Joyce Dube 2
Other* 29
Total 100
* Other is held by 11 HDSAs whose shareholdings range between 2% and 4%.
THE BEE TRANSACTION
Phatsima will effectively acquire 22 million new Growthpoint linked units
or 2.3% of the total Growthpoint linked units currently in issue. The market
value of the investment is R279.4 million, based on the closing price of a
Growthpoint linked unit of R12.70 on 8 December 2006.
Terms of participation by Phatsima
Salient features of participation by Phatsima in the BEE Transactions are as
follows:
- Phatsima is not entitled to sell or alienate their interest in Growthpoint
during the lock-in period;
- Phatsima must be and remain controlled by broad based BEE entities and/or
individuals for the duration of the lock-in period to the extent required by the
BBBEE Act and all other applicable laws and regulations from time to time;
- following the expiry of the lock-in period, should Phatsima wish to dispose
of their interest in Growthpoint, or any part thereof, and there is still a
requirement for Growthpoint to maintain its BEE equity ownership, Phatsima will
be required to sell their interest, or the relevant part thereof, to a third
party that will maintain its BEE status; and
- Phatsima has undertaken that, during the lock-in period, they will not
participate, without Growthpoint`s prior written consent, in any other property
holding organisation, which competes with Growthpoint.
SALIENT TERMS OF THE BEE TRANSACTIONS AND FUNDING
Phatsima will acquire 22 million new Growthpoint linked units, which will be
issued at R11.50 per linked unit as part of a renounceable vendor placing, in
terms of the agreements concluded between Growthpoint and the vendors of the
Business Connexion (Proprietary) Limited property portfolio acquired by
Growthpoint, salient details of which were released on the Securities Exchange
News Service of the JSE Limited on 8 June 2006.
Old Mutual Specialised Finance (Proprietary) Limited ("Omsfin") will advance
R202.4 million of senior and junior funding to partly fund the BEE Transactions.
Interest rates in respect of this funding will effectively be fixed for the
duration of the loan period being 10 years.
Growthpoint will advance mezzanine funding of R57.4 million which will also
attract a fixed interest rate. At the settlement date of the mezzanine funding,
Phatsima will pay to Growthpoint, to the extent that funds are available, an
additional 2% interest per annum and a further amount calculated to be 40% of
the net equity upside of Phatsima, which is capped at a total return of 15% to
Growthpoint.
All funding will be provided on a 10-year basis with an election by the lenders
to review their funding after seven years.
Investec Private Bank will provide a facility of up to R12.3 million to Phatsima
to fund the equity participation of Phatsima of R1.1 million in the BEE
Transaction and to fund the BEE Manco Transaction.
BOARD REPRESENTATION
Herman Mashaba, who holds an indirect beneficial interest in Phatsima of 40%,
through the Herman and Connie Mashaba Trust, is already a non-executive director
of the Growthpoint Board of Directors and will continue to be so appointed.
For and on behalf of the board
Growthpoint Properties Limited
Sandton
11 December 2006
Investment Bank & Transaction Sponsor to Growthpoint
Adviser
Investec Corporate Finance Investec Bank
Lead Debt Arranger Senior and Junior Lender to the
Transaction
Investec Bank Treasury and Old Mutual Specialised Finance
Specialised Finance logo
Legal Adviser to the Transaction
Jowell Glyn & Marais logo
Date: 11/12/2006 17:42:18 Supplied by www.sharenet.co.za
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