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CGR - Calgro - Disposal of fleurhof and related funding arrangements
CALGRO M3 HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 2005/027663/06)
Share Code: CGR ISIN: ZAE000109203
("Calgro" or "the Calgro Group" or "the Company")
DISPOSAL BY CALGRO M3 LAND (PROPRIETARY) LIMITED OF ITS 30% EQUITY INTEREST IN
FLEURHOF EXTENSION 2 (PROPRIETARY) LIMITED AND RELATED FUNDING ARRANGEMENTS
AND CONTINUATION OF CAUTIONARY ANNOUNCEMENT
1. THE TRANSACTION
1.1 Further to the cautionary announcement released on SENS on 27
February 2009, shareholders are hereby advised that Calgro M3 Land
(Proprietary) Limited ("Calgro M3 Land"), a wholly-owned subsidiary
of the Company, has entered into a sale of shares agreement dated 26
February 2009 ("the Sale of Shares Agreement") in terms of which
Calgro M3 Land will dispose of 30% of its equity interest in and
cede its claims against Fleurhof Extension 2 (Proprietary) Limited
("Fleurhof"), a wholly-owned subsidiary of Calgro M3 Land, to South
Africa Workforce Housing Fund LP ("the Purchaser") for a total cash
consideration of R30 million ("the disposal").
1.2 In addition, and as a condition precedent of the disposal, a
shareholders agreement (as amended), was concluded between the
Purchaser, Calgro M3 Land and Fleurhof ("the Parties") dated 11
March 2009 ("the Shareholders Agreement") in terms of which, inter
alia, it was agreed that:
1.2.1 30 ordinary shares at a par value of R1 per ordinary
share, representing 30% of the equity of Fleurhof, will be
sold to the Purchaser in terms of the disposal, and
subsequently will be converted into 30 Class A ordinary
shares ("the Class A shares"). The remaining 70 ordinary
shares, representing 70% of the equity of Fleurhof, will
be retained by Calgro M3 Land and will be converted into
70 Class B shares ("the Class B shares").
With regards to the rights, privileges, restrictions and
conditions of the Class A shares and Class B shares, Class
A shares will, amongst others, as regards to shareholders`
distributions:
- rank before Class B shares;
- will be entitled to receive payment of a special
dividend (detailed in 1.2.3); and
- will rank before Class B shares as regards dividend
payments, and such dividends and special dividend
will rank in priority to any other dividends which,
after the date of issue of the Class A shares, may be
declared in respect of any other ordinary shares of
Fleurhof;
1.2.2 as and when required, and solely to meet the working or
other capital requirements of the Project (as defined in
paragraph 2 below), the Purchaser and Calgro M3 Land will
advance, each in their respective capacity, shareholder
loans to Fleurhof in response to a drawdown notice issued
by Fleurhof. Such shareholder loans will be unsecured,
will bear interest at a rate of 2% above the ruling prime
interest rate and will be repayable from profits generated
by the Project. Accordingly, the Purchaser will advance
to Fleurhof an initial shareholder loan in the amount of
R50 million;
1.2.3 a special dividend equal to R30 million, will be payable
by Fleurhof to the Purchaser out of the profits generated
by the Project prior to the payment of any dividends, or
other amounts, on account of any other shares in the
issued share capital of Fleurhof; and
1.2.4 Calgro M3 Land will be required to repurchase all of the
Class A shares held by the Purchaser voetstoots, for a
purchase consideration equal to the par value of those
shares, being R1 per Class A share, with effect from the
business day immediately after the date of completion of
the Project
(collectively "the Transaction").
1.3. The Transaction and the implementation thereof are subject to the
fulfilment of certain conditions precedent as set out in paragraph 7
below.
1.4 The effective date of the Transaction will be the date of fulfilment
of all the conditions precedent, as set out in paragraph 7 below.
2. NATURE OF BUSINESS CARRIED ON BY FLEURHOF
Fleurhof was established as a special purpose vehicle on 4 August 2005 by
Calgro M3 Land for the sole purpose of implementing a project to
consolidate and subdivide the Farm Vogelstruisfontein, install
infrastructure and engineering services thereon, and thereafter to
construct and dispose of top structures, including residential houses
which will be transferred to qualifying persons as identified by various
government, provincial and/or local departments of housing, as well as
sectional title multi-storey units and freestanding housing units to
individual purchasers and commercial sites and sites for social amenities
("the Project");
3. BACKGROUND TO THE PURCHASER
The Purchaser was established as an en commandite partnership under the
laws of South Africa, and represents the South African investment
interests of the International Housing Solutions group ("IHS"). IHS is a
United Kingdom based investment firm focused on residential housing, that
partners with financial institutions, private capital groups, real estate
developers and local governments to provide finance for residential
property projects, concentrating on the more affordable end of the
market. IHS is currently active in South Africa, the United Kingdom and
Jordan.
4. RATIONALE FOR THE TRANSACTION
In response to current depressed and uncertain market conditions facing
both local and international businesses, and in light of ongoing
commitments facing Calgro in connection with various upcoming development
projects, management consider it prudent and in the best interests of the
Company, to inject capital into the business by partnering with a locally
based equity funder. The capital raised from the Transaction will be
used to partly satisfy the medium term funding requirements of the
Project, but will also assist in de-risking the wider Calgro Group by
providing a source of easily accessible capital funds. Furthermore,
management believe that the relationship with IHS will not only provide
capital resources, but also potential future investment opportunities for
the wider Calgro Group, as well as access to the research, risk
assessment and technical advisory capabilities of IHS.
5. CONSIDERATION AND APPLICATION OF SALE PROCEEDS
5.1 The sale proceeds of R30 million will be applied primarily towards
meeting current and future project related funding requirements of
the wider Calgro Group; and
5.2 the shareholder loan of R50 million advanced by the Purchaser, will
be used solely by Fleurhof to fund the operational and working
capital requirements of the Project. This will allow Fleurhof to
commence the installation of services on the Project in the very
near short term, thereby expediting the overall deliverables of the
Project.
6. FINANCIAL EFFECTS
The pro forma financial effects of the Transaction will be announced in
due course.
7. CONDITIONS PRECEDENT
The Transaction is subject to, inter alia, the following conditions
precedent:
7.1 Sale of Shares Agreement :
7.1.1 receipt by the Purchaser of a certified copy of the record
of decision to be issued to Fleurhof, and the Purchaser`s
acceptance of the terms and conditions thereof, by the
Gauteng Government: Department of Agriculture,
Conservation and Environment, in respect of the Project;
7.1.2 receipt by the Purchaser of a signed and binding agreement
concluded simultaneously with the Sale of Shares
Agreement, between Fleurhof and Central Rand Gold South
Africa (Proprietary) Limited ("CRG"), in terms of which
CRG is entitled to explore, mine and/or extract minerals,
metals and/or precious stones on, in and/or from that
portion of the land as per agreement, same being
unconditional with regards to its terms, to the
satisfaction of the Purchaser; and
7.1.3 all necessary regulatory approvals as well as shareholder
approval. In this regard, the Company wishes to advise
that it has obtained irrevocable undertakings to vote in
favour of the Transaction, from shareholders holding 76.1%
of the issued share capital of Calgro.
7.2 Shareholders Agreement:
Fulfilment of all the conditions precedent contained in the Sale of
Shares Agreement by 25 May 2009.
8. CATEGORISATION AND DOCUMENTATION
In terms of the Listings Requirements of the JSE, the disposal
consideration of R30 million and the shareholder loan of R50 million
advanced by the Purchaser in terms of the Shareholders Agreement, need to
be aggregated for categorisation purposes. Accordingly, the disposal is
deemed to be a Category 1 transaction and requires shareholder approval.
A circular to shareholders setting out the terms of the Transaction will,
subject to approval by the JSE, be posted to Calgro shareholders within
28 days from this announcement.
9. CONTINUATION OF CAUTIONARY ANNOUNCEMENT
Shareholders of Calgro are advised to continue exercising caution when
dealing in Calgro shares on the JSE until such time as the pro forma
financial effects of the Transaction have been announced.
Johannesburg
13 March 2009
Corporate and Designated Advisor: PSG Capital (Proprietary) Limited
Date: 13/03/2009 14:18:02 Supplied by www.sharenet.co.za
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