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FPT - Fountainhead Property Trust - Rights offer declaration announcement

Release Date: 21/02/2011 16:22
Code(s): FPT
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FPT - Fountainhead Property Trust - Rights offer declaration announcement Fountainhead Property Trust JSE code: FPT ISIN: ZAE000097416 ("Fountainhead") a portfolio forming part of the Fountainhead Property Trust Scheme ("the Scheme"), a collective investment scheme in property established in terms of the Collective Investment Schemes Control Act, No. 45 of 2002, as amended, and managed by Fountainhead Property Trust Management Limited (Registration number 1983/003324/06) RIGHTS OFFER DECLARATION ANNOUNCEMENT 1. Introduction Fountainhead`s investment strategy is to increase the size and overall quality of its property portfolio, thereby enhancing the long term distribution growth prospects for Fountainhead unitholders. This will be achieved through the acquisition of superior properties as well as through refurbishing certain properties in the portfolio. In order to implement this strategy, Fountainhead intends to raise R1.0 billion by way of a renounceable rights offer to qualifying Fountainhead unitholders ("the Rights Offer"). 2. Rationale for the Rights Offer It is envisaged that the Rights Offer proceeds, in combination with the utilisation of Fountainhead`s debt facilities, will be used to fund property acquisitions and refurbishments. The Rights Offer proceeds will also enhance Fountainhead`s capability of concluding any other potentially large acquisitions that may arise. 2.1. Property acquisitions Purchase agreements have been signed in respect of the following property acquisitions: Sector Building name Purchase Expected price initial
(Rand yield million) Retail Access Park 419 8.69% Office 300 Middel Street 214 8.65% Office CK3 (an 80% undivided 204 9.10% share) Office Cedarwood House 72 9.00% Note: 1) The proposed acquisition of Access Park is subject to the fulfilment of certain conditions precedent and unitholders are referred to the SENS announcement released on 25 January 2011 for further details. All of the above are high-quality properties that have been identified for their capacity to provide a solid long-term income stream for the benefit of unitholders. In addition, Fountainhead is currently evaluating further possible acquisitions. 2.2. Property refurbishments One of Fountainhead`s flagship assets, the Blue Route Mall, is currently undergoing a major redevelopment, costing approximately R800 million. The redeveloped mall will be a 56 000 square meter regional shopping centre, boasting an improved tenant mix, a dedicated food court, as well as approximately 3 000 parking bays. On completion, the Blue Route Mall will assert its position as the dominant shopping centre in the southern suburbs of Cape Town. In addition, management is currently assessing the feasibility of refurbishing two other retail assets: Bryanston Shopping Centre has one of the highest trading densities of any property in the Fountainhead portfolio. The centre currently faces competition from nearby retail developments. In order to attract and retain customers and to protect its market share, the shopping centre requires a refurbishment. The strategic acquisition of Cedarwood House on an adjacent property provides further opportunity and flexibility to expand the existing footprint. A refurbished centre, together with its prime location, will contribute positively towards the long term performance of Fountainhead. Rosebank Mews is located directly opposite the Gautrain Station, in the rapidly growing node of Rosebank. In order to capitalise on its favourable location, the opportunity exists to increase the bulk of this property in order to redevelop it with additional office and retail space. 3. Terms of the Rights Offer In terms of the Rights Offer, 166 666 667 new Fountainhead units ("Rights Offer Units") will be offered for subscription to Fountainhead unitholders recorded in the register at 17h00 on the record date for the Rights Offer, being Friday, 18 March 2011 ("Qualifying Unitholders"), on the basis of 16.73288 new Fountainhead units for every 100 Fountainhead units held by such unitholders, at 600 cents per Rights Offer Unit. The Rights Offer price represents a discount of 8.1% to the volume-weighted average price of Fountainhead units on the JSE Limited ("JSE") for the five days ended Friday, 18 February 2011. 4. Excess applications Applications for additional Rights Offer Units will be allowed. 5. Unitholder commitments Certain Fountainhead unitholders have provided written undertakings to follow all of their rights in terms of the Rights Offer and to collectively subscribe for and/or apply for 106.1 million Rights Offer Units, representing 63.6% of the Right Offer. In consideration for such undertakings, a commitment fee equal to 1.5% of the committed amount, being R9.5 million in aggregate, is payable by Fountainhead to such unitholders. The balance of the Rights Offer has not been underwritten. 6. Unaudited pro forma financial effects The unaudited pro forma financial effects set out below have been prepared to assist Fountainhead unitholders to assess the impact of the Rights Offer on the basic and diluted earnings per unit, headline earnings per unit, net asset value ("NAV") per unit and tangible NAV per unit of Fountainhead. Due to the nature of these pro forma financial effects, they are presented for illustrative purposes only and may not fairly present Fountainhead`s financial position or the results of its operations after the Rights Offer. The unaudited pro forma financial effects have been prepared in accordance with the Listings Requirements and the Guide on Pro Forma Financial Information issued by The South African Institute of Chartered Accountants, and are the responsibility of the board of directors. The material assumptions on which the pro forma financial effects are based are set out in the notes following the table. Pro forma financial effects for the year ended 30 September 2010 Before Pro forma After the Percenta the adjustmen Rights ge Rights ts Offer change
Offer Basic earnings per 55.2 (1.9) 53.3 (3.4%) unit (cents) Diluted earnings 55.2 (1.9) 53.3 (3.4%) per unit (cents) Headline earnings 55.5 (1.9) 53.6 (3.5%) per unit (cents) Distribution per 54.1 (1.7) 52.4 (3.2%) unit (cents) NAV per unit 674 (11) 663 (2.0%) (cents) Tangible NAV per 674 (11) 663 (2.0%) unit (cents) Units in issue at 996 043 166 666 1 162 709 16.7% 30 September 2010 081 667 748 Weighted average 996 043 166 666 1 162 709 16.7% number of units in 081 667 748 issue Notes and assumptions: 1) The audited financial information has been extracted, without adjustment, from the published, audited financial statements of Fountainhead for the year ended 30 September 2010. 2) The pro forma adjustments to the statement of comprehensive income have been calculated on the assumption that the proceeds from the Rights Offer were received on 1 October 2009. 3) The pro forma adjustments to the statement of financial position have been calculated on the assumption that the proceeds from the Rights Offer were received on 30 September 2010. 4) A Rights Offer price of 600 cents per unit has been used for the pro forma adjustments with 166 666 667 units issued for gross proceeds of R1.0 billion, before deducting expenses. 5) The net Rights Offer proceeds has been assumed to repay floating-rate loans, totalling R775 million. Interest paid has been adjusted to include net interest savings of R45.6 million after the incurrence of R3.3 million breakage fees. 6) The surplus cash balance has been assumed to be invested in an access bond facility at the Prime Rate minus 4.1%. Interest received has been adjusted to include additional interest income of R24.6 million. 7) Estimated expenses of R13.3 million (excluding VAT), relating to the Rights Offer, have been taken into account in determining the financial effects. 7. Salient dates and times Subject to the fulfilment of the conditions set out in paragraph 8, the timetable for the Rights Offer is set out below. 2011 Last day to trade in Fountainhead units in order to Friday, 11 March participate in the Rights Offer (cum-entitlement) on Fountainhead units commence trading ex-entitlement at Monday, 14 March 09h00 on Listing of and trading in the letters of allocation on Monday, 14 March the JSE commences at 09h00 on Record date for the Rights Offer on Friday, 18 March Rights Offer circular and form of instruction, where Tuesday, 22 March applicable, posted to Qualifying Unitholders on Rights Offer opens at 09h00 on Tuesday, 22 March Letters of allocation credited to an electronic account Tuesday, 22 March held at the transfer secretaries in respect of holders of certificated units on CSDP or broker accounts credited with entitlements in Tuesday, 22 March respect of holders of dematerialised units on Last day for trading letters of allocation on the JSE on Friday, 1 April Listing of Rights Offer Units and trading therein on the Monday, 4 April JSE commences at 09h00 on Rights Offer closes at 12h00 on Friday, 8 April Rights Offer Units issued on Monday, 11 April CSDP or broker accounts in respect of holders of Monday, 11 April dematerialised units debited and updated with Rights Offer Units and unit certificates posted to certificated unitholders by registered post on or about Results of the Rights Offer released on SENS on Monday, 11 April Results of the Rights Offer published in the press on Tuesday, 12 April Rights Offer Units in respect of excess applications Wednesday, 13 April issued on or about CSDP or broker accounts of holders of dematerialised Wednesday, 13 April units debited and updated with Rights Offer Units in respect of excess applications, if applicable, and unit certificates (in respect of excess applications, if applicable) posted to certificated unitholders by registered post on or about Refund cheques, if applicable, posted to holders of Wednesday, 13 April certificated units in respect of unsuccessful excess applications on or about Notes: 1) Unit certificates may not be dematerialised or rematerialised between Monday, 14 March 2011 and Friday, 18 March 2011, both days inclusive. 2) CSDPs effect payment on a delivery versus payment basis in respect of dematerialised units. 3) Dematerialised unitholders are required to inform their CSDP or brokers of their instructions in term of the Rights Offer in the manner and time stipulated in the agreement governing the relationship between the unitholder and their CSDP or broker. 4) All times are South African times. 5) The above dates and times are subject to amendment. Any amendments to the dates and times will be released on SENS and published in the South African press. 8. Conditions precedent The implementation of the Rights Offer is subject to the fulfilment of the following: - approval of the Rights Offer being obtained from the Registrar of Collective Investment Schemes; - approval of the Rights Offer circular being obtained from the South African Reserve Bank; - approval of the Rights Offer circular being obtained from the JSE; and - approval of the listing of the letters of allocation and the listing of the Rights Offer Units being obtained from the JSE. 9. Finalisation announcement It is anticipated that the finalisation announcement for the Rights Offer will be released on SENS on Friday, 4 March 2011 and in the South African press on Monday, 7 March 2011. 9. Rights Offer circular The Rights Offer circular and a form of instruction in respect of a letter of allocation, where applicable, will be posted to all Fountainhead unitholders registered on the record date for the Rights Offer on or about Tuesday, 22 March 2011. 10. Jurisdiction The Rights Offer does not constitute an offer in any jurisdiction in which it is illegal to make such an offer. The Rights Offer Units have not been and will not be registered under the Securities Act of the United States of America (the "United States"). Accordingly, the Rights Offer Units may not be offered, sold, resold, delivered or transferred, directly or indirectly, in or into the United States or to, or for the account or benefit of, United States persons, except pursuant to exemptions from the Securities Act of the United States. The Rights Offer does not constitute an offer in the District of Columbia, the United States, the Dominion of Canada, the Commonwealth of Australia, Japan or in any other jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer. Unitholders resident outside the common monetary area should consult their professional advisors to determine whether any governmental or other consents are required or other formalities need to be observed to allow them to take up the Rights Offer, or trade their entitlement. Unitholders holding Fountainhead units on behalf of persons who are resident outside the common monetary area are responsible for ensuring that taking up the Rights Offer, or trading in their entitlements under that offer, do not breach regulations in the relevant overseas jurisdictions. Johannesburg 21 February 2011 Investment bank and sponsor Standard Bank Independent sponsor PricewaterhouseCoopers Corporate Finance (Proprietary) Limited Independent reporting accountants KPMG Inc. Legal adviser Edward Nathan Sonnenbergs Inc. Date: 21/02/2011 16:22:00 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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