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VUN - Vunani Limited - Proposed listing of Vunani and withdrawal of cautionary
announcement
VUNANI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/020641/06)
JSE code: VUN
ISIN: ZAE000110359
("Vunani" or "the Company" or "the Group"))
ANNOUNCEMENT RELATING T0 THE PROPOSED LISTING OF VUNANI AND INTER ALIA, THE:
* CONSOLIDATION OF VUNANI`S PROPERTY HOLDINGS;
* ISSUE BY VUNANI PROPERTY INVESTMENT FUND (PTY) LIMITED ("VPIF") OF A
MAXIMUM OF 66 334 357 LINKED UNITS FOR CASH ("THE CASH ISSUE"); AND
* SALE BY VUNANI PROPERTIES (PTY) LIMITED ("VP") OF 8 033 137 LINKED UNITS
IN VPIF ("THE VP PLACING")
AND WITHDRAWAL OF THE CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Further to the cautionary announcements released, the last of which was dated
27 May 2011, shareholders are advised that Vunani is in the process of
restructuring its property investments into one vehicle, VPIF, in which it
currently has an effective 39.1% interest as well as preparing VPIF for a
listing on the Main Board of the JSE Limited.
The Competition Authorities have been consulted regarding the property
consolidation within the Group and have indicated that they consider this to
be an internal restructuring and therefore not notifiable in terms of the
provisions of the Competition Act 1998 (Act 89 of 1998), as amended.
PROPERTY CONSOLIDATION
Vunani`s interest in commercial property investments, through its effective
39.1% interest in VPIF, was formed in 2006 when Vunani and Hyprop Investments
Limited ("Hyprop") pooled their respective commercial properties into a black-
owned and controlled property fund. VP is 78% owned by Vunani and holds 50.2%
of VPIF, while the balance is held by Hyprop, with The Standard Bank of South
Africa Limited providing the debt funding for VPIF.
As part of an internal restructuring within the Group, the following
transactions will be effected, in terms of an agreement, dated 20 June 2011,
entered into between VP and VPIF, which will result in VPIF supplementing its
existing property portfolio with 3 A+ grade quality, well located properties,
with long leases with blue chip tenants from VP:
* VPIF will acquire the entire issued ordinary share capital of Cedar Park
Properties 31 (Pty) Limited, which owns the Cedar Park property described
as Building 9 at Greenstone Hill Office Park, Emerald Boulevard,
Greenstone Hill, Edenvale, as a going concern, based on the aggregate net
asset value thereof for R3.9 million;
* VPIF will acquire the entire issued ordinary share capital of Pacific
Eagle Investments 204 (Pty) Limited, which owns the property situated at
14 Loop Street, Cape Town, as a going concern, based on the aggregate net
asset value thereof for R13 million;
* VPIF will acquire the Athol Ridge property on which Athol Ridge Office
Park located at 151 Katherine Street, Sandown is situated, as a going
concern for an aggregate amount of R104.4 million. (collectively "the
Acquisition properties").
ISSUE FOR CASH AND THE VP PLACING ("THE TRANSACTIONS")
The cash issue is based on a proposed private placing by way of an offer to
subscribe for a maximum of 66 334 357 new VPIF units to raise an amount of
approximately R497.5 million, which will be used to settle the costs of the
proposed listing and repay loans. The VP placing of 8 033 137 of its VPIF
units to raise approximately R60.2 million will be used to settle debt.
The cash issue and the VP placing will be implemented via a bookbuild exercise
and it is estimated that the final subscription price will be between R7.00
and R8.00 per VPIF unit.
CONDITIONS PRECEDENT TO THE PROPERTY CONSOLIDATION AND THE TRANSACTIONS
The property consolidation and the transactions are conditional, inter alia,
on:
* JSE approval of the proposed listing of VPIF;
* approval by Vunani shareholders of disposal of interests in subsidiaries;
and
* a minimum amount of R366.7 million being raised by VPIF pursuant to the
cash issue and the VP placing.
FINANCIAL EFFECTS OF THE PROPERTY CONSOLIDATION AND THE TRANSACTIONS
The unaudited pro forma financial effects of the property consolidation and
the transactions, for which the directors are responsible, are provided for
illustrative purposes only to show the effect thereof on the loss per share
("LPS") and headline loss per share ("HLPS") as if they had taken effect on 1
January 2010 and on net asset value per share ("NAVPS") and net tangible asset
value per share (NTAVPS") as if they had taken effect on 31 December 2010.
Because of their nature, the unaudited pro forma financial effects may not
give a fair presentation of the Group`s financial position and performance.
The unaudited pro forma financial effects have been compiled from the audited
consolidated financial statements of Vunani for the year ended 31 December
2010 and are presented in a manner consistent with the format and accounting
policies adopted by Vunani and have been adjusted as described in the notes
set out in Appendix 1:
Audited Deconsolida- Deconsolida- Investments
Before the tion of VPIF tion of acquired
property company Acquisition
consolida- properties
tion
and the
transaction
s
(Note 1)
LPS (cents) (Note (2.2) (0.9) 0.1 1.0
2)
HLPS (cents) (Note (2.9) (0.0) 0.2 0.0
2)
NAVPS (cents) (Note 5.3 (6.2) 4.0 2.1
3)
NTAVPS (cents) Note 4.2 (6.1) 4.0 2.1
3)
Weighted average 4 282 465 4 282 465 4 282 465 4 282 465
number of shares in
issue (`000)
Actual shares in 4 763 502 4 763 502 4 763 502 4 763 502
issue at end of
period (`000)
(Continued)
Other After the
adjustments property
Consolidation
and the %
transactions change
LPS (cents) (Note 0.2 (1.8) 18.2
2)
HLPS (cents) (Note 0.2 (2.5) 13.8
2)
NAVPS (cents) (Note (0.1) 5.1 (3.7)
3)
NTAVPS (cents) Note (0.1) 4.1 (2.4)
3)
Weighted average 4 282 465 4 282 465
number of shares in
issue (`000)
Actual shares in 4 763 502 4 763 502
issue at end of
period (`000)
Notes:
1 The "Audited 31 December 2010" column information has been extracted from
the company`s audited results for the year ended 31 December 2010.
2 The effects relating to NAVPS and NTAVPS are based on the following
assumptions and information:
- The transactions were effected on 31 December 2010 and after the
transactions, Vunani will hold an effective indirect 13.0%
investment in VPIF as opposed to an investment in a subsidiary,
which is reflected in the audited 31 December 2010 column.;
- the deconsolidation of VPIF and the Acquisition properties (i.e.
removal from the consolidated results of Vunani)
- The increase in other investments is due to VPIF being accounted for
as an investment post the listing of VPIF at an assumed price of
R7.50 for 28 626 048 units. A further adjustment has been made to
other investments as Vunani Properties will dispose of 8 033 137
VPIF units at an assumed price of R7.50 each to settle excess debt
to Investec Limited on the Athol Ridge property being disposed of;
- A decrease in the non-current portion of other financial liabilities
due to the deconsolidation of VPIF and the Acquisition properties as
well as to the disposal of 8 033 137 VPIF units at an assumed price
of R7.50 each in order to settle the excess debt on the Athol Ridge
property being disposed of;
- A decrease in trade and other payables results from the
deconsolidation of VPIF and the Acquisition properties. A rental
guarantee has been provided by Vunani to VPIF for vacant space for a
period of 2 year ending June 2013, or until the vacancy is filled,
whichever is earlier, and results in an increase in trade and other
payable of R3.3 million. The trade and other payables are further
increased by R1.5m in respect of the cost of the circular;
- The movement in both accumulated profit and minority interest is as
a result of the aforementioned transactions.
3 The effects relating to the LPS and HLPS are based on the following
assumptions and information:
- The transactions were effective on 1 January 2010;
- The transaction costs of R1.5 million will be written off in the
income statement;
- The deconsolidation of VPIF;
- Operating expenses will decrease as a result of the deconsolidation
of VPIF together with the Acquisition properties. Furthermore
additional expenses of R3.1 million as a result of a rental
guarantee being provided by Vunani to VPIF for vacant space for a
period of 2 year ending June 2013, or until the vacancy is filled,
whichever is earlier as VP has provided a rental guarantee to VPIF.
In addition to this, fees to the extent of R1.5 million have been
incurred.
- Post listing, VPIF will become an investment and distributions to
the extent of R10.9 million will flow to Vunani, therefore
increasing investment income. The distributions are based on the
historical results of VPIF together with the Acquisition properties
adjusted for listing costs and accounted for by applying Vunani`s
effective indirect shareholding of 13.0% assuming the maximum number
of VPIF units are subscribed for.
- Taxation as a result of the VPIF and the Acquisition properties.
4 All adjustments will have a continuing effect.
5 The proceeds from the listing will be used to repay debt of R60.2
million.
6 The net assets that will be disposed as a result of the transaction are
R276.7 million.
7 The attributable profits that will be disposed as a result of the
transaction are R88.7 million.
EFFECTIVE DATE
The effective date of the property consolidation and the transactions will be
the listing date of VPIF.
CATEGORISATION OF THE PROPERTY CONSOLIDATION AND THE TRANSACTIONS
The property consolidation within the Group is classified as a Category 2
transaction in terms of the Listings Requirements of the JSE Limited
("Listings Requirements") and no shareholders` approval is therefore required
in respect thereof
The transactions involve the issue of VPIF units for cash and the sale of VPIF
units by subsidiaries of Vunani. As Vunani is an AltX listed company, and the
transactions exceed 50% of the market capitalisation thereof, the JSE requires
that they be treated as a Category 1 disposal and are accordingly subject to
shareholders` approval. A circular to shareholders in this regard will be
despatched shortly.
WITHDRAWAL OF THE CAUTIONARY ANNOUNCEMENT
Having regard to the information set out above, the cautionary announcement is
hereby withdrawn.
Sandton
27 June 2011
Independent Designated Adviser
Grindrod Bank Limited
Corporate Adviser and Joint Designated Adviser
Vunani Corporate Finance
Legal adviser
Edward Nathan Sonnenbergs Inc.
Date: 27/06/2011 17:26:02 Supplied by www.sharenet.co.za
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