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MSP - MAS Plc - Abridged private placement memorandum and announcement of

Release Date: 01/08/2011 09:00
Code(s): MSP
Wrap Text

MSP - MAS Plc - Abridged private placement memorandum and announcement of capital raising MAS plc Previously Mergon Property Holdings Limited (Incorporated in the Isle of Man) (Registration number 2893V) (Registered as an external company in the Republic of South Africa) (Registration number 2010/000338/10) JSE Share code: MSP SEDOL: B4LFGHO ISIN: IM00B4LFGH00 ("MAS" or "the Company") ABRIDGED PRIVATE PLACEMENT MEMORANDUM AND ANNOUNCEMENT OF CAPITAL RAISING The information in this abridged private placement memorandum has been extracted from the private placement memorandum ("PPM") dated 1 August 2011 and is not an invitation to the public to subscribe for shares in MAS. It is issued in compliance with the Luxembourg Stock Exchange`s ("LuxSE") Rules and Regulations ("LuxSE Listings Requirements"), the JSE Limited ("JSE") Listings Requirements and the South African Companies Act for the purpose of providing information to the public regarding MAS and to provide information to select investors with regards to the private placement. A potential investor should consult with its own legal, business and tax advisers to determine the appropriateness and consequences of an investment in the Company. The PPM relates to a third capital raising, by MAS, by way of a private placement of up to 62 516 280 shares of no par value ("private placement shares"), at an issue price of Euro1.00 per share, in the share capital of MAS, thereby raising up to Euro62 516 280 or approximately R600 million (before private placement expenses) ("the private placement"), in South Africa, Europe and the Isle of Man ("IOM"). 1. Incorporation and history MAS was incorporated in the IOM on 3 July 2008 under the name of Mergon Property Holdings Limited. The Company changed its name to MAS plc on 4 March 2009. MAS listed on the Euro-MTF market of the LuxSE ("Euro-MTF market") on 12 August 2009, where it has its primary listing, and on the Alternative Exchange of the JSE ("AltX") on 31 August 2009, where it has its secondary listing. MAS was registered as an external company in South Africa on 8 January 2010. 2. Overview of MAS 2.1 Introduction The Company has been established to invest primarily in the high quality office, retail, industrial and other property sectors initially in the UK, Germany and Switzerland. The Company`s objective is to provide shareholders with an opportunity to invest in a long term closed-ended investment company with an infinite life for investors seeking European investment opportunities that yield stable returns and portfolio diversification. MAS is subject to IOM corporate law and according to such law the Company is not required to include a specific objects clause in its articles of association. The object of the Company can be determined by its board of directors and the object as aforementioned in this paragraph has been accepted by the directors as the objective of the Company. 2.2 Investment strategy Whilst the board of directors of MAS recognises the importance of capital growth in the Company`s investment portfolio, the principal focus will be to acquire properties that will result in the creation of a portfolio that has good yield qualities with strong and reliable internal cash flows. The Company`s aim is to deliver a reliable and growing dividend return to its shareholders with the ultimate objective of sustaining a dividend yield of no less than 7% on capital invested. To achieve this, the Company will aim to invest no less than 80% of its capital by means of transactions that will enable it to accumulate a portfolio of well- located, good quality commercial properties at attractive yields. The Company will focus on acquiring properties with long-term lease covenants. Where properties with shorter-term leases are acquired, such investments will be selected so that the income reduction risk to the Company of leases terminating without renewal is spread over time. The Company will invest the balance of its capital in properties that stand to benefit from active asset management, including opportunities where development or refurbishment is required, in order to create the possibility of achieving a better overall return for the portfolio. However, the Company is not a speculative property developer, therefore when acquisitions are made that require an element of active asset management, there will be a strong focus on risk mitigation. Such risk mitigation strategies may include, but are not limited to, securing tenancy agreements prior to conclusion of the purchase. As part of the approach in managing its cash resources, the Company may also consider providing mezzanine finance on property transactions where there is ample realisable security to cover the loan. 2.3 MAS Property Advisors Limited MAS Property Advisors Limited, the ("investment adviser") is an IOM incorporated company set up specifically to provide dedicated investment advisory services to the Company. The investment adviser will provide investment advisory services to the Company in terms of an investment advisory agreement, the details of which are set out in Annexure 3 to the PPM. 2.4 Borrowings The terms of the Company`s bank borrowings will be determined on a project by project basis and the Company will be advised by the investment adviser in this regard. The final decision in each case will be subject to the approval of the Company`s independent directors, namely J Jansen and R Spencer ("independent directors"). It is anticipated that property acquisitions, together with the related debt funding, will be made through special purpose vehicles. It is the intention of the Company that acquisitions will be geared such as to achieve an appropriate balance between the risk of carrying debt and the enhancement of earnings through gearing and protection will be acquired against unforeseen increases in short term interest rates. It is not intended that total gearing on the portfolio will exceed 70% of total assets in the portfolio. 2.5 Dividend policy The Company aims to provide an investment to shareholders that maximises shareholder value by adopting a high income distribution policy. It is the Company`s intention to distribute on a semi-annual basis all of its revenue profits, subject to applicable laws and periodic repayment obligations under any amortising loan facilities. Other than in unforeseen and exceptional circumstances, it is not the intention to retain income for investment purposes. Where funds are required to grow the investment portfolio, the Company will ordinarily look to achieve this by raising fresh funds from shareholders or the market. 2.6 Prospects The board believes that the Company has excellent prospects on the basis of: - the Aldi Portfolio already acquired; - the DPD Property already acquired; - Metchley Hall already acquired; - the potential acquisition pipeline as detailed in the PPM; - current market conditions; and - access to future deal flow. Accordingly, the directors believe MAS will achieve the dividend yield in line with the Company`s expectations detailed above. 3. The private placement 3.1 The purpose of the private placement is to: - raise additional capital to fund the acquisition of further properties; - enhance the size of the free float of shareholders on both the Euro-MTF market and the AltX, in order to create liquidity in the Company`s shares; - enable Sanlam Investment Management ("Sanlam") and Atterbury Investment Holdings Limited ("Atterbury") to invest their committed capital of R100 million each; and - provide existing shareholders of MAS in South Africa, Europe and the IOM with the opportunity to subscribe for additional shares in MAS. It is intended that the capital raised through the private placement will be applied to fund new property acquisitions, being those identified as the potential acquisition pipeline in the PPM, or similar investments. The board retains discretion to determine the final allocation of the private placement proceeds, which will be subject to the approval of the independent directors. 3.2 Details of the private placement The private placement shares will be offered for subscription to existing shareholders in proportion to their existing shareholding in MAS and in compliance with the pre-emptive rights set out in the articles of association of MAS. Separate documentation in this regard has been despatched to existing shareholders. The prescribed period for the offer to existing shareholders pursuant to the pre-emptive rights will run concurrently with the offer to third parties from the opening date of the private placement. For the sake of clarity, the rights of existing shareholders under the pre-emptive rights do not constitute warrants and will not be listed or separately traded on either of the Euro-MTF market or AltX. To the extent that the private placement is not fully subscribed by existing shareholders, the private placement shares will be offered to select institutions, high net worth individuals and business associates, in South Africa, Europe and the IOM. Existing shareholders and those select institutions, high net worth individuals and business associates in South Africa, Europe and the IOM ("applicants") that have been invited to apply should do so by completing the private placement application forms which will be provided to them in accordance with the provisions of the PPM and the instructions contained in the private placement application forms. No offer will be made to the public in respect of the private placement. The private placement is open to applicants only. Applicants should note that Rand denominated subscription consideration will be converted from Rand to Euro at the closing spot exchange rate on the closing date of the private placement and that the private placement shares will only be issued on market as listed shares. 3.3 Commitments under private placement As at the date of issue of the PPM, MAS has received binding subscription undertakings in an aggregate amount of R200 million. The undertakings are from Sanlam and Atterbury and each has undertaken to invest an amount of R100 million in the share capital of MAS by way of subscription for MAS shares in terms of the private placement. 4. Future capital raisings It is the intention of the Company to raise additional capital in the coming years. The expansion of the capital base will be undertaken to exploit continued investment opportunities for the construction of the Company`s overall portfolio. The Company will endeavour to give all MAS shareholders an equal opportunity to subscribe for additional shares in MAS, provided that same makes commercial sense and subject to regulatory requirements. A detailed announcement will be made to shareholders in this regard at an appropriate date. 5. Migration of JSE ALTX listing to Main Board The Company`s current JSE listing is on the AltX. MAS recognises the constraints this places on potential institutional investors and is intent on migrating its listing on the JSE`s Main Board as soon as circumstances will allow it to do so and same may be approved by the JSE. 6. Financial information 6.1 Anticipated returns The Company`s aim is to deliver a reliable and growing dividend return to its shareholders with the ultimate objective of sustaining a dividend yield of no less than 7% on capital invested. This expectation is based on the board`s assessment of prevailing market conditions. If, in the Company`s view, circumstances change in future to make this expectation inappropriate as a medium to long term objective, this will be communicated to shareholders. 6.2 Financial information The consolidated forecast statements of comprehensive income (the "forecasts") and the consolidated forecast statements of financial position (collectively, the "forecast financial information"), including the assumptions on which they are based and the financial information from which they have been prepared, are the responsibility of the board. The forecasts have not been reviewed or reported on by the Company`s independent auditors or an independent reporting accountant. The forecasts have been prepared in accordance with the Company`s accounting policies and in compliance with the International Financial Reporting Standards. The forecast financial information of MAS is presented in section 3 of the PPM. The unaudited consolidated pro forma statement of financial position has not been reviewed or reported on by the Company`s independent auditors or an independent reporting accountant. The unaudited consolidated pro forma statement of financial position is the responsibility of the board and has been prepared to reflect the financial position of MAS following the private placement. The unaudited consolidated pro forma statement of financial position has been prepared for illustrative purposes only and because of its nature may not give a fair reflection of MAS` financial position. The unaudited consolidated pro forma statement of financial position has been compiled in compliance with the accounting policies of MAS. The unaudited consolidated pro forma statement of financial position of MAS is presented in Annexure 7 to the PPM. Extracts of the audited historical financial information for the years 28 February 2011, 2010 and 2009 for MAS, the preparation of which is the responsibility of the board, are presented in Annexure 8 to the PPM. 7. Important dates and times(1) 2011 Last day to trade for existing shareholders to be Thursday, 4 August recorded on the share register to be entitled to participate in the private placement Record date for existing shareholders to participate Friday, 12 August in the private placement
Opening date of the private placement at 09:00 on Monday, 15 August Closing date of the private placement at 12:00 on Friday, 26 August
Results of the private placement released on the Monday, 29 August LuxSE and Securities Exchange News Service ("SENS") Notification of allotments Wednesday, 31 August Payment of subscription amount and accounts at CSDP, Friday, 2 September banks or broker updated on or before 12:00 on
Listing of private placement shares on Euro-MTF Friday, 2 September market and AltX at commencement of trade on Posting of share certificates in respect of Friday, 2 September certificated shareholders that subscribed for shares in terms of the private placement on or about Accounts at CSDP, banks or broker updated in respect Friday, 2 September of dematerialised shareholders that subscribed for shares in terms of the private placement on (2) Refund of any over-subscriptions for applicants Monday, 5 September subscribing for certificated shares (1) All references to time are Central European time (which is currently the same as South African time). These dates and times are subject to amendment. Any such amendment will be released on the LuxSE and SENS. (2) Payment in respect of dematerialised shareholders will be on a delivery versus payment basis. 8. Copies of the PPM The PPM is available in English only. The PPM is available to applicants on the Company`s website (www.masplc.com) and hard copies will be provided to applicants in due course. In the PPM an indicative exchange rate of Euro1 : R9.5975 has been used. Applicants should note that the shares in MAS are Euro denominated shares and therefore the Rand denominated subscription consideration raised in terms of the private placement for shares shall be converted from Rand to Euro at the closing spot exchange rate on the closing date of the private placement, and therefore certain figures stated in the PPM and this announcement, including, inter alia, the number of issued shares and the market capitalisation of MAS may vary from the actual figures on listing of the private placement shares, dependent on movements in the exchange rate. The board of the Company does not believe that any such variations will be material, however in the event that they are material MAS will announce same on the LuxSE website and SENS. In line with exchange control approval obtained by the Company from the South African Reserve Bank, the shares will only be allotted and issued to the applicants on the listing date of the private placement shares and will only be issued on market as listed shares. Isle of Man 1 August 2011 Luxembourg legal adviser M Partners Corporate adviser, bookrunner and sponsor Java Capital Date: 01/08/2011 09:00:01 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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