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RDF - Redefine Properties Limited - Proposed Distribution of shares and
debentures in Arrowhead Properties Limited to Redefine linked unitholders
Redefine Properties Limited
(Registration No. 1999/018591/06)
Share Code: RDF ISIN: ZAE000143178
Bond Code: RDFC01 ISIN: ZAG000088998
("Redefine" or "the company")
PROPOSED DISTRIBUTION ("DISTRIBUTION") OF SHARES AND DEBENTURES IN ARROWHEAD
PROPERTIES LIMITED ("ARROWHEAD") TO REDEFINE LINKED UNITHOLDERS
INTRODUCTION
Redefine linked unitholders are advised that a circular in respect of inter alia
the proposed distribution to Redefine linked unitholders of the shares (by way
of an unbundling) (the "unbundling") and debentures (by way of a partial
repayment of the existing Redefine debentures) (the "repayment") in Arrowhead
together with an Arrowhead pre-listing statement detailing the proposed listing
of 84 839 675 Arrowhead "A" linked units and 84 839 675 Arrowhead "B" linked
units on the JSE was posted to Redefine linked unitholders on 30 September 2011.
DISPOSAL TO ARROWHEAD, DISTRIBUTION AND LISTING
Redefine has concluded an agreement to dispose of a diversified portfolio of
ninety-eight industrial, office and retail properties to Arrowhead (which is
currently a wholly owned subsidiary of Redefine) for an aggregate purchase
consideration of R1 720 900 000.
Eighty-nine of the properties (the "owned properties") are, subject to the
approval of the distribution by Redefine linked unitholders, being disposed of
with effect from 1 September 2011 for a purchase consideration of R1 440 600
000, to be settled as follows:
- R644 415 062 in cash out of bank debt to be raised by Arrowhead;
- R172 666 613 by the issue of 169 679 350 ordinary shares in Arrowhead (the
"consideration shares"); and
- R623 518 325 by the issue of 84 839 675 Arrowhead "A" class debentures and
84 839 675 Arrowhead "B" class debentures (the "consideration debentures").
Subject to the requisite approval of Redefine linked unitholders, the
consideration shares will be distributed to Redefine linked unitholders by way
of an unbundling in terms of section 46 of the Income Tax Act and the
consideration debentures will be distributed by way of a partial repayment of
the existing Redefine debentures.
Immediately after the distribution the consideration shares and the
consideration debentures will be linked to form Arrowhead "A" and "B" linked
units. As a result of the distribution and the subsequent linking of the
consideration shares and consideration debentures, Redefine linked unitholders
will hold one Arrowhead "A" linked unit and one Arrowhead "B" linked unit for
every 31.70889 Redefine linked units held by them on the record date for
participation in the distribution. The JSE has granted a listing for the
Arrowhead "A" and "B" linked units in the "Real Estate Holdings and Development"
sector of the JSE subject to the registration of transfer of more than half (in
value) of the owned properties into Arrowhead`s name.
The remaining nine properties (the "pre-emptive properties" and the "leasehold
properties") are subject either, in the case of five of the properties which are
pre-emptive properties, to the consent of holders of pre-emptive rights over the
properties concerned or, in the case of four of the properties which are
leasehold properties, to the consent of the landowner to the transfer of the
leasehold rights to Arrowhead.
The total purchase consideration for the pre-emptive properties and the
leasehold properties is R280 300 000 which, on and subject to receipt of the
necessary consents, will be settled as follows:
- R125 384 938 in cash out of bank debt to be raised by Arrowhead; and
- the balance by the issue of 16 507 400 Arrowhead "A" linked units and 16
507 400 Arrowhead "B" linked units to Redefine.
Further information in relation to the distribution is contained in the circular
posted to Redefine linked unitholders.
RATIONALE FOR THE DISTRIBUTION
The disposal of the owned properties, the leasehold properties and the pre-
emptive properties to Arrowhead and the subsequent distribution and listing of
the Arrowhead linked units is in line with Redefine`s strategy of restructuring
and improving the quality of its core property portfolio. In the view of the
Redefine board the proposed transactions represent the optimal mechanism for
disposing of a substantial component of the properties that no longer fit
Redefine`s investment profile while at the same time providing Redefine linked
unitholders with the option of continued exposure to these high-yielding assets.
The distribution and listing of Arrowhead will create a high yielding income
fund that is able to focus on growing income, both by management of the existing
portfolio and by the conclusion of yield enhancing acquisitions that would not
fit Redefine`s investment criteria. Arrowhead will be internally managed by a
dedicated and experienced management team lead by Gerald Leissner who brings
with him a wealth of experience in the real estate market and the listed
property sector.
The "A" linked units will receive quarterly interest distributions equivalent to
the higher of 15c per unit or 50% of the total distributable income and the "B"
linked units will receive the balance of the distributable income. The "A"
linked units should appeal to risk averse investors with the "B" linked units
appealing to investors with more risk appetite. Redefine linked unitholders can
elect whether to retain or trade out of their "A" and "B" linked units depending
on their individual risk appetite.
Further information in relation to Arrowhead is detailed in the Arrowhead pre-
listing statement posted to Redefine linked unitholders.
UNAUDITED PRO FORMA FINANCIAL EFFECTS
The pro forma financial information is based on Redefine`s published unaudited
results for the 6 months ended 28 February 2011. The pro forma financial
information has been prepared for illustrative purposes only to provide
information on how the transactions may have impacted on the financial position
of Redefine if the transactions had occurred on 28 February 2011 and on the
results of Redefine if the transactions had occurred on 1 September 2010.
Because of its nature, the pro forma financial information may not fairly
present Redefine`s financial position after the transactions. The pro forma
financial information is the responsibility of the directors of Redefine.
The detailed unaudited pro forma financial information is set out in the
circular and the financial effects are summarised below. The independent
reporting accountants` limited assurance report on the unaudited pro forma
financial information is set out in the circular.
Scenario 1 Before After % change
(cents) (cents)
NAV excl deferred tax (cents) 800.50 769.63 -3.9%
NTAV excl deferred tax (cents) 631.08 600.22 -4.9%
Earnings per unit (cents) 36.29 38.90 7.2%
Headline earnings per unit (cents) 35.91 38.71 7.8%
Distribution per unit (cents) 31.00 29.11 -6.1%
Scenario 2 Before After % change
(cents) (cents)
NAV excl deferred tax (cents) 800.50 769.31 -3.9%
NTAV excl deferred tax (cents) 631.08 599.89 -4.9%
Earnings per unit (cents) 36.29 37.97 4.6%
Headline earnings per unit (cents) 35.91 37.64 4.8%
Distribution per unit (cents) 31.00 29.14 -6.0%
Scenario 1 illustrates the effects of the disposal of the owned properties, the
pre-emptive properties and the leasehold properties and of the distribution.
Scenario 2 illustrates the effects of the disposal of only the owned properties
together with the distribution.
Notes & assumptions:
The numbers in the "Before" column have been extracted from Redefine`s interim,
unaudited published results for the six month period ending 28 February 2011.
The numbers in the "After" column represent the effect of the disposal of the
Arrowhead portfolio pursuant to the Arrowhead transaction on the results for the
six month period ending 28 February 2011.
In respect of Scenario 1 distributable income arising on the Arrowhead linked
units held by Redefine post the distribution has been calculated assuming debt
of R800m at a borrowing cost of 9.5% per annum and administration costs of R6m
for the six month period.
The cash proceeds on the consideration received has been used to reduce long-
term borrowings, net of capital gains tax payable based on an interest rate of
8.9% per annum.
NOTICE OF GENERAL MEETING
Linked unitholders are advised that the circular was posted on, Friday, 30
September 2011, which includes, inter alia, a notice convening a general meeting
of Redefine shareholders to be held at the offices of the company at 2 Arnold
Road, Rosebank, 2196 at 8:00 on Friday, 28 October 2011 and a general meeting of
Redefine debenture holders to be held at the offices of the company at 2 Arnold
Road, Rosebank, 2196 at 8:30 on Friday, 28 October 2011 to consider and, if
deemed fit, pass the resolutions required to implement the proposed transactions
and to approve certain other shareholders and debenture holders resolutions.
SALIENT DATES AND TIMES
Salient dates and times in relation to the proposed transactions
2011
Circular and Arrowhead pre-listing statement posted to Friday, 30 September
Redefine linked unitholders on
Last day to trade in order to be eligible to vote at Friday, 14 October
the general meetings on
Record date in order to be eligible to vote at the Friday, 21 October
general meetings on
Last day to lodge forms of proxy in respect of the Wednesday, 26
general meeting of the Redefine shareholders to be held October
on Friday, 28 October by 08:00 on
Last day to lodge forms of proxy in respect of the Wednesday, 26
general meeting of the Redefine debenture holders to be October
held on Friday, 28 October by 08:30 on
General meeting of the Redefine shareholders at 08:00 Friday, 28 October
on
General meeting of the Redefine debenture holders at Friday, 28 October
08:30 on
Results of the general meetings released on SENS on Friday, 28 October
Results of the general meetings published in the press Monday, 31 October
on
Expected date upon which the listing condition is Monday, 28 November
fulfilled on
Expected JSE approval for the listing of Arrowhead on Wednesday, 30
November
Expected date upon which the finalisation date Thursday, 1 December
announcement and the abridged pre-listing statement
published on SENS on
Expected date upon which the finalisation date
announcement and the
abridged pre-listing statement published in the press Friday, 2 December
on
Expected last day to trade in Redefine linked units on Thursday, 8 December
the JSE in order to participate in the unbundling and
the repayment on
Expected date that the Redefine linked units will trade Friday, 9 December
ex the unbundling and the repayment and that trade in
the Arrowhead linked units will be listed on the JSE
from the commencement on
Expected unbundling record date in order to participate Thursday, 15
in the unbundling and the repayment on December
Expected date that the Arrowhead linked units pursuant Monday, 19 December
to the unbundling and the repayment are to be credited
to the accounts of dematerialised Redefine linked
unitholders at their CSDP or broker and posted to
certificated Redefine linked unitholders on
Tax apportionment announcement pursuant to the Monday, 19 December
unbundling on
Notes:
1. All dates and times are local time in South Africa. The above dates and times
are subject to change. Any change will be released on SENS and published in the
press.
2. The dates in respect of the expected dates upon which the finalisation date
announcement and the abridged pre-listing statement is published on SENS and in
the press, the expected last day to trade in Redefine linked units on the JSE in
order to participate in the unbundling and the repayment, the expected date that
the Redefine linked units will trade ex the unbundling and the repayment and
that trade in the Arrowhead linked units will be listed on the JSE, have changed
from those published in the circular to Redefine linked unitholders and the
Arrowhead pre-listing statement posted to Redefine linked unitholders on 30
September 2011. The change of dates are as reflected above but Redefine linked
unitholders should note that these dates may change again as they are dependent
upon the date upon which the listing condition referred to in note 4 below is
fulfilled.
3. Redefine linked unit certificates may not be dematerialised or rematerialised
between the listing date and the unbundling record date, both days inclusive.
4. Subject to the registration of transfer from Redefine to Arrowhead of more
than half (by market value) of the owned properties portfolio (the "listing
condition"), the JSE has granted Arrowhead a listing in respect of at least 84
839 675 Arrowhead "A" linked units and 84 839 675 Arrowhead "B" linked units in
the "Real Estate: Real Estate Holdings and Development" sector of the JSE Lists,
in terms of the FTSE classification, under the abbreviated name "ARROW A", JSE
code: "AWA" and ISIN code: ZAE0001518101 and "ARROW B", JSE code "AWB" and ISN
code: ZAE000158119, with effect from the commencement of business on a date to
determined by the JSE upon the JSE being reasonably satisfied that the listing
condition has been fulfilled, which date is expected to be during November or
December 2011 (the "listing date"). Upon the listing condition being fulfilled,
Arrowhead will issue an abridged pre-listing statement and Redefine will issue
the finalisation date announcement setting out, inter alia, the number of
Arrowhead "A" linked units and Arrowhead "B" linked units in issue and to be
listed, as well as the salient dates regarding the listing, the unbundling and
the repayment. These will include the unbundling last day to trade, the listing
date, the unbundling record date and the unbundling date.
3 October 2011
Corporate advisor, legal advisor and sponsor to Redefine
Java Capital
Debt sponsor
Absa Capital
(the investment banking division of Absa Bank Limited, affiliated with Barclays
Capital)
Reporting accountants
PKF (Jhb) Inc.
Date: 03/10/2011 15:52:59 Supplied by www.sharenet.co.za
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