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Proposed pro rata issue of linked units to fund participation in RI P.L.C. capital raise and posting of circular
Redefine Properties International Limited
(Incorporated in the Republic of South Africa)
(Registration number 2010/009284/06)
JSE share code: RIN ISIN Code: ZAE000149282
(“RIN” or “the company”)
PROPOSED PRO RATA ISSUE OF LINKED UNITS TO FUND PARTICIPATION IN RI PLC CAPITAL
RAISE AND POSTING OF CIRCULAR
1. Introduction
On 23 August 2011, Redefine International P.L.C. (formerly Wichford P.L.C.)
(“RI LC”) completed a reverse takeover of Redefine International Holdings
Limited (formerly Redefine International plc) (“reverse takeover”). As part of
the terms of the reverse takeover, a capital raising implementation agreement
was entered into between RI PLC, RIN and Redefine Properties Limited, with the
object of facilitating a capital raising of approximately £100 million. RI PLC
is now proceeding with this capital raising which will be undertaken by way of a
firm placing and an open offer.
RIN linked unitholders are advised that RIN has posted a circular dated
10 August 2012 (“the circular”) relating to the proposed capital raising by
RI PLC (“RI PLC capital raising”) and the participation by RIN in the open offer
and a pro rata specific issue by RIN of new RIN linked units for cash (the “pro
rata offer”) to all RIN linked unitholders in order to fund its participation in
the open offer (“the transactions”). The circular contains a notice convening a
general meeting on Friday, 7 September 2012, to consider and pass the
resolutions necessary to effect the transactions.
Terms defined in the circular shall bear the same meanings where used in this
announcement.
2. FIRM PLACING AND OPEN OFFER
The board of directors of RI PLC intend to use the net proceeds (after
transaction costs) of the firm placing and the open offer, amounting to
approximately £100 million, to reduce RI PLC’s financial leverage through the
repayment and restructuring of certain debt facilities and to take advantage of
distressed and/or attractive investments where the underlying asset quality is
strong. The capital raised is expected to provide a long-term stable capital
structure from which a sustainable dividend can be distributed. Further details
of the use of proceeds are set out in Annexure 1 of the circular.
3. PRO RATA OFFER
In terms of the capital raising implementation agreement RIN agreed to subscribe
for the percentage equal to its then holding of RI PLC shares, being 65.6%, in
respect of any capital raising by RI PLC of approximately £100 million prior to
October 2012 (“RIN’s proportionate subscription”). Subsequent to the reverse
takeover, RIN has acquired additional shares in RI PLC such that RIN currently
holds approximately 71.7% of RI PLC.
RIN will participate in the open offer only and intends to subscribe for up to
£74.8 million of the proposed capital raising by RI PLC. In terms of the capital
raising implementation agreement RIN’s participation in the open offer is
supported by a £65.6 million underwriting commitment from Redefine. Redefine may
elect to place new RIN linked units subscribed for in terms of its underwriting
commitment with third parties.
In order to fund RIN’s proportionate subscription in the proposed RI PLC capital
raising and to ensure that RIN linked unitholders are treated equitably, the
board has resolved to undertake a pro rata offer.
The pro rata offer is an opportunity for all RIN linked unitholders on the RIN
linked unit register on Friday, 21 September 2012 to apply for new RIN linked
units pro rata to their current holding.
Full details relating to the maximum number and price of new RIN linked units to
be issued, any discount or premium to the 30-day VWAP, if applicable, at which
the new RIN linked units will be issued, the procedure for acceptance of the pro
rata offer and the action required by RIN linked unitholders will be contained
in a further circular to linked unitholders that is expected to be posted on or
about Friday, 31 August 2012 and which will be accompanied by detailed SENS and
press announcements on Friday, 31 August 2012 and Monday, 3 September 2012
respectively.
The new RIN linked units will be issued in the form of a convertible security.
The convertible security will be issued ‘ex’ the entitlement to the interest
distribution in respect of the six-month period ending 31 August 2012. Upon
issue, each convertible security will be listed and save for their entitlement
to the interest distribution in respect of the six-month period ending
31 August 2012, shall rank pari passu in all respects with the existing RIN
linked units in issue. The anticipated date for the conversion of the
convertible securities to new RIN linked units is expected to be on Monday,
3 December 2012.
RIN linked unitholders who apply for their proportionate share of the pro rata
offer will be entitled to apply for excess linked units not taken up by other
RIN linked unitholders and any such excess linked units will be attributed
equitably taking cognisance of the number of linked units held by each RIN
linked unitholder prior to such allocation, including those taken up as a result
of the pro rata offer, and the number of excess linked units applied for by each
RIN linked unitholder.
4. RELATED PARTY CONSIDERATIONS
Under the pro rata offer, new RIN linked units may be issued at a discount and
to related parties. Given that it is proposed that the new RIN linked units be
offered to all RIN linked unitholders pro rata to their current shareholding the
JSE have ruled that all RIN linked unitholders are being treated equally and
accordingly a fairness opinion would not be required and all RIN linked
unitholders will be entitled to vote on the resolution to approve the specific
issue of linked units for cash.
5. GENERAL MEETING
The resolutions set out in the notice attached to the circular must be passed at
the general meeting in order for the RI PLC capital raising and the pro rata
offer to proceed.
The board of directors of RIN considers that the transactions are in the best
interests of the company and the linked unitholders as a whole. Accordingly, the
board unanimously recommends that all RIN linked unitholders vote in favour of
the resolutions proposed at the general meeting and the directors intend to do
so in respect of their own beneficial holdings.
6. UNAUDITED PRO FORMA FINANCIAL EFFECTS
Set out below are the unaudited consolidated pro forma financial effects which
are based on the unaudited consolidated interim results of RIN for the six
months ended 29 February 2012, adjusted for:
- the pro rata offer;
- the open offer; and
- other adjustments including the VBG restructure,
(collectively, “the Adjustments”), on the bases set out in the notes and
assumptions to the unaudited consolidated pro forma financial effects below.
The unaudited consolidated pro forma statement of comprehensive income and the
unaudited consolidated pro forma statement of financial position (together, “the
unaudited consolidated pro forma financial information”)of the group and the
explanatory notes thereto is set out in Annexure 6 of the circular. The
independent reporting accountants’ limited assurance report on the unaudited
consolidated pro forma financial information is set out in Annexure 7 of the
circular.
The unaudited consolidated pro forma financial information is the responsibility
of the directors of RIN and is provided for illustrative purposes only to
illustrate the effects on RIN’s historical results and financial position
following the Adjustments. Due to the nature of the unaudited consolidated pro
forma financial information, it may not fairly present the group’s financial
position, changes in equity, results of operations or cash flows, after the
Adjustments.
It has been assumed that with respect to the unaudited consolidated pro forma
statement of financial position, the Adjustments took place on 29 February 2012
and with respect to the unaudited consolidated pro forma statement of
comprehensive income, the Adjustments took place at commencement of the period
being 1 September 2011.
Before Vendor Total After the % change
consideration after the Adjustments after the
placing vendor vendor
consideration consideration
placing placing and
the
Adjustments
Actual number 405 507 10 000 415 507 633 648
of linked
units in
issue (‘000)
Weighted 387 654 10 000 397 654 615 795
number of
linked units
in issue
(‘000)
Basic 0.51 0.23 0.33 (35.29)
earnings per
linked unit
(pence)
Headline 2.88 2.55 1.65 (42.71)
earnings per
linked unit
(pence)
Earnings 2.21 2.47 1.82 (17.64)
available for
distribution
per linked
unit (pence)
Distribution 2.09 2.47 1.82 (12.92)
per linked
unit (pence)
Net asset 32.43 32.58 34.16 5.33
value per
linked unit
(pence)
*The net tangible asset value per linked unit amounts are equal to the net asset
value per linked unit amounts
Notes and assumptions
1. The numbers in the “Before” column have been extracted from the unaudited
consolidated interim financial statements of RIN for the six months ended
29 February 2012.
2. Vendor consideration placing:
a. On 11 May 2012 the company, pursuant to a vendor consideration placing,
raised a total of R49.5 million (£3.846 million) through the issue of 10 000 000
linked units at an issue price of R4.95 per linked unit.
b. The total proceeds from the vendor consideration placing were utilised by RIN
to subscribe for 10 000 000 ordinary shares in RI PLC and thus increased RIN’s
shareholding in RI PLC from 69.98% to 71.71%. Accordingly, the non-controlling
interest decreased from 30.02% to 28.29 %.
3. Adjustments
a. It has been assumed that in terms of the RIN pro rata specific issue a total
of 218 141 257 new linked units will be issued at a price of R4.465 per new
linked unit raising gross proceeds (before transaction costs of £0.13 million)
of £74.92 million. A GBP:ZAR exchange rate of £1.00:R13.00 has been assumed to
apply.
b. It has been assumed that all existing RI PLC shareholders will participate in
the open offer in proportion to their shareholdings, including RIN. Accordingly,
it has been assumed that there is no effect on RIN’s statement of comprehensive
income with the exception that £0.221 million of interest income would be
generated from cash held following the issue of new RI PLC shares in terms of
the open offer. Although the balance of the proceeds of the RIN pro rata
specific issue and the RI PLC open offer are intended to be used to finance
yield enhancing investment opportunities in direct property in the UK and Europe
and repay debt facilities, there are no firm commitments at the date of the
circular to deploy the balance of the proceeds which will be received from the
RIN pro rata specific issue and RI PLC open offer. Accordingly, there is no
factually supportable financial information regarding potential investments or
repayment of debt facilities. Consequently, it has been assumed that the net
proceeds of the RIN pro rata specific issue and the RI PLC open offer will be
held as cash and cash equivalents. Interest on cash balances has been calculated
at a rate of 0.25% per annum.
c. The board of directors of RI PLC confirm that it is their intention to use
the capital raised to finance yield enhancing investment opportunities. As a
result of the assumption in b above, the earnings available for distribution per
linked unit of 1.82 pence does not take into account such proposed investments.
d. The additional earnings resulting from the Adjustments are assumed to be
distributed as debenture interest in accordance with the provisions of the
debenture trust deed.
e. It has been assumed that RIN will use the net proceeds of £74.8 million
(after estimated transaction costs of £0.13 million) raised from the pro rata
specific issue to participate in the RI PLC open offer in proportion to its
existing shareholding of 71.71%.It has been assumed that in terms of the RI PLC
open offer total proceeds of approximately £104.3 million will be raised, before
estimated transaction costs of £4.3 million which will be deducted against the
share premium of RI PLC.
f. Other than transaction costs, all of the Adjustments above have a continuing
effect.
7. SALIENT DATES AND TIMES
2012
Last day to trade in order to be eligible to vote
at the general meeting Friday, 24 August
Record date in order to vote at the general
meeting Friday, 31 August
Receipt of forms of proxy in respect of the
general meeting of RIN linked unitholders by
10:00 on Wednesday, 5 September
The general meeting of RIN linked unitholders
held at 10:00 on Friday, 7 September
Results of the general meeting released on SENS
on Friday, 7 September
Results of the general meeting published in the
press on Monday, 10 September
All dates and times are local times in South Africa. The above dates and times
are subject to change. Any changes will be released on SENS and published in the
press in South Africa.
Sponsor to Redefine Properties International Limited
Java Capital
Independent reporting accountants and auditors of RIN
KPMG Inc.
10 August 2012
Date: 10/08/2012 04:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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