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Disposal of Hotel Properties and Renewal of Cautionary Announcement
The Don Group Limited
Incorporated in the Republic of South Africa
(Registration number: 1946/023123/06)
Share Code: DON ISIN: ZAE000008462
(“The Don” or “the Company”)
DISPOSAL OF HOTEL PROPERTIES AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Further to the announcement dated 20 November 2012, shareholders are hereby provided with full details of
the disposal of the Company’s five remaining hotel properties.
1. INTRODUCTION AND RATIONALE
The Board of directors of The Don (“the Board”) is pleased to inform shareholders that The Don, through
its wholly-owned subsidiaries, Granport Investments Proprietary Limited (“Granport”) and Fluxrab
Investments 44 Proprietary Limited (“Fluxrab”) has, as detailed below, entered into agreement to dispose
of its remaining five hotel properties, being the properties situated at 10 Tyrwhitt Avenue, Rosebank,
Johannesburg (“Rosebank Property”), 6 Electron Avenue, Isando, Johannesburg (“Isando Property”),
672 Schoeman Street, Arcadia, Pretoria (“Arcadia 1 Property”), 220 Queen Street, Bruma,
Johannesburg (“Eastgate Property”) and 599 Pretorius Street, Arcadia, Pretoria (“Arcadia 2 Property”)
for a total purchase consideration of R120.5 million (“the Disposals”), which Disposals constitute a
proposal to dispose of all or the greater part of The Don’s assets in terms of section 112 of the
Companies Act, 2008 (Act 71 of 2008), as amended (“Companies Act”). The conditions precedent to the
Disposals are, the obtaining of all necessary regulatory approvals and approval by shareholders of The
Don in general meeting.
In light of continuing weak trading conditions, the Board has been obliged to reconsider The Don’s future
in the hotel industry and accordingly, since ceasing its hotel operations in 2011, has been leasing all of
its properties as furnished residential apartments. Furthermore, as set out in a circular to shareholders
dated 25 September 2012 regarding (and using the terms therein unless otherwise stated) the disposal
by The Don of four of its nine hotel properties, being the Sandton 3 and Sandton 1 Properties, the Beach
Road Property and the Sandton 4 Property, it was the intention of the Board to apply the proceeds from
the disposals of the four hotel properties to substantially settle all liabilities, and thereafter to dispose of
The Don’s remaining five hotel properties. The Board is of the opinion that, given the challenges facing
the tourism sector, the decision to change direction and exit the saturated hotel industry is in the best
interests of shareholders.
Shareholders are advised that the implementation of the Disposals will result in The Don being
classified as a “cash shell” in terms of the Listings Requirements of the JSE Limited (“JSE”) and should
the Company, within a period of six months after such classification, fail to enter into an agreement
relating to the acquisition of viable assets that satisfy the conditions for listing in terms of the Listings
Requirements, its listing will be suspended.
The Board will carefully consider all options available to the Company to unlock value for its
shareholders going forward. The most appropriate option decided on will be disclosed to shareholders
in the circular referred to in paragraph 9 below.
2. THE DISPOSAL OF THE ROSEBANK PROPERTY
The Board is pleased to inform shareholders that Granport has entered into an Agreement of Sale dated
14 November 2012 (“the Rosebank Property Agreement”) with Calaska Trading 35 Proprietary Limited
(“Calaska”) to dispose of the Rosebank Property, together with all the buildings and improvements
thereon, including fittings and fixtures to Calaska for a purchase consideration of R36.0 million.
2.1 Details of the Rosebank Property
The Rosebank Property comprises Portion 1 of Stand 137 Rosebank and Re of Stand
129 Rosebank, which measures approximately 3 098 square metres, situated at 10 Tyrwhitt Avenue,
Rosebank, Johannesburg.
2.2 Purchase consideration and effective date of the disposal of the Rosebank Property
The total purchase consideration of R36.0 million for the Rosebank Property is to be settled by
Calaska as follows:
- a deposit of R300 000.00 payable in cash to Granport’s Conveyancers within five days of
signature of the Rosebank Property Agreement; and
- the balance of the purchase consideration, being R35.7 million, payable in cash free of
exchange, against registration of transfer and which will be secured by means of a bank
guarantee/s / insurance guarantee/s acceptable to and in favour of Granport and/or its
nominee/s. Calaska will deliver such guarantee/s to Granport’s Conveyancers within 45 days
after approval of the disposal of the Rosebank Property by shareholders in general meeting.
Calaska shall take possession of the Rosebank Property on the date of registration of transfer
thereof.
2.3 Other terms of the Rosebank Property Agreement
The transfer costs pertaining to the Rosebank Property are to be paid to Granport’s Conveyancers
by Calaska, upon request.
Granport shall be liable for and shall pay a broker’s commission of R720 000.00 (plus VAT) to its
broker, Watprop Proprietary Limited, upon registration of transfer of the Rosebank Property, as a first
draw against the proceeds of the disposal thereof.
The Rosebank Property is sold “voetstoots”, without any warranty as to either patent or latent
defects, and subject to such conditions mentioned or referred to in Granport’s Title Deed and the
relevant prior Title Deeds and to all such conditions and servitudes, if any, that may exist in respect
thereof.
Granport shall continue with all short-term leases by third parties on the basis that, subsequent to
the signature of the Rosebank Property Agreement, all leases are to be approved by both Granport
and Calaska.
3. THE DISPOSAL OF THE ISANDO PROPERTY
The Board is pleased to inform shareholders that Fluxrab has entered into an Agreement of Sale dated
14 November 2012 (“the Isando Property Agreement”) with Magnacorp 398 Proprietary Limited
(“Magnacorp”) to dispose of the Isando Property, together with all fixtures and fittings of a permanent
nature to Magnacorp for a purchase consideration of R24.5 million.
3.1 Details of the Isando Property
The Isando Property comprises Erf 638 Isando Ext 1 and Erf 465 Isando Ext 1, Johannesburg, which
measures approximately 4 563 square metres, situated at 6 Electron Avenue, Isando,
Johannesburg.
3.2 Purchase consideration and effective date of the disposal of the Isando Property
The total purchase consideration of R24.5 million is to be settled by Magnacorp as follows:
- a deposit of 10% payable in cash to Fluxrab’s Conveyancers within seven days of signature of
the Isando Property Agreement; and
- the balance of the purchase consideration, being R22.05 million, payable in cash free of
exchange, against registration of transfer and which will be secured by means of a bank
guarantee/s acceptable to and in favour of Fluxrab and/or its nominee/s. Magnacorp will deliver
such guarantee/s to Fluxrab’s Conveyancers within 45 days after having been informed that the
Isando Property Agreement has been signed.
Magnacorp shall take possession of the Isando Property on the date of registration of transfer.
3.3 Other terms of the Isando Property Agreement
The transfer costs pertaining to the Isando Property are to be paid to Fluxrab’s Conveyancers by
Magnacorp, upon request.
Fluxrab shall be liable for and shall pay a broker’s commission of 3.0% of the purchase price of the
Isando Property, being R735 000.00, (plus VAT) to its broker, Ryan Joffe Properties, upon
registration of transfer.
The Isando Property is sold “voetstoots”, without any warranty as to either patent or latent defects,
and subject to such conditions mentioned or referred to in Fluxrab’s Title Deed and the relevant prior
Title Deeds and to all such conditions and servitudes, if any, that may exist in respect thereof.
Fluxrab shall continue with all the short-term leases over the Isando Property on the basis that,
subsequent to the signature of the Isando Property Agreement, all leases are to be approved by both
Fluxrab and Magnacorp.
4. THE DISPOSAL OF THE ARCADIA 1 PROPERTY
The Board is pleased to inform shareholders that Granport has entered into an Agreement of Sale dated
14 November 2012 (“the Arcadia 1 Property Agreement”) with Sentinel Executive Suites CC (“Sentinel”)
to dispose of the Arcadia 1 Property, together with all improvements thereon to Sentinel for a purchase
consideration of R21.0 million.
4.1 Details of the Arcadia 1 Property
The Arcadia 1 Property comprises Portion 1 of Erf 260 Arcadia Township and Erf 263 Arcadia
Township, which measure approximately 1 276 square metres and approximately 2 552 square
metres respectively, situated at 672 Schoeman Street, Arcadia, Pretoria.
4.2 Purchase consideration and effective date of the disposal of the Arcadia 1 Property
The total purchase consideration of R21.0 million is to be settled by Sentinel as follows:
- a deposit of 10% payable in cash to Granport’s Conveyancers within seven days of signature of
the Arcadia 1 Property Agreement; and
- the balance of the purchase consideration, being R18.9 million payable in cash free of
exchange, against registration of transfer and which will be secured by means of a bank
guarantee/s acceptable to and in favour of Granport and/or its nominee/s. Sentinel will deliver
such guarantee/s to Granport’s Conveyancers within 45 days after having been informed that
the Arcadia 1 Property Agreement has been signed.
Sentinel shall take possession of the Arcadia 1 Property on the date of registration of transfer.
4.3 Other terms of the Arcadia 1 Property Agreement
The transfer costs pertaining to the Arcadia 1 Property are to be paid by to Granport’s Conveyancers
by Sentinel, upon request.
Granport shall be liable for and shall pay a broker’s commission of 3.0% of the purchase price of the
Arcadia 1 Property, being R630 000.00, (plus VAT) to its broker, Ryan Joffe Properties, upon
registration of transfer.
The Arcadia 1 Property is sold “voetstoots”, without any warranty as to either patent or latent defects,
and subject to such conditions mentioned or referred to in Granport’s Title Deed and the relevant
prior Title Deeds and to all such conditions and servitudes, if any, that may exist in respect thereof.
Granport shall continue with all short-term leases by third parties on the basis that, subsequent to
the signature of the Arcadia 1 Property Agreement, all leases are to be approved by both Granport
and Sentinel.
5. THE DISPOSAL OF THE EASTGATE PROPERTY
The Board is pleased to inform shareholders that Granport has entered into a Deed of Sale Agreement
dated 14 November 2012 (“the Eastgate Property Agreement”) and an Addendum thereto dated
29 November 2012 with Mystic River Investments 26 Proprietary Limited (“Mystic River”), represented by
Mohamed Carim, to dispose of the Eastgate Property, together with all improvements thereon, to Mystic
River for a purchase consideration of R20.0 million.
5.1 Details of the Eastgate Property
The Eastgate Property comprises Portion 1 of Erf 136 Bruma and Portion 7 of Erf 201 Bruma, which
measure approximately 4 030 square metres and approximately 227 square metres respectively,
situated at 220 Queen Street, Bruma, Johannesburg.
5.2 Purchase consideration and effective date of the disposal of the Eastgate Property
The total purchase consideration of R20.0 million is to be settled by Mystic River as follows:
- a deposit of 5% payable in cash to the agent, Aucor Corporate Proprietary Limited, upon
signature of the Eastgate Property Agreement, which amount shall be paid over to Granport’s
Conveyancer’s before or against registration of transfer; and
- the balance of the purchase consideration, being R19.0 million payable in cash free of
exchange, against registration of transfer and which will be secured by means of a bank
guarantee/s acceptable to and in favour of Granport and/or its nominee/s. Mystic River will
deliver such guarantee/s to Granport’s Conveyancers within 45 days from written request by
Granport’s Conveyancers in respect thereof.
Mystic River shall take possession of the Eastgate Property on the date of registration of transfer.
5.3 Other terms of the Eastgate Property Agreement
The transfer costs pertaining to the Eastgate Property are to be paid by to Granport’s Conveyancers
by Mystic River.
Granport shall be liable for and shall pay an agent’s commission of 3.0% of the purchase price of the
Eastgate Property (plus VAT) to its agents, Ryan Joffe Properties and Aucor Corporate Proprietary
Limited in the amount of R200 000.00 and R400 000.00 respectively, upon registration of transfer.
The Eastgate Property is sold “voetstoots”, and subject to the terms and conditions and servitudes
mentioned or referred to in Granport’s current and/or prior Title Deeds and to the conditions of
establishment of the Township in which it is situated and to the zoning applied to it under any Town
Planning Scheme.
The Eastgate Property is currently being let to tenants and is being sold subject to all existing
tenancies, which shall not endure further than 12 months from date of signature of the Eastgate
Property Agreement. Granport shall not enter into or renew any leases of which the validity period
shall extend to a date beyond 12 months from date of signature of the Eastgate Property Agreement.
Granport shall further ensure that all such new or renewed lease agreements shall contain a clause
permitting Granport to terminate the lease agreement at any time by giving 30 days prior notice of
cancellation. All new or renewed lease agreements shall specifically record that the property has
been sold and that Mystic River wishes to take vacant possession of the Eastgate Property.
6. THE DISPOSAL OF THE ARCADIA 2 PROPERTY
The Board is pleased to inform shareholders that the Granport has entered into an Agreement of Sale
dated 14 November 2012 (“the Arcadia 2 Property Agreement”) with Calaska to dispose of the Arcadia 2
Property – together with all the buildings and improvements thereon, including fittings and fixtures to
Calaska for a purchase consideration of R19.0 million.
6.1 Details of the Arcadia 2 Property
The Arcadia 2 Property comprises Portion 1 of Stand 1208 Arcadia Township, which measures
approximately 2 427 square metres, situated at 599 Pretorius Street, Arcadia, Pretoria.
6.2 Purchase consideration and effective date of the disposal of the Arcadia 2 Property
The total purchase consideration of R19.0 million for the Arcadia 2 Property is to be settled by
Calaska as follows:
- a deposit of R100 000.00 payable in cash to Granport’s Conveyancers within five days of
signature of the Arcadia 2 Property Agreement; and
- the balance of the purchase consideration, being R18.9 million, payable in cash free of
exchange, against registration of transfer and which will be secured by means of a bank
guarantee/s / insurance guarantee/s acceptable to and in favour of the Granport and/or its
nominee/s. Calaska will deliver such guarantee/s to Granport’s Conveyancers within 45 days
after approval of the disposal of the Arcadia 2 Property by shareholders in general meeting.
Calaska shall take possession of the Arcadia 2 Property on the date of registration of transfer
thereof.
6.3 Other terms of the Arcadia 2 Property Agreement
The transfer costs pertaining to the Arcadia 2 Property are to be paid to the Granport’s
Conveyancers by Calaska, upon request.
Granport shall be liable for and shall pay a broker’s commission of R427 500.00 (plus VAT) to its
broker, Watprop Proprietary Limited, upon registration of transfer of the Arcadia 2 Property, as a first
draw against the proceeds of the disposal thereof.
The Arcadia 2 Property is sold “voetstoots”, without any warranty as to either patent or latent defects,
and subject to such conditions mentioned or referred to in Granport’s Title Deed and the relevant
prior Title Deeds and to all such conditions and servitudes, if any, that may exist in respect thereof.
Granport shall continue with all short-term leases by third parties on the basis that, subsequent to
the signature of the Arcadia 2 Property Agreement, all leases are to be approved by both Granport
and Calaska.
7. CONDITIONS PRECEDENT OF THE DISPOSALS
The Disposals are subject to:
- the obtaining of all necessary regulatory approvals, including, inter alia, approval by the Takeover
Regulation Panel (“Panel”) and the JSE; and
- approval by shareholders of The Don in general meeting.
8. PRO FORMA FINANCIAL EFFECTS OF THE DISPOSALS
The pro forma financial effects of the Disposals on the reported financial information of The Don will be
announced to shareholders in due course.
9. CATEGORISATION OF THE DISPOSALS AND FURTHER DOCUMENTATION
The Disposals constitute a Category 1 transaction in terms of section 9.5(b) of the JSE Listings
Requirements and a proposal to dispose of all of the assets of The Don in terms of section 112 of the
Companies Act. Accordingly, a circular containing full details of the Disposals (“Circular”), including, inter
alia, a notice to convene a general meeting of shareholders of The Don in order to consider and, if
deemed fit to pass, with or without modification, the resolutions necessary to approve and implement the
Disposals, will be distributed to shareholders of The Don in due course.
10. RECOMMENDATION AND FAIRNESS OPINION
In accordance with Companies Regulation 90(1), The Don’s Independent Board has appointed an
independent expert acceptable to the Panel (“Independent Expert”), to provide it with external advice in
relation to the Disposals and to make appropriate recommendations to the Independent Board in the
form of an Independent Expert Report.
The substance of the external advice received from the Independent Expert and the views of the
Independent Board will be detailed in the Circular.
11. RESPONSIBILITY STATEMENT
The Independent Board accepts responsibility for the information contained in this Announcement to the
extent that it relates to The Don. To the best of their knowledge and belief, the information contained in
this Announcement is true and nothing has been omitted which is likely to affect the import of the
information.
12. RENEWAL OF CAUTIONARY ANNOUNCEMENT
Further to paragraph 8 above, shareholders are advised to exercise caution when dealing in The Don’s
securities until a further announcement, incorporating the pro forma financial effects of the Disposals, is
made.
Johannesburg
30 November 2012
Sponsor
Merchantec Capital
Date: 30/11/2012 12:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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