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Update Regarding A) The Access Park Acquisition And Claw-Back Offer And Rights Offer B) Adoption Of New Memorandum
Vividend Income Fund Limited
Incorporated in the Republic of South Africa
(Registration Number 2010/003232/06)
JSE Alpha Code: VIF
ISIN: ZAE000150918
(“Vividend” or “the Company”)
UPDATE REGARDING A) THE ACCESS PARK ACQUISITION AND CLAW-BACK OFFER AND RIGHTS OFFER B) ADOPTION OF
NEW MEMORANDUM OF INCORPORATION C) POSTING OF CIRCULAR AND NOTICE OF GENERAL MEETING D)
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
A) THE ACCESS PARK ACQUISITION AND CLAW-BACK OFFER AND RIGHTS OFFER
1. INTRODUCTION
Linked Unitholders are referred to the announcement released on SENS on Friday, 1 March 2013, advising Linked
Unitholders that various agreements had been entered into (“the Access Park Acquisition Agreements”), which if
successfully concluded would result in Vividend acquiring 90% of the property known as Access Park Kenilworth
(“the Access Park Property”) for a purchase consideration of R483.4 million, escalating at R158,920 per day from
1 July 2013 to the date of transfer (“the Access Park Acquisition”). In terms of the Access Park Acquisition
Agreements, the effective date of the Access Park Acquisition shall be the date of transfer of the Access Park
Property into the name of Vividend, which, subject to the fulfilment of the applicable conditions precedent, is
expected on or about 1 May 2013.
The Company will fund the purchase consideration applicable to the Access Park Acquisition from a combination
of a) debt secured from local banking partners b) a partially (54.1%) underwritten renounceable claw-back offer
and rights offer, in terms of which 99 817 808 new linked units (“the Claw-back Offer and Rights Offer Linked
Units”) will be offered to Linked Unitholders recorded in the register at the applicable record date to be
determined (“the Claw-back Offer and Rights Offer”), at a subscription price of 540 cents per Claw-back Offer and
Rights Offer Linked Unit, in the ratio of 52.24 Claw-back Offer and Rights Offer Linked Units for every 100 linked
units held at the close of trade on the applicable record date to be determined. The full details of the Claw-back
Offer and Rights Offer will be announced on SENS and set out in a separate circular to be sent to Linked
Unitholders in due course.
The voting power of the Claw-back Offer and Rights Offer Linked Units will be in excess of 30% of the voting
power of all Linked Units held by linked unitholders prior to the Claw-back Offer and Rights Offer. Accordingly, it
is necessary to obtain the authority of linked unitholders by way of a special resolution, as required in terms of
section 41(3) of the Companies Act, in order to proceed with the Claw-back Offer and Rights Offer.
Full details of the Access Park Acquisition and authority to issue the Claw-back Offer and Rights Offer Linked Units
are contained in a circular that has been posted to Linked Unitholders on Friday, 22 March 2013 (“the Circular”).
2. PRO FORMA FINANCIAL EFFECTS OF THE ACCESS PARK ACQUISITION AND THE CLAW-BACK OFFER AND RIGHTS
OFFER
The unaudited pro forma statements of financial position of Vividend post the Access Park Acquisition and the
Claw-back Offer and Rights Offer, as set out below, are the responsibility of the directors of Vividend. The
unaudited pro forma statements of financial position are presented in a manner consistent with the basis on
which the historical financial information has been prepared and in terms of Vividend’s accounting policies. The
unaudited pro forma statements of financial position have been presented for illustrative purposes only and,
because of their nature, may not give a fair reflection of Vividend’s financial position post the implementation of
the Access Park Acquisition and the Claw-back Offer and Rights Offer.
These unaudited pro forma statements of financial position, as set out below, should be read in conjunction with
the unaudited pro forma statements of financial position as set out in Annexure 1 of the Circular.
The independent reporting accountants’ report on the pro forma statements of financial position is included as
Annexure 2 of the Circular.
The table below sets out the unaudited pro forma statements of financial position post the Access Park
Acquisition and the Claw-back Offer and Rights Offer, based on the audited financial results for the year ended
31 August 2012 and on the assumption that for calculating the net asset value per Linked Unit and net asset value
excluding deferred taxation liability per Linked Unit (tangible net asset value per Linked Unit) a) the effective date
of the Access Park Acquisition is 1 May 2013 and b) the Access Park Acquisition is funded by a combination of
debt (secured from local banking partners) and 54.1% of the Claw-back Offer and Rights Offer, being that portion
of the Claw-back Offer and Rights Offer subject to irrevocable commitment on the last practicable date.
Results before the Pro forma Change Pro forma results after Change
Access Park results after (%) the Access Park (%)
Acquisition and the Access Acquisition and the
the Claw-back Park Claw-back Offer and
Offer and Rights Acquisition Rights Offer
Offer
Net asset value per
Linked Unit (cents) 499 497 (0.4%) 503 1.2%
Net asset value per
Linked Unit,
excluding deferred
taxation liability
(tangible net asset
value) (cents) 505 503 (0.4%) 508 1.0%
Number of Linked
Units in issue (‘000) 191,075 191,075 - 245,080 28.26%
Notes and assumptions:
1. The “Results before the Access Park Acquisition and the Claw-back Offer and Rights Offer” figures are
extracted from the audited consolidated financial statements of the Group for the year ended 31 August
2012.
2. The net asset value per Linked Unit and net asset value excluding deferred taxation liability per Linked
Unit (tangible net asset value per Link Unit) figures are calculated based on the actual number of Linked
Units in issue at 31 August 2012 and on the basis that a) the Access Park Acquisition was effected on 31
August 2012 and b) 54.1% of Claw-back Offer and Rights Offer, being that portion of the Claw-back Offer
and Rights Offer subject to an irrevocable commitment at the last practicable date, was effected on 31
August 2012.
3. Transaction costs of R2 460 000 are assumed to be applicable to the Access Park Acquisition and
transaction costs of R7 375 000 are assumed to be applicable to the Claw-back Offer and Rights Offer.
R5 395 000 of these costs, which relate to placement fees applicable to the Claw-back Offer and Right
Offer, have been allocated to Debenture capital. The balance has been expensed through the statement
of comprehensive income.
4. In terms of the Access Park Acquisition, Vividend will acquire 90% of the Access Park Property for a
purchase consideration of R483.4 million, subject to any price adjustment made in terms of the Access
Park Acquisition Agreements. Should transfer of 90% of the Access Park Property into the name of
Vividend take place on 1 May 2013, as anticipated, the purchase consideration will be R473.7 million.
5. In terms of IFRS, the Access Park Property is recorded at its market value on the date of acquisition, with
the difference between the market value and the purchase consideration, as finally determined per the
Access Park Agreements, being allocated through the statement of comprehensive income.
6. Vividend will issue 54 004 710 linked units, or 54.1% of the Claw-back Offer and Rights Offer, at 540 cents
per Linked Unit, subject to a 1.85% placement fee payable in terms of the Irrevocable Commitments.
7. The Put and Call Options applicable to the remaining 10% of the Access Park Property not owned by
Vividend post the Access Park Acquisition, have been valued using the Black & Scholes Option Valuation
Model, which incorporates the following input variables: a) an underlying price of R48.4m b) a strike price
of R74.7m c) a dividend yield of 0% d) a risk free rate of 7.45% e) a volatility of 18.3% f) an option period
of 5 years g) an escalation rate, as applied to Net Property Income, of 7% and h) an effective date of
1 May 2013.
8. All adjustments, except for transaction costs, are expected to have a continuing effect.
3. FORECAST FINANCIAL INFORMATION OF ACCESS PARK PROPERTY
Set out below is the forecast statement of comprehensive income applicable to the Access Park Property on a
stand-alone basis for the 4 month period ending 31 August 2013 and the 12 month period ending 31 August
2014. The forecasts have been prepared on the assumption that a) the effective date of the Access Park
Acquisition is 1 May 2013 b) the Access Park Acquisition is funded by a combination of debt (from local banking
partners) and 54.1% of the Claw-back Offer and Rights Offer, being that portion of the Claw-back Offer and Rights
Offer subject to irrevocable commitment on the last practicable date.
The profit forecasts, including the assumptions on which they are based and the financial information from which
they are prepared, are the responsibility of the directors of Vividend. The forecasts must be read in conjunction
with the reporting accountants’ report thereon, which is attached as Annexure 4 of the Circular.
The profit forecasts have been:
• prepared in accordance with Vividend’s accounting policies and in compliance with IFRS; and
• prepared in relation to the Access Park Property only, which post implementation of the Access Park
Acquisition will be transferred into the name of Vividend.
A limited review was conducted by the independent reporting accountant whose report is contained in Annexure
4 of the Circular.
4 months 12 months
ending 31 ending 31
August 2013 August 2014
R’000 R’000 R’000
Revenue, excluding straight-line lease income 18 469 57 202
adjustment
Straight-line lease income adjustment 1 071 1 514
Revenue 19 540 58 716
Property expenses (5 217) (14 356)
Net Property Income 14 323 44 360
Other operating expenses (1 193) (2 385)
Operating Profit 13 130 41 975
Fair value adjustments (1 071 (1 514)
Finance costs ( 5 117) (15 354)
Profit before debenture interest and taxation 6 942 25 107
Debenture interest (6 942) (25 107)
Profit before taxation - -
Taxation charge - -
Total comprehensive income - -
ASSUMPTIONS WITHIN THE CONTROL OF MANAGEMENT
• Vividend does not plan to dispose of part, or the whole of, the Access Park Property during the forecast period.
• Gross rentals forecasted for the Access Park Property consist of contracted and un-contracted revenue. Un-
contracted revenue (which includes month to month leases) from the Access Park Property, in aggregate,
accounts for 29% and 43% of Revenue for the 2013 and 2014 forecast periods respectively. Un-contracted
revenue is calculated with reference to the following 1) current contracted gross rentals 2) escalation profiles
applicable to historic and current Gross Rentals 3) vacancy guarantees provided by the vendors 4) current
market-related rentals 5) current market-related escalation rates 6) location and size of un-contracted gross
lettable area (“GLA”) 7) marketability of un-contracted GLA.
• Lease agreements that are subject to contingent and/or turnover rentals are maintained at existing levels.
• All existing lease agreements are valid and enforceable.
• Leases that expire during the forecast period are assumed to be renewed at current gross rentals escalated at the
time of expiry by the historic escalation rate applicable to either a) the expired lease b) existing leases consistent
in nature with the expired lease.
• Current vacant space has been assumed to remain vacant during the forecast period.
• Property expenses are determined with reference to a detailed review of the historical information provided by
the Vendors. No property expenses have been increased in the 2013 and 2014 forecast periods by more than
15% over the historical financial period.
• Consumption based recoveries are consistent with the 1) historical information provided 2) valuer income
statements 3) vendor forecasts and budgets 4) market-related information.
• A doubtful debt impairment provision, amounting to 1.5% of net property income before the doubtful debt
impairment provision, has been included in property expenses for the duration of the forecast period to account
for probable doubtful debts. This provision is over and above the vacancy profile maintained during the forecast
period.
• No fair value adjustments have been made to the Access Park Property, other than as a result of straight-line
lease income adjustments.
• The asset management fee applicable to the asset manager has been calculated on a market price per Linked
Unit of R5.68 throughout the forecast period.
• Distributions to Linked Unitholders are paid biannually on 28 February and 31 August.
ASSUMPTIONS OUT OF THE CONTROL OF MANAGEMENT
• The effective date of the Access Park Acquisition is 1 May 2013.
• The effective date of the Claw-back Offer and Rights Offer is 1 April 2013.
• No Claw-back Offer and Rights Offer Linked Units, save for those subject to irrevocable commitment at the last
practicable date, are issued as part of the Claw-back Offer and Rights Offer.
• The fixed interest rate applicable to debt facilities is set at 8% for the duration of the forecast period. Origination
costs applicable to the deployment of debt facilities are included in the interest cost over the forecast period.
The inflation rate applicable to all expenditure carried forward into the 2013 and 2014 forecast periods is 8%.
B) ADOPTION OF NEW MEMORANDUM OF INCORPORATION
In terms of the Companies Act 71 of 2008, as amended (“the Companies Act”), every pre-existing company has
until 1 May 2013 to amend its Memorandum of Incorporation to conform to the Companies Act. Accordingly
Linked Unitholders are advised that the Company intends to replace its existing Memorandum of Incorporation
(previously known as the memorandum of incorporation and articles of association) with a new Memorandum of
Incorporation, which is aligned to the requirements of the Companies Act.
Full details of the new Memorandum of Incorporation are contained in the Circular.
C) POSTING OF CIRCULAR AND NOTICE OF GENERAL MEETING
The Company has posted a Circular, dated Friday 22 March 2013, to its Linked Unitholders relating to a) the
approval of the Access Park Acquisition b) the authority to issue the Claw-back Offer and Rights Offer Linked
Units and c) the adoption of a new Memorandum of Incorporation. A copy of the Circular will also be available on
Vividend’s website (www.vividend.co.za).
The general meeting, convened in terms of the notice incorporated in the Circular, will be held at Unit 6,
Rozenhof Office Court, 20 Kloof Street, Gardens, Cape Town on Tuesday 23 April 2013, commencing at 11h00
(‘the General Meeting”) for purposes of considering and, if deeming fit, passing with or without modification, the
resolutions required to give effect to a) the Access Park Acquisition b) the authority to issue the Claw-back Offer
and Rights Offer Linked Units, and c) the adoption of a new Memorandum of Incorporation.
Salient dates and times for the General Meeting are:
2013
Circular, Notice of General Meeting and Form of Proxy posted to Linked
Unitholders on Friday, 22 March
Last day to trade in order to be eligible to vote at General Meeting Friday, 5 April
Record date to be eligible to vote at General Meeting Friday, 12 April
Last day to lodge Forms of Proxies in respect of General Meeting by 11h00 on Friday, 19 April
General meeting to be held at 11h00 on Tuesday, 23 April
Results of the General Meeting released on SENS on Tuesday, 23 April
Note: Dematerialised Linked Unitholders, other than those with “own name” registration, must inform their
CSDP or broker of their intention to attend the General Meeting in order for such CSDP or Broker to be able
to issue them with the necessary letters of representation to enable them to attend such meeting.
Alternatively, should they not wish to attend the General Meeting, they should provide their CSDP or Broker
with their voting instructions. This must be effected in terms of the Custody Agreement entered into
between the Linked Unitholder and the CSDP or Broker.
D) WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Linked Unitholders are referred to the renewal of cautionary announcement, released on SENS on 1 March 2013,
and are advised that the relevant details of the Access Park Acquisition have been disclosed in this
announcement and accordingly caution is no longer required to be exercised by Linked Unitholders when
dealing in the Company’s securities.
22 March 2013
Cape Town
Sponsor and Corporate Adviser
PSG Capital
Auditors and Reporting Accountants
Baker Tilly SVG
Independent Property Valuer
Active Blue Valuation Solutions
Attorneys and Trustee for Debenture Holders
Fluxmans Attorneys
Date: 22/03/2013 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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