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Specific Repurchase and Dealing in Securities by a Director
Growthpoint Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Linked unit code: GRT ISIN ZAE000037669
(“Growthpoint”)
ACQUISITION BY THE GROWTHPOINT STAFF INCENTIVE SCHEME TRUST (“GSIST”) AND
GROWTHPOINT MANAGEMENT SERVICES (PTY) LIMITED (“GMS”) OF 16,500,000
GROWTHPOINT LINKED UNITS FOR AN AGGREGATE PURCHASE CONSIDERATION OF
R354,750,000 AND DEALING IN SECURITIES BY A DIRECTOR
1. BACKGROUND TO THE SPECIFIC REPURCHASE
In December 2006, Growthpoint concluded a Broad-based Black Economic Empowerment
(“BBBEE”) transaction with Phatsima, a BBBEE entity, in terms of which Phatsima Properties
Proprietary Limited (“Phatsima”), through Meadowood Investments 11 Proprietary Limited
("Meadowood") and Canyon Springs Investments 25 Proprietary Limited ("Canyon Springs")
(together “the SPV’s”), acquired 22,000,000 Growthpoint linked units, representing 2.3% of the total
linked units in issue at the time. At that time, Growthpoint, Phatsima and the SPV’s also entered into
a relationship agreement ("the Relationship Agreement") which provides for a lock-in period of the
greater of 7 years from the date on which the Relationship Agreement became effective or the date
on which all debt financing incurred for purposes of acquiring Growthpoint linked units is repaid. After
the expiry of the lock-in period, Growthpoint retains pre-emptive rights to acquire all of the linked units
indirectly owned by Phatsima in the event that Phatsima elects to sell any or all of its Growthpoint
linked units.
To date, significant value has been created for Phatsima and its shareholders due to the good
performance of the Growthpoint linked unit price since 2006. However, the original funding structure
continues to have significant debt exposure to third party funders as well as mezzanine debt facilities
originally provided by Growthpoint. Following internal deliberations by the board of directors of
Phatsima, a strategic decision was taken to remove all gearing in the structure by Phatsima agreeing
to sell down the requisite number of Growthpoint linked units as would be required to repay all debt
incurred for purposes of acquiring Growthpoint linked units.
Considering that Phatsima currently remains within the lock-in period as provided for in the
Relationship Agreement and the fact that Growthpoint retains pre-emptive rights over any sale by
Phatsima of any of its Growthpoint linked units, GSIST and GMS have agreed, subject to the
suspensive conditions set out below, to acquire 16,500,000 Growthpoint linked units for an aggregate
purchase consideration of R354,750,000 which proceeds will be sufficient to allow the SPV’s to repay
all of the outstanding debt financing incurred for purposes of acquiring Growthpoint linked units.
Following the successful implementation of the specific repurchase Phatsima will own, through
Meadowood, 5,500,000 Growthpoint linked units, representing a holding of 0.3% of the total linked
units in issue, net of linked units held in treasury and will no longer have any debt outstanding in
connection with its acquisition of this holding.
2. THE GSIST ACQUISITION
Growthpoint linked unitholders (“Linked Unitholders”) are advised that GSIST has entered into an
agreement with Phatsima and the SPV's pursuant to which GSIST will acquire 8,000,000 Growthpoint
linked units at a price of R21.50 per linked unit, amounting to a gross purchase consideration of
R172,000,000. The purchase price per linked unit represents a discount of 16.9% to the 30 day
volume weighted average price (“VWAP”) of Growthpoint linked units as at 27 June 2013 and is
inclusive of any rights to distributions made by Growthpoint in the future.
The GSIST was established in 2007 as the official employee share trust for all share incentive
schemes for Growthpoint employees and currently has a liability in respect of options awarded to
employees of Growthpoint in respect of more than 7 million Growthpoint linked units. The Growthpoint
linked units being purchased in terms of the GSIST acquisition will be used to hedge the current
liability of the trust as well as new option awards anticipated to be made in September 2013.
3. THE GMS ACQUISITION
Linked Unitholders are further advised that GMS, a wholly-owned subsidiary of Growthpoint and the
entity that employs all of the Growthpoint employees, has entered into an agreement with Phatsima
and the SPV's pursuant to which GMS will acquire 8,500,000 Growthpoint linked units at a price of
R21.50 per linked unit, amounting to a gross purchase consideration of R182,750,000. The purchase
price per linked unit represents a discount of 16.9% to the 30 day VWAP of Growthpoint linked units
as at 27 June 2013 and is inclusive of any rights to distributions made by Growthpoint in the future.
The GMS acquisition offers Growthpoint the opportunity to acquire Growthpoint linked units at a
substantial discount to both the current trading price, as well as the 30 day VWAP, of Growthpoint
linked units at 27 June 2013. It is Growthpoint’s intention to utilize the linked units purchased
pursuant to the GMS acquisition to structure a new staff share incentive scheme which would have
the objective of incentivizing and retaining Growthpoint staff over the longer term.
4. SPECIFIC REPURCHASE FROM A RELATED PARTY
As GMS will be acquiring linked units directly from Meadowood at a pre-determined price, the
purchase of such linked units constitutes a specific repurchase ("Specific Repurchase") as defined
in the JSE Listings Requirements ("Listings Requirements").
In terms of the Listings Requirements, Phatsima is deemed to be a related party to Growthpoint which
arises as a result of Mr. Herman Mashaba being a director of Growthpoint and an associate of
Phatsima and Meadowood.
However, in accordance with the Listings Requirements, the Specific Repurchase is to be
implemented at a discount to the 30 day VWAP, and therefore a fairness opinion will not be required.
5. SUSPENSIVE CONDITIONS
The Specific Repurchase is subject to fulfillment of the suspensive conditions that:
i. the security to which the linked units indirectly owned by Phatsima is subject shall have been
released;
ii. the shares constituting the linked units indirectly owned by Phatsima shall have been
transferred by Canyon Springs to Meadowood; and
iii. the special resolution approving the Specific Repurchase shall have been duly passed by
Linked Unitholders at a general meeting of Growthpoint in accordance with the Companies Act,
No. 71 of 2008 and the Listings Requirements.
6. UNAUDITED AND UNREVIEWED PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED
BBBEE TRANSACTION
The unaudited and unreviewed pro forma financial effects (“pro forma financial effects”) of the
Specific Repurchase of linked units, the calculation of which is the responsibility of the Growthpoint
board of directors, are provided for illustrative purposes only to provide information about how the
Specific Repurchase will affect the financial position of Linked Unitholders by illustrating the effect
thereof on the earnings per linked unit, headline earnings per linked unit and distributable earnings
per linked unit as if the Specific Repurchase had been implemented on 30 June 2012 and, for the
purpose of net asset value per linked unit (“NAV”) and tangible net asset value per linked unit
(“TNAV”) of Growthpoint, as if the Specific Repurchase had been implemented on 31 December
2012.
Because of their nature, the pro forma financial effects may not give a fair presentation of
Growthpoint’s financial position, changes in equity, results of operations, cash flow and performance
after the Share Repurchase. The pro forma financial effects have been compiled using accounting
policies that comply with International Financial Reporting Standards and are consistent with those
applied in the audited consolidated financial statements of Growthpoint for the twelve months ended
30 June 2012. There are no post balance sheet events which require adjustment to the pro forma
financial effects.
Before the After the
%
Specific Specific
Change
Repurchase Repurchase
Earnings per linked unit (cents) (26.70) (26.83) -0.49%
Headline earnings per linked unit (cents) 44.55 45.26 1.59%
Distributable earnings per (cents) 72.70 72.16 -0.73%
NAV (cents) 1,677 1,674 -0.22%
TNAV (cents) 1,654 1,650 -0.23%
Weighted average number of linked units in issue
(‘000) 1,767,603,559 1,759,103,559 -0.48%
Number of linked units in issue (‘000) 1,767,603,559 1,759,103,559 -0.48%
Notes:
1. The financial information in the "Before the Repurchase" column has been prepared based
on Growthpoint’s interim published financial results for the six months ended 31 December
2012.
2. Earnings have been decreased by the net finance charges based on an assumed interest
rate of 8.75%. This effect is expected to be of a continuing nature. A distribution of
R6,052,000 will be due to Growthpoint as Growthpoint is acquiring the linked units cum
distribution. Once-off net transaction costs assumed in respect of the Specific Repurchase of
approximately R1,827,500 have been taken into account.
3. The Specific Repurchase is assumed to be funded from existing debt facilities not being
utilised. Mezzanine finance currently lent by Growthpoint to the SPVs shall have been repaid
to the extent of R72,215,324. The mezzanine finance is currently earning interest of 10.35%
per annum.
4. The number of securities held in treasury after the Specific Repurchase is 8,500,000.
7. SALIENT DATES AND TIMES
The salient dates and times in respect of the Proposed Transaction are summarised below:
2013
Circular and notices of the general meeting posted to Friday, 12 July
Linked Unitholders
Last day to trade in Growthpoint linked units in order Friday, 26 July
to be recorded in Growthpoint’s securities register to
vote at the general meeting
Record date to be entitled to attend, participate in and Friday, 2 August
vote at the general meeting by close of trading
Proxy forms for the general meeting to be received by Thursday, 8 August
09h30
General meeting of Linked Unitholders held at 09h30 Monday, 12 August
Special resolution submitted to CIPC for filing Monday, 12 August
Results of the general meeting released on SENS Monday, 12 August
Notes:
1. All dates and times may be changed by Growthpoint. Any change will be published on SENS.
2. All times given in this announcement are local times in South Africa.
8. PUBLICATION OF CIRCULAR
A circular containing full details of the Specific Repurchase and incorporating a notice of general
meeting is being prepared and will be posted to Linked Unitholders on or about Friday, 12 July 2013.
9. DIRECTOR’S DEALINGS
In compliance with the Listings Requirements, the following information is disclosed in relation to the
Specific Repurchase in respect of which binding legal agreements were entered into between
Growthpoint and an associate of a director whereby Growthpoint linked units will be acquired by an
associate of a director of Growthpoint at a price of R21.50 per linked unit, subject to the suspensive
conditions detailed in this announcement.
Director associate: Meadowood Investments 11 Proprietary Limited
Director: Herman Mashaba
Company: Growthpoint Properties Limited
Date of transaction: 28 June 2013
Nature of transaction: Specific repurchase from associate of director
Number of securities: 16,500,000
Class of securities: Linked units
Total value of securities: 354,750,000
Nature of interest: Indirect beneficial
Clearance obtained: Yes
28 June 2013
Investment bank Sponsor
Investec Corporate Finance Investec Bank Limited
Legal advisers Reporting Accountants
Glyn Marais Incorporated KPMG
Date: 28/06/2013 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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