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Specific Repurchase of Growthpoint Linked Units and Dealings in Securities
Growthpoint Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Linked unit code: GRT ISIN ZAE000037669
(“Growthpoint”)
ACQUISITION BY GROWTHPOINT MANAGEMENT SERVICES PROPRIETARY LIMITED
(“GMS”) OF 26,333,333 GROWTHPOINT LINKED UNITS AND MIGANU INVESTMENT
HOLDINGS PROPRIETARY LIMITED OF 12,000,000 GROWTHPOINT LINKED UNITS FOR AN
AGGREGATE PURCHASE CONSIDERATION OF R824,166,660 AND DEALING IN SECURITIES
BY ASSOCIATES OF DIRECTORS
1. BACKGROUND TO THE TRANSACTION
In August 2005 Growthpoint concluded a Broad-based Black Economic Empowerment (“BBBEE”)
transaction with Amabubesi Investments Proprietary Limited (“Amabubesi”), Miganu Investment
Holdings Proprietary Limited (“Miganu”), Unipalm Investment Holdings Limited (“Unipalm”), Desert
Wind Properties 84 Proprietary Limited (“Desert Wind”) and Amabubesi Beneficial Trust (collectively
referred to as “the Beneficiaries”), in terms of which the Beneficiaries acquired 100,000,000
Growthpoint linked units (14.2% of the total linked units then in issue) through Quick Leap
Investments 429 Proprietary Limited (“Quick Leap”) and the AMU Trust, which are special purpose
vehicles created for the purpose of holding Growthpoint linked units on behalf of the Beneficiaries.
At that time, Growthpoint, the Beneficiaries, Quick Leap and AMU Trust 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 the Growthpoint linked units is repaid. After the
expiry of the lock-in period, the Beneficiaries have first pre-emptive rights on the Growthpoint linked
units held within Quick Leap, following which Growthpoint retains pre-emptive rights to acquire all of
the linked units indirectly owned by the Beneficiaries in the event that the Beneficiaries elect to sell in
whole or in part their Growthpoint linked units held within Quick Leap.
To date, significant value has been created for the Beneficiaries and their shareholders due to the
good performance of the Growthpoint linked unit price since 2005. However, the original funding
structure continues to have significant debt exposure to a third party funder, namely Investec Bank
Limited (“Investec”), and mezzanine debt facilities provided by Growthpoint. Following internal
deliberations by the boards of directors of Unipalm and Desert Wind, a strategic decision was taken
by each of Unipalm and Desert Wind to extricate their entire beneficial interest from the existing
structure. Unipalm and Desert Wind beneficially hold 33,333,333 and 5,000,000 Growthpoint linked
units respectively.
Considering that (i) the Beneficiaries currently remain within the lock-in period as provided for in the
Relationship Agreement, and (ii) the other beneficiaries within Quick Leap as well as Growthpoint
itself retain pre-emptive rights over the sale of the beneficial interest in Growthpoint linked units by
Unipalm and Desert Wind; Miganu and GMS have agreed, subject to the suspensive conditions set
out below, to acquire a total of 38,333,333 Growthpoint linked units, where Miganu and GMS will
acquire 12,000,000 and 26,333,333 Growthpoint linked units respectively (“the Specific
Repurchase”), for an aggregate purchase consideration of R824,166,660. The proceeds of which will
allow Unipalm and Desert Wind to extinguish all of the proportional debt attributable to their beneficial
holding and entirely relinquish their beneficial holding in Growthpoint linked units beneficially held
through Quick Leap and the AMU Trust.
Additionally, an agterskot (“the Agterskot”) totaling R33,333,333 will be payable to Unipalm to the
extent the Growthpoint 15 day volume weighted average price (“VWAP”) reaches or exceeds R30.00
per linked unit during the 18-month period commencing 2 business days following the fulfillment of
the suspensive conditions as detailed below (“the Closing Date”).
Lastly, Growthpoint and Miganu have agreed to underwrite the costs in the proportion 70% and 30%
respectively relating to the unwinding of swap contracts previously entered into with Investec in order
to fix the cost of funding within Quick Leap. Such underwriting of swap costs relates to the portion of
debt attributable to Unipalm and is for the benefit of Unipalm only. Such costs will only be payable to
the extent they exceed R2,000,000 in total (“the Underwriting”).
2. THE UNIPALM TRANSACTION
Growthpoint linked unitholders (“Linked Unitholders”) are 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 Miganu and Unipalm (“the Unipalm binding agreement”) pursuant to which
GMS will acquire 23,333,333 linked units (“the Unipalm Specific Repurchase”) and Miganu will
acquire 10,000,000 linked units from Quick Leap at a price of R21.50 per linked unit, amounting to a
gross purchase consideration of R716,666,660 (“the Unipalm Transaction”). The purchase price per
linked unit represents a discount of 16.7% to the 30 day VWAP of Growthpoint linked units as at 28
June 2013 and is inclusive of rights to any distribution that has accrued in respect of the linked units
being acquired until the Closing Date.
The Agterskot of R1.00 per linked unit acquired, totaling R23,333,333 due from Growthpoint and
R10,000,000 due from Miganu, will become payable in the event the Growthpoint 15 day VWAP
reaches or exceeds R30.00 per linked unit within the 18 month period commencing on the Closing
Date.
Growthpoint and Miganu have agreed to the Underwriting for the benefit of Unipalm. The swap
contracts have been entered into by Quick Leap with Investec in order to fix the cost of funding on a
tranche of debt advanced by Investec to Quick Leap. The Underwriting amount and the financial
effects thereof are considered immaterial.
In the event that Amabubesi elects to exercise any pre-emptive rights as detailed above, Growthpoint
and Miganu may agree to pursue the Unipalm Transaction in respect of the reduced number of units.
3. THE DESERT WIND TRANSACTION
Linked Unitholders are advised that GMS has entered into an agreement with Miganu and Desert
Wind (“the Desert Wind binding agreement”) pursuant to which GMS will acquire 3,000,000 linked
units (“the Desert Wind Specific Repurchase”) and Miganu will acquire 2,000,000 linked units from
Quick Leap at a price of R21.50 per linked unit, amounting to a gross purchase consideration of
R107,500,000 (“the Desert Wind Transaction”). The purchase price per linked unit represents a
discount of 16.7% to the 30 day VWAP of Growthpoint linked units as at 28 June 2013 and is
inclusive of any rights to distributions made by Growthpoint in the future.
In the event that Amabubesi elects to exercise any pre-emptive rights as detailed above, Growthpoint
and Miganu may agree to pursue the Desert Wind Transaction in respect of the reduced number of
units.
4. RATIONALE FOR THE SPECIFIC REPURCHASE
The Specific Repurchase 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 as at 28 June
2013. It is Growthpoint’s intention to utilise the linked units purchased pursuant to the Specific
Repurchase to structure a new staff share incentive scheme which would have the objective of
incentivising and retaining Growthpoint staff over the longer term as well as to pursue new
transactions in the furtherance of Growthpoint's overall empowerment credentials and BEE rating.
5. SPECIFIC REPURCHASE FROM A RELATED PARTY
Ragavan Moonsamy is a director of Growthpoint and an associate of Unipalm due to his indirect
beneficial holding in Unipalm. As such, the Unipalm Specific Repurchase, albeit through Quick Leap,
constitutes a specific repurchase from a related party.
However, in accordance with the JSE Listings Requirements (“Listings Requirements”), the
Unipalm Specific Repurchase is to be implemented at a discount to the 30 day VWAP, therefore, a
fairness opinion will not be required.
6. SUSPENSIVE CONDITIONS
The Unipalm Transaction is subject to fulfillment of the suspensive conditions before 31 August 2013
that:
i. the shareholders of Unipalm and Miganu shall have adopted the requisite resolutions to
approve and give effect to the Unipalm Transaction in accordance with the Companies Act, No.
71 of 2008 (“the Companies Act”);
ii. the board of directors of each of Unipalm and Miganu shall have approved the terms of the final
sale and purchase agreements;
iii. Investec shall have unconditionally undertaken to release its security interest in the linked units
to be acquired by GMS and Miganu on the date that all suspensive conditions have been
fulfilled against receipt of payment due to it pursuant to the Investec debt financing agreements
in a form satisfactory to all the parties to the Unipalm Transaction;
iv. all pre-emptive rights shall have been waived in writing to the satisfaction of GMS, Unipalm and
Miganu;
v. to the extent required, the AMU Trust Deed shall have been amended to enable the Unipalm
Transaction to proceed on the terms contemplated in the Unipalm binding agreement;
vi. a tax opinion or binding tax ruling from SARS is to be obtained to the satisfaction of Unipalm
confirming the specific tax treatment of the Unipalm Transaction, including the effect of
prepayment and swap costs payable by Quick Leap, on the minimum amount of R261,000,000
expected to be received by Unipalm before accounting for dividend withholdings tax; and
vii. Linked Unitholders shall have adopted the requisite resolutions in accordance with the
Companies Act and the Listings Requirements approving the Unipalm Specific Repurchase.
The Desert Wind Transaction is subject to fulfillment of the suspensive conditions before 31 August
2013 that:
i. the shareholders of Desert Wind and Miganu shall have adopted the requisite resolutions to
approve and give effect to the Desert Wind Transaction in accordance with the Companies Act;
ii. the board of directors of each of Desert Wind and Miganu shall have approved the terms of the
final sale and purchase agreement;
iii. Investec shall have unconditionally undertaken to release its security interest in the linked units
to be acquired by GMS and Miganu on the date that all suspensive conditions have been
fulfilled against receipt of payment due to it pursuant to the Investec debt financing agreements
in a form satisfactory to all the parties to the Desert Wind Transaction;
iv. all pre-emptive rights shall have been waived in writing to the satisfaction of GMS, Desert Wind
and Miganu or the parties who hold such rights shall have elected not to exercise them;
v. to the extent required, the AMU Trust Deed shall have been amended to enable the Desert
Wind Transaction to proceed as per the terms set out in the Desert Wind binding agreement;
and
vi. Linked Unitholders shall have adopted the requisite resolutions in accordance with the
Companies Act and the Listings Requirements approving the Desert Wind Specific
Repurchase.
7. UNAUDITED AND UNREVIEWED PRO FORMA FINANCIAL EFFECTS OF THE UNIPALM
SPECIFIC REPURCHASE AND THE DESERT WIND SPECIFIC REPURCHASE
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 non-public 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) (27.11) -1.52%
Headline earnings per linked unit (cents) 44.55 44.85 0.67%
Distributable earnings per linked unit (cents) 72.70 72.44 -0.36%
NAV per linked unit (cents) 1,677 1,670 -0.41%
TNAV per linked unit (cents) 1,654 1,647 -0.44%
Weighted average number of linked units in issue
1,767,603,559 1,741,270,226 -1.49%
(‘000)
Number of linked units in issue (‘000) 1,767,603,559 1,741,270,226 -1.49%
Notes:
1. The financial information in the "Before the Specific Repurchase" column has been prepared
based on Growthpoint’s interim financial results for the six months ended 31 December 2012.
2. The financial information in the “After the Specific Repurchase” column is the combined effect
of the Unipalm Specific Repurchase and the Desert Wind Specific Repurchase.
3. 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
R18,749,333 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 R5,661,667 have been taken into account.
4. The Specific Repurchase is assumed to be funded from existing debt facilities not being
utilised. Mezzanine finance currently lent by Growthpoint to Quick Leap shall have been
repaid to the extent of R53,274,197. The mezzanine finance is currently earning interest of
15% per annum.
5. The cost of the Underwriting is considered as immaterial and has not been taken into account
when preparing the pro forma financial effects.
6. The number of securities held in treasury after the Specific Repurchase is 26,333,333 before
taking into account the specific repurchase of 8,500,000 Growthpoint linked units from
Phatsima Properties Proprietary Limited as announced on 28 June 2013.
8. SALIENT DATES AND TIMES
The salient dates and times in respect of the Unipalm Transaction and the Desert Wind 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 are subject to change by Growthpoint. Any change will be published on
SENS.
2. All times given in this announcement are local times in South Africa.
9. 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.
10. DEALINGS IN SECURITIES BY ASSOCIATES OF DIRECTORS
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 associates of directors whereby Growthpoint linked units will be acquired by an
associate of a director of Growthpoint and simultaneously sold by another director of Growthpoint at a
price of R21.50 per linked unit, before taking into account the Agterskot of R1.00 per linked unit
subject to the suspensive conditions detailed in this announcement.
Director associate: Unipalm Investment Holdings Limited
Director: Ragavan Moonsamy
Company: Growthpoint Properties Limited
Date of transaction: 28 June 2013
Nature of transaction: Disposal of linked units
Number of securities: 33,333,333
Class of securities: Linked units
Total value of securities: R716,666,659.50
Nature of interest: Indirect beneficial
Clearance obtained: Yes
Director associate: Miganu Investment Holdings Proprietary Limited
Director: Mzolisi Diliza
Company: Growthpoint Properties Limited
Date of transaction: 28 June 2013
Nature of transaction: Acquisition of linked units
Number of securities: 12,000,000
Class of securities: Linked units
Total value of securities: R258,000,000
Nature of interest: Indirect non-beneficial
Clearance obtained: Yes
1 July 2013
Sandton
Investment bank Sponsor
Investec Corporate Finance Investec Bank Limited
Legal advisers Reporting Accountants
Glyn Marais Incorporated KPMG
Date: 01/07/2013 04:34:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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