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Disposal of Shares and Loan Accounts and Cautionary Announcement
BONATLA PROPERTY HOLDINGS LIMITED
(Registration number 1996/014533/06)
Share code: BNT ISIN: ZAE000013694
(”Bonatla” or “the Company”)
DISPOSAL OF SHARES AND LOAN ACCOUNTS IN MILESTONE PLACE
PROPERTIES (PTY) LTD AND PROPERTY 259 PROPERTIES (PTY) LTD AND
CAUTIONARY ANNOUNCEMENT
Shareholders are advised that a major subsidiary of the
Company, Bonatla Properties (Pty) Ltd (“the Seller”) entered
into two separate disposal agreements, dated 30 October 2013,
with Polska Properties Direct (Pty) Ltd (“the Purchaser”) in
terms of which it will sell the shares and loan accounts in
Milestone Place Properties (Pty) Ltd (“Milestone Place”) and
the shares and loan accounts in Property 259 Properties (Pty)
Ltd (“Property 259 Properties”) to the Purchaser with effect
from 1 June 2013. The overriding rationale for the disposals
is cash-flow based, the board being of the opinion that the
retention of these companies will result in the Company
incurring unnecessary holding costs and capital expenses.
Full details of each disposal are set out below:
1. MILESTONE PLACE PROPERTIES (PTY) LTD (“MILESTONE PLACE”)
1.1 TERMS OF THE DISPOSAL
The Purchaser will purchase from the Seller all the
shares and loan accounts in Milestone Place, save for the
loan of R3 326 917.86 made by the Seller to Milestone
Place on behalf of the Bluezone Property Holding Company
as per the Section 311 compromise agreement previously
announced. Milestone Place owns Block A and D in the
sectional title scheme located at Ptn 23 of Erf 1008,
Irene, Extension 30. In terms of the agreement, the
Seller has undertaken to manage the affairs surrounding
the letting of the property by no later than 31 December
2013; to bear the costs of relocation of the tenants, if
any, and to paint a portion of the façade in Block A.
The consideration for the disposal of the shares and loan
accounts in Milestone Place will be a maximum amount of
R9 million (“Milestone Place Disposal Consideration”),
which amount is to be settled in cash and will be paid as
follows:
(i) An amount of R2 million will be paid in cash to the
Seller by no later than 31 October 2013;
(ii) An amount of R6 million will be paid to the Seller
when the purchaser raises a mortgage bond against
the property, which mortgage bond is to be raised
by 31 December 2013, failing which the Seller will
be entitled to immediately register a first mortgage
bond of R7 million against the property based on the
prevailing terms and conditions of Nedbank Property
Finance and the prevailing prime lending rate for
commercial transactions;
(iii) An amount of R1 million will be paid to the Seller
by 1 November 2013, provided that leases on the
property will provide the Purchaser with a forward
yield of not less than 12% based on an investment of
R9 million. In the event that this is not achieved,
the final payment will be reduced pro rata by
applying to the net projected rental income from 1
November 2013 to 31 October 2014, a 12% net forward
initial yield, less interest at 9% per annum on the
balance of the Milestone Place Disposal
Consideration from the effective date. The parties
have agreed that the information to be used for the
purpose of calculating any such pro rata reduction
will be based on the property management information
supplied by the Seller in agreement with the
Purchaser.
1.2 RATIONALE FOR THE DISPOSAL
The properties owned by Milestone Properties are
categorised as a B Grade properties and internal and
external renovation is required in the offices and the
underground parking, the cost of which will not be able
to be recovered through rental increases. Furthermore,
the existing leases on the property expire in 2014 and
there is an indication that at least two of the existing
tenants will be vacating the premises; the lease rental
level is expected to reduce by an estimated R20 per
square metre and additional spend on tenant installation
costs to upgrade the premises are likely to be incurred.
The board is of the opinion that the exit yield of 8.5%
is acceptable for a non-institutionalised, sectional
title property and a short over-capitalised lease.
1.3 PROPERTY SPECIFIC INFORMATION
PROPERTY NAME ADDRESS LOCATION SECTOR
Milestone Route 21 Irene, Offices
Properties Corporate Gauteng
Park
WEIGHTED RENTABLE AREA VALUATION ACQUISITION
AVERAGE (M2) PRICE
RENTAL PER M2
R90 1 284 R12 500 000 R9 878 000
1.4 SUSPENSIVE CONDITIONS
The agreement is subject to the Directors of the Seller
resolving to approve the sale of the shares and loan
accounts in Milestone Place to the Purchaser.
2. PROPERTY 259 PROPERTIES (PTY) LTD (“PROPERTY 259
PROPERTIES”)
2.1 TERMS OF THE DISPOSAL
The Purchaser will purchase from the Seller all the
shares and loan accounts in Property 259 Properties, save
for the loan of R4 249 759.27 made by the Seller to
Property 259 Properties on behalf of the Bluezone
Property Holding Company as per the Section 311
compromise agreement previously announced. Property 259
Properties owns the property situated at Erf 1091,
Ferndale and includes the land and buildings situated at
259 Kent Avenue, Johannesburg.
The consideration for the disposal of the shares and loan
accounts in Property 259 Properties will be a maximum
amount of R14 million (“Property 259 Disposal
Consideration”), which amount is to be settled in cash
and will be paid as follows:
(i) An amount of R5 million will be paid in cash to the
Seller by no later than 31 October 2013;
(ii) An amount of R7.5 million will be paid to the Seller
when the purchaser raises a mortgage bond against
the property, which mortgage bond is to be raised
by 31 December 2013, failing which the Seller will
be entitled to immediately register a first mortgage
bond of R9 million against the property based on the
prevailing terms and conditions of Nedbank Property
Finance and the prevailing prime lending rate for
commercial transactions;
(iii) An amount of R1.5 million will be paid to the Seller
by 1 November 2013, provided that:
- The existing tenant renting the buildings
located at 259 Kent Avenue, Johannesburg has
agreed to extend the lease to continue
occupying the building for at least another
three years; and
- that such lease will provide the Purchaser with
a forward yield of not less than 12% based on
an investment of R14 million.
In the event that the 12% forward yield is not
achieved, the final payment will be reduced pro rata
by applying to the net projected rental income from
1 November 2013 to 31 October 2014, a 12% net
forward initial yield. The parties have agreed that
the information to be used for the purpose of
calculating any such pro rata reduction will be
based on the property management information
supplied by the Seller in agreement with the
Purchaser. The parties have furthermore agreed that
the Seller will manage the affairs surrounding the
lease renewal referred to above on the basis that
the tenant has, in principle, agreed to renew such
lease.
2.2 RATIONALE FOR THE DISPOSAL
The property owned by Property 259 Properties is
currently categorised as a B Grade property and will
require some internal renovation, the cost of which will
not be recoverable through an increase in the rental
level, even in the event of the tenant vacating the
premises at the end of the lease agreement in September
2014. The board is of the opinion that the exit yield of
9.5% is acceptable for a non-institutionalised, sectional
title property and a short over-capitalised lease.
2.5 SUSPENSIVE CONDITIONS
The agreement is subject to the Directors of the Seller
resolving to approve the sale of the shares and loan
accounts in Property 259 Properties to the Purchaser.
2.6 PROPERTY SPECIFIC INFORMATION
PROPERTY NAME ADDRESS LOCATION SECTOR
Property 259 259 Kent Randburg, Offices
Avenue Johannesburg
WEIGHTED RENTABLE AREA VALUATION ACQUISITION
AVERAGE (M2) PRICE
RENTAL PER M2
R97.50 1 485 R12 500 000 R15 302 000
3. THE PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS
Pro forma financial effects will be announced as soon as
practicable after the announcement of the Company’s results
for the period ended 30 June 2013.
4. DOCUMENTATION
The disposals will be subject to the approval of Bonatla
shareholders in general meeting.
The Johannesburg Stock Exchange (“JSE”) is, however, still
concluding the investigation previously announced on SENS
and the JSE’s Issuer Regulation Division has accordingly
advised that it will not review the previous acquisition
circular and associated transactions nor any further
circulars until the investigation has been concluded. The
board is, however, firmly of the opinion that the
transactions are in the best interests of the Company and
thus, in order to enable them to proceed, the Company will,
in the interim, be seeking irrevocable undertakings from
existing shareholders to vote in favour of these Disposals.
It is anticipated that the JSE required information
relating to these Disposals will be included in a revised
submission of the circular to shareholders that was
submitted to the JSE Regulation Division in mid-2012.
5. CAUTIONARY ANNOUNCEMENT
Shareholders are advised to continue to exercise caution in
dealing in their Company’s securities until an announcement
detailing the pro forma financial effects of the Disposals
is made.
By order of the board
1 November 2013
Sponsor
Arcay Moela Sponsors Proprietary Limited
Date: 04/11/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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