Wrap Text
Sale of business by a subsidiary and withdrawal of the cautionary announcement
VUNANI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/020641/06)
JSE code: VUN
ISIN: ZAE000163382
(“Vunani” or “the Company” or “the Group”)
SALE OF BUSINESS BY A SUBSIDIARY AND WITHDRAWAL OF THE CAUTIONARY ANNOUNCEMENT
1. BACKGROUND INFORMATION
A Sale of Business Agreement, dated 9 November 2013, has been entered into between Vunani
Property Asset Management Proprietary Limited (“VPAM”), a wholly owned subsidiary of Vunani
Properties Proprietary Limited (“Vunani Properties”), which is a 78% owned subsidiary of Vunani, and
Texton Property Investments Proprietary Limited (“the Purchaser”) in terms of which VPAM will dispose
of its business, including the cession and assignment of the Asset Management Agreement between
Vunani Property Investment Fund Limited (“VPIF”) and VPAM (“the Asset Management Agreement”),
and the transfer of employment contracts to the Purchaser (“the Agreement”) for a total cash amount of
R117 million (“the Transaction”).
1.1 Rationale for the Transaction
Vunani regularly reviews its portfolio of businesses with a view to enhancing the Group’s strategy
and growth prospects. Sometimes this translates into merger and acquisition transactions that
complement existing activities. In the course of such discussions and engagements, Vunani
received a proposal from the Purchaser regarding the sale of the business of VPAM. Having
regard to the disposal consideration, the board considered it to be in the best interest of
shareholders of the Company to enter into the Transaction.
The Group is confident that, notwithstanding the Transaction, it has the experience and
wherewithal to continue to find and invest in value accretive opportunities in the property and
other sectors and that the Transaction will significantly enhance its prospects in the future.
1.2 Effective date
The Effective Date of the Transaction will be the date that the Agreement takes effect and
becomes operative upon the fulfilment or waiver of the suspensive conditions.
1.3 Disposal consideration
The total cash consideration is R117 million (“Cash Consideration”) which will be settled as
follows:
• An initial payment of R102 million on the third business day following the Effective Date; and
• A deferred payment of R15 million on the first business day after the expiry of a 12 month
period from the Effective Date, provided that any amount payable by VPAM to the Purchaser
arising out of any breach of warranty or any other claim arising out of the Agreement shall be
deducted from this amount subject to a maximum aggregate deduction of R9 million. This
deferred payment will not bear interest unless the Purchaser fails to settle the amount due on
time.
1.4 Suspensive conditions
The Agreement is subject, inter alia, to:
• the written consent of the board of directors of VPIF for the cession and assignment of the
Asset Management Agreement;
• shareholders of Vunani approving the Transaction at a general meeting;
• VPIF unitholders approving the cession and assignment of the Asset Management Agreement
at a general meeting; and
• approval as required in terms of the Competition Act (No 89 of 1998), as amended.
In terms of the Agreement, the suspensive conditions must be fulfilled or waived on or before 28
February 2014 or such later date as agreed on by all the parties.
1.5 Information relating to VPAM
VPAM is a wholly-owned subsidiary of Vunani Properties.
VPAM’s sole business activity is the provision of property asset management services to VPIF in
terms of the Asset Management Agreement.
The current directors of VPAM are EG Dube (Chairman), RF Kane (CEO), A Judin, B Khoza and
PW Mackenzie.
Mr RF Kane has taken up a shareholding in Cozifor Proprietary Limited (which owns 100% of the
Purchaser) through his family trust and has waived any direct or indirect rights to any dividend
resulting from the disposal consideration of R117 million. Mr. Kane will remain as the CEO of
VPIF.
In terms of the Transaction, the following full-time employees of VPAM will be transferred to the
Purchaser:
RF Kane, D Govender, M de Lange and P Bonga.
1.6 Information relating to Vunani Properties
Information relating to Vunani Properties is set out below:
Directors: Address Shareholders
NM Anderson Vunani House Vunani – 78%
EG Dube 151 Katherine Street, Ludlow Trust – 10%
A Judin Sandown Eagle Trust – 12%
RF Kane
BM Khoza
PW Mackenzie
1.7 Information relating to the Purchaser
Details relating to the Purchaser are set out below:
Registered name: Texton Property Investments Proprietary Limited
Legal form: A private company (Registration number 2004/029298/07), duly
registered and incorporated with limited liability in accordance with the
laws of the RSA.
Business address: 54 Bompas Road, Dunkeld West, Johannesburg
Directors: AN de Rauville, JPG de Rauville, DJ Tew, RF Kane, M de Lange,
JA Legh, MJ van Heerden
Shareholder: 100% Cozifor Proprietary Limited
Shareholders of Cozifor Proprietary Limited are as follows:
25% Handful of Keys Proprietary Limited
20% Investec Bank Limited
17% Ludlow Trust (RF Kane)
15% JA Legh
15% Nooitgedacht Familie Trust
5% N&G Trust
3% M de Lange
The Purchaser represents a consortium of investors led by Angelique de Rauville, the Managing
Director of Handful of Keys Proprietary Limited. Until April this year, she was employed by the
Investec Group and headed up Investec’s property investments business for 10 years for both
the South African and United Kingdom operations.
1.8 Application of the disposal consideration
Immediately following the receipt of the disposal consideration the directors of VPAM and, in turn,
Vunani Properties, have agreed to declare and pay a dividend, net of taxation and transaction
costs, of the disposal consideration (the “net disposal consideration”). Vunani will receive 78/90
of the net disposal consideration, an amount of approximately R86.5 million. It is Vunani’s
intention to initially hold these funds in cash and utilise them to grow and further the prospects of
the Group.
1.9 Irrevocable undertaking
Vunani Group Proprietary Limited, which has a 72.4% shareholding in the Company, has
provided an irrevocable undertaking to vote in favour of the Transaction.
2 FINANCIAL EFFECTS
The unaudited pro forma financial effects of the Transaction, for which the directors are responsible, are
provided for illustrative purposes only to show the effect thereof on the earnings per share (“EPS”), diluted
earnings per share (“DEPS”), headline earnings per share (“HEPS”) and diluted headline earnings per
share (“DHEPS”) as if it had taken effect on 1 January 2013 and on net asset value per share (“NAVPS”)
and net tangible asset value per share (NTAVPS”) as if it had taken effect on 30 June 2013. Because of
their nature, the unaudited pro forma financial effects may not give a fair presentation of the Group’s
financial position subsequent to the Transaction. The unaudited pro forma financial effects have been
compiled from the unaudited consolidated financial statements of Vunani for the six months ended 30
June 2013 and are presented in a manner consistent with the format and accounting policies adopted by
Vunani and have been adjusted as described in the notes set out below:
Unaudited Unaudited
before the pro forma
Transaction after the %
Note 30.6.2013 Transaction change
EPS and DEPS (cents) 2 9.3 93.9 909.7
HEPS AND DHEPS (cents) 2 7.2 5.7 -20.8
NAVPS (cents) 3 201.8 283.5 40.5
NTAVPS (cents) 3 167.3 249.0 48.8
Number of ordinary shares in issue at period end
(net of treasury shares)(‘000) 105 415 105 415
Weighted average number of shares in issue at
period end (‘000) 105 415 105 415
Notes (all values shown in R’000):
1. The “Unaudited before the transaction” column information has been extracted from the company’s
unaudited condensed consolidated results for the six months ended 30 June 2013.
2. The effects relating to the EPS, DEPS, HEPS and DHEPS are based on the following assumptions
and information:
2.1 The Transaction was effected on 1 January 2013.
2.2 Net profit after taxation attributable to the sale of the business that is subject to the Transaction
amounts to R1 578.
2.3 Transaction costs estimated at R378 have been included in calculating the financial effects.
2.4 The net effect on the statement of comprehensive income is an increase in total comprehensive
income of R97 823. Of this amount, R84 949 is attributable to Vunani and R12 874 is attributable
to non-controlling interests.
3. The effects relating to the NAVPS and NTAVPS are based on the following assumptions and
information:
3.1 The Transaction was effected on 30 June 2013.
3.2 The net cash attributable to Vunani will be used to enhance the Group’s cash reserves.
3.3 A dividend of R11 598 will be paid to the non-controlling interest.
3.4 The net increase in equity (after taking into account the Cash Consideration less Transaction
costs, taxation and the dividend declared to the non-controlling interest) amounts to R87 808 of
which R86 180 is attributable to Vunani and R1 623 to non-controlling interest.
The Transaction will have a continuing effect with the exception of the profit on the sale of the business
and the Transaction costs.
3 WITHDRAWAL OF THE CAUTIONARY ANNOUNCEMENT
Having regard to the information set out above, the cautionary announcement is hereby withdrawn.
4 CIRCULAR TO SHAREHOLDERS
The Transaction is categorised as a Category 1 disposal in terms of the Listings Requirements of the JSE
Limited (“Listings Requirements”). Accordingly, a circular prepared in terms of the Listings Requirements,
containing a notice of general meeting of shareholders, will be dispatched to shareholders during the
course of December 2013.
Sandton
11 November 2013
Corporate Adviser
Vunani Corporate Finance
Designated Adviser
Grindrod Bank Limited
Independent reporting accountants and auditors
KPMG Inc
Legal Adviser
Werksmans Inc
Investment Bank
Investec Bank Limited
Date: 11/11/2013 12:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
