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Disposal Of Shares And Loan Accounts In Various Properties, Partial Withdrawal Of Cautionary, Renewal Of Cautionary
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 CHAMBERS GROUND FLOOR
PROPERTIES (PTY) LTD (“Chambers”), TROPICAL PARADISE TRADING 320
PROPRIETARY LIMITED (“Tropical 320”) AND TROPICAL PARADISE TRADING 334
PROPRIETARY LIMITED (“Tropical 334”), PARTIAL WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT, RENEWAL OF CAUTIONARY ANNOUNCEMENT AND VOLUNTARY
UPDATE ON SUSPENSION
Shareholders are advised that a major subsidiary of the Company, Bonatla Properties (Pty)
Ltd (“the Seller”) entered into three separate disposal agreements, last dated 31 December
2013 and approved by the board of directors of Bonatla on 14 February 2014, with Polska
Properties Direct (Pty) Ltd (“Polska”) and Fulloutput 147 (Pty) Ltd (“Fulloutput”), in terms of
which it will sell the shares and loan accounts in Chambers and Tropical 320 to Polska and
the shares and loan accounts in Tropical 334 to Fulloutput with effect from 1 July 2013 and
1 September 2013 respectively. Polska and Fulloutput are not related parties to Bonatla.
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
losses, holding costs and capital expenses. All the disposal agreements contain normal
warranties for such disposals.
Full details of each disposal are set out below:
1. CHAMBERS
1.1 TERMS OF THE DISPOSAL
Polska will purchase from the Seller all the shares and loan accounts in Chambers,
save for the loan of R2 799 864.36 made by the Seller to Chambers on behalf of the
Bluezone Property Holding Company as per the Section 311 compromise agreement
previously announced. Chambers owns Chambers Ground Floor Block E 39187,
Bellville, Tyger Valley, Bellview together with the common property attaching to each
unit.
The consideration for the disposal of the shares and loan accounts in Chambers is
R3.7 million (“Chambers Disposal Consideration”), which amount has been settled in
cash as follows:
(i) An amount of R1.7 million received in cash;
(ii) An amount of R2 million for the assumption of the existing bond on the property.
In addition, the Seller has settled all outstanding tax liabilities and other debts were
settled by 31 December 2013.
The agreement is subject to the provisions of the JSE Listings Requirements.
1.2 RATIONALE FOR THE DISPOSAL
The properties owned by Chambers are categorised as a B Grade properties and
internal and external renovation are required in the offices and the underground
parking, the cost of which will not be able to be recovered through rental increases.
Furthermore, two of the existing leases on the property expire this year and one will be
expiring in 2015, which tenant has indicated that they will be vacating the premises;
the lease rental level is expected to reduce by an estimated R15 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 9.0% is acceptable for a non-
institutional size, sectional title property and a short over-capitalise size lease.
1.3 PROPERTY SPECIFIC INFORMATION
PROPERTY ADDRESS LOCATION SECTOR
NAME
Chambers Ground Floor Block Tyger Valley, Offices
E 39187 Bellville Bellview
WEIGHTED RENTABLE AREA VALUATION ACQUISITION
AVERAGE (M2) PRICE
RENTAL PER M2
R104.70 854 m2 R8 500 000 R9 550 000
1.4 SUSPENSIVE CONDITIONS
The disposal is subject to the JSE Listings Requirements, where applicable.
2. TROPICAL 320
2.1 TERMS OF THE DISPOSAL
The Purchaser will purchase from the Seller all the shares and loan accounts in
Tropical 320, save for the loan of R2,999,774.86 made by the Seller to Tropical
Paradise on behalf of the Bluezone Property Holding Company as per the Section 311
compromise agreement previously announced. Tropical 320 owns the properties
situated at Chambers 2nd and 3rd Floor Chambers, Block E, Erf 39187, Bellville Tyger
Valley, Bellview together with the common property attaching to each unit.
The consideration for the disposal of the shares and loan accounts in Tropical 320 is
R10.7 million (“Tropical 320 Disposal Consideration”), which amount is to be settled in
cash and will be paid as follows:
(i) An amount of R1.1 million, which was paid in cash to the Seller by 31 December
2013;
(ii) An amount of R6.3 million for the assumption of the existing bond on the
property;
(iii) An amount of R3.3 million (less R600 000 as detailed below) has been received
in cash.
The Seller has undertaken to resolve and repair problems caused by moisture or rain.
In addition, the Seller has disclosed an outstanding tax liability of R600 000, which the
Seller had undertaken to settle, together with any penalties and interest that may
accrue, by no later than 31 December 2013. As the Seller is disputing with SARS that
this tax liability is due, it has been agreed with the Purchaser to retain R600 000 of the
purchase price whilst this matter is resolved. All other debts at the effective date were
settled in full by 31 December 2013.
The agreement is subject to the provisions of the JSE Listings Requirements.
2.2 RATIONALE FOR THE DISPOSAL
The properties owned by Tropical 320 are categorised as a B Grade properties and
internal renovation as well as extensive waterproofing and maintenance 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 has been an indication that two of the existing tenants will be
vacating the premises; the lease rental level is expected to reduce by an estimated
R17 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 11%
is acceptable for a non-institutional size, sectional title property and a short over-
capitalise lease.
2.5 SUSPENSIVE CONDITIONS
The disposal is subject to the JSE Listings Requirements, where applicable.
2.6 PROPERTY SPECIFIC INFORMATION
PROPERTY ADDRESS LOCATION SECTOR
NAME
Tropical 320 Chambers 2nd and Tyger Valley, Offices
3rd Floor Bellview
Chambers, Block
E, Erf 39187
Bellville
WEIGHTED RENTABLE AREA VALUATION ACQUISITION
AVERAGE (M2) PRICE
RENTAL PER M2
R97.00 2 029 m2 R13 000 000 R13 000 000
3. TROPICAL 334
3.1 TERMS OF THE DISPOSAL
The Purchaser will purchase from the Seller all the shares and loan accounts in
Tropical 334, save for the loan of R5 434 377.72 made by the Seller to Tropical 334 on
behalf of the Bluezone Property Holding Company as per the Section 311 compromise
agreement previously announced. Tropical 334 owns the buildings, land and
improvements thereon at Erf 1060, Ferndale, 260 Surrey Avenue, Randburg, South
Africa.
The consideration for the disposal of the shares and loan accounts in Tropical 334 is
R42 million (“Tropical 334 Disposal Consideration”), which amount is to be settled in
cash and will be paid as follows:
(i) An amount of R6 million has been paid in cash to the Seller by 31 December
2013;
(ii) An amount of R10 million for the assumption of the existing bond on the
property;
(iii) An amount of R26 million (less R600 000 as detailed below) will be paid to the
Seller within 6 months of the effective date being 1 September 2013 being 31
March 2014. In the event that the occupancy of the property remains low and
tenants have not signed leases that enable Fulloutput to raise a bond of R36
million against the property, then the obligation to pay the R26 million shall be
delayed and reduced in proportion to the funding provided by the bank. Any
shortfall will be paid as soon as funding is raised.
In addition, the Seller has disclosed an outstanding tax liability of R600 000, which the
Seller had undertaken to settle, together with any penalties and interest that may
accrue, by no later than 31 December 2013. As the Seller is disputing with SARS that
this tax liability is due, it has been agreed with the Purchaser to retain R600 000 of the
purchase price whilst this matter is resolved. All other debts at the effective date were
settled in full by 31 December 2013.
3.2 RATIONALE FOR THE DISPOSAL
The properties owned by Tropical 334 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 will expire in 2014 and although there
has been no indication that existing tenants will be vacating the premises; the lease
rental level is expected to reduce by an estimated R11.50 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 8.40% is acceptable for a
non-institutional size, sectional title property and a short over-capitalise lease.
3.3 SUSPENSIVE CONDITIONS
The agreement is subject to the provisions of the JSE Listings Requirements.
3.4 PROPERTY SPECIFIC INFORMATION
PROPERTY ADDRESS LOCATION SECTOR
NAME
Tropical 334 Erf 1060, Ferndale, Randburg, South Offices
260 Surrey Africa
Avenue,
WEIGHTED RENTABLE AREA VALUATION ACQUISITION
AVERAGE (M2) PRICE
RENTAL PER M2
R71.00 2980 m2 R50 000 000 R66 000 000
4. THE PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS
Pro forma financial effects will be announced as soon as practicable.
5. 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.
6. PARTIAL WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcements dated 12 December 2013
which advised that the company expected that an announcement of the disposal of
Madeline Street property was imminent. Shareholders are advised that the
negotiations have been terminated in this regard.
7. RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the previous cautionary announcements dated 6 March
2013, 22 April 2013, 5 July 2013, 8 July 2013, 19 August 2013, 1 November 2013,
4 November 2013, 17 December 2013 and 31 January 2014 respectively and are
advised that certain negotiations referred to therein are still in progress, or pro forma
financial effects are still required to be announced. Details of these are summarised
as follows:
Pro forma effects still to be announced:
- Disposal of Bishops Court announced on 17 May 2013;
- Disposal of Austin Crossing announced on 17 May 2013;
- Acquisition of an increased shareholding in CPTech from related parties
announced on 17 May 2013;
- Disposal of Chambers announced above;
- Disposal of Tropical 320 announced above; and
- Disposal of Tropical 334 announced above.
On-going discussions and/or negotiations:
- Acquisition of 75.1% of Guilder Investments Proprietary Limited;
- Acquisition of 75.1% in a special purpose vehicle to be formed for the Jozini
acquisition;
- Acquisition of Ruitersvlei.
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 above
transactions is made and until further announcements are made regarding the on-
going discussions and/or negotiations detailed above.
8. VOLUNTARY UPDATE ON SUSPENSION
In accordance with paragraph 1.6 of the JSE Listings Requirements which deals with
the suspension of a Company’s securities by the Johannesburg Stock Exchange
(“JSE”), shareholders are referred to the announcements published on 14 November
2012, 24 April 2013, 5 July 2013 and 8 July 2013 and are advised the status as
follows:
- The JSE FRIP investigation into various accounting issues in the 2009 circulars
and annual financial statements was closed by the JSE after a thorough
investigation and no restatement of the 2009 annual financial statements was
required;
- In addition to the above mentioned FRIP issue, the JSE had raised two other
issues:
- the acquisition of the Bluezone portfolio which acquisition has been
beneficially completed yet shareholder approval remains outstanding; and
- the transfer of the 200 000 m2 bulk for the Durban Point Development
Corporation (“DPDC”) as detailed in the circulars to shareholders dated
11 April 2009 and 27 July 2009 respectively (“the two circulars”), which was
part of a number of acquisitions that constituted a reverse listing based on
which the original suspension was lifted on 17 August 2009, has been
delayed due to litigation and Environmental Impact Assessment objections
with regard to the development of a small craft harbour at the Durban
Waterfront and the high water mark.
With regard to the Bluezone acquisition, as previously announced over the past couple
of years, the transaction was substantially delayed due to the Bluezone liquidation,
judicial management processes as well as the s311 Court processes. Bonatla has
acquired the beneficial interest in the Bluezone portfolio and has consolidated the
results of Bluezone over the past three years in accordance with IFRS. The
acquisition of the Bluezone portfolio has taken place through a court process. A
circular to shareholders (“the Circular”) has been submitted to the JSE during mid-
2012 but the JSE had advised that it required the FRIP and other issues to be resolved
before it will provide further comments on the Circular. It is the Company’s
understanding that the completion of the Circular in due course and subsequent
shareholder approval will resolve this matter from a JSE position. It should be noted
that irrevocable undertakings exceeding 70% have been obtained to vote in favour of
the Bluezone acquisition and related transactions detailed in the said circular.
Although the DPDC acquisition remains outside of the control of Bonatla due to the
various legal processes the Company has received the benefit of the three year rental
guarantee as detailed in the two 2009 circulars. Shareholders are advised that
payment for the bulk through the issue of preference shares has not occurred.
It is the Company’s understanding that the JSE has finalised its investigation and is
close to ruling on the balance of the issues but it is waiting for a response to letters
issued to a former director who is now overseas and his alternate. The balance of the
directors and former directors have provided their responses to the JSE. Thereafter,
the JSE will then be able to assess the status of the listing with regard to the impact of
the above. The Company then expects it will be able to proceed with the Circular to
shareholders regarding, inter alia, the acquisition of the Bluezone portfolio and other
previously announced transactions detailed under the renewal of cautionary above.
The Circular to shareholders will require substantial redrafting due to the effluxion of
time and the number of additional transactions entered into over the past two years.
In the interim, as previously announced, the Company has arranged a scrip lending
arrangement of 150 000 000 unlisted Bonatla shares for Bluezone shareholders from
CDA Property Consultants Proprietary Limited in order to deliver shares in Bonatla to
the former Bluezone shareholders.
The Company continues with its intention to work constructively and positively with the
JSE to resolve any and all outstanding issues as timeously as possible.
By order of the board
21 February 2014
Sponsor
Arcay Moela Sponsors Proprietary Limited
Date: 21/02/2014 04:38:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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