Wrap Text
Announcement of offer by Acucap to acquire all Sycom Units in issue and withdrawal of cautionary announcement
Acucap Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 2001/021725/06)
Share code: ACP
ISIN: ZAE000037651
(Approved as a REIT by the JSE)
("Acucap")
Sycom Property Fund
A Collective Investment Scheme in Property
("CISP") registered in terms of the Collective
Investment Schemes Control Act, No. 45 of 2002
("CISCA") and managed by Sycom Property Fund
Managers Limited
(Registration number 1986/002756/06)
Share code: SYC ISIN: ZAE000019303
(Approved as a REIT by the JSE)
("Sycom")
ANNOUNCEMENT OF OFFER BY ACUCAP TO ACQUIRE ALL THE SYCOM PARTICIPATORY
INTERESTS NOT HELD BY ACUCAP (OR ITS SUBSIDIARY) AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
The board of directors of Acucap is pleased to announce that it will, in terms of a document
that will be posted to holders of participatory units in Sycom ("Sycom Units") on or about 31
March 2014 ("Offer Document"), extend an offer to all holders of Sycom Units ("Sycom
Unitholders"), other than Acucap and its wholly-owned subsidiary, Sycom Property Fund
Managers Limited ("SPFM"), to acquire all their Sycom Units ("Offer Units") in exchange for
Acucap securities (as described in paragraph 4.2, in the ratio of 58 Acucap securities for
every 100 Sycom Units held on the closing date of the Offer ("Exchange Ratio"), on the terms
and conditions set out in the Offer Document and as summarised below ("Offer").
2. INVOLVEMENT OF SYCOM AND SPFM
The board of directors of SPFM, being cognisant of its fiduciary responsibilities to Sycom
Unitholders, has, on a voluntary basis, established a committee of independent board
members ("the Sycom Independent Board") to ensure sound corporate governance
practice. The single purpose of the Sycom Independent Board is to consider the terms of the
Offer and to provide Sycom Unitholders with its opinion thereof. For this reason, this
announcement is being made jointly by Acucap and Sycom.
3. RATIONALE FOR THE OFFER
Acucap's status as a Real Estate Investment Trust ("REIT") was approved by the JSE Limited
("JSE") with effect from 1 April 2013. Acucap carries on the business of a property holding
company through the ownership of investment properties by its subsidiaries and investees,
including Sycom, in which it currently holds 33.39% directly. Acucap also holds 100% of the
shares in SPFM, the manager of Sycom.
The implementation of the Offer may result in Acucap acquiring up to 100% of the Sycom
Units in issue, thereby resulting in Sycom becoming wholly-owned by Acucap, effectively
merging the organisations and the property portfolios ("Enlarged Acucap").
Acucap believes that implementation of the Offer will bring a number of benefits to Acucap's security holders (whether holders of linked units shares, ("Acucap Security Holders") and Sycom
Unitholders. These benefits include, inter alia:
3.1. Sycom's property portfolio is complementary to that of Acucap, Therefore the Enlarged
Acucap, following successful implementation of the Offer, will enjoy greater sectoral
diversification and reduced asset concentration risk;
3.2. the Enlarged Acucap will offer a single entry-point for investors which may result in
the attraction of interest from a wider group of investors including tracker funds
and international investors. In addition, the Enlarged Acucap's increased market
capitalisation will increase its representation in the listed property index (FTSE/JSE
South African Listed Properties Index), as compared to the current individual
representation of Acucap and Sycom. Mutual funds and tracker funds that track the
index, or investors that include any form of index weighting in their investment
strategy, are thereafter expected to adjust their portfolios in favour of the Enlarged
Acucap. This increased interest is expected to have a positive impact on the
Enlarged Acucap's rating and liquidity thereby enhancing its ability to raise capital
for meaningful acquisitions;
3.3. those Sycom Unitholders that accept the Offer will hold their investment in an
entity with a greater investor spread as compared to Sycom wherein Acucap already
directly holds 33.39% of the Sycom Units;
3.4. the Enlarged Acucap is expected to achieve operational synergies post the
implementation of the merger that include, inter alia, cost efficiencies, streamlining
of operations, more efficient allocation of senior management's time and the
alignment of strategic objectives. The acquisition by Acucap of up to 100% in Sycom
will increase the critical mass of the asset base of the Enlarged Acucap. The
significantly larger asset base will allow for increased redevelopment opportunities,
as the asset/s being redeveloped will comprise a smaller percentage of the total
asset base, and will reduce any dilution of returns during the redevelopment
phases. Furthermore, a larger asset base and balance sheet will provide reach into
larger transactions, allowing the Enlarged Acucap to optimise the composition of its
property portfolio and grow the overall size of the portfolio through acquisitions of
meaningful scale, which is in line with the strategy of owning a smaller number of
individually significant assets; and
3.5. if Acucap acquires 100% of the Sycom Units in issue that are not already owned by
it, then it is Acucap's intention to procure the delisting and ultimate winding-up or
other form of restructure of Sycom in the most efficient manner. Pursuant to this
ultimate step, the external management company would cease to exist, resulting in
a better aligned and investor friendly corporate structure with fewer possible
conflicts of interest. As the management team is the same for both organisations,
Sycom Unitholders can be assured there will be no dilution in performance and, in
fact, this should enhance returns as there will be no requirement for the
maintenance of a second listing on the JSE and for having dual regulators, with its
concomitant costs.
4. TERMS OF THE OFFER
4.1. The Exchange Ratio
In terms of the Offer, each Sycom Unitholder that accepts the Offer on or before the
closing date of the Offer ("Accepting Sycom Unitholder") will, subject to fulfilment
of all conditions precedent thereto, ultimately receive securities in Acucap, in the
ratio ("Exchange Ratio") of 58 Acucap securities for every 100 Sycom Units held
("Offer Consideration").
The Exchange Ratio has been determined by Acucap as the closest approximation
and best representation of the ratios between:
4.1.1. the ratio of the historical distributions declared by Acucap per linked unit in
Acucap ("Acucap Linked Unit") as compared to the historical
distributions declared by Sycom per Sycom Unit in respect of the previous
three financial years;
4.1.2. the historical volume weighted average share price of Acucap Linked Units and
Sycom Units respectively, in respect of the previous twelve month period; and
4.1.3. the expected average forecast distributions per Acucap Linked Unit and Sycom
Unit for the next five financial years.
The Exchange Ratio represents a premium of 1.2% to the ratio calculated as the 30 day
volume weighted average JSE trading price ("VWAP") of Sycom Units at close of trade on
24 March 2014 to the 30 day VWAP of Acucap Linked units as the same date.
If Acucap does not acquire 100% of the Sycom Units in terms of the Offer and an
opportunity to acquire additional Sycom Units arises after the closing date of the
Offer, Acucap undertakes that it will not in such event acquire these additional
Sycom Units at a more favourable exchange ratio than the Exchange Ratio of 58
Acucap securities per every 100 Sycom Units without first obtaining the support
from Sycom Unitholders that held such number of Sycom Units that represents at
least 50% of the Offer acceptances and, to the extent required, Acucap Security
Holders and applicable regulators.
4.2. Nature of the Offer Consideration
Acucap currently has a linked unit capital structure in terms of which each par value
share in Acucap ("Acucap Share") is indivisibly linked to a subordinated debenture
("Acucap Debenture"), forming an Acucap Linked Unit.
In a separate announcement released on SENS immediately prior to this
announcement, Acucap proposed to holders of Acucap Linked Units ("Acucap Linked
Unitholders"), that a restructure be implemented pursuant to which it will through a
scheme of arrangement and the adoption of a new Memorandum of Incorporation,
convert its linked unit structure into an all equity structure ("Acucap Restructure").
Acucap Linked Unitholders are referred to the aforementioned announcement for
further detail on the Acucap Restructure.
The Acucap Restructure is subject to, inter alia, approval by Acucap Linked
Unitholders by way of both ordinary and special resolutions as well as the necessary
filing being made at the Companies and Intellectual Properties Commission.
The nature of the Offer Consideration is therefore dependent on the
implementation of the Acucap Restructure. If the Acucap Restructure is approved
and implemented, the Offer Consideration will take the form of no par value shares
in Acucap at the Exchange Ratio. Whereas, if the Acucap Restructure is not
approved or implemented for any reason, the Offer Consideration will take the form
of Acucap Linked Units at the Exchange Ratio.
4.3. The Offer period
The Offer will open for acceptances at 9:00 on 31 March 2014 and will be open for
acceptances by Sycom Unitholders at any time during such period until 12:00 on
Friday, 16 May 2014 ("Offer Closing Date").
Acucap may, in its absolute and sole discretion, extend the Offer Closing Date. Any
extension to the Offer Closing Date will be announced on SENS and published in the
South African press.
4.4. Sycom Receipts
In order to allow for the implementation of the Acucap Restructure and facilitate
payment of the Final Distributions (as discussed in paragraph 6), the Offer
Consideration will be issued to Accepting Sycom Unitholders on the later of –
4.4.1. 30 June 2014; or
4.4.2. the first Monday following 15 business days after the date on which all
conditions precedent to the Offer are fulfilled and/or, where possible,
waived,
("Consideration Pay Date").
In order to ensure that Accepting Sycom Unitholders are not out of the market and
so are able to trade between the Offer Closing Date and the Consideration Pay Date,
Accepting Sycom Unitholders will be issued an acknowledgement of receipt in
respect of each such Sycom Unit tendered into the Offer ("Represented Sycom
Unit"), which receipt will constitute a tradable acknowledgement of the ownership
of that Represented Sycom Unit ("Sycom Receipt"), in a ratio of one Sycom Receipt
for every Represented Sycom Unit. The Sycom Receipts will in all respects reflect
ownership of the underlying Sycom Unit and be fully tradable on the JSE under
share code SYCR and ISIN ZAE000189551. The Sycom Units of Accepting Sycom
Unitholders that are tendered into the Offer, will, in turn, be placed into an escrow
account with Computershare Investor Services (Pty) Ltd ("Escrow Account") on the
date of issue of the Sycom Receipts, where they will be held for ultimate delivery to
Acucap on the Consideration Pay Date.
Each holder of a Sycom Receipt on the Consideration Pay Date (which may be the
original Accepting Sycom Unitholder or a transferee) will be entitled to the Offer
Consideration and the Represented Sycom Units will be transferred to Acucap.
4.5. Conditions precedent to the Offer
The Offer is subject to the fulfilment or, where applicable, waiver, of the following
conditions precedent:
4.5.1. the approval by holders of Acucap Shares ("Acucap Shareholders") of an
ordinary resolution authorising Acucap to acquire the Offer Units in terms
of section 9 of the JSE Listings Requirements;
4.5.2. the approval by Acucap Linked Unitholders of special resolution/s
authorising Acucap to issue the Offer Consideration;
4.5.3. the approval by the JSE of the listing of the Sycom Receipts and the Offer
Consideration; and
4.5.4. other regulatory approvals and consents to the extent necessary.
5. RISKS TO SYCOM UNITHOLDERS THAT DO NOT ACCEPT THE OFFER
The Sycom Independent Board has identified various risks to Sycom Unitholders associated
with not accepting the Offer, particularly that:
5.1. it is Acucap's stated intention to acquire 100% of the Offer Units. However, given
that the Offer is not regulated in terms of parts B and C of Chapter 5 of the
Companies Act, 2008 ("the Act") (relating to the takeover provisions), as it is not an
offer in respect of a "regulated company" as contemplated therein, there are no
"squeeze-out" or compulsory acquisition mechanisms applicable to the Offer as
contemplated in section 124 of the Act. Although Acucap may succeed in acquiring
90% or more of the Offer Units sought to be acquired by Acucap, it will in such
event not be in a position to compulsorily acquire, pursuant to the Offer, the Sycom
Units of those remaining Sycom Unitholders who do not accept the Offer;
5.2. given the inability of Acucap to "squeeze-out" the remaining Sycom Unitholders
who fail to accept the Offer, there is a risk that Sycom remains listed on the JSE with
the remaining Sycom Unitholders holding an interest in a substantially less liquid
counter that in turn may affect the price at which the Sycom Units trade and may
affect the ease with which Sycom Unitholders are able to dispose of their Sycom
Units; and
5.3. furthermore, if Acucap is unsuccessful in acquiring 100% of the Offer Units such
that, after the Offer, the Sycom Units held by Sycom Unitholders other than Acucap
and SPFM comprise less than 20% of the total Sycom Units in issue, the JSE may
require SPFM to take steps to suspend and ultimately terminate the listing of Sycom
for failure to comply with the JSE's ongoing public spread requirements, although it
is likely that the JSE and the Registrar of Collective Investment Schemes appointed
in terms of the CISCA would be mindful of the interests of minority Sycom
Unitholders in such circumstances.
6. DISTRIBUTIONS
As set out in paragraph 4.4 of this announcement, the Consideration Pay Date is expected to
be on or after 30 June 2014. Given that the Exchange Ratio has been determined based on,
inter alia, forecast distributions with effect from the financial year commencing 1 April
2014, Acucap and Sycom will each declare the final distributions for the 6 month period
ended 31 March 2014 ("the Final Distribution") immediately prior to the Consideration Pay
Date. Pertinent dates relevant to the Final Distribution are set out in paragraph 12 below.
Acucap Linked Unitholders registered as such on the Friday immediately prior to the
Consideration Pay Date ("Final Distributions Record Date") will be entitled to the Final
Distribution declared by Acucap. Similarly, Sycom Unitholders registered as such on the Final
Distributions Record Date will be entitled to the Final Distribution declared by Sycom.
7. OPINION AND RECOMMENDATIONS
The Sycom Independent Board has appointed Rand Merchant Bank (a division of FirstRand
Bank Limited) ("the Independent Expert") to provide it with an opinion on whether the Offer
is fair and reasonable to Sycom Unitholders.
Having considered the terms and conditions of the Offer and based on the assumptions set
out in its report, the Independent Expert has concluded that the Offer is fair and reasonable
to Sycom Unitholders.
The Sycom Independent Board has a responsibility to act in the interests of Sycom
Unitholders and, as a consequence of this responsibility and for purposes of sound
corporate governance, has voluntarily resolved to provide Sycom Unitholders with its
opinion on the merits of the Offer. To this end, the members of the Sycom Independent
Board have taken into consideration, amongst other things, the Independent Expert's
opinion, the Sycom Independent Board's understanding of the businesses of Acucap and
Sycom, the terms and conditions of the Offer and Acucap's rationale for the Offer, which
sets out the commercial rationale for a consolidation of these two entities into one
organisation with the same management team. The Sycom Independent Board has also
considered the risks in respect of not accepting the Offer.
On the basis of the analysis undertaken by the members of the Sycom Independent Board,
further details of which will be contained in the Offer Document, they are all of the opinion
that the Offer is fair and reasonable to Sycom Unitholders. The Sycom Independent Board
accordingly recommends that Sycom Unitholders accept the Offer.
8. INDICATIVE SUPPORT
Acucap Linked Unitholders, collectively holding 32% of all Acucap Linked Units, have expressed indicative
support for all resolutions necessary to implement the Acucap Restructure and the Offer.
Furthermore, Sycom Unitholders, holding in aggregate 33% of the Offer Units, have indicated their willingness
to accept the Offer.
9. PROPERTY SPECIFIC INFORMATION
Details of the Enlarged Acucap property portfolio at 1 April 2014 are set out below:
Original
Weighted
purchase
Valuation as at Rentable Property average Effective date
Property Location Valuer price/
1 April 2014 area portfolio rental per of acquisition
development
month
cost
R'000 m2 R/m2 R'000
Retail 10 218 475 517 666 130.53 5 280 673
Kempton
Festival Mall 1 560 000 80 521 A 1 113.75 652 059 2002-03-01
Park
Bayside Centre Milnerton 1 100 000 45 630 A 2 147.01 787 969 2007-08-01
Key West Krugersdorp 1 038 000 55 396 A 1 123.51 544 822 2002-03-01
Gardens Centre Cape Town 490 000 14 530 A 2 224.02 348 506 2007-08-01
Howard Centre Pinelands 290 000 14 780 A 2 137.30 245 633 2007-08-01
The Village Square Randfontein 338 000 20 723 A 1 121.96 142 918 2002-03-01
Westville Mall Durban 271 000 12 533 A 1 139.24 210 715 2007-08-01
East Rand Value
Mall Boksburg 212 000 13 869 A 1 115.95 153 253 2006-03-03
Somerset
Helderberg Hyper 227 350 21 323 A 2 78.21 189 883 2007-08-01
West
14th Avenue Hyper Roodepoort 205 000 26 146 A 1 70.17 103 875 2006-04-25
50% Hillcrest
Corner Durban 185 500 9 923 A 1 145.30 154 041 2007-06-01
Sunward Centre Boksburg 162 000 11 890 A 1 126.55 44 713 2001-12-01
27,5% of The
Port 180 242 12 803 A 1 100.34 66 931 2004-10-01
Bridge Elizabeth
Fricker Road,
Boulevard Piazza 6 000 A 1 133.34 7 528 2007-08-01
Illovo 497
50% of Fourways William Nicol
Crossing Retail Drive, 496 500 24 413 S 1 134.79 140 293 2003-03-31
Centre Fourways
Louwtjie
Rothman
42% of N1 City Mall 619 080 27 109 S 1 135.15 177 344 2003-03-31
Street,
Goodwood
Cecile Road,
Paarl Mall 733 000 37 038 S 1 139.65 486 877 2007-01-31
Paarl
77.86% of Vaal Vanderbijlpark
1 012 803 38 829 S 1 157.09 787 969 2007-08-01
Mall
Greenacres, A: 50%
100% of
Port 1 035 000** 40 767 and S: 1 174.94 1 016 000 2014-03-31*
Greenacres
Elizabeth 50%
Inanda Road,
50% of Watercrest
Waterfall 57 000 8 946 S 1 60.04 35 344 2012-12-18
Mall
(Kloof area)
Offices 6 136 150 321 242 149.03 4 056 880
A:60%
Tygerberg Office A: 2010-07-17
Parow 547 700 27 594 and 1 143.68 462 750
Park S: 2010-03-31
S:40%^
Golf Park Mowbray 222 000 16 682 A 2 120.38 191 624 2007-08-01
Microsoft, Bryanston 211 000 9 432 A 1 150.06 138 269 2007-08-01
82 Grayston Drive,
Sandown 122 000 6 522 A 1 162.54 131 057 2007-08-01
Sandown
Tiger Brands Bryanston 138 400 6 418 A 1 136.16 100 402 2007-08-01
28 Fricker Road,
Illovo 101 500 6 406 A 1 157.73 98 311 2006-04-01
Illovo
Bogare, Menlyn Pretoria 113 000 6 301 A 1 127.26 45 159 2001-12-06
Nautica, Granger
Cape Town 100 000 5 791 A 2 169.52 42 859 2001-12-01
Bay
Pharos House,
Durban 99 000 5 825 A 1 135.48 50 564 2007-08-01
Westville Mall
4 Fricker Road,
Illovo 91 000 4 610 A 1 169.52 75 146 2007-08-01
Illovo
The Village, Faerie
Pretoria 84 200 6 910 A 1 120.24 48 222 2002-03-01
Glen
SA Weather
Pretoria 85 800 4 270 A 1 115.94 37 927 2004-11-01
Services
36 Fricker Road,
Illovo 75 700 4 442 A 1 165.58 31 265 2004-01-01
Illovo
16 Fricker Road,
Illovo 66 500 3 658 A 1 136.33 66 462 2007-08-01
Illovo
Albion Springs, Rondebosch 44 550 3 327 A 2 166.38 41 291 2007-08-01
Bremerton Office Port
59 300 3 643 A 1 123.50 24 981 2001-12-01
Park Elizabeth
Advocates' Protea Place,
126 500 7 163 S 1 133.16 57 547 2003-03-31
Chambers Sandton
Foreshore,
ENS Building 323 000 18 288 S 1 163.60 215 396 2007-01-31
Cape Town
Georgian
Georgian Crescent Crescent, 85 000 6 433 S 1 135.87 44 844 2003-03-31
Bryanston
Harrowdene Office Woodmead,
780 000 42 080 S 1 143.13 345 044 2004-10-01
Park Sandton
Riverwoods Office Civin Drive,
155 000 10 873 S 1 140.32 43 400 2003-03-31
Park Bedfordview
The Woodlands Woodmead,
2 505 000 114 574 S 1 159.35 1 764 360 2012-12-21
Office Park Sandton
Industrial 430 950 30 141 67.10 161 987
20% of N1 Business
Midrand 160 000 15 298 A 1 66.96 78 295 2007-12-01
Park
30% of White Road
Joint Venture, Cape Town 24 450 4 065 A 2 83.51 19 300 2009-01-08
Retreat
25% of Montague
Cape Town 246 500 10 778 A 1 61.12 64 392 2006-12-19
Business Park
TOTAL 16 785 575 869 049 136.73 9 499 540
* Transfer of the Greenacres property remains subject to conveyancing, but is expected imminently.
** As at 31 December 2013.
^ Calculated based on pro rata rentable area.
A. Part of the Acucap property portfolio.
S. Part of the Sycom property portfolio.
1. Valued by P. Parfitt of Quadrant Properties (Pty) Ltd, an independent registered valuer, registered in terms of the Property
Valuer's Professional Act, No. 47 of 2000.
2. Valued by MRB.Gibbons of MillsFitchet Magnus Penny CC, an independent registered valuer registered in terms of the
Property Valuer's Professional Act, No. 47 of 2000.
10. FORECAST FINANCIAL INFORMATION
Depending on the number of Offer acceptances, Acucap may, following the implementation
of the Offer, obtain control of Sycom (where "control" bears the meaning as defined in
IFRS 10) and accordingly, Sycom is consolidated into the Acucap group results from
1 May 2014, on the assumption that all conditions precedent are fulfilled or waived on or before
5 May 2014 (being the date of the general meeting of Acucap Shareholders and holders of Acucap
Debentures (:Acucap Debenture Holders") ("Acucap General Meetings")).
In light of the above, the forecast financial information has been prepared on the Enlarged
Acucap, assuming that Acucap acquires 100% of the Sycom Units in issue and therefore that
Sycom is consolidated into the Enlarged Acucap for the 11 months commencing on
1 May 2014.
Accepting Sycom Unitholders will no longer be invested directly in Sycom but will instead
acquire an indirect interest in Sycom through an investment in the Enlarged Acucap. The
forecast financial information of the Enlarged Acucap may therefore be useful to Sycom
Unitholders in evaluating whether to accept the Offer in respect of all, some or none of their
Sycom Units.
The table below sets out the forecast financial information in respect of:
(i) Acucap for the 12 months ending 31 March 2014 ("Acucap 2014 Forecast");
(ii) Sycom for the 12 months ending 31 March 2014 ("Sycom 2014 Forecast"); and
(iii) the Enlarged Acucap for the 12 months ending 31 March 2015 (including the
consolidation of Sycom for the 11 months from 1 May 2014 as discussed above)
("Enlarged Acucap 2015 Forecast"),
(collectively ,"the Summary Forecast Financial Information")
The Summary Forecast Financial Information has been extracted from the forecast
statement of comprehensive income of Acucap and Sycom, as included in the circular to
Acucap Linked Unitholders to be dated on or about 31 March 2014 ("Circular")
("Forecast Financial Information") and should be read in conjunction with the Forecast
Financial Information and the independent reporting accountants' report thereon, as set
out in the Circular.
This Summary Forecast Financial Information, the Forecast Financial Information, the
assumptions on which the Forecast Financial Information is based and the financial
information from which the Forecast Financial Information is prepared, are the
responsibility of the directors of Acucap.
2014 2015
Acucap 2014 Sycom 2014 Enlarged Acucap
Forecast Forecast 2015 Forecast
R'000 R'000 R'000
Revenue 670 393 662 445 1 388 564
Operating expenses (52 960) (140 461) (205 296)
Net rental and related revenue 617 434 521 984 1 183 267
Investment income 29 580 19 306 19 889
Fair value changes 801 045 467 384 -
Net finance costs (735 817) (124 820) (376 827)
Loss on disposal of interest in associate - - (272 717)
Loss on de-recognition of SPFM management contract - - (245 109)
Gain on acquisition - - 1 014 414
Profit before taxation 712 248 883 853 1 322 918
Taxation (4 039) (556) -
Profit for the period 708 209 883 297 1 322 918
Fair value gain on listed investment (77 898) - -
Net change in fair value of derivative instrument at fair
15 254 34 881 -
value through profit and loss
Other comprehensive income net of taxation (62 644) 34 881 -
Total comprehensive income net of taxation 645 565 918 178 1 322 918
Adjusted for accounting allocations** (83 202) (499 603) (463 101)
Sycom distributable earnings for the month of April
- - 29 475
2014 not consolidated for accounting purposes***
Distributable earnings 562 363 418 575 889 292
Basic and diluted earnings per share/Acucap no par 404.48 441.36 538.03
value share (cents)
Basic and diluted headline earnings per share /Acucap 70.67 230.93 -
no par value share (cents)
Distribution per share/Acucap no par value share 321.80 184.19 343.06
Number of shares/Acucap no par value shares in issue 183 511 200 131 260 740
('000)
Number of Acucap no par value shares in issue net of
those shares issued in terms of the BEE transaction* 175 090 200 131 252 319
('000)
Weighted average number of Acucap no par value
shares in issue ('000) 175 090 235 474 245 883
*Earnings per Acucap no par value share is calculated net of 8 420 994 Acucap no par value shares held by Thesele Group
Proprietary Limited ("Thesele") that were issued pursuant to a BEE transaction in 2006. Due to restrictions placed on
Thesele's ability to dispose of these Acucap no par value shares and the surety provided by Acucap to the financier of the
BEE transaction, these Acucap no par value shares are treated as not having been issued for accounting purposes.
**Comprises straight-lining adjustments, fair value adjustments (in respect of 2014 only) and loss on disposal of interest in
associate, loss on de-recognition of SPFM management contract and gain on acquisition (in respect of 2015 only).
***Acucap is entitled to the distributable earnings in respect of Sycom for the 1 month ending 30 April 2014. As a result of
this the distributable earnings in respect of Sycom for the 1 month ending 30 April 2014 is included in the calculation of the
distributable earnings amount in respect of the Enlarged Acucap for the 12 months ending 31 March 2015.
Notes and assumptions:
The basis of preparation and selected assumptions used in the compilation of the Summary Forecast
Financial Information (as required in terms of section 13.11(b)(ii) of the JSE Listings Requirements) are set
out below. Acucap Linked Unitholders are referred to the Forecast Financial Information contained in the
Circular for all assumptions on which the Forecast Financial Information and Summary Financial Information
has been derived.
1. The Summary Forecast Financial Information has been prepared on the assumption that all
regulatory requirements have been fulfilled in respect of the Acucap Restructure on or before
1 May 2014.
2. The Enlarged Acucap 2015 Forecast has been prepared based on the assumption that the holders of
all the Offer Units accept the Offer and the financial results of Sycom are consolidated into the
Enlarged Acucap with effect from 1 May 2014 (i.e. for 11 months). Net profit of R28.03 million in
relation to Sycom for the 1 month ended 30 April 2014 is therefore not included in the forecast net
profit of the Enlarged Acucap for 2015 (as this is earned by Sycom prior to the assumed effective
date of 1 May 2014). Further detail on Sycom's forecast results for the 1 month ended 30 April 2014
are included in the Circular.
3. As Acucap will acquire the Offer Units cum distribution (i.e. the Offer Units will qualify for the full
distribution for the six months ended 30 September 2014, including the month of April 2014), the
distributable income of the Enlarged Acucap for the 2015 financial year is calculated after adding in
the distributable income of Sycom for the month of April 2014.
4. The Summary Forecast Financial Information has been prepared utilising the accounting policies of
Acucap and is based on the following:
a. budgets prepared by the property management of Acucap;
b. the historical financial information of Acucap and Sycom ("Historical Financial
Information"); and
c. the Acucap directors' knowledge of and experience in the property industry.
5. Contracted revenue comprises rental income (net of straight lining adjustments) and expense
recoveries from existing tenants and has been based on existing lease agreements for the duration
of such agreements.
6. Uncontracted revenue in respect of the Summary Forecast Financial Information is as follows:
a. Acucap 2014 Forecast: 9.45% of total gross rental income of Acucap for the 12 months
ending 31 March 2014;
b. Sycom 2014 Forecast: 8.85% of the total gross rental income of Sycom for the 12 months
ending 31 March 2014; and
c. Enlarged Acucap 2015 Forecast: 29.46% of the total gross rental income of the Enlarged
Acucap for the 12 months ending 31 March 2015.
7. Operating expenses are based on the Historical Financial Information, supplier service contracts
(where available) and the Acucap directors' knowledge of and experience in the property industry.
8. Finance costs are calculated using the effective interest rate per loan agreement over the period of
the forecasts.
9. Distributable earnings are calculated assuming that the following will be declared to Acucap Security
Holders as a distribution:
a. Acucap 2014 Forecast: Not less than 99% of the Acucap distributable income for the 12
months ending 31 March 2014;
b. Sycom 2014 Forecast: 100% of the Sycom distributable income for the 12 months ending
31 March 2014; and
c. Enlarged Acucap 2015 Forecast: 100% of Enlarged Acucap distributable income for the 12
months ending 31 March 2015.
11. PRO FORMA FINANCIAL EFFECTS ON ACUCAP
Set out below is the summary pro forma financial effects on the net asset value and tangible
net asset value per Acucap Linked Unit (or, if the Acucap Restructure is approved, per
Acucap no par value share) after the acquisition by Acucap of all Offer Units.
The summary pro forma financial effects of Acucap are the responsibility of the directors of
Acucap and have been prepared for illustrative purposes only, to provide information to
Acucap Linked Unitholders on how the implementation of the Offer may have impacted on
the financial position of Acucap as at 30 September 2013. In addition, this information may
be useful to Sycom Unitholders in providing them with information on the pro forma
financial position of the Enlarged Acucap (in which they will become invested, should they
accept the Offer).
Due to their nature, the summary pro forma financial effects may not fairly present
Acucap's financial position and/or changes in Acucap Linked Unitholders' capital after
implementation of the Offer.
The summary pro forma financial effects have been prepared using accounting policies that
comply with International Financial Reporting Standards and that are consistent with those
applied in the audited, published financial statements of Acucap for the year ended 31
March 2013.
(1) (2) (3)
Acucap before Acucap after
Change
implementation implementation
(%)
of the Offer of the Offer
Net asset value per Acucap Linked Unit/Acucap no par
value share (cents) 3 908.47 4 104.80 5.0
Tangible net asset value per Acucap Linked Unit/Acucap no
par value share (cents) 3 768.48 4 104.80 8.9
Acucap Linked Units/Acucap no par value share in issue
(‘000) 175 090 252 319 44.1
Notes and assumptions:
1. The net asset value and tangible net asset value per Acucap Linked Unit per column (1) have been
extracted from the reviewed interim financial information of Acucap as at 30 September 2013.
2. The net asset value and tangible net asset value per Acucap Linked Unit/Acucap no par value share
per column (2) have been calculated after adjusting for the following:
a. assuming that 100% of Sycom Unitholders (other than SPFM and Acucap) accept the Offer in
respect of all their Sycom Units;
b. consolidation of the consolidated statement of financial position of Sycom into Acucap,
which is based on the statement of financial position of Sycom, as extracted from the
reviewed interim financial information of Sycom as at 30 September 2013. The reviewed
statement of financial position of Sycom as at 30 September 2013 has been adjusted for
the acquisition by Sycom of, inter alia, the 50% undivided share in the Somerset Mall from
AECI Pension Fund and the subsequent disposal thereof to Hyprop Investments Limited
which were effective on 1 October 2013 and further information pertaining to which are
included in a circular posted to Sycom Unitholders on 14 June 2013;
c. elimination of Acucap's existing investment in Sycom at cost;
d. de-recognition of the intangible asset held by Acucap as a result of Acucap's right to earn
management and administrative fees from Sycom in terms of the Sycom property
management agreement, Sycom asset management agreement and Retail international
property management agreement;
e. de-recognition of the inter-company distribution payable by Sycom to Acucap on Monday,
9 December 2013;
f. payment of estimated transaction costs by Acucap amounting to R11.7 million, of which
R10.8 million is written off against stated capital and the remaining R864 000 expensed;
g. payment of estimated transaction costs by Sycom amounting to R2.3 million, all of which
are expensed;
h. elimination of Sycom Unitholders interest, amounting to R2.4 million, on consolidation by
Acucap;
i. issue of the Offer Consideration at the fair value of R39.25 per Acucap security (calculated
as the share price per Acucap Linked Unit on 17 March 2014 (being the last practicable
date per the Circular), resulting in a R3.031 million adjustment to stated capital;
j. loss on deemed disposal by Acucap of its initial investment in Sycom at fair value; and
k. gain from a bargain purchase arising as a result of the acquisition contemplated by the
Offer amounting to R1.014 million, net of the de-recognition of the intangible asset held by
Acucap as detailed in note 3b above and transaction costs expensed by Acucap and Sycom
amounting to R3.164 million.
3. The percentage change is measured as the percentage difference between column (1) and
column (2).
12. SALIENT DATES AND TIMES
2014
Record date to be sent: Thursday, 20 March
(i) in respect of Acucap Linked Unitholders, the Circular; and
(ii) in respect of Sycom Unitholders, the Offer Document.
("Record Date")
Publication of this announcement on SENS Wednesday, 26 March
Posting of: Monday, 31 March
(i) the Circular to Acucap Linked Unitholders and
(ii) the Offer Document to Sycom Unitholders.
Offer Opening Date at 9:00 on Monday, 31 March
Last day to trade in Acucap Linked Units in order to be eligible to
vote at the Wednesday, 16 April
Acucap General Meetings
Record date in order to be eligible to participate in and vote at the Acucap Friday, 25 April
General Meetings ("Acucap Record Date")
Acucap General Meetings to be held at 9:00 on Monday, 5 May
Release of announcement on SENS regarding: Monday, 5 May
(i) whether the condition precedent to the Offer that Acucap
Shareholders and Acucap Debenture Holders (as appropriate)
approve the acquisition by Acucap of the Offer Units and the
issue of Offer Consideration, has been fulfilled; and
(ii) updating Sycom Unitholders as to the status of the Acucap
Restructure and the nature of the Offer Consideration (that is,
Acucap Linked Units or Acucap no par value shares)
("Acucap Update Announcement")
Offer becomes unconditional on Tuesday, 6 May
Acucap Update Announcement published in the South African press on Tuesday, 6 May
Last date for Sycom Unitholders to trade in order to be recorded in the Friday, 9 May
Sycom register on the Offer Closing Date
Listing and commencement of trading of 133 153 525 Sycom Receipts on the Monday, 12 May
JSE, under share code SYCR and ISIN number ZAE000189551 at 9:00 (note 3)
Offer Closing Date at 12:00 on Friday, 16 May
Sycom Units held by Accepting Sycom Unitholders to be transferred into the Friday, 16 May
Escrow Account with effect from close of business on
Monday, 19 May
Holders of dematerialised Sycom Units will have their accounts at their CSDP
or broker automatically credited with their Sycom Receipts on
Monday, 19 May
Holders of certificated Sycom Units will have Sycom Receipts credited to an
electronic register at the transfer secretaries on
Declaration date in respect of the Final Distributions Thursday, 5 June
Finalisation date in respect of the Final Distributions Thursday, 12 June
Last date to trade in order to be recorded in Acucap's register and/or Friday, 20 June
Sycom's register (as applicable) on the Final Distributions Record Date
Last day to trade in Sycom Receipts under the ISIN number ZAE000189551 Friday, 20 June
and share code SYCR at the close of business on
Listing of the Offer consideration on the JSE at 9:00 on Monday, 23 June
Suspension of the Sycom Receipts on the JSE from commencement of trade Monday, 23 June
on
The date on which Acucap Linked Unitholders and Sycom Unitholders must Friday, 27 June
be recorded in the Acucap and Sycom registers (respectively) to receive the
Final Distributions ("Final Distributions Record Date") at 12:00 on
The date on which holders of Sycom Receipts must be recorded in the Friday, 27 June
register of Sycom Receipt holders in order to receive the Offer Consideration
at 12:00 on
The date of transfer of the Sycom Units acquired pursuant to the Offer into Monday, 30 June
the name of Acucap (note 4)
Pay date in respect of the Final Distributions (note 4) Monday, 30 June
Consideration Pay Date (note 4) Monday, 30 June
Termination of Sycom Receipts and Acucap Linked Units at the Monday, 30 June
commencement of business on
Notes:
1. All times quoted in this announcement are local times in South Africa.
2. The above dates and times are subject to change. Any material changes will be released on SENS and in
the South African press.
3. The maximum number of Sycom Receipts will be listed and commence trading on Monday, 12 May 2014,
calculated assuming that 100% of Sycom Unitholders accept the Offer.
4. The Consideration Pay Date of 30 June 2014 is dependent on the fulfilment and/or waiver of all conditions
precedent to the Offer as set out in paragraph 4.5. In the event that the conditions precedent to the Offer
are not fulfilled and/or waived as at this date, the Consideration Pay Date will be extended accordingly.
Any such amendment will be announced on SENS and in the South African press.
13. FURTHER DOCUMENTATION
The Offer Document, which contains full details of the terms of the Offer, together with
forms of acceptance, transfer and surrender will be posted on or about Monday,
31 March 2014, to all Sycom Unitholders registered as such on the Record Date.
The Circular, which contains full details of the terms of the proposed acquisition by Acucap
and the Acucap Restructure, and includes the notices of the General Meetings, forms of
proxy and forms of surrender will also be posted on or about Monday, 31 March 2014, to all
Acucap Linked Unitholders registered as such on the Record Date.
The Offer Document and Circular will both also be available for download on the repective
websites of Acucap (www.acucap.co.za) and Sycom (www.sycom.co.za) with effect from the
date of posting.
14. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Following this announcement of the final terms of the Offer, including the unaudited pro
forma financial effects and salient dates, Acucap Linked Unitholders and Sycom Unitholders
are no longer required to exercise caution when dealing in their Acucap Linked Units and
Sycom Units respectively.
Cape Town
26 March 2014
Corporate Advisor and Sponsor to Acucap and Sycom
QUESTCO
Legal and tax advisor to Acucap
DLA CLIFFE DEKKER HOFMEYR
Legal advisor to Sycom and SPFM
BOWMAN GILFILLAN
Independent reporting accountants to Acucap
KPMG
Independent Expert on the Offer
RAND MERCHANT BANK (A DIVISION OF FIRSTRAND BANK LIMITED)
Competition advisor to Acucap and Sycom
VANI CHETTY
Date: 27/03/2014 07:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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