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Rights offer declaration announcement
FORTRESS INCOME FUND LIMITED
(Incorporated in the Republic of South Africa)
Registration number 2009/016487/06
JSE share codes: FFA ISIN: ZAE000141313
FFB ISIN: ZAE000141321
(Approved as a REIT by the JSE)
(“Fortress” or “the company”)
RIGHTS OFFER DECLARATION ANNOUNCEMENT
Introduction
Fortress intends undertaking a rights offer to Fortress linked unitholders in order to raise approximately R1 billion (“the
rights offer”).
The proceeds from the rights offer are expected to be used to finance the company’s pipeline of acquisitions and
developments as well as for strategic opportunities.
Salient terms of the rights offer
Fortress A linked unitholders will be offered a total of 43 856 417 Fortress A linked units (“new Fortress A linked
units”) at an issue price of R13.90 each in the ratio of 11.52800 new Fortress A linked units for every 100 Fortress A
linked units held by them on Friday, 23 May 2014.
Fortress B linked unitholders will be offered a total of 43 856 417 Fortress B linked units (“new Fortress B linked
units”) at an issue price of R8.90 each in the ratio of 11.52800 new Fortress B linked units for every 100 Fortress B linked
units held by them on Friday, 23 May 2014.
The JSE has granted listings for the letters of allocation and the rights offer linked units as follows:
- 43 856 417 renounceable nil paid letters of allocation in respect of new Fortress A linked units with effect from the
commencement of business on Monday, 19 May 2014 to close of business on Friday, 30 May 2014, both days
inclusive, in the “Real Estate Investment Trust” sector of the JSE, under JSE share code: “FFAN” and ISIN:
ZAE000190617;
- 43 856 417 renounceable nil paid letters of allocation in respect of new Fortress B linked units with effect from the
commencement of business on Monday, 19 May 2014 to close of business on Friday, 30 May 2014, both days
inclusive, in the “Real Estate Investment Trust” sector of the JSE, under JSE share code: “FFBN” and ISIN:
ZAE000190625; and
- 43 856 417 new Fortress A linked units with effect from Monday, 2 June 2014, at an issue price per rights offer linked
unit of R13.90 each in the “Real Estate Investment Trust” sector of the JSE, under the abbreviated name: “Fortress A”,
JSE share code: “FFA” and ISIN: “ZAE000141313”; and
- 43 856 417 new Fortress B linked units with effect from Monday, 2 June 2014, at an issue price per rights offer linked
unit of R8.90 each in the “Real Estate Investment Trust” sector of the JSE, under the abbreviated name: “Fortress B”,
JSE share code: “FFB” and ISIN: “ZAE000141321”.
Fortress has not received any irrevocable undertakings from existing linked unitholders to participate in the rights offer.
Resilient Property Income Fund Limited (“Resilient”) has agreed to underwrite all of the new Fortress A linked units and
the new Fortress B linked units (collectively, “rights offer linked units”), to the value of R999 926 308, in consideration
for an underwriting fee of R2 500 000 (an amount equivalent to 0.25% of Resilient’s commitment on the rights offer
linked units). The effect of this underwriting commitment is that the rights offer is fully underwritten. Accordingly, the
rights offer will be fully subscribed and is therefore not conditional on a minimum subscription.
Excess linked units
Fortress linked unitholders will have the right to apply for any excess rights offer linked units not taken up by other linked
unitholders subject to such rights being transferable upon renunciation of the letters of allocation, and any such excess
linked units will be attributed equitably, taking cognisance of the number of linked units and rights held by the unitholder
just prior to such allocation, including those taken up as a result of the rights offer, and the number of excess rights
applied for by such unitholder.
If you are a certificated linked unitholder and you wish to apply for excess rights offer linked units you must complete the
form of instruction attached to the rights offer circular (defined below) in accordance with the instructions contained
therein. If you are a dematerialised linked unitholder and you wish to apply for excess rights offer linked units you must
instruct your CSDP or broker as to the number of excess rights offer linked units for which you wish to apply.
Important dates and times for linked unitholders
2014
Last day to trade in Fortress linked units in order to participate in the rights offer Friday, 16 May
Listing and trading of letters of allocation in respect of the new Fortress A linked units on
the JSE under JSE share code: “FFAN” and ISIN: ZAE000190617 Monday, 19 May
Listing and trading of letters of allocation in respect of the new Fortress B linked units on
the JSE under JSE share code: “FFBN” and ISIN: ZAE000190625 Monday, 19 May
Fortress linked units commence trading on the JSE ex-rights offer entitlement Monday, 19 May
Rights offer circular and form of instruction posted to certificated linked unitholders Tuesday, 20 May
Record date for determination of linked unitholders entitled to participate in the rights offer
(initial record date) Friday, 23 May
Dematerialised linked unitholders will have their accounts at their CSDP or broker
automatically credited with their entitlement Monday, 26 May
Certificated linked unitholders on the register will have their entitlement credited to a
nominee account held with the transfer secretaries Monday, 26 May
Rights offer opens at 09:00 Monday, 26 May
Rights offer circular posted to dematerialised linked unitholders Tuesday, 27 May
Last day to trade letters of allocation on the JSE Friday, 30 May
Maximum number of rights offer linked units listed and trading therein commences on the
JSE Monday, 2 June
Rights offer closes at 12:00 Friday, 6 June
Record date for letters of allocation (final record date) Friday, 6 June
New Fortress linked units issued Monday, 9 June
Dematerialised linked unitholders’ accounts updated and debited by CSDP or broker (in
respect of entitlements to rights offer linked units) Monday, 9 June
Results of rights offer announced on SENS Monday, 9 June
Results of rights offer announced in the press Tuesday, 10 June
Certificates posted to certificated linked unitholders (in respect of the rights offer linked
units) Wednesday, 11 June
Refunds (if any) to certificated linked unitholders in respect of unsuccessful excess linked
unit applications made Wednesday, 11 June
Dematerialised linked unitholders’ accounts updated and debited by their CSDP or broker
(in respect of successful excess linked unit applications) Wednesday, 11 June
Notes:
1. All references to dates and times are to local dates and times in South Africa.
2. Dematerialised linked unitholders are required to inform their CSDP or broker of their instructions in terms of the rights offer in the manner and
time stipulated in the agreement governing the relationship between the linked unitholder and his/her/its CSDP or broker.
3. Linked unit certificates may not be dematerialised or rematerialised between Monday, 19 May 2014 and Friday, 23 May 2014, both days
inclusive.
4. Dematerialised linked unitholders will have their accounts at their CSDP or broker automatically credited with their rights and certificated
linked unitholders will have their rights credited to a nominee account at Link Market Services South Africa Proprietary Limited.
5. CSDP’s effect payment in respect of dematerialised linked unitholders on a delivery-versus-payment method.
Pro forma financial effects of the rights offer
The table below sets out the pro forma financial effects of the rights offer based on Fortress’ published interim results for
the six months ended 31 December 2013. These financial effects are the responsibility of the directors of Fortress and they
have been prepared for illustrative purposes only, in order to provide information about the financial position and results
of Fortress assuming the rights offer had been implemented on 31 December 2013 for purposes of the pro forma
consolidated statement of financial position and on 1 July 2013 for purposes of the pro forma consolidated statement of
comprehensive income, using the accounting policies as at 31 December 2013.
The pro forma consolidated statement of comprehensive income and pro forma consolidated statement of financial
position of the Fortress group for the six months ended 31 December 2013 and the explanatory notes thereto are set out in
Annexure 3 to the rights offer circular and should be read in conjunction with the reporting accountants’ report thereon
reproduced in Annexure 4 of the rights offer circular.
Due to its nature, the pro forma financial information (collectively, the pro forma financial effects, the pro forma
consolidated statement of comprehensive income and the pro forma consolidated statement of financial position) may not
give a fair reflection of Fortress’ financial position, changes in equity, results of operations or cash flows subsequent to
the rights offer.
The table below reflects the pro forma financial effects of the rights offer per Fortress A linked unit and per Fortress B
linked unit:
Fortress before the Fortress after
rights offer the rights offer % change
Basic earnings per A share (cents) 42.80 38.14 (10.9)
Basic earnings per B share (cents) 42.80 38.14 (10.9)
Basic earnings per A linked unit (cents) 101.61 96.95 (4.6)
Basic earnings per B linked unit (cents) 61.69 58.59 (5.0)
Headline earnings per A share (cents) 45.30 40.36 (10.9)
Headline earnings per B share (cents) 45.30 40.36 (10.9)
Headline earnings per A linked unit (cents) 104.11 99.17 (4.7)
Headline earnings per B linked unit (cents) 64.19 60.81 (5.3)
Distribution per A linked unit (cents) 58.81 58.81 -
Distribution per B linked unit (cents) 18.89 20.45 8.3
NAV per combined linked unit (R) R20.32 R20.58 1.3
NAV per A linked unit (R) R14.45 R14.45 -
NAV per B linked unit (R) R5.87 R6.13 4.4
Notes and assumptions:
1. Fortress has no dilutionary instruments in issue.
2. The figures set out in the “Fortress before the rights offer” column have been extracted, without adjustment, from the interim results of Fortress
for the six months ended 31 December 2013.
3. The rights offer is assumed to be implemented on 31 December 2013 for NAV purposes and on 1 July 2013 for earnings per share and headline
earnings per share purposes. The rights issue will raise approximately R1 billion through the issue of 43 856 417 Fortress A linked units at
R13.90 per new Fortress A linked unit and 43 856 417 Fortress B linked units at R8.90 per new Fortress B linked unit.
4. Estimated once-off transaction costs of R3.85 million are assumed to be incurred by Fortress and debited to share premium.
5. Although the proceeds of the rights offer are expected to be used to finance the company’s pipeline of acquisitions and developments as well as
for strategic opportunities, there are no firm commitments at the date of this circular to deploy the proceeds of the rights offer. Accordingly, the
cash received in terms of the rights offer is assumed to reduce interest-bearing borrowings.
Foreign linked unitholders
Introduction
Foreign linked unitholders may be affected by the rights offer, having regard to prevailing laws in their relevant
jurisdictions. Such foreign linked unitholders should inform themselves about and observe any applicable legal
requirements of such jurisdiction in relation to all aspects of the rights offer circular (defined below) that may affect them,
including the rights offer. It is the responsibility of each foreign linked unitholder to satisfy himself as to the full
observation of the laws and regulatory requirements of the relevant foreign jurisdiction in connection with the rights offer,
including the obtaining of any governmental, exchange or other consents or the making of any filing which may be
required, the compliance with other necessary formalities and the payment of any issue, transfer or other taxes or other
requisite payments due in such jurisdiction. The rights offer is governed by the laws of South Africa and is subject to
applicable laws and regulations, including the Exchange Control Regulations.
Affected foreign linked unitholders
Any Fortress linked unitholder who is in doubt as to his position with respect to the rights offer in any jurisdiction,
including, without limitation, his tax status, should consult an appropriate independent professional adviser in the relevant
jurisdiction without delay. Foreign linked unitholders are reminded that they may dispose of their Fortress linked units on
or prior to the last day to trade, in which case they will not participate in the rights offer.
Foreign linked unitholders accordingly must take their own advice on whether they are entitled, after the rights offer, to
continue to beneficially hold any Fortress linked units distributed to them and take the appropriate action in accordance
with that advice.
Note to U.S. linked unitholders
The rights offer linked units will not be registered with the U.S. Securities and Exchange Commission (“SEC”) under the
U.S. Securities Act of 1933, as amended, or any U.S. state securities laws. Neither the SEC nor any U.S. federal or state
securities commission has registered, approved or disapproved the rights offer linked units or passed comment or opinion
upon the accuracy or adequacy of the rights offer circular (defined below). Any representation to the contrary is a
criminal offence in the U.S.
Fortress linked unitholders who are citizens or residents of the U.S. are advised that the rights offer linked units have not
been and will not be registered under the U.S. Securities Exchange Act of 1934, as amended.
Circular
Further details of the rights offer will be set out in the circular to Fortress linked unitholders (“the rights offer circular”)
which is expected to be posted to certificated linked unitholders on Tuesday, 20 May 2014 and to dematerialised linked
unitholders on Tuesday, 27 May 2014. The rights offer circular will be made available on the company’s website
www.fortressfund.co.za from Friday, 30 May 2014.
9 May 2014
Corporate advisor, legal advisor and sponsor
Java Capital
Reporting accountants and auditors
Deloitte
Date: 09/05/2014 04:08:00 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.
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