OCTODEC INVESTMENTS LIMITED - Posting of circulars and firm intention of Octodec to acquire the entire linked unit capital of Premium

Release Date: 01/07/2014 16:11
Code(s): OCT PMM
 
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Posting of circulars and firm intention of Octodec to acquire the entire linked unit capital of Premium

Octodec Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1956/002868/06)
Share Code: OCT
ISIN Code: ZAE000005104
(“Octodec”)
REIT status approved


Premium Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/003601/06)
Share Code: PMM
ISIN Code: ZAE000009254
(“Premium”)
REIT status approved



Posting of circulars and additional information pertaining to the firm intention of Octodec to acquire
the entire linked unit capital of Premium that it does not already own (“the Proposed Transaction”)

1.   Posting of circulars

     Further to the firm intention announcement that was released on the stock exchange news service
     (“SENS”) of the JSE Limited on 10 June 2014 (“Firm Intention Announcement”) regarding the
     Proposed Transaction and the proposed capital restructure of Octodec (“Octodec Capital
     Restructure”), linked unitholders of Octodec (“Octodec linked unitholders”) and linked unitholders of
     Premium (“Premium linked unitholders”) (collectively, “linked unitholders”) are advised that the
     following documentation has been posted today, 1 July 2014:

     -   the circular to Octodec linked unitholders (“Octodec Circular”), including revised listing
         particulars, the notices of the general meetings of Octodec shareholders and Octodec debenture
         holders (“the Octodec General Meetings”) to be convened for the purposes of, inter alia,
         approving the Proposed Transaction and the Octodec Capital Restructure, the forms of proxy and
         a form of surrender and transfer; and

     -   the circular to Premium linked unitholders (“Premium Circular”), including the notice of the
         general meeting of Premium linked unitholders (“the Scheme Meeting”) to be convened for the
         purposes of, inter alia, approving the scheme of arrangement in terms of section 114(1)(d) of the
         Companies Act, 2008 (No. 71 of 2008), as amended (“the Scheme”), proposed by the
         independent board of directors of Premium between Premium and Premium linked unitholders,
         in terms of which the Proposed Transaction will be effected, the form of proxy and a form of
         surrender and transfer.
     
     The Octodec Circular will be available on the Octodec website (www.octodec.co.za) and the
     Premium Circular will be available on the Premium website (www.premiumproperties.co.za) from
     today, 1 July 2014.

2.   Indicative support

     Premium linked unitholders holding or controlling, directly and indirectly, 26 965 562 Premium
     linked units, comprising approximately 30.8% of Premium linked units able to vote at the Scheme
     Meeting, have provided letters of support to vote in favour of the Scheme. The Wapnick Family
     which holds 29.9% of Premium linked units are precluded from voting on the Scheme in terms of
     section 115(4) of the Companies Act, but are fully supportive thereof.

     Octodec linked unitholders holding or controlling, directly and indirectly, 71 195 453 Octodec linked
     units, comprising approximately 60.7% of the Octodec linked units able to vote at the Octodec
     General Meetings, have provided letters of support to vote in favour of the Proposed Transaction.

     Further details relating to the abovementioned letters of support are contained in the Octodec and
     Premium Circulars.

3.   Financial information

3.1. Pro forma financial effects for Premium

     Linked unitholders are advised that the pro forma financial information of Premium, as included in
     the Firm Intention Announcement, has been adjusted pursuant to the review process by the
     independent reporting accountants, and a summary of the reviewed pro forma financial information
     of Premium as included in the Premium Circular is presented in the table below.

     The information presented in the table below is a summary of the pro forma financial effects of the
     Proposed Transaction on Premium’s earnings, headline earnings, distributable earnings, net asset
     value (“NAV”) and tangible net asset value (“TNAV”) per linked unit (“Premium Pro Formas”) that has
     been summarised from the pro forma statement of financial position and statement of
     comprehensive income of Premium as included in the Premium Circular.

     The Premium Pro Formas are the responsibility of the Premium Board and have been presented for
     illustrative purposes only, to provide information to Premium linked unitholders on how the
     implementation of the Proposed Transaction may have impacted on Premium linked unitholders had
     the transaction been effected on 28 February 2014 for statement of financial position purposes and
     1 September 2013 for statement of comprehensive income purposes. Because of their nature, the
     Premium Pro Formas may not fairly present the effect of the Proposed Transaction on Premium’s
     linked unitholders.

     The Premium Pro Formas are based on Premium’s reviewed results for the six months ended 28
     February 2014 and have been prepared in accordance with Premium’s accounting policies and in
     compliance with IFRS.

                                          Before Proposed       After Proposed            Change (%)
                                                     (1)                (2) (3)
                                          Transaction           Transaction

NAV and TNAV per linked unit /
                                                  2 010.4              2 385.2              18.6%
share (cents)

Distributable earnings per linked                   84.5                  94.0              11.2%
unit (cents)

Diluted distributable earnings per
                                                   84.5                   92.0               8.9%
linked unit / share (cents)

Basic earnings per linked unit
               (4)                                 79.3                 494.9              524.1%
/share (cents)

Diluted earnings per linked unit /
              (4)                                  79.3                 484.1              510.5%
share (cents)

Headline earnings per linked unit
                (4)                                87.8                 173.0               97.0%
/ share (cents)

Diluted headline earnings per
                            (4)                    87.8                 169.2              92.7%
linked unit / share (cents)

Weighted average number of
linked units / shares in issue                 156 773               231 262               47.5%
(‘000)

Number of linked units / shares in
                                               156 773               236 403               50.8%
issue (‘000)



The “Before Proposed Transaction” and “After Proposed Transaction” column above are not
comparable for a Premium linked unitholder because the “After Proposed Transaction” column has
not been adjusted for the swap ratio of 88.5 Octodec linked units per 100 Premium linked units held
by a Premium linked unitholder (“the Swap Ratio”). The table below illustrates the comparable NAV,
TNAV and distributable earnings per linked unit after the Swap Ratio has been applied.

                                      Before Proposed       After Proposed            Change (%)
                                                  (1)              (2) (3)
                                         Transaction        Transaction

NAV and TNAV per linked unit /
                                                2 010.4              2 110.9                5.0%
share (cents)

Distributable earnings per linked
                                                   84.5                  83.2             (1.5%)
unit (cents)

Diluted distributable earnings per
                                                   84.5                  81.4             (3.7%)
linked unit / share (cents)



Notes and assumptions:

Linked unitholders are referred to the pro forma financial information contained in the Premium
Circular for all assumptions on which the Premium Pro Formas have been derived.

     1. The "Before Proposed Transaction" column has been reviewed by Grant Thornton, and an
        unmodified review conclusion was issued.

     2. The pro forma statement of comprehensive income is prepared on the basis that the Proposed
        Transaction took place on 1 September 2013.

     3. The pro forma statement of financial position is prepared on the basis that the Proposed
        Transaction took place on 28 February 2014.

     4. The undiluted and diluted “After Proposed Transaction” earnings and headline earnings per
        linked unit are not comparable to the undiluted and diluted “Before Proposed Transaction”
        earnings and headline earnings per linked unit, respectively, because they have been adjusted for
        once-off items of a capital nature that are not distributable to Premium linked unitholders, such
        as the gain on acquisition of subsidiary and reversal of deferred tax.

     5. There are no other post balance sheet events which would result in an adjustment for purposes
        of the Premium Pro Formas.

3.2. Pro forma financial effects for Octodec

     The summary of the reviewed pro forma financial information of Octodec as included in the Octodec
     Circular was included in the Firm Intention Announcement.

3.3. Forecast financial information

     The summary of the reviewed forecast statements of comprehensive income of Octodec and
     Premium as included in the Octodec Circular were included in the Firm Intention Announcement.

4.   Salient dates and times

     The salient dates and times relevant to the Proposed Transaction were included in the Firm Intention
     Announcement. Premium linked unitholders are advised that the time of the general meeting of
     Premium linked unitholders has been amended and it will now commence at 13h00 on Thursday, 31
     July 2014.

Pretoria

1 July 2014



Investment Bank, Corporate Advisor and Sponsor to Octodec and Premium

Nedbank Capital



Legal adviser to Octodec and Premium

Tugendhaft Wapnick Banchetti and Partners



Independent reporting accountants to Octodec and Premium

Deloitte & Touche

Date: 01/07/2014 04:11:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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