Wrap Text
Posting of circular and notices of scheme and general meetings
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”)
POSTING OF CIRCULAR, NOTICES OF A COMBINED DEBENTURE HOLDERS GENERAL MEETING, AN “A” DEBENTURE HOLDERS SCHEME MEETING, A “B” DEBENTURE
HOLDERS SCHEME MEETING, A COMBINED ORDINARY SHAREHOLDERS GENERAL MEETING, AN “A” ORDINARY SHAREHOLDERS GENERAL MEETING AND A “B” ORDINARY
SHAREHOLDERS GENERAL MEETING
1. INTRODUCTION
Linked unitholders are advised that the company has on Tuesday, 3 February 2015 posted a circular to linked unitholders
(the “circular”) relating to:
- the conversion of Fortress’ authorised and issued ordinary par value shares to authorised and issued ordinary shares
of no par value;
- the increase of Fortress’ authorised share capital;
- the conversion of the company’s current “A” linked unit capital structure to an “A” ordinary share structure by:
- the delinking of each Fortress “A” ordinary share from a Fortress “A” debenture;
- the cancellation of each “A” debenture and concomitant waiver, for no consideration, by the “A” debenture
holders of their right to be repaid the debt reflected in each “A” debenture or to receive any other form of
compensation;
- the capitalisation of the value allocated to each “A” debenture in the books of account of the company,
equating to the issue price of each “A” debenture, to Fortress’ stated capital account; and
- the termination of the Debenture Trust Deed,
to be effected by way of a scheme of arrangement in terms of section 114 of the Companies Act, 71 of 2008 (the
“Companies Act”) which scheme is being proposed by the company between the company and its “A” debenture
holders (the ““A” debenture scheme”);
- the conversion of the company’s current “B” linked unit capital structure to a “B” ordinary share structure by:
- the delinking of each Fortress “B” ordinary share from a Fortress “B” debenture;
- the cancellation of each “B” debenture and concomitant waiver, for no consideration, by the “B” debenture
holders of their right to be repaid the debt reflected in each “B” debenture or to receive any other form of
compensation;
- the capitalisation of the value allocated to each “B” debenture in the books of account of the company,
equating to the issue price of each “B” debenture, to Fortress’ stated capital account; and
- the termination of the Debenture Trust Deed,
to be effected by way of a scheme of arrangement in terms of section 114 of the Companies Act, which scheme is
being proposed by the company between the company and its “B” debenture holders (the ““B” debenture
scheme”);
- the amendment of Fortress’ Memorandum of Incorporation to enable the change in Fortress’ capital structure;
- the amendment of Fortress’ Debenture Trust Deed to enable the schemes;
- the adoption of a new Memorandum of Incorporation to give effect to the change in Fortress’ capital structure; and
- the subsequent termination of Fortress’ Debenture Trust Deed,
(collectively the “transactions”).
The circular contains:
- a notice convening a combined debenture holders general meeting, to be held at 10:00;
- a notice convening an “A” debenture holders scheme meeting, to be held at the later of 10:15 or 5 minutes after the
completion of the combined debenture holders general meeting;
- a notice convening a “B” debenture holders scheme meeting, to be held at the later of 10:30 or 5 minutes after the
completion of the “A” debenture holders scheme meeting;
- a notice convening a combined ordinary shareholders meeting, to be held at the later of 10:45 or 5 minutes after the
completion of the “B” debenture holders scheme meeting;
- a notice convening an “A” ordinary shareholders general meeting to be held at the later of 11:00 or 5 minutes after
the completion of the combined ordinary shareholders general meeting; and
- a notice convening a “B” ordinary shareholders general meeting to be held at the later of 11:15 or 5 minutes after
the completion of the “A” ordinary shareholders general meeting,
on Thursday, 5 March 2015 at the registered office of Fortress at 3 rd Floor, Rivonia Village, Rivonia Boulevard, Rivonia,
2191, for the purposes of considering and, if deemed fit, passing, with or without modification, the resolutions required to
approve the transactions, including the “A” debenture scheme and the “B” debenture scheme (collectively the “schemes”).
The circular is also available in electronic format on the company’s website at www.fortressfund.co.za.
2. RATIONALE
In terms of the revised section 13 of the JSE Listings Requirements (which has been amended to cater for REIT legislation)
the total consolidated IFRS liabilities of a REIT may not exceed 60% of its total consolidated IFRS assets. The liability
constituted by a company’s issued debentures is (in terms of IFRS) required to be taken into account in the calculation for
the determination of such 60% threshold.
By converting its capital structure, Fortress will, by virtue of the cancellation of its issued debentures, further reduce the
ratio of its total consolidated liabilities to total consolidated assets to 28.61% (calculated as at the last practicable date with
reference to the company’s audited results for the year ended 30 June 2014). This will ensure that the company’s
consolidated liabilities remain below the aforementioned 60% threshold requirement and will also provide the company
with greater flexibility to take on additional debt should the need arise, and thus allow the company to pursue an
acquisitive growth strategy whilst limiting potential shareholder dilution.
Additional benefits in converting the company’s current linked unit capital structure to an all share structure include:
- the alignment of the company’s capital structure with the internationally recognised all equity REIT capital
structures;
- simplifying the administration and accounting treatment of the company’s capital structure; and
- the removal of the cost structure associated with debentures.
3. CONDITIONS PRECEDENT TO THE “A” DEBENTURE SCHEME
The “A” debenture scheme will be subject to the following conditions precedent:
- the approval of the “A” debenture scheme by the requisite majority of “A” debenture holders at the “A” debenture
holders scheme meeting, as contemplated in section 115(2) of the Companies Act;
- if applicable, the approval of the implementation of such resolution by the Court as contemplated in section
115(3)(a) of the Companies Act;
- if applicable, the company not treating the aforesaid resolution as a nullity, as contemplated in section 115(5)(b) of
the Companies Act;
- the requisite majority of “A” and “B” debenture holders collectively approving the relevant resolutions required to
authorise:
- the amendment of the Fortress Debenture Trust Deed;
- the delinking of each of the company’s “A” ordinary shares from an “A” debenture so as to no longer
constitute an “A” linked unit;
- the delinking of each of the company’s “B” ordinary shares from a “B” debenture so as to no longer
constitute a “B” linked unit; and
- the termination of the Debenture Trust Deed, without payment or other compensation to “A” debenture
holders or “B” debenture holders,
at the combined debenture holders general meeting;
- the requisite majority of “A” debenture holders approving the relevant resolutions required to authorise:
- the amendment of the Fortress Debenture Trust Deed;
- the delinking of each of the company’s “A” ordinary shares from an “A” debenture so as to no longer
constitute an “A” linked unit; and
- the termination of the Debenture Trust Deed, without payment or other compensation to “A” debenture
holders,
at the “A” debenture holders scheme meeting;
- the requisite majority of “A” and “B” ordinary shareholders collectively approving the relevant resolutions required
to authorise:
- the par value conversion of the company’s ordinary shares;
- the increase of the company’s authorised share capital;
- the delinking of each of the company’s “A” ordinary shares from an “A” debenture so as to no longer
constitute an “A” linked unit;
- the delinking of each of the company’s “B” ordinary shares from a “B” debenture so as to no longer
constitute a “B” linked unit;
- the amendment of Fortress’ Memorandum of Incorporation; and
- the adoption of a new Memorandum of Incorporation,
at the combined ordinary shareholders general meeting;
- the requisite majority of “A” ordinary shareholders approving the relevant resolutions required to authorise:
- the par value conversion of the company’s ordinary shares;
- the increase of the company’s authorised share capital;
- the delinking of each of the company’s “A” ordinary shares from an “A” debenture so as to no longer
constitute an “A” linked unit;
- the delinking of each of the company’s “B” ordinary shares from a “B” debenture so as to no longer
constitute a “B” linked unit;
- the amendment of Fortress’ Memorandum of Incorporation; and
- the adoption of a new Memorandum of Incorporation,
at the “A” ordinary shareholders general meeting;
- in respect of the adoption of the new Memorandum of Incorporation, no shareholder exercises its dissenting
shareholder appraisal rights in terms of section 164 of the Companies Act;
- the fulfilment (and/or waiver) of the conditions precedent to the “B” debenture scheme, save for any condition
precedent to the “B” debenture scheme in terms of which the conditions precedent to the “A” debenture scheme are
required to be fulfilled (and/or waived); and
- all applicable regulatory and statutory approvals are obtained.
The conditions precedent have been inserted in the company’s favour. If a condition precedent is capable of being waived,
the company may waive such condition, in its sole discretion, at any time prior to the fulfilment thereof.
4. CONDITIONS PRECEDENT TO THE “B” DEBENTURE SCHEME
The “B” debenture scheme will be subject to the following conditions precedent:
- the approval of the “B” debenture scheme by the requisite majority of “B” debenture holders at the “B” debenture
holders scheme meeting, as contemplated in section 115(2) of the Companies Act;
- if applicable, the approval of the implementation of such resolution by the Court as contemplated in section
115(3)(a) of the Companies Act;
- if applicable, the company not treating the aforesaid resolution as a nullity, as contemplated in section 115(5)(b) of
the Companies Act;
- the requisite majority of “A” and “B” debenture holders collectively approving the relevant resolutions required to
authorise:
- the amendment of the Fortress Debenture Trust Deed;
- the delinking of each of the company’s “A” ordinary shares from an “A” debenture so as to no longer
constitute an “A” linked unit;
- the delinking of each of the company’s “B” ordinary shares from a “B” debenture so as to no longer
constitute a “B” linked unit; and
- the termination of the Debenture Trust Deed, without payment or other compensation to “A” debenture
holders or “B” debenture holders,
at the combined debenture holders general meeting;
- the requisite majority of “B” debenture holders approving the relevant resolutions required to authorise:
- the amendment of the Fortress Debenture Trust Deed;
- the delinking of each of the company’s “B” ordinary shares from a “B” debenture so as to no longer
constitute a “B” linked unit; and
- the termination of the Debenture Trust Deed, without payment or other compensation to “B” debenture
holders,
at the “B” debenture holders scheme meeting;
- the requisite majority of “A” and “B” ordinary shareholders collectively approving the relevant resolutions required
to authorise:
- the par value conversion of the company’s ordinary shares;
- the increase of the company’s authorised share capital;
- the delinking of each of the company’s “A” ordinary shares from an “A” debenture so as to no longer
constitute an “A” linked unit;
- the delinking of each of the company’s “B” ordinary shares from a “B” debenture so as to no longer
constitute a “B” linked unit;
- the amendment of Fortress’ Memorandum of Incorporation; and
- the adoption of a new Memorandum of Incorporation,
at the combined ordinary shareholders general meeting;
- the requisite majority of “B” ordinary shareholders approving the relevant resolutions required to authorise:
- the par value conversion of the company’s ordinary shares;
- the increase of the company’s authorised share capital;
- the delinking of each of the company’s “A” ordinary shares from an “A” debenture so as to no longer
constitute an “A” linked unit;
- the delinking of each of the company’s “B” ordinary shares from a “B” debenture so as to no longer
constitute a “B” linked unit;
- the amendment of Fortress’ Memorandum of Incorporation; and
- the adoption of a new Memorandum of Incorporation,
at the “B” ordinary shareholders general meeting;
- in respect of the adoption of the new Memorandum of Incorporation, no shareholder exercises its dissenting
shareholder appraisal rights in terms of section 164 of the Companies Act;
- the fulfilment (and/or waiver) of the conditions precedent to the “A” debenture scheme, save for any condition
precedent to the “A” debenture scheme in terms of which the conditions precedent to the “B” debenture scheme are
required to be fulfilled (and/or waived); and
- all applicable regulatory and statutory approvals are obtained.
The conditions precedent have been inserted in the company’s favour. If a condition precedent is capable of being waived,
the company may waive such condition, in its sole discretion, at any time prior to the fulfilment thereof.
5. SECTION 114 REPORTS
The board has appointed Grant Thornton Advisory Services Proprietary Limited (the “independent expert”) as the
independent expert (which meets the requirements set out in section 114(2) of the Companies Act) to advise it on the
proposed “A” debenture scheme and the proposed “B” debenture scheme and to compile a report in terms of section 114 of
the Companies Act to the independent board concerning each of the schemes.
The independent expert has prepared reports to the board in compliance with section 114(3) of the Companies Act, each of
which report confirms that the “A” debenture scheme and the “B” debenture scheme are fair and reasonable to Fortress’
debenture holders. The independent expert’s reports are included in the circular.
6. VIEWS OF THE BOARD
None of the directors have any conflict of interests in relation to the scheme and all directors are able to make impartial
decisions in relation to the schemes. Accordingly, all directors are considered to be “independent” (as defined under
Regulation 81 of the Takeover Regulations).
The board, having considered the terms and conditions of the schemes, is in favour of the schemes and the transactions and
recommends that linked unitholders vote in favour of the resolutions set out in the notices convening the debenture holders
combined general meeting, the “A” debenture holders scheme meeting, the “B” debenture holders scheme meeting, the
combined ordinary shareholders general meeting, the “A” ordinary shareholders general meeting and the “B” ordinary
shareholders general meeting (collectively the “meetings”), to implement the schemes and the transactions.
The directors of the company who hold linked units intend to vote in favour of the resolutions set out in the notices
convening the meetings, to implement the schemes and the transactions.
7. SALIENT DATES AND TIMES
The salient dates and times relating to the transactions are as set out below.
2015
Record date to receive circular (together with the notices convening the combined debenture
holders general meeting, the “A” debenture holders scheme meeting, the “B” debenture holders
scheme meeting, the combined ordinary shareholders general meeting, the “A” ordinary
shareholders general meeting, and the “B” ordinary shareholders general meeting (collectively
referred to as the “meetings”)) Friday, 23 January
Circular (together with the notices convening the meetings) posted Tuesday, 3 February
Announcement relating to the issue of the circular (together with the notices convening the
meetings) released on SENS Tuesday, 3 February
Announcement relating to the issue of the circular (together with the notices convening the
meetings) published in the press Wednesday, 4 February
Last day to trade in order to be eligible to vote at the meetings Friday, 20 February
Voting record date Friday, 27 February
Last day to lodge forms of proxy for the combined debenture holders general meeting (by
10:00) Tuesday, 3 March
Last day to lodge forms of proxy for the “A” debenture holders scheme meeting (by 10:15) Tuesday, 3 March
Last day to lodge forms of proxy for the “B” debenture holders scheme meeting (by 10:30) Tuesday, 3 March
Last day to lodge forms of proxy for the combined ordinary shareholders general meeting
(by 10:45) Tuesday, 3 March
Last day to lodge forms of proxy for the “A” ordinary shareholders general meeting (by 11:00) Tuesday, 3 March
Last day to lodge forms of proxy for the “B” ordinary shareholders general meeting (by 11:15) Tuesday, 3 March
Combined debenture holders general meeting held at 10:00 Thursday, 5 March
“A” debenture holders scheme meeting held at the later of 10:15 or 5 minutes after the
completion of the combined debenture holders general meeting Thursday, 5 March
“B” debenture holders scheme meeting held at the later of 10:30 or 5 minutes after the
completion of the “A” debenture holders scheme meeting Thursday, 5 March
Combined ordinary shareholders general meeting held at the later of 10:45 or 5 minutes after
the completion of the “B” debenture holders general meeting Thursday, 5 March
“A” ordinary shareholders general meeting held at the later of 11:00 or 5 minutes after the
completion of the combined ordinary shareholders general meeting Thursday, 5 March
“B” ordinary shareholders general meeting held at the later of 11:15 or 5 minutes after the
completion of the “A” ordinary shareholders general meeting Thursday, 5 March
Results of the meetings released on SENS Thursday, 5 March
Special resolutions submitted to CIPC for filing Friday, 6 March
Results of the meetings published in the press Friday, 6 March
Last date on which “A” debenture holders can make application to court in terms of section
115(3)(a) of the Companies Act if the “A” debenture scheme is approved by “A” debenture
holders at the “A” debenture holders scheme meeting but with sufficient opposing votes that “A”
debenture holders may require the company to obtain court approval for the “A” debenture
scheme as contemplated in section 115(3)(a) of the Companies Act Thursday, 19 March
Last date on which “B” debenture holders can make application to court in terms of section
115(3)(a) of the Companies Act if the “B” debenture scheme is approved by “B” debenture
holders at the “B” debenture holders scheme meeting but with sufficient opposing votes that
“B” debenture holders may require the company to obtain court approval for the “B” debenture
scheme as contemplated in section 115(3)(a) of the Companies Act Thursday, 19 March
If no debenture holders exercise their rights in terms of section 115(3)(a) of the Companies Act
Special resolutions expected to be registered by CIPC Monday, 23 March
Finalisation date expected to be Wednesday, 25 March
Finalisation date announcement expected to be released on SENS Wednesday, 25 March
Finalisation date announcement expected to be published in the press Thursday, 26 March
Expected last day to trade in existing “A” linked units on the JSE prior to the delinking of the
“A” linked units and the capitalisation of the “A” debentures Wednesday, 1 April
Expected last day to trade in existing “B” linked units on the JSE prior to the delinking of the
“B” linked units and the capitalisation of the “B debentures Wednesday, 1 April
Trading in delinked “A” ordinary shares of no par value under the new ISIN: ZAE000192787
and the existing code of “FFA” commences Thursday, 2 April
Trading in delinked “B” ordinary shares of no par value under the new ISIN: ZAE000192795
and the existing code of “FFB” commences Thursday, 2 April
Expected suspension of listing of “A” linked units on the JSE Thursday, 2 April
Expected suspension of listing of “B” linked units on the JSE Thursday, 2 April
Expected scheme implementation record date for the delinking of the “A” linked units and the
capitalisation of the “A” debentures at the close of business Friday, 10 April
Expected scheme implementation record date for the delinking of the “B” linked units and the
capitalisation of the “B” debentures at the close of business Friday, 10 April
Expected scheme operative date Monday, 13 April
Expected date dematerialised “A” ordinary shareholders will have their accounts updated at
their CSDP or broker Monday, 13 April
Expected date dematerialised “B” ordinary shareholders will have their accounts updated at
their CSDP or broker Monday, 13 April
Expected date of issue of new replacement share certificates provided that the old “A” linked
unit certificates have been surrendered by 12:00 on Friday, 10 April 2015 (any certificated “A” Monday, 13 April
linked units surrendered after this date will be replaced within five business days after receipt
by the transfer secretaries)
Expected date of issue of new replacement share certificates provided that the old “B” linked
unit certificates have been surrendered by 12:00 on Friday, 10 April 2015 (any certificated “B”
linked units surrendered after this date will be replaced within five business days after receipt
by the transfer secretaries) Monday, 13 April
Expected termination of listing of “A” linked units (at the commencement of trade) Monday, 13 April
Expected termination of listing of “B” linked units (at the commencement of trade) Monday, 13 April
Notes:
1. All dates and times may be changed by the company. Any change will be published on SENS and in the South African press.
2. Linked unitholders should note that as transactions in Fortress linked units are settled in the electronic settlement system used by
Strate, settlement of trades takes place five business days after such trade. Therefore, unitholders who acquire Fortress linked units
after Friday, 27 February 2015 will not be eligible to vote at the debenture holders scheme meetings, the combined debenture holders
general meeting or the shareholders general meetings.
3. All times given in this announcement are local times in South Africa.
4. If the combined debenture holders general meeting, “A” debenture holders scheme meeting, “B” debenture holders scheme meeting,
combined ordinary shareholders general meeting, “A” ordinary shareholders general meeting and/or the “B” ordinary shareholders
general meeting are adjourned or postponed, forms of proxy submitted for the initial combined debenture holders general meeting,
“A” debenture holders scheme meeting, “B” debenture holders scheme meeting, combined ordinary shareholders general meeting,
“A” ordinary shareholders general meeting and/or the “B” ordinary shareholders general meeting, as the case may be, will remain
valid in respect of any adjournment or postponement of the combined debenture holders general meeting, “A” debenture holders
scheme meeting, “B” debenture holders scheme meeting, combined ordinary shareholders general meeting, “A” ordinary
shareholders general meeting and/or the “B” ordinary shareholders general meeting, as the case may be.
5. No dematerialisation of linked unit certificates may take place after Wednesday, 1 April 2015.
3 February 2015
Corporate advisor, legal advisor and sponsor
Java Capital
Independent expert
Grant Thornton
Date: 03/02/2015 04:52:00 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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