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DELTA PROPERTY FUND LIMITED - Further announcement regarding the termination of the existing asset management agreement and renewal of cautionary

Release Date: 09/03/2015 11:00
Code(s): DLT     PDF:  
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Further announcement regarding the termination of the existing asset management agreement and renewal of cautionary

Delta Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/005129/06)
Share code: DLT ISIN: ZAE000194049
(“Delta” or “the Company”)
REIT status approved

Further announcement regarding the termination of the existing
asset management agreement and renewal of cautionary
announcement


1.    Termination of asset management agreement


Further to the announcement dated 12 February 2015 in which
Delta shareholders were advised that Delta’s board of
directors intended to approach shareholders for approval to
exercise the termination clause in its existing asset
management agreement with MPI Property Asset Management
Proprietary Limited (“MPIPAM”) (“Existing Manco Agreement”)
and simultaneously enter into an asset management agreement
(“New Manco Agreement”) with a new asset management company
(“New Manco”), the board wishes to provide Delta shareholders
with an update regarding these matters.
As previously announced, if approved the termination will be
concluded in terms of the provisions of the Existing Manco
Agreement, which permits Delta to terminate the Existing Manco
Agreement on notice if approved by Delta shareholders and
subject to the payment of the relevant termination fee
(“Termination Fee”). Based on the methodology set out in the
Existing Manco Agreement, the Termination Fee is not
anticipated to exceed R10m (ten million Rand). It should
however be noted that the actual Termination Fee payable can
only be calculated after the date on which the termination
becomes effective.
2.    New Manco Agreement
Delta will seek to ensure that the New Manco complies with the
requirements of the Department of Public Works for purposes of
its leases with Delta.
It is envisaged that New Manco will employ the staff of MPIPAM
and will be wholly-owned by a trust to be established for the
benefit of its black employees (“Trust”). None of the existing
shareholders of MPIPAM will be beneficiaries of the Trust.
As previously announced, Delta will seek to conclude the New
Manco Agreement on terms no less favourable to Delta than
those contained in the Existing Manco Agreement, including as
regards the monthly asset management fee payable to New Manco
is proposed to remain as one twelfth of 0.35% of Delta’s
enterprise value.
Delta will be looking to appoint the New Manco for a period of
5 years, with the option for Delta to extend this by further 3
year periods.
No termination fees payable by Delta are anticipated and it is
proposed that the demobilisation fees payable on termination
are restricted to the costs actually incurred by New Manco.


3.    Finalisation of terms and shareholder approval


Delta shareholders are advised that the envisaged terms set
out above remain, inter alia, subject to agreement with New
Manco, review by the JSE, and shareholder approval.
Termination of the Existing Manco Agreement is also subject to
shareholder approval in terms of the JSE Listings Requirements
and accordingly, Delta is in the process of preparing a
circular, which will incorporate a notice of general meeting,
to provide Delta shareholders with full details and to convene
a general meeting of Delta shareholders to consider and, if
deemed acceptable, approve the resolutions required to
terminate the Existing Manco Agreement and approve the New
Manco Agreement.


4.    Renewal of cautionary announcement


In light of the above, Delta shareholders are advised to
continue to exercise caution when dealing in the Company’s
securities until a further announcement is made.

9 March 2015
Johannesburg


Investment bank and sponsor
Nedbank Capital


Legal advisor
Bowman Gilfillan Inc.


Communications advisor
Instinctif Partners

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