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Specific issue units to the Arrowhead Charitable Trust and adoption of Arrowhead Unit Purchase and Option Scheme
ARROWHEAD PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2011/000308/06)
JSE share code: AWA ISIN: ZAE000158101
JSE share code: AWB ISIN: ZAE000158119
(Approved as a REIT by the JSE)
(“Arrowhead” or “the company”)
SPECIFIC ISSUE OF LINKED UNITS FOR CASH TO THE ARROWHEAD CHARITABLE TRUST AND ADOPTION OF THE ARROWHEAD UNIT PURCHASE AND OPTION SCHEME
SPECIFIC ISSUE OF LINKED UNITS
The Arrowhead Charitable Trust (the “Trust”) was established for purposes of enhancing the welfare of persons and
educational institutions where Arrowhead has a presence. The Trust now wishes to increase its capital base by
subscribing for 15 500 000 Arrowhead A linked units and 15 500 000 Arrowhead B linked units (the “subscription
units”) in terms of a specific issue of linked units for cash (the “specific issue”), pursuant to a loan and subscription
agreement entered into between Arrowhead and the Trust on or about 4 May 2015 (the “loan and subscription
agreement”).
Subject to fulfilment of the conditions precedent set out below (the “conditions precedent”), and on the fifth business
day after the date on which such conditions precedent are fulfilled (or such other date as the JSE may prescribe in
terms of the Listings Requirements) (the “subscription date”), Arrowhead will issue the subscription units to the
Trust at a price of R9.95 per A linked unit and R9.98 per B linked unit, being the respective prices per A and B linked
unit equivalent to the volume weighted average price at which Arrowhead A and B linked units traded for the
30 trading days immediately preceding the last practicable date prior to finalisation of the circular, being
29 April 2015.
The total subscription price payable for the subscription units will be financed by an interest-bearing loan to be
granted by Arrowhead to the Trust, in an amount equivalent to the aggregate subscription price payable for the
subscription units (the “trust loan”). The trust loan, which will be secured by a pledge and cession in securitatem
debiti of the subscription units, will be repayable out of the proceeds of the sale by the Trust of the subscription units.
The interest on the trust loan will be equivalent to the dividend distributions received on the subscription units. The
trust loan shall be repayable in full on the earlier of:
- the fifth anniversary of the subscription date;
- the date on which the Trust and Arrowhead agree in writing that the trust loan will be repaid; and
- the date immediately preceding the occurrence of an insolvency event (as defined in the loan and subscription
agreement).
The Trust will generate its capital from the profit on the sale of the subscription units. Once the trust loan has been
repaid, the income generated from the Trust capital will be used to make donations and distributions to its
beneficiaries, being:
- underprivileged communities or individuals in cities, towns and areas where Arrowhead is invested;
- projects designed to benefit the aforesaid communities or individuals; and/or
- charitable organisations benefitting the aforesaid communities or individuals.
CONDITIONS PRECEDENT
The specific issue remains subject to fulfilment of the following conditions precedent on or before 30 June 2015, or
such later date as is agreed to in writing between Arrowhead and the Trust:
- Arrowhead shareholders passing all resolutions required to approve the specific issue of the subscription units
to the Trust for the subscription price payable in cash, including the placement of 15 500 000 A linked units
and 15 500 000 B linked units in the authorised but unissued share capital of Arrowhead under the control of
the board of directors for that purpose; and
- Arrowhead shareholders passing all resolutions required to authorise the board of directors of Arrowhead to
grant financial assistance to the Trust as is envisaged in sections 44 and 45 of the Companies Act.
PRO FORMA FINANCIAL EFFECTS AND ACCOUNTING TREATMENT
Given that the interest received by Arrowhead on the trust loan will be equivalent to the distributions payable on the
subscription units, the issue of the subscription units will have no effect on distributions per unit until such time as the
subscription units are sold by the Trust.
Until such time as the trust loan is repaid, Arrowhead will consolidate the Trust into the group financial statements. As
a result of this consolidation neither the subscription units nor the trust loan will be reflected in Arrowhead’s
consolidated financial statements and accordingly the transaction will have no effect on the pro forma historical
earnings, headline earnings or asset value per unit. Therefore no pro forma financial information has been provided.
On the repayment of the trust loan, Arrowhead will cease to consolidate the Trust. At that point, Arrowhead’s group
financial statements will reflect:
- the issue of the subscription units at their then market value by crediting share and debenture capital and
premium by the appropriate amount;
- the repayment of the trust loan by debiting cash; and
- the difference between the trust loan and the then market value of the subscription units (i.e. the profit earned
by the Trust) as a debit to donations (this charge to the group income statement will not affect interest
distributions made by Arrowhead).
ADOPTION OF ARROWHEAD UNIT PURCHASE AND OPTION SCHEME
The company intends to replace the existing Arrowhead Unit Purchase Trust with the Arrowhead Unit Purchase and
Option Scheme (the “scheme”). The purpose of the scheme is to align the interests of the group’s employees and
executive directors with those of the linked unitholders of the company, by providing an opportunity to acquire linked
units in the company.
POSTING OF CIRCULAR
Linked unitholders are advised that the company has, on Wednesday, 13 May 2015, posted a circular to linked
unitholders (the “circular”) relating to:
- the specific issue of the subscription units to the Trust, in terms of a specific issue of linked units for cash, as
further detailed above;
- the granting by Arrowhead of a loan to the Trust to fund its subscription for the subscription units, as further
detailed above; and
- the adoption of the Arrowhead Unit Purchase and Option Scheme,
(collectively the “transactions”).
The circular contains a notice convening a general meeting of Arrowhead shareholders, to be held at 10:00 on
Thursday, 11 June 2015 at the registered office of Arrowhead at 2 nd Floor, 18 Melrose Boulevard, Melrose Arch,
Johannesburg, 2196 (the “general meeting”), for the purposes of considering and, if deemed fit, passing, with or
without modification, the resolutions required to approve the transactions.
The circular is also available in electronic format on the company’s website at www.arrowheadproperties.co.za.
SALIENT DATES AND TIMES
The salient dates and times relating to the transactions are set out below. All dates and times in this circular are local
times in South Africa and are subject to change. Any such changes will be released on SENS and, if required,
published in the press.
2015
Record date for receipt of the circular Thursday, 30 April
Issue and post the circular to linked unitholders Wednesday, 13 May
Posting of the circular published on SENS Wednesday, 13 May
Posting of the circular published in the press Thursday, 14 May
Last day to trade in order to be eligible to participate in and vote at the general meeting Friday, 29 May
Record date for voting purposes Friday, 5 June
Last day to lodge forms of proxy for the general meeting (by 10:00) Tuesday, 9 June
General meeting held at 10:00 Thursday, 11 June
Results of general meeting released on SENS Thursday, 11 June
Results of general meeting released in the press Friday, 12 June
Linked units issued to Arrowhead Charitable Trust, and listed at the commencement of Monday, 22 June
trading
13 May 2015
Corporate advisor, sponsor and trustee for debenture holders
Java Capital
Legal advisor
DLA Cliffe Dekker Hofmeyr
Date: 13/05/2015 05:40:00 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
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