Wrap Text
Proposed merger between Equites and Intaprop Proprietary Limited and cautionary announcement
EQUITES PROPERTY FUND LIMITED
(formerly VB Transport (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2013/080877/06)
JSE share code: EQU ISIN: ZAE000188843
(Approved as a REIT by the JSE)
(“Equites” or “the company”)
PROPOSED MERGER BETWEEN EQUITES AND INTAPROP PROPRIETARY LIMITED AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the cautionary announcements released on SENS on Wednesday, 11 March 2015 and Friday,
24 April 2015 and are advised that Equites has entered into an agreement (“the merger agreement”) in terms of which it
will acquire all of the shares and claims in Intaprop in consideration for ordinary shares of no par value in the capital of
Equites (“consideration shares”) (“the merger”). The parties to the merger agreement are Equites, Intaprop Proprietary
Limited (“Intaprop”) and the shareholders of Intaprop who are Henlizer Investment Trust, Norman Donald Campbell
Whale, Timothy Alexander Middleton, Pendennis Investment Trust, Kingsley Alexander Trust, Archangel Trust,
Richentan Familie Trust and Taking Time Trust (“sellers”). The consideration shares will be allotted and issued to the
sellers, in their applicable proportions.
2. OVERVIEW OF INTAPROP AND RATIONALE
2.1. Intaprop is a private property development and investment enterprise, which was founded in 1990. It has a
successful track record of developing large scale corporate real estate and has a significant skills base.
2.2. The existing property portfolio of Equites comprises predominantly industrial properties which are situated in
Cape Town. The merger with Intaprop is consistent with the company’s growth strategy of diversifying
geographically by focusing on the three major metropolitan areas, being the greater Cape Town, Gauteng and the
greater Durban. The Intaprop property portfolio is located in Gauteng and Cape Town and consists primarily of
industrial properties and undeveloped industrial land.
2.3. The combination of these two portfolios is expected to unlock significant shareholder value through the
complementary nature of the property assets, the tenant mix and the geographical spread. The merged entity
would further benefit from enhanced growth opportunities, increased diversification by rental income, economies
of scale and the reduction in the impact of property specific risks on the performance of the enlarged property
portfolio.
3. MECHANICS OF THE MERGER
3.1. Effective date
The effective date of the merger is Wednesday, 1 July 2015.
3.2. Purchase consideration
3.2.1. The purchase consideration (“purchase consideration”) payable for the shares and claims is the
sum of –
3.2.1.1. an amount of R1 660 341 550, being the agreed value of the properties or portions
of properties on which property developments have been completed (“Intaprop
developed properties”);
3.2.1.2. plus an amount of R231 782 800, being the agreed value of the undeveloped
properties;
3.2.1.3. minus the amount of any loan or other financial indebtedness (other than in respect
of any fixed interest rate agreement, interest rate swap, interest rate hedge or other
derivative instrument to which any subsidiary company within the Intaprop group
(the “group”) may be a party (“hedges”)) of any company in the group to any bank,
financial institution or other debt provider (“debt funding”) as at 30 June 2015;
3.2.1.4. plus (if the amount is positive) or minus (if the amount is negative) the marked-to-
market value of all hedges as at 30 June 2015;
3.2.1.5. plus (if the amount is positive) or minus (if the amount is negative) the net working
capital of the group, excluding any amount which has been taken into account as
part of the amount of debt funding or the marked-to-market value of hedges (“net
working capital”) as at 30 June 2015; and
3.2.1.6. minus the amount of any liabilities of the group which are not included in the debt
funding and the marked-to-market value of any hedges and which are not taken into
account in calculating the net working capital, as at 30 June 2015.
3.2.2. The purchase consideration is currently estimated to be approximately R456 801 791.
3.3. Payment of the purchase consideration
3.3.1. The calculation of the purchase consideration, payable on the later of the effective date or the 5 th
business day after fulfilment or waiver of all of the conditions referred to in paragraph 4 below
(“closing date”), will be based on the projected management accounts of Intaprop as at
30 June 2015 (“estimated purchase consideration”).
3.3.2. All risk in and all benefit attaching to the shares and claims will, against payment of the estimated
purchase consideration, pass to Equites on the closing date but with commercial effect from the
effective date.
3.3.3. Effective date accounts as at 30 June 2015 will be prepared and the purchase consideration will be
adjusted if the estimated purchase consideration differs from that as per the effective date accounts.
3.3.4. On the closing date, Equites will issue such number of consideration shares at an issue price of
R12.00 per share which have an aggregate value equal to 90% of the estimated purchase
consideration with the balance to be issued at an issue price of R12.00 per share following
finalisation of the effective date accounts, subject to any adjustment thereof and provided further
that if there is a downward adjustment greater than the outstanding portion of the purchase
consideration, the difference will be refunded to Equites, firstly from the proceeds of certain
consideration shares pledged back by the sellers to Equites as security for certain of their
obligations under the merger agreement, and the balance, if any in cash.
3.3.5. On the closing date the sellers will pay Intaprop any amounts of any nature which may then be
owing by the sellers to Intaprop.
3.4. Equites clean-out distribution
3.4.1. Equites will, in addition to the regular dividend distribution of its net income for the 6 month
distribution period ended 28 February 2015, declare an interim dividend distribution in an amount
equal to all of its net income for the period commencing on 1 March 2015 and ending on the day
before the effective date (“Equites clean-out distribution”).
3.4.2. Accordingly, the consideration shares issued in settlement of the purchase consideration will not
rank for participation in the Equites clean-out distribution.
3.5. Intaprop pre-closing distributions
3.5.1. Intaprop will be entitled, but not obliged to declare as a distribution to the sellers, any accumulated
revenue profits of Intaprop for the period ending on the day prior to the effective date (“permitted
income distribution”) if payment thereof can be funded from actual cash on hand, in the ordinary
and regular course of business, and without increasing the amount of the debt.
3.5.2. Intaprop must, prior to the closing date, declare as a distribution an amount equal to the net amount
actually recovered by Intaprop in respect of the disputed claims of Intaprop against third parties
(“ring-fenced claims proceeds distribution”).
3.5.3. The permitted income distribution (if declared) must have been paid in full prior to the closing
date, failing which the sellers will have no further claim thereto. Intaprop will make payments of
the ring-fenced claims proceeds distribution as and when the amounts are actually received by
Intaprop.
3.5.4. The shares and claims will be sold ex any rights to the permitted income distribution and the ring-
fenced claims proceeds distribution.
3.6. The merger agreement contains price adjustment mechanisms typical and appropriate for a transaction of this
nature, which will be fully disclosed in the circular referred to in paragraph 5 below.
3.7. Development agreement
In addition to the merger, Intaprop Investments Proprietary Limited (“developer”), will enter into agreements
with Equites (“development agreements”) pursuant to which the developer will for consideration provide certain
development services in respect of the bulk and undeveloped land forming part of the immovable properties
(“undeveloped properties”) owned by the group.
3.8. Following the merger, the seller may elect a suitably qualified and experienced nominee to the board of directors
of Equites for as long as the consideration shares represent not less than 10% of the issued share capital of Equites
or for a period of 24 months after the closing date, whichever is the longer period. Such nominee will also be able
to appoint an alternate director.
3.9. Warranties commonly provided for transactions of this nature have been provided by the sellers to Equites.
4. CONDITIONS PRECEDENT
The merger agreement is subject to the following outstanding conditions precedent as at the date and time of this
announcement –
4.1. conclusion of the development agreements by not later than Friday, 12 June 2015;
4.2. any third parties who have leases, rights of occupation, options, rights of first refusal or similar rights in respect of
any of the immovable properties owned by the group, (“properties”) providing such written consents or waivers
as may be required in connection with the implementation of all the transactions contemplated in the merger
agreement by not later than Friday, 26 June 2015;
4.3. any third parties who have leases, rights of occupation, rights of termination in event of a change in control,
options, rights of first refusal, or similar rights in respect of any of the properties, identified by Equites and
notified to the sellers, providing such written consents or waivers as may be required in connection with the
implementation of all the transactions contemplated in the merger agreement by not later than Friday,
3 July 2015; the counterparties to any debt funding agreements (“debt funding counterparties”) or hedges
(“hedge counterparties”) to which any of the companies in the group may be a party providing such written
consents or approval as may be required under the relevant debt funding agreements or hedges, in order for the
transactions in the merger agreement to be effected without triggering any event of default or other potential
adverse consequence under the relevant debt funding agreements or hedges by not later than Friday, 3 July
2015;approval by Equites’ board of directors by not later than Friday, 31 July 2015;
4.4. delivery by Equites of written notice to the sellers that it is satisfied with the results of the due diligence
investigation and that it wishes to proceed with the merger by not later than Friday, 31 July 2015;
4.5. the shareholders of Equites providing all such necessary authorisations, and approvals and/or waivers as may be
required by them to give effect to the merger and all other transactions contemplated in the merger agreement by
not later than Friday, 28 August 2015;
4.6. Equites has obtained all such approvals and/or dispensations as may be required of any regulatory authority as
may be required to give effect to the merger and all other transactions contemplated in the merger agreement by
not later than Friday, 28 August 2015; and
4.7. obtaining approval by the Competition Authorities for the merger by not later than Wednesday,
30 September 2015.
5. PROPERTY SPECIFIC INFORMATION
5.1. Details of the properties in the Intaprop portfolio, including property name and address, geographical location,
sector, rentable area, weighted average rental per square meter and the valuations attributed to the properties, are
set out below.
5.2. Equites is acquiring all of the shares and claims in Intaprop and has not attributed individual valuations to each of
the properties in the Intaprop portfolio. The values of the properties as set out above are based on negotiated
valuations between the Equites and the sellers as at 28 May 2015.
Property name, Sector Rentable area Weighted Lease Acquisition Valuation
address and (m2) average expiry yield as at 1 July
geographic rental per 2015
location square (R’000)
metre
(R/m2)*
8 Melville Road Commercial - Offices 3 960 208.65 Feb 2023 8.25% 60 090 021
8 Melville Road,
Illovo Boulevard,
Johannesburg,
Gauteng
Equity Park Commercial - Offices 3 200 119.26 Various 9.25% 49 510 133
Cnr Brooklyn and
Lynnwood Roads,
Brooklyn,
Pretoria, Gauteng
Wasteman Industrial - Offices, MRF 107.92 Aug 2026 9.00% 58 506 090
Saxdowne and workshops:
Business Park, 4 066
Western Cape - Land: 21 090
- Additional
parking
extension:
4 917
Formscaff Industrial - Offices and 126.42 Jul 2019 9.00% 30 811 601
Saxdowne warehouse:
Business Park, 1 828
Western Cape - Land: 13 130
UTI Pharma Industrial - Offices: 7 420 135.38 Aug 2022 8.60% 820 884 363
1 Meadowview - Distribution
Lane, centre: 36 034
Meadowview - Land: 67 967
Business Estate
West, Linbro
Park, Gauteng
Triton Express Industrial - Offices: 2 659 88.44 Sep 2024 8.00% 188 373 287
1 Gordon Avenue, - Warehouse:
Meadowview 10 599
Business Estate - Staff village:
East, Linbro Park, 650
Gauteng - Workshops and
sundry: 291
- Land: 42 643
Premier Foods Industrial - Offices: 730 64.49 Jun 2024 8.00% 80 124 390
2 Meadowview - Warehouse:
Lane, 7 332
Meadowview - Staff village:
Business Estate 221
West, Linbro - Land: 20 996
Park, Gauteng
Esco Industrial - Offices: 600 69.29 Jul 2024 8.00% 51 966 697
87 Hilton Road, - Warehouse:
Meadowview 4 400
Business Estate - Land: 10 306
West, Linbro
Park, Gauteng
Triton Fleet and Industrial - Offices: 443 165.53 Oct 2024 8.50% 26 103 769
MTN mast - Workshops 471
1 Price Lane, - Truck wash and
Meadowview sundry 203
Business Estate - Land: 6 349
East, Linbro Park,
Gauteng
MTN Mast Industrial - Cellular mast N/A Apr 2021 8.00% 702 769
1 Price Lane,
Meadowview
Business Estate
East, Linbro Park,
Gauteng
DHL (old GMS) Industrial - Offices: 860 63.20 Jun 2020 8.00% 59 250 225
6 Meadowview - Warehouse:
Lane, 5 390
Meadowview - Land:14 476
Business Estate
West, Linbro
Park, Gauteng
ATC Tower Industrial - Cellular mast N/A Jul 2024 8.25% 923 636
Meadowview
Business Park,
Gauteng
* Weighted average rentals include contractual charges for parking, additional yard space and various other sundry items.
6. FINANCIAL EFFECTS OF THE MERGER AND RENEWAL CAUTIONARY ANNOUNCEMENT
6.1. Shareholders are advised that the financial effects of the merger will be announced in due course.
6.2. Accordingly, shareholders are advised to continue to exercise caution when dealing in the company’s securities
until a further announcement is made.
7. CATEGORISATION AND DOCUMENTATION
The merger, which is classified as a Category 1 transaction in terms of the JSE Listings Requirements, requires shareholder
approval. Accordingly a circular, detailing the terms of the merger and incorporating a notice convening a general meeting
in order to pass the necessary resolutions to implement the merger, will be posted to Equites shareholders shortly.
29 May 2015
Corporate advisor and sponsor
Java Capital
Legal advisor to Equites
Cliffe Dekker Hofmeyr
Date: 29/05/2015 02:00:00 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.
Sharenet Sites 
