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Acquisition of warehousing compound in Mozambique leased by two multi-national tenants with Dollar underpinned lease
DELTA AFRICA PROPERTY HOLDINGS LIMITED
(Registered by continuation in the Republic of
Mauritius)
(Registration number 128881 C1/GBL)
JSE share code: DLA
SEM share code: DEL.N0000
ISIN: MU0473N00010
(“Delta”)
ACQUISITION OF WAREHOUSING COMPOUND IN MOZAMBIQUE LEASED BY TWO MULTI-NATIONAL TENANTS WITH
DOLLAR UNDERPINNED LEASES
1. INTRODUCTION
1.1. Shareholders are advised that on 16 February 2016 Delta, through its wholly-owned subsidiary, Delta
International Mauritius Limited, entered into an agreement (“Agreement”) with Great Lakes Property
(Mozambique) Limited (“Seller”), Sonera Foundation (“Sonera”), Hodarihold Limited (“Hodari”) and CD
Properties Limited (“CD Properties”), in order to amend and revive a share sale agreement (“Initial Sale
Agreement”) that was previously concluded between the above parties (other than Delta), but which was
not implemented. The Initial Sale Agreement, as amended and revived by the Agreement, is hereafter
referred to as the “Acquisition Agreement”.
1.2. In terms of the Acquisition Agreement, Delta will purchase the entire issued share capital of CD Properties
(“Sale Shares”), which is incorporated in Mauritius, from the Seller, and will take cession and assignment of
the rights and obligations of Sonera and Hodari under the Initial Sale Agreement, such sale and such cession
and assignment to occur on the terms, and subject to the conditions, set out in the Acquisition Agreement
(“Transaction”).
1.3. CD Properties holds 98% of the issued ordinary share capital of Gateway Properties Limitada (“Gateway
Properties”), a company incorporated in Mozambique, which is due to acquire the Plexus Warehousing
Complex Downtown, corner Road No.1 and Avenue Marginal, Pemba City, Mozambique (“Property”) from
Plexus Mozambique Limitada (“Plexus”), pursuant to a promissory purchase and sale agreement concluded
between Gateway Properties and Plexus on 10 November 2015, subject to certain conditions precedent being
fulfilled (“Gateway Agreement”). An amendment agreement will be concluded between Plexus and Gateway
on or about 19 February 2016 to amend those conditions precedent in the Gateway Agreement.
1.4. In terms of the Acquisition Agreement, Commotor Limitada (“Commotor”), a wholly-owned subsidiary of
Delta, will acquire the remaining 2% in Gateway Properties’ issued ordinary share capital from Nicolas Peter
Francis Earlam (“Earlam”) and Fritz Alexander Grobien (“Grobien”), each of whom holds 1% of such issued
share capital.
2. RATIONALE FOR THE TRANSACTION
2.1. Delta has identified this well-positioned warehouse complex opposite the port in Pemba, Mozambique as an
opportunity to expand its footprint in Mozambique. With the discovery of gas in the Rovuma river basin in
the northern province of Cabo Delgado, Pemba is forecast to receive significant investment from both the
oil and gas sector and the Government of Mozambique.
2.2. The investment also meets Delta’s stringent investment criteria of strong counterparty leases underpinned
by long-term dollar-based leases.
2.3. The following salient points should be highlighted:
2.3.1. the investment is headlined by the following leases:
2.3.1.1. Bollore African Logistics Mozambique, S.A., Africa’s largest transport and logistics operator, is leasing
warehouses 2 to 7 on a 5 year term;
2.3.1.2. Plexus is leasing warehouse 1 on a 5 year term. Plexus has operations on three continents and is
currently the largest cotton producer in Mozambique; and
2.3.2. the leases are USD denominated, payable in either United States Dollars or Mozambican Meticais.
3. PURCHASE CONSIDERATION
3.1. The total purchase consideration due under the Acquisition Agreement amounts to USD 8,499,888
(“Purchase Consideration”), of which:
3.1.1. USD 5,800,000 will be advanced as a loan by Commotor or its nominee in Mozambique to Gateway
Properties, to allow the latter to pay the purchase price due under the Gateway Agreement for the
Property to Plexus. Such purchase price is to be paid by Gateway Properties on the date on which the
last of the Conditions Precedent (as defined in paragraph 5 below) is fulfilled (“Payment Date”), at which
point Gateway Properties will be a subsidiary of Delta;
3.1.2. USD 799,888 will be paid to the Seller on the Payment Date;
3.1.3. USD 1,200,000 is due to Hodari, of which USD 500,000 is to be used by Hodari to refurbish the Property.
This amount of USD 1,200,000 is to be settled by way of a payment of USD 400,000 to Hodari on the
Payment Date, with the remainder to be paid to Hodari within 90 days thereafter; and
3.1.4. USD 700,000 is due to Sonera, of which USD 400,000 is to be paid to Sonera on the Payment Date, with
the remainder being paid Sonera within 90 days thereafter.
3.2. An adjustment account will be finalised within 90 days after transfer to account for any other assets or
liabilities attributable to the Transaction.
3.3. Delta intends to fund the Purchase Consideration and all transaction costs by way of placing of Delta shares
in terms of the Stock Exchange of Mauritius Ltd (“SEM”) Listing Rules and a vendor consideration placement
of Delta shares in terms of the JSE Listing Requirements to third parties and/or debt funding.
4. EFFECTIVE DATE
Subject to the Conditions Precedent, as indicated in paragraph 5 below, being fulfilled or, where applicable
waived, the Transaction will be deemed to have become effective on 1 December 2015 (“Effective Date”).
5. CONDITIONS PRECEDENT
5.1. The Acquisition Agreement is subject to the following conditions precedent (“Conditions Precedent”):
5.1.1. that Earlam and Grobien unconditionally transfer and assign their shares in Gateway Properties to
Commotor;
5.1.2. that, by 29 February 2016, Delta’s due diligence investigation in respect of CD Properties, Gateway
Properties and the Property be completed to Delta’s satisfaction;
5.1.3. that, by 29 February 2016, Delta’s board of directors has approved the entering into of the Acquisition
Agreement and all other agreements and transaction contemplated therein to which Delta is a party;
5.1.4. that, by 29 February 2016, the Seller’s board of directors has approved the entering into of the Acquisition
Agreement and all other agreements and transaction contemplated therein to which the Seller is a party;
5.1.5. that, by 29 February 2016, Delta confirms to the Seller, Sonera and Hodari that it has succeeded in raising
the equity required to pay the Purchase Consideration;
5.1.6. that, by 29 February 2016, Delta and Gateway Properties confirm that Commotor (or its nominee) and
Gateway have entered into a loan agreement, in terms of which Commotor (or its nominee) will advance
an amount of USD 5,800,000 to Gateway Properties to allow Gateway Properties to purchase the Property
from Plexus under the Gateway Agreement;
5.1.7. that, by 29 February 2016, a five-year lease is signed between Plexus and Gateway Properties in respect
of warehouse 1 of the Property at the rate of USD 15,000 per month, the effectiveness of which shall be
contingent on the transfer of the Property from Plexus to Gateway Properties; and
5.1.8. that, by 29 February 2016, a public deed of purchase and sale of the Property to Gateway Properties be
executed.
5.2. The parties to the Acquisition Agreement may agree to extend the date for fulfilment of one or more of the
Conditions Precedent prior to the expiry of the relevant time periods set out in paragraph 5.1 above.
5.3. Unless all Conditions Precedent have been fulfilled or waived by not later than the relevant dates for
fulfilment thereof, as set out in paragraph 5.1 above (or such later date or dates as may be agreed in writing
between the parties before the aforesaid date or dates) the provisions of the Acquisition Agreement will
never become of any force of effect and the status quo ante will be restored as near as may be possible and
none of the parties to the Acquisition Agreement will have any claim against the others in terms thereof or
arising from the failure of the Conditions Precedent.
6. CONDITIONS SUBSEQUENT
6.1. In addition to the Conditions Precedent detailed in paragraph 5 above, the Acquisition Agreement is also
subject to the following conditions subsequent (“Conditions Subsequent”):
6.1.1. that, by 1 March 2016, the correction of the quotas of Gateway Properties, be recorded in the Official
Gazette of Mozambique (Boletim da Republica) to reflect correctly the proportions of the quoataholding
in both percentage and amounts; and
6.1.2. that, by 1 March 2016, all other authorisations and conditions necessary to ensure that foreign direct
investment, whether as equity or loans, can be transferred to Gateway Properties and Gateway Properties
can freely expatriate dividends to CD Properties and Commotor, shall have been obtained.
6.2. Unless the Conditions Subsequent have been fulfilled by the dates required for each (or any extension of
such date/s) or waived by Delta, the following will occur:
6.2.1. within 30 business days of written notice from the Seller to Delta of the non-fulfilment of any Condition
Subsequent, the Seller shall remit to Hodari and Sonera the amount of USD 25,000 each to cover time
spent and out-of-pocket costs (including due diligence costs, surveys, travel to Pemba, among others)
during the period of negotiation of the transaction; and
6.2.2. within 45 business days of the date of such written notice of non-fulfilment, the Seller shall purchase back
the Sale Shares from Delta for the same amount for which they were. All transactions costs for this
transaction will be for the account of the Seller.
7. WARRANTIES
The Seller has provided warranties to Delta that are standard for a transaction of this nature.
8. THE PROPERTY
8.1. The details of the Property are as follows:
Property Name and Address Geographical Sector Gross Weighted
Location Lettable Average Gross
Area Rental/m2
(m2) (USD)
Plexus Warehousing Pemba, Light Industrial 6,374 11.8
Complex Downtown, corner Mozambique
Road No.1 and Avenue
Marginal, Pemba City
8.2. Details regarding the Property, as at the Effective Date of 1 December 2015, are set out below:
Property Name and Address Purchase Yield Weighted Lease Vacancy % by
Attributable to Average Duration GLA
Shareholders Escalation (years)
Plexus Warehousing 9.3% 0% 4.3 years 0.0%
Complex Downtown, corner
Road No.1 and Avenue
Marginal, Pemba City.
Notes:
a) The costs associated with the Transaction are estimated at USD 576,779.
b) The Property has been valued by Jones Lang LaSalle Proprietary Limited, independent and registered
professional valuers in terms of the Property Valuers Profession Act, No. 47 of 2000, who have
attributed a value of USD 8,663,000 as at 31 December 2015.
9. FORECAST FINANCIAL INFORMATION OF THE TRANSACTION
The forecast financial information relating to the Transaction for the financial periods ending 30 June 2016 and
30 June 2017 are set out below. The forecast financial information has not been reviewed or reported on by a
reporting accountant in terms of section 8 of the JSE Listings Requirements and Chapter 12 of the SEM Listing
Rules and is the responsibility of Delta’s directors.
Forecast for the 7 month period Forecast for the 12 month
ending 30 June 2016 period ending 30 June 2017
(USD) (USD)
Revenue – uncontracted income 525,000 900,000
Revenue – uncontracted income 0 0
Property expenses (15,750) (27,900)
Net property income 509,250 872,550
Administration fees (6,417) (11,880)
Asset management fees (25,251) (45,452)
Operating profit 477,582 815,218
Finance costs (251,156) (416,053)
Profit before tax 226,426 399,165
Tax (63,918) (113,610)
Income attributable to shareholders 162,508 285,555
Earnings available for distribution 162,508 285,555
Notes:
a) Contracted income is based on current signed leases.
b) There is no uncontracted rental revenue or near-contracted rental revenue for either the 7 month
period ending 30 June 2016 or the 12 month period ending 30 June 2017.
c) There is no non-rental revenue for either the 7 month period ending 30 June 2016 or the 12 month
period ending 30 June 2017.
d) No rental guarantee has been provided to Delta.
e) Operating expenses do not contain any material individual expenditure items.
10. CATEGORISATION
10.1. The Transaction qualifies as a Category 2 acquisition for Delta in terms of the JSE Listings Requirements.
10.2. The Transaction constitutes an undertaking in the ordinary course of business of Delta and therefore does
not fall under the scope of Chapter 13 of the SEM Listing Rules.
10.3. On implementation of the Transaction, CD Properties will become a subsidiary of Delta. In this regard, Delta
confirms that the requirements of paragraph 10.21 of Schedule 10 of the JSE Listings Requirements will be
complied with.
11. GENERAL
11.1. Delta Africa has its primary listings on both the Official Market of the SEM and the Main Board of JSE Limited.
16 February 2016
JSE sponsor and corporate advisor to Delta Company Secretary to Delta
PSG Capital Intercontinental Fund Services
Directors: Sandile Nomvete (chairman), Greg Pearson*, Bronwyn Anne Corbett*, Peter Todd (lead independent),
Maheshwar Doorgakant, Chandra Kumar Gujadhur, Ian Macleod and Leon van de Moortele*
(*executive director)
Company Secretary: Intercontinental Fund Services Ltd
Registered address: Level 5, Alexander House, 35 Cybercity, Ebene, 72201, Mauritius
Transfer secretary in South Africa: Computershare Investor Services (Pty) Ltd
Registrar and Transfer Agent (Mauritius): Intercontinental Secretarial Services Ltd
Corporate advisor and JSE Sponsor: PSG Capital (Pty) Ltd
SEM sponsor: Capital Markets Brokers Ltd
This Notice is issued pursuant to the JSE Listings Requirements, SEM Listing Rule 11.3 and the Securities Act of
Mauritius 2005.
The Board of directors of Delta Africa Property Holdings Limited accepts full responsibility for the accuracy of the
information contained in this communiqué.
Date: 16/02/2016 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.
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