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AFRICAN DAWN CAPITAL LIMITED - Disposal of Rental Enterprise by Candlestick Park Investments Proprietary Limited

Release Date: 11/04/2016 17:10
Code(s): ADW     PDF:  
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Disposal of Rental Enterprise by Candlestick Park Investments Proprietary Limited

African Dawn Capital Limited
Incorporated in the Republic of South Africa
(Registration Number: 1998/020520/06)
JSE share code: ADW
ISIN: ZAE000060703
(“Afdawn” or “the Company")

DISPOSAL OF RENTAL ENTERPRISE BY CANDLESTICK PARK INVESTMENTS
PROPRIETARY LIMITED

1.   THE TRANSACTION

     Shareholders are hereby advised that Candlestick Park
     Investments Proprietary Limited (“Seller” or  “Candlestick”), a wholly-owned subsidiary of Afdawn
     entered into a sale of rental enterprise agreement with
     SJJMC Property Proprietary Limited or its nominee
     (“Purchaser”) dated 8 April 2016 (“the Agreement”). In
     terms of the Agreement, the Purchaser will purchase from
     the Seller the rental enterprise, which enterprise is
     conducted as a going concern on Portion 214 of the Farm
     Lyttleton 381, Registration Division IR, Gauteng Province
     (“the Property”) and includes the following (“Rental
     Enterprise”):

     1.1   the Property and the building(s);

     1.2   all right, title and interest of the Seller in and to
           the underlying existing lease agreements related to
           the Property (“Lease Agreements”);

     1.3   all right, title and interest of the Seller in and to
           the security contract concluded between the Seller
           and a service provider;

     1.4   all fixed assets which form part of the Rental
           Enterprise;

     1.5   the goodwill appertaining to the Rental Enterprise;
           and

     1.6   all other assets necessary to conduct the Rental
           Enterprise,
     (referred to as “the Transaction”).

2.   OVERVIEW OF THE RENTAL ENTERPRISE

     The Rental Enterprise is conducted as a going concern on
     the Property and consists of a residential housing complex
     where residential units are rented out to tenants on an
     annual lease basis.

3.   EFFECTIVE DATE

     The effective date of the Transaction shall be the 1st
     (first) business day after the date of fulfilment or waiver
     of the last of the conditions precedent set out in paragraph
     7 below (“Effective Date”).

4.   RATIONALE FOR THE TRANSACTION

     The Rental Enterprise and the Property have been identified
     as a non-core asset by the Afdawn board of directors. The
     Transaction is in line with the strategy of the Company to
     dispose of certain non-core assets. The net proceeds of the
     Transaction will be used to reduce liabilities and fund
     other ongoing commitments of the Company.


5.   PURCHASE CONSIDERATION

     In terms of the Agreement, the purchase price for the Rental
     Enterprise shall be an amount, in the aggregate, of
     R32.5 million (inclusive of VAT at a rate of 0% (zero
     percent)).

6.   USE OF PROCEEDS

     Shareholders are referred to the SENS announcements
     released by the Company on 23 December 2015 and 30 March
     2016 advising Shareholders of the settlement agreement
     entered into between Candlestick, Blue Dot Properties 1198
     CC (“Blue Dot”), Nedbank Limited (“Nedbank”), African Dawn
     Property Transfer Finance 2 Proprietary Limited (“PTF2”)
     and African Dawn Property Transfer Finance 3 Proprietary
     Limited (“PTF3”)(“Settlement Agreement”), which
     Settlement Agreement has subsequently been made an order
     of court.

     In terms of the Settlement Agreement, the proceeds received
     by Candlestick from the Transaction will be divided and
     paid as follows:

     6.1    Nedbank will be paid, as a first charge, the amount
            of the balance due to it under the mortgage bond over
            the fixed Property, as at date of transfer (“Proceeds
            Less Nedbank Mortgage”);

     6.2    30% of the Proceeds Less Nedbank Mortgage will be
            paid to Blue Dot;

     6.3    35% of the Proceeds Less Nedbank Mortgage will be
            paid to PTF3 in full and final settlement of its loan
            claim against Candlestick; and

     6.4    35% of the Proceeds Less Nedbank Mortgage will be
            paid to PTF2, a wholly-owned subsidiary of Afdawn, in
            full and final settlement of its loan claim against
            Candlestick.

     Based on the terms of the Settlement Agreement, Afdawn
     expects to receive proceeds of R8.7 million as a result of
     the Transaction.

7.   CONDITIONS PRECEDENT

     The Transaction is subject to the fulfilment or waiver of
     the following conditions precedent:

     7.1.    by no later than 5 (five) business days after the
             date of signature of the Agreement, the board of
             directors of the Purchaser adopt written resolutions
             in terms whereof the board authorises the conclusion
             of the Agreement by the Purchaser;

     7.2.    by no later than 5 (five) business days after the
             date of signature of the Agreement, the board of
             directors of the Seller adopt written resolutions
             in terms whereof the board authorises the conclusion
             of the Agreement by the Seller and approves the sale
             of the Rental Enterprise;

      7.3.   by no later than 5 (five) business days after the
             date of signature of the Agreement, a special
             resolution is adopted by the sole shareholder of the
             Seller at a meeting of the shareholder in terms of
             section 112 of the Companies Act, in terms whereof
             the shareholder of the Seller approves the disposal
             of the Rental Enterprise in terms of the Agreement,
             which Rental Enterprise constitutes all or greater
             part of the assets of the Seller; and

      7.4.   to the extent required, by no later than 90 (ninety)
             business days after the date of signature of the
             Agreement, all approvals required under the JSE
             Listings Requirements are obtained for the
             Transaction.

      The conditions precedent set out in clauses 7.1 and 7.2
      above are expressed for the benefit of the parties, who
      shall be entitled to waive the requirement for fulfilment
      thereof by written agreement between them. The condition
      precedent in clause 7.3 above is statutory in nature and
      incapable of being waived. The condition precedent in
      clause 7.4 above is expressed for the benefit of the Seller,
      who shall be entitled to waive the requirement for
      fulfilment thereof upon written notice to the Purchaser.

8.    FINANCIAL INFORMATION

      The net value of the Rental Enterprise, which is the subject
      of the Transaction, was R10.95 million as at the year ended
      28 February 2015.

      The loss attributable to the Rental Enterprise, which is
      the subject of the Transaction was R0.24 million for the
      year ended 28 February 2015.

9.    OTHER RELEVANT INFORMATION

      The parties have provided warranties to each other that are
      standard to a transaction of this nature.

10.   CATEGORISATION

      The Transaction constitutes a Category 1 Transaction in
      terms of the JSE Listings Requirements. Accordingly, a
      circular will be distributed to Afdawn shareholders in due
      course providing further information relating to the
      Transaction and convening a general meeting of shareholders
      in order to obtain shareholder approval for the
      Transaction.

Cape Town
11 April 2016

Corporate Adviser and Transaction Designated Adviser
PSG Capital

Date: 11/04/2016 05:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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