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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
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