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Ann re the Acq of Safari Lodge, a Specific Issue of Shares for Cash & Intention to Establish dom med term note Prog
ORION REAL ESTATE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/021085/06)
Share Code: ORE ISIN: ZAE000075651
("Orion Real Estate" or “the company”)
ANNOUNCEMENT REGARDING THE ACQUISITION OF SAFARI LODGE, A SPECIFIC ISSUE OF
SHARES FOR CASH AND INTENTION TO ESTABLISH A DOMESTIC MEDIUM TERM NOTE
PROGRAMME
ACQUISITION OF SAFARI LODGE
Shareholders are advised of the Acquisition of Safari Lodge (“the property”) as a going
concern by Orion Real Estate (“the Purchaser”) from Gmeiner Investment Holding Proprietary
Limited (“the Seller”) for a consideration of R100 000 000. The effective date of the
transaction will be the date of transfer of the property into the name of the Purchaser. The
Seller is a related party to Orion Real Estate.
Rationale for the Acquisition
Orion Real Estate continually evaluates its property portfolio and seeks to maximise its return
to its shareholders. The Acquisition of Safari Lodge is in line with this strategy.
Terms of the Acquisition
The total consideration for the Acquisition of the property is R100 000 000 plus VAT at 0%,
payable in cash, payable by the Purchaser to the Seller on transfer of the property, and by
way of a loan account, a portion of which loan will be set off against the cumulative
amounts owed by the Franz Gmeiner private group of companies. The ratio of cash and
loan account will be determined in due course but is expected to be in the ratio of
R30 000 000 cash and the balance by way of loan account. Any remaining loan balance
due will attract interest at the prime rate less 1% with payment terms to be agreed between
the Seller and the Purchaser.
If VAT becomes payable at a rate other than 0%, the agreement will immediately be
cancelled without a claim against the other party. No brokers commission is payable on the
Acquisition.
Property Specific Information
Property specific information is detailed below:
PROPERTY NAME ADDRESS LOCATION SECTOR
Safari Lodge Portion 161 of the Farm Rustenberg, North Hospitality (hotel
Town and Townlands of West Province and conference
Rustenberg 272, facilities)
Registration Division J.Q.
RENTABLE AREA WEIGHTED AVERAGE TENANT PROFILE PROPERTY
RENTAL PER M2 VALUATION
5.6313 Hectares, R55.23 (per the existing Orion Hotels and R104 700 000
including land and rental agreement) and Resorts (South
buildings thereon R53.60 (based on a Africa) Proprietary
with GLA of 9 328m2 rental of R500 000 per Limited
month)
Financial Information
The property has been valued by Bradley Ryle, an independent external registered property
valuer, on 30 June 2015 at a fair value of R104 700 000, on the basis that the section of the
hotel that burnt down will be rebuilt and refurbished and that the valuation is to include this
replaced section of the building. The Seller is responsible for the rebuilding and refurbishing
of the section of the property.
The purchase consideration is R100 000 000 and no brokerage is payable.
Impact on statement of comprehensive income
The Acquisition is subject to a lease being signed in the amount of R500 000, excluding VAT,
per month as further detailed under conditions precedent below. The company will incur
interest costs on any bond raised, which amount will be determined in due course, and
normal operating costs. Any remaining related party loan payable will attract interest at
prime less 1%. Orion Hotels is controlled indirectly by Franz Gmeiner.
Impact on statement of financial position
The purchase will result in an increase of investment property of R100 000 000, an increase in
bond borrowings of approximately R30 000 000, a reduction in related party loans receivable
and increase in a related party loan payable.
Conditions Precedent and Documentation
The Acquisition is subject to a number of conditions precedent, including inter alia, the
following:
- The procurement of a bond;
- A satisfactory due diligence;
- Board and shareholder approvals; and
- The signing of a ten year fully repairing, insuring and maintaining lease with Orion Hotels
and Resorts (South Africa) Proprietary Limited (the current tenant) at a monthly rental
of R500 000 plus VAT, which lease will be subject to an annual escalation of 6% prior to
transfer.
The Acquisition is categorised as a Category 1 transaction and is also a related party
acquisition. The Acquisition will thus require shareholder approval. The related party and
associates of the related party will be precluded from voting.
SPECIFIC ISSUE OF SHARES FOR CASH
Orion Real Estate shareholders are advised that Orion Real Estate intends on issuing up to
309 042 000 new shares, being approximately 49% of the shares in issue at 29 February 2016.
The issue price will be determined by the board of directors of Orion Real Estate from time to
time, but the price will be no less than the 30 day VWAP. It is the intention of the board to
place the shares closer to the net asset value per share of the company, which at
31 December 2015 was 98.68 cents per share. The shares to be issued will rank pari passu
with the existing shares in issue.
Rationale for the Issue
The rationale for the Issue of Shares is to enable the company to comply with the Listings
Requirements, notably achieving the 20% public shareholder spread as contemplated in
section 4.28 of the Listings Requirements. Currently, Orion does not fully comply with the
Listings Requirements in that it has 564 public shareholders holding 5.63% of the entire issued
share capital of the company, which is less than the 20% of the spread requirements. Orion
also intends to broaden the shareholder spread to include BEE subscribers. No shareholder
will be issued a shareholding of greater than 34.9%, and thus the Issue of Shares for Cash will
not trigger a mandatory offer.
Opening and Closing Dates
There is no specific opening and closing of the Issue of Shares for Cash as it is the intention to
place the shares over the next 18 months. Announcements relating to the placement of
shares will be made from time to time in accordance with the JSE Listings Requirements.
Financial Effects
As the placing will be for cash only, no additional financial information is required.
Subsequent to this share issue, assuming all the shares are issued, Orion Real Estate will have
up to 939 740 688 shares in issue.
A circular to shareholders is being prepared and will be sent to shareholders, together with a
notice of General Meeting, within the 60 day time frame set out in the JSE Listings
Requirements.
INTENTION TO ESTABLISH A DOMESTIC MEDIUM TERM NOTE PROGRAMME
Orion proposes to establish the Orion Real Estate Limited ZAR1,000,000,000 Domestic Medium
Term Note Programme ("Programme") pursuant to the final Programme Memorandum to be
approved by the JSE Limited. A further announcement will be made in due course.
By order of the board
18 May 2016
Sponsor
Arbor Capital Sponsors Proprietary Limited
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