Wrap Text
Acquisition of interest in Echo Prime Properties B.V and Notification in terms of s45(5) of the Companies Act 71
THE PIVOTAL FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/030215/06)
JSE share code: PIV ISIN: ZAE000196440
(“Pivotal” or “the company”)
ACQUISITION OF AN INTEREST IN ECHO PRIME PROPERTIES B.V. AND NOTIFICATION IN TERMS OF SECTION 45(5) OF THE COMPANIES ACT 71 OF 2008
INTRODUCTION
Pivotal shareholders are referred to the announcement released by Redefine Properties Limited (“Redefine”) on 1 March 2016,
advising of the conclusion of an agreement in terms of which Redefine will acquire 75% (plus one share) of the issued share
capital of Echo Prime Properties B.V. (“EPP”) (the “Redefine transaction”), as well as to the announcement released by Pivotal
on 8 April 2016, advising of the in principle agreement to co-invest with Redefine in EPP through the acquisition from Redefine
of a number of shares in EPP.
EPP owns a portfolio of prime real estate assets throughout Poland, further detailed below (the “property portfolio”).
Pivotal is now pleased to announce the conclusion of:
- a share sale agreement between Pivotal Global Proprietary Limited (a wholly-owned subsidiary of Pivotal) (“Pivotal
Global”) and Redefine (“the share sale agreement”), in terms of which Pivotal will acquire a stake in EPP; and
- a co-investor agreement between Pivotal Global, various other co-investors and Redefine (the “co-investment
agreement”).
RATIONALE
Pivotal’s investment in EPP is in keeping with the company’s strategy of investing up to 15% of its assets in mature emerging
markets, offering the company an opportunity to invest in a number of high-quality properties with attractive yield spreads. The
transaction in addition offers participation in a substantial development pipeline with a value on completion in excess of €500
million, given EPP’s right to share in the profit derived from the sale of certain assets currently being developed by subsidiaries of
Echo Investment S.A. (“Echo”), the current shareholder of EPP, and in respect of which EPP has a right of first offer to acquire.
SALIENT TERMS OF THE SHARE SALE AGREEMENT AND CO-INVESTMENT AGREEMENT
Pivotal Global will acquire a beneficial interest in such number of ordinary shares in the capital of EPP as is equal to 6.0606% of
all issued shares of EPP (the “EPP shares”) from Redefine, for a purchase consideration of EUR31,154,199, payable in cash (the
“transaction”). The total consideration payable by Pivotal Global for each EPP share equates to the consideration payable by
Redefine for its shares in EPP, plus Pivotal Global’s share of Redefine’s transaction costs.
The transaction attributes a value to the total property portfolio of EUR1,188,000,000. The property portfolio generates net
operating income of EUR71,000,000 and total distributable income (net of interest and withholding tax) of EUR46,000,000.
Pivotal Global’s 6.0606% share of such distributable income is EUR2,787,876.
The transaction will be implemented on a back-to-back basis with the Redefine transaction, and is accordingly effective on the
date on which completion of the Redefine transaction occurs, which will be 31 May 2016.
Given the back-to-back nature of the transaction, Pivotal Global will effectively assume all rights and obligations associated with
its shareholding in EPP pro rata, on the basis agreed in terms of the Redefine transaction and any shareholders agreement between
Redefine, Echo and EPP.
The share sale agreement and co-investors agreement each contain warranties and other provisions that are typical for a
transaction of their nature.
CONDITIONS PRECEDENT
All conditions precedent to the transaction have been fulfilled. The transaction is accordingly unconditional.
THE PROPERTY PORTFOLIO
The details of the properties owned by EPP, including the property name, location, sector, monthly weighted average rental per
square metre, the GLA and the valuation, effective as at 15 January 2016 and attributed by Pivotal, are as follows:
Monthly
weighted
average rental
per m2 GLA Valuation
Property name Location Sector (EUR/m2)1 (m2) (EUR’ million)2
Pasaz Grunwaldzki Pl. Grunwaldzki 22, Wroclaw Retail 22.99 49 402 233 200 000
Galaxy Al. Wyzwolenia 18-20, Szczecin Retail 24.20 41 297 200 900 000
Galeria Echo Kielce ul. Swietokrzyska 20, Kielce Retail 14.83 77 400 206 400 000
Galeria Amber Kalisz ul. Górnoslaska 82, Kalisz Retail 13.29 34 785 74 100 000
Galeria Veneda ul. Zawadzka 38, Lomza Retail 13.68 15 026 34 500 000
Outlet Park u. Struga 42, Szczecin Retail 16.55 22 232 60 300 000
Galeria Sudecka ul. Jana Pawla II 51, Jelenia Góra Retail 10.53 31 005 51 900 000
Galeria Olimpia ul. Kolejowa 4, Belchatów Retail 10.57 21 757 38 700 000
Centrum Echo Belchatow ul. Kolejowa 4, Belchatów Retail 5.77 11 426 9 620 000
Centrum Echo Przemysl ul. 29 Listopada 4, Przemy?l Retail 6.50 5 759 4 560 000
Total Retail 310 089 914 180 000
Malta Office Park Baraniaka 88, Poznan Office 14.34 27 973 63 700 000
Park Rozwoju ul. Konstruktorska 10, Warsaw Office 13.39 33 004 73 300 000
A4 Business Park Francuska 42, Katowice Office 12.81 18 028 37 000 000
West Gate ul. Lotnicza 12, Wroclaw Office 13.05 14 714 40 400 000
Astra Kielce Al. Solidarnosci 36, Kielce Office 13.06 11 670 31 100 000
Oxygen Malczewskiego 22, Szczecin Office 15.39 12 680 28 300 000
Total Office 118 069 273 800 000
TOTAL 428 158 1 187 980 000
Note:
1. Excluding rental income generated by non-area units, for example parking lots and antennae.
2. The valuation amount reflects the value attributed to each of the properties by the directors of Pivotal, having considered an
appraisal of the property portfolio conducted by Savills plc. The directors of Pivotal are not independent and are not
registered as professional valuers or as professional associate valuers in terms of the South African Property Valuers
Profession Act, No 47 of 2000.
It is intended that EPP’s property and asset management function is undertaken internally by its executive management together
with an appropriately skilled and experienced staff complement that is familiar with the properties. In the interim, the property
portfolio will be managed by Griffin Real Estate sp. z o.o., a leading investor in the commercial real estate markets of Central and
Eastern Europe.
CATEGORISATION
The transaction will be classified as a category 2 transaction in terms of paragraph 9.5(a) of the JSE Listings Requirements and
accordingly will not require the approval of Pivotal shareholders.
NOTIFICATION IN TERMS OF SECTION 45(5) OF THE COMPANIES ACT
Pivotal had entered into a written intra-group loan with Pivotal Global in terms of which, inter alia, the company will advance an
amount to Pivotal Global sufficient to discharge its obligations in terms of the share sale agreement. In order to discharge the loan
to Pivotal Global, Pivotal has entered into a written term loan agreement with Investec Bank Limited ("Investec") in terms of
which, inter alia, Investec will lend and advance an amount of €33,310,025 to Pivotal.
The intra-group loan to Pivotal Global constitutes financial assistance as contemplated in accordance with section 45 of the
Companies Act (“financial assistance”), which financial assistance exceeds one tenth of one percent of the company’s net worth.
Notice is accordingly hereby given in terms of the provisions of section 45(5) of the Companies Act 71 of 2008
(the “Companies Act") and pursuant to the special resolution passed at the annual general meeting of the company held on
3 September 2015 authorising the board of directors of the company (the “board”) to provide financial assistance to current and
future subsidiaries and to current and future associated companies of the company, that the board adopted a resolution on 6 May
2016 to provide financial assistance in terms of section 45 of the Companies Act on the basis set out above.
In accordance with section 45(3)(b) of the Companies Act, the board is satisfied and acknowledges, in respect of the financial
assistance granted that:
- immediately after providing the financial assistance, Pivotal would satisfy the solvency and liquidity test as provided for in
section 4 of the Companies Act; and
- the terms under which the financial assistance is to be given are fair and reasonable to Pivotal.
20 May 2016
Corporate advisor and sponsor
Java Capital
Legal advisor
Cliffe Dekker Hofmeyr
Date: 20/05/2016 03:35:00 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 
