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DISPOSAL OF SUBSIDIARY
Freedom Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration No. 2012/129186/06)
Share code: FDP
ISIN: ZAE000185260
(“Freedom” or the “Company” or the “Group”)
DISPOSAL OF 100% OF THE ISSUED ORDINARY SHARES AND CLAIMS AGAINST, ZOLO PROPS
PROPRIETARY LIMITED
1. INTRODUCTION
Shareholders are advised that Freedom has entered into a sale of shares and
claims agreement (“Sale Agreement”) with SADC Infrastructure Consulting
Proprietary Limited (the “Purchaser”) in terms of which the Purchaser will
acquire (the “Sale”) all of the issued ordinary share capital in and claims
against Zolo Props Proprietary Limited (the “Company”), for a total
consideration comprising R12,100,000 (twelve million and one hundred thousand
Rand) in cash (“Cash Consideration”).
2. RATIONALE FOR THE SALE
The Sale is in line with Freedom’s strategy of divesting of non-core assets
as set out in an announcement released on the Securities Exchange News Service
of JSE Limited (the “JSE”) on 15 March 2016 (the “Announcement”). The proceeds
will be applied within the Group in accordance with the details set out in
the Announcement.
3. BACKGROUND TO THE COMPANY AND THE PURCHASERS
3.1. The Company
The Company is a wholly owned subsidiary of Freedom and the owner of two
properties (the “Properties”), each of which are vacant land zoned for
residential development, held under separate deeds of sale and located in
Stellenbosch in the Western Cape.
3.2. The Purchasers
The Purchaser is a private company incorporated in South Africa.
4. MATERIAL TERMS OF THE SALE AGREEMENT
4.1. Conditions Precedent
All conditions precedent to the Sale, including approval by the boards of
directors of each of the Seller and the Purchaser and other than:
- the completion of a satisfactory due diligence by the Purchaser; and
- the transfer of the Properties from Freedom to the Purchaser,
each by no later than 17:00 South African time on 30 June 2016, have been
fulfilled.
4.2. Sale Consideration
The Cash Consideration must be paid to the Seller or the Seller’s nominee
on or before 15 July 2016.
A portion of the Cash Consideration, a maximum of R3,900,000 (three million
and nine hundred thousand Rand) excluding any interest payable thereon (the
“Facility Amount”), will be set-off against the obligation of Freedom to
repay the construction costs of the first 10 (ten) residential units to be
constructed by the Purchaser on Erf 5973, Burgersfort Extension 40 Township
(“Burgersford Erf”) in terms of a loan agreement (the “Loan Agreement”)
concluded between Freedom, the Purchaser and Zambesa Investments
Proprietary Limited (a wholly owned subsidiary of Freedom and owner of the
Burgersford Erf) on 15 June 2016.
In terms of the Loan Agreement, the Purchaser has agreed to make available
the Facility Amount to Freedom consequent to the cancellation of the
agreement entered into between Freedom and the shareholders of Bilko
Investments (Proprietary) Limited (“Bilko”) on 24 August 2016, as amended
on 18 September 2013, 31 October 2013, 19 November 2013 and 30 November
2013, respectively, and in terms of which Freedom had agreed to acquire
the entire share capital and loan accounts of Bilko for an amount of
R12,000,000 (twelve million Rand), the details of which were disclosed in
the Company’s Pre-Listing Statement, and which statement is available for
download from the Company’s website hosted at www.freedompropertyfund.com
(see Pre-Listing Statement link on the Investor Relations page of the
website).
4.3. Effective Date
The effective date of the Sale Agreement will be the date of fulfilment
(or waiver, as the case may be) of all of the conditions precedent set out
in paragraph 4.1 above.
4.4. Other
Freedom and the Purchaser have each provided warranties that are standard
to a transaction of this nature.
5. VALUE AND PROFITS ATTRIBUTABLE TO THE PROPERTIES
The value of the Properties, effective as of 28 February 2015, and as determined
by an external valuer to the Company, Mr JS Bosman (M.I.V) (SA), is as set out
below:
Property AH Plots 25, 26, 28 & 29
Title deed numbers: 23981/2014 and 18519/2010
Location: Stellenbosch, Western Cape
Sector: Residential
Original purchase price: R11,714,320 (eleven million seven hundred and
fourteen thousand three hundred and twenty Rand)
Valuation: R21,100,000 (twenty one million one hundred
thousand Rand)
The Properties were held for development and hence gross lettable area, weighted
average rental per square meter and rental income numbers are not available.
The Properties contributed costs of R8,997 (eight thousand nine hundred and
ninety seven Rand) to the Group’s earnings for the year ended 28 February 2015.
6. CATEGORISATION
Due to its relative size to the market capitalisation of Freedom, the Sale is
deemed to constitute a Category 2 transaction under the JSE Listings Requirements.
Johannesburg
24 June 2016
Sponsor
Bravura Capital Proprietary Limited
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