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Disposal by wholly owned 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 PORTION 18 OF FARM 799 BY FREEDOM’S WHOLLY OWNED SUBSIDIARY, CLEAR
CREAK TRADING 145 PROPRIETARY LIMITED
1. INTRODUCTION
Shareholders are referred to the announcement released by Freedom on the
Securities Exchange News Service (“SENS”) of JSE Limited on 24 February 2016
wherein it was advised that a wholly owned subsidiary of Freedom, Clear Creek
Trading 145 Proprietary Limited (the “Seller”) had entered into a sale
agreement (the “First Sale Agreement”) with Garvin Investments Holdings
Proprietary Limited (the “Purchaser”) whereby the Purchaser had offered to
acquire Portion 18 of Farm 799 (the “Property”) from the Seller, for a total
consideration of R22,000,000 (twenty two million Rand) plus valued added tax,
if applicable.
Shareholders are hereby advised that the conditions precedent to the First
Sale Agreement were not fulfilled by the requisite dates and hence that the
transfer of the Property into the name of the Purchaser by 31 May 2016 did
not take place.
Consequent to the non-fulfilment of the conditions precedent to the First Sale
Agreement, the Company and the Purchaser have entered into a new sale agreement
(the “Second Sale Agreement”) whereby the Purchaser has offered to acquire
the Property (the “Sale”) for R15,000,000 (fifteen million Rand) plus valued
added tax if applicable (the “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 SENS 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 SELLER AND THE PURCHASER
3.1. The Seller
The Seller is a wholly owned subsidiary of Freedom and the owner of the
Property, located in the Registration Division East London RD and in extent
17,9910 ha (seventeen comma nine nine one zero hectares).
3.2. The Purchaser
The Purchaser is a private company incorporated in South Africa.
4. MATERIAL TERMS OF THE SALE SECOND 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 receipt by the Seller of confirmation (the “Confirmation”)
that the Purchaser has obtained formal approval for a loan that is
satisfactory in amount and terms to the board of directors of the
Purchaser, have been fulfilled.
The Confirmation must be presented to the board of directors of the Seller
on or before 18 July 2016.
4.2. Sale Consideration
The Consideration is payable on demand by the Seller no more than 7 (seven)
days prior to the anticipated date of transfer of the Property into the
name of the Purchaser.
4.3. Effective Date
The effective date of the Second 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
The Seller and the Purchaser have each provided warranties that are
standard to a transaction of this nature.
5. VALUE AND PROFITS ATTRIBUTABLE TO THE PROPERTY
The value of the Property, effective as of 28 February 2015, and as determined
by an external valuer to the Seller, Mr JS Bosman (M.I.V) (SA), is as set out
below:
Title deed numbers: 1685/2014
Location: East London, Eastern Cape
Sector: Residential
Original purchase price: R46,500,000 (forty-six million five hundred
thousand Rand) together with capitalized
acquisition costs of R2,996,397 (two million
nine hundred and ninety-six thousand three
hundred and ninety-seven Rand)
Valuation: R115,900,000 (one hundred and fifteen million
nine hundred thousand Rand)
The Property was held for development and hence gross lettable area, weighted
average rental per square meter and rental income numbers are not available.
The Property contributed earnings of R54,013,515 (fifty-four million thirteen
thousand five hundred and fifteen Rand) to the Group’s earnings for the year
ended 28 February 2015 with such earnings reflecting an adjustment to the fair
value of the Property net of costs and deferred taxes. The Property’s contribution
to the Group’s headline earnings for the same period was a loss of R7,144 (seven
thousand one hundred and forty-four Rand).
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
11 July 2016
Sponsor
Bravura Capital Proprietary Limited
Date: 11/07/2016 04:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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