HOSPITALITY PROPERTY FUND LIMITED - Cash payment in respect of fractional entitlement

Release Date: 06/10/2016 11:12
Code(s): HPB HPA
 
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Cash payment in respect of fractional entitlement

HOSPITALITY PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/014211/06)
Share code for A shares: HPA
ISIN for A shares: ZAE000203022
Share code of B shares: HPB
ISIN for B shares: ISIN ZAE000214656
(Approved as a REIT by the JSE)
(“Hospitality” or “the company”)


CASH PAYMENT IN RESPECT OF FRACTIONAL ENTITLEMENT


Shareholders are referred to the various announcements relating to the transaction in terms of which Tsogo Sun Holdings Limited
will acquire a controlling stake in Hospitality by vending a portfolio of ten hotel properties into Hospitality in exchange for the
issue of Hospitality ordinary shares and the restructure of Hospitality’s dual-class share capital structure to a single-class share
capital structure (the “capital restructure”), the last of which was released by Hospitality on 23 September 2016.

The capital restructure contemplates the consolidation of all authorised B ordinary shares (“B shares”) (both issued and unissued)
in the ratio of 3.5:1, such that holders of B shares will hold 1 B share for every 3.5 B shares held immediately prior to the
implementation of such consolidation (the “consolidation”). The allocation of B shares in terms of the consolidation will be such
that any entitlement to a fraction of a B share (“fractional entitlement”) will be rounded down to the nearest whole number,
resulting in the allocation of whole B shares only, with a cash payment being made to the relevant shareholder in respect of the
fractional entitlement (the “cash payment”).

Shareholders are advised that the value of a B share to be utilised in determining the cash payment due to a shareholder in respect
of any fractional entitlement is R11.31025. In accordance with the requirements of the JSE Limited, this amount has been
determined with reference to the weighted average price of a B share traded on the JSE on Wednesday, 5 October 2016,
discounted by 10%.

The gross amount of the cash payment per fractional entitlement will be paid to B shareholders entitled thereto. There will be no
withholding tax applicable.

To the extent that a shareholder held B shares as an asset as defined in paragraph 1 of the Eighth Schedule to the Income Tax Act
no. 58 of 1962 (“Income Tax Act”), which does not constitute trading stock, the cash payment will be regarded as capital in
nature. The cash payment will accordingly be taxed in terms of the applicable provisions of the Eighth Schedule to the Income
Tax Act read with section 26A of the Income Tax Act, that is, subject to capital gains tax. To the extent that a shareholder held the
B shares as trading stock as defined in section 1 of the Income Tax Act, the cash payment will be regarded as revenue in nature.
The cash payment will accordingly be taxed as normal income in terms of the applicable provisions of the Income Tax Act.

By way of example:

Assuming that a shareholder holds 100 B shares at the close of business on the record date for implementation of the capital
restructure, being Friday, 7 October 2016, such shares will be consolidated to 28.57143 ordinary shares in terms of the capital
restructure. However, applying the rounding principle detailed above, the shareholder will, following the implementation of the
capital restructure, hold 28 ordinary shares and receive a cash payment in respect of the fractional entitlement of R6.46302, being
R11.31025 x 0.57143.

The salient dates and times announced on Friday, 23 September 2016 remain unchanged.

6 October 2016

Corporate advisor and transaction sponsor to Hospitality
Java Capital

Corporate law and tax advisors to Hospitality
ENS Africa

Corporate advisor and transaction sponsor to Tsogo Sun
Investec Bank Limited

Corporate law advisor to Tsogo Sun
Tabacks

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