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ASCENSION PROPERTIES LIMITED - Joint firm intention by Rebosis to acquire the Ascension A shares it does not already own by scheme of arrangement

Release Date: 27/10/2016 14:54
Code(s): AIA REB     PDF:  
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Joint firm intention by Rebosis to acquire the Ascension A shares it does not already own by scheme of arrangement

Ascension Properties Limited                                    Rebosis Property Fund Limited
(Registration number 2006/026141/06)                            (Registration number 2010/003468/06)
JSE share code: AIA ISIN: ZAE000204566                          JSE share code: REB ISIN: ZAE000201687
(Approved as a REIT by the JSE)                                 (Approved as a REIT by the JSE)
(“Ascension” or “the company”)                                  (“Rebosis”)



JOINT ANNOUNCEMENT OF A FIRM INTENTION BY REBOSIS TO MAKE AN OFFER TO ACQUIRE 100% OF THE ISSUED A ORDINARY SHARES OF ASCENSION 
THAT IT DOES NOT ALREADY OWN BY SCHEME OF ARRANGEMENT


1.   Introduction and rationale

     Ascension and Rebosis have concluded an agreement in terms of which Rebosis has given notice of its firm intention to
     offer to acquire all of the Ascension A ordinary shares that Rebosis does not already own in exchange for Rebosis A
     ordinary shares, by scheme of arrangement (the “scheme”).

     Following the implementation of a scheme of arrangement between Ascension and Ascension B shareholders on
     17 August 2015, Rebosis acquired (and subsequently delisted) all of the Ascension B shares in issue and Ascension
     became a listed subsidiary of Rebosis.

     The proposed transaction will result in an enlarged market capitalisation for Rebosis, with economies of scale and
     enhanced liquidity. The terms of the Rebosis A ordinary shares effectively mirror the terms of the Ascension A ordinary
     shares. In addition, the cash-cover ratio applicable to the Rebosis A ordinary shares will be significantly higher than the
     cash-cover ratio applicable to Ascension A shares.

     Rebosis and Ascension are of the view that the proposed transaction and the implementation of the scheme best advances
     the interests of their investors.

2.   Scheme consideration

     In terms of the scheme, if implemented, the Ascension A shares held by Ascension A shareholders will be exchanged for
     Rebosis A ordinary shares Rebosis (“Rebosis A ordinary consideration shares”) on a swap ratio of 19.34236 Rebosis A
     ordinary consideration shares for every 100 Ascension A shares held.

     In accordance with the terms of the Rebosis A ordinary consideration shares, upon the declaration of a distribution by
     Rebosis to its ordinary shareholders, no such distribution shall be paid to Rebosis ordinary shareholders unless the Rebosis
     A ordinary consideration shares have been paid their distribution, which shall be in the same amounts as Ascension A
     shares’ entitlement to fixed income distributions. In addition, the rights of Rebosis A ordinary consideration shares in
     relation to voting and liquidation proceeds will effectively mirror those attaching to Ascension A shares save that –

     -       for every 5.17 Ascension A shares, an Ascension A shareholder will instead hold 1 Rebosis A ordinary
             consideration share with an entitlement to preferred income distributions, as referred to above;
     -       the voting rights attaching to the Rebosis A ordinary consideration shares will be not more than 25% of the total
             voting rights applicable to Rebosis shareholders collectively (that is the voting rights of the holders of Rebosis A
             ordinary consideration shares and Rebosis ordinary shares); and
     -       no further Rebosis A ordinary consideration shares will be created or issued.

3.   Conditions

     The scheme will be subject to the following suspensive conditions:

     -       approval by Rebosis shareholders and filing by the Companies and Intellectual Property Commission of the
             requisite special resolutions, including resolutions to amend the memorandum of incorporation and authorised
             shares of Rebosis, required to authorise the implementation of the scheme and the allotment and issue of the
             Rebosis A ordinary consideration shares;
     -       to the extent required under section 115(3) of the Companies Act, approval by the court of the implementation of
             the scheme resolution court is obtained and, if applicable, Ascension not having treated the special resolution
            required in terms of section 115(2) of the Companies Act to approve the scheme (the “scheme resolution”) as a
            nullity, as contemplated in section 115(5)(b) of the Companies Act;
     -      Ascension shareholders not having given, in terms of section 164(3) of the Companies Act, valid notice of objection
            to the scheme resolution taken at the scheme meeting and those objecting Ascension shareholders not having voted
            against the scheme resolution at the scheme meeting;
     -      all applicable regulatory and statutory approvals are obtained; and
     -      such approvals, consents or waivers, if any, as may be required in terms of any debt funding agreement entered into
            by Ascension, in order to give effect to the scheme.

4.   Undertaking to Rebosis A ordinary shareholders

     In terms of the scheme Rebosis will provide an undertaking in favour of the holders of Rebosis A shares from time to time,
     that the directors of Rebosis shall not of their own accord initiate any process or steps designed to result in a conversion of
     the Rebosis A shares to Rebosis ordinary shares as contemplated in clause 18 of the Memorandum of Incorporation of
     Rebosis (which sets out the terms on which the Rebosis A ordinary shares may be converted into Rebosis ordinary shares),
     it being understood that such undertaking will not be construed as affecting the rights of Rebosis shareholders to effect
     such a conversion in terms of clause 18 of the Memorandum of Incorporation of Rebosis or as affecting any legal
     obligations which the directors of Rebosis may have in terms of clause 18 of the Memorandum of Incorporation of
     Rebosis.

5.   Distributions

     The Rebosis A ordinary consideration shares are to be issued “cum” entitlement to all distributions for the period from
     1 September 2016.

     Rebosis will declare and pay an interim distribution to Rebosis ordinary shareholders for the six months ending
     31 August 2016 in the ordinary course of business.

     In addition, Ascension will declare and pay an interim distribution to Ascension A shareholders and the Ascension B
     shareholder (Rebosis) for the six months ending 31 August 2016 in the ordinary course of business.

     Rebosis’ interim distributions in respect of the Rebosis A ordinary shares and the Rebosis ordinary shares for the financial
     year ending 31 August 2017 will be for the period 1 September 2016 to 28 February 2017. The full interim distributions
     will be payable to all Rebosis shareholders who hold Rebosis A ordinary shares and Rebosis ordinary shares as at the
     record date for participation in such distribution.

6.   Ascension board undertakings

     Rebosis has received undertakings from Ascension that for the period up to the implementation of the scheme:

     -      Ascension will continue to conduct its business in the ordinary and regular course;
     -      save for the proposed acquisition by Ascension of the immovable property situate at 66 Jorissen Street,
            Johannesburg, the salient features of which have been disclosed to Rebosis and save as publically announced on
            SENS up to the date of this announcement (which, for the avoidance of doubt, includes the disposal of the
            properties known as Bergstan House, Matrix House and Nedbank Centre, announced on SENS on 11 August 2016)
            or as may be agreed to by Rebosis in writing, Ascension will not make any further acquisitions or effect any
            disposals;
     -      not declare or make any distributions other than as referred to in this announcement without the prior written
            consent of Rebosis;
     -      not solicit, initiate or encourage any expression of interest, enquiry, proposal or offer regarding any merger,
            amalgamation, business combination, takeover bid, sale or other disposition of all or substantially all of the equity in
            and/or business and/or assets of Ascension, or afford options to acquire equity, the business and/or assets of
            Ascension or enter into any negotiation or consummate any transaction for any type of similar transaction or series
            of transactions, which would or could constitute a change of control (as contemplated in section 123(5) of the
            Companies Act read with Regulation 86 of the Takeover Regulations) in relation to Ascension or which could
            reasonably be considered to be likely to preclude or frustrate the proposed transaction with Rebosis or its
            implementation ("alternative proposal") or to approve or recommend an alternative proposal or enter into any
            agreement related to an alternative proposal.

7.   Pro forma earnings and net asset value effects pertaining to the scheme

     As the Ascension A shareholders will, in terms of the scheme, exchange their Ascension A shares for Rebosis A ordinary
     consideration shares that will effectively mirror the economics of the Ascension A shares (as referred to in paragraph 2)
     there will be no financial effect on Ascension A shareholders who elect to receive the Rebosis A consideration shares. In
     addition, the cash-cover ratio applicable to the Rebosis A ordinary consideration shares will be significantly higher than the
     cash-cover ratio applicable to Ascension A shares.
8.    Ascension shareholder support

      No Ascension A shareholder has given any undertaking to vote in favour of the A share scheme, however Coronation
      Asset Managers Proprietary Limited, acting on behalf of its clients (“Coronation”) which controls c.60% of the Ascension
      A shares in issue has provided Rebosis with a written ‘in principle’ letter of support in favour of the scheme.

9.    Independent expert

      In accordance with the requirements of chapter 5 of the Companies Regulations, the independent board comprises Haroon
      Takolia, Mervyn Burton, Nkosi-Yawo Gugushe and Mbulelo Renene, being directors Ascension has indicated are
      independent for the purposes of considering the scheme in accordance with the requirements of the Companies Regulations
      (the “independent board”).

      The independent board will appoint an independent expert acceptable to the Takeover Regulation Panel (“TRP”) (as
      required in terms of section 114(2) of the Companies Act, read together with regulations 91(1) and 110 of the Companies
      Regulations) (the “independent expert”), to advise and report to the independent board on the offer by way of a fair and
      reasonable opinion. The independent expert’s full report as well as the independent board’s opinion of the scheme and the
      scheme consideration will be included in the circular to be issued to Ascension A shareholders in respect of the scheme.

10.   Confirmation to the TRP

      In accordance with the Companies Act’s Regulations, Rebosis has confirmed with the TRP that, upon the filing of the
      requisite special resolutions required to authorise the implementation of the scheme and the allotment and issue of the
      Rebosis A ordinary consideration shares, it will have a sufficient number of authorised and unissued Rebosis A ordinary
      shares in order to satisfy the offer.

11.   Shareholding of Rebosis in Ascension

      Rebosis currently holds:

      -        28 001 628 Ascension A shares, comprising approximately 9.1% of the Ascension A shares in issue; and
      -        376 359 014 Ascension B shares, comprising 100% of the Ascension B shares in issue.

12.   No concert party arrangements

      Rebosis is not acting in concert with any person in relation to the scheme.

13.   Documentation and timing in regard to the scheme

      Full details of the scheme will be set out in a joint circular which will be distributed by Rebosis and Ascension to each of
      the Ascension A shareholders within 20 business days after the date of this firm intention announcement and which will
      include the opinion of the independent expert referred to in paragraph 9 above, notice of the general meeting of Ascension
      A shareholders to approve the scheme, and the salient dates and times applicable to the scheme.

14.   Categorisation of the scheme for Rebosis

      The scheme is classified as a Category 2 transaction for Rebosis in terms of the JSE Listings Requirements. As such, it is
      not in terms of the JSE Listings Requirements, subject to approval by Rebosis shareholders.

      A general meeting of Rebosis shareholders will be called to approve the requisite special resolutions, including a resolution
      to amend the memorandum of incorporation of Rebosis, required to authorise the implementation of the scheme and the
      allotment and issue of the Rebosis A ordinary consideration shares.

15.   Property specific information

      The property specific information required in terms of the JSE Listings Requirements in relation to each of the properties
      comprising Ascension’s property portfolio, is set out below.

             Property Name       Physical Address                   Property            Building         Weighted    Valuation as at
                                                                    description     rentable area   Average Rental     29 February
                                                                    and use               (GLA)             Per m2             2016
                                                                                                               (R)         (R ’000)
        1.   Bathopele           Cnr Loveday and Market Streets,    Office                11 500             101.9          153 000
             Building            Johannesburg
        2.   Spectrum            Cnr Voortrekker and Blanckenberg   Office                 7 550              93.3          100 000
                                 Streets, Bellville
            

             Property Name        Physical Address                           Property            Building         Weighted    Valuation as at
                                                                             description     rentable area   Average Rental     29 February
                                                                             and use               (GLA)             Per m2             2016
                                                                                                                        (R)         (R ’000)
       3.    Schreiner            94 Pritchard Street, Johannesburg          Office                18 815              80.0          180 000
             Chambers
       4.    Mishumo House        De Korte and De Beer Streets,              Office                 6 154              90.0           77 000
                                  Braamfontein
       5.    Sigma                7 Blanckenberg Road, Bellville, Cape       Office                 3 751             137.1           56 000
                                  Town
       6.    45 Castle Street     45 Castle Street, Cape Town                Office                 9 537             120.2          141 000
       7.    Bergstan House*      Cnr Castle and Loop Streets, Cape          Office                 2 838              96.2           36 000
                                  Town
       8.    Matrix House*        Cnr Strand and Bree Streets, Cape Town     Office                 9 001              93.1           71 000
       9.    Nedbank Centre*      Cnr Strand and Loop Streets, Cape          Office                 5 905              76.9           53 500
                                  Town
       10.   NBC                  76 Juta Street, Braamfontein               Office                10 000              64.9          152 000
       11.   PROROM               Cnr Brown and Paul Kruger Streets,         Office                 6 431             108.7           80 000
                                  Nelspruit
                                  Mpumalanga
       12.   VWL                  Corner Vermeulen & Paul Kruger             Office/Retail         17 989              83.7          180 000
                                  Streets, Nelspruit
       13.   14 Long Street       14 Long Street, Cape Town                  Office                 9 975              90.9          120 000
       14.   373 Pretorius        373 Pretorius Street, Pretoria, Gauteng    Office                13 340             125.9          236 000
             Street
       15.   Meyersdal            65 Phillip Engelbrecht Street, Meyersdal   Office                 4 957              85.0           46 000
       16.   Infinity Office      4 Robin Close Meyersdal Nature Estate,     Office                12 681             138.9          250 000
             Park, Meyersdal      Meyersdal
       17.   238 Roan             Corporate Landing, 238 Roan Crescent,      Industrial             9 035              80.3           91 000
             Crescent, Midrand    Ranjespark
       18.   Grand Central        Cnr Darling and Plein Streets, Cape        Office and            33 577             127.5          588 000
                                  Town                                       retail
       19.   Medscheme            37 Conrad Drive, Florida Noord,            Office                 6 792              93.0          105 000
                                  Roodepoort
       20.   Kingfisher           King Fisher Crescent, Meyersdal            Office                 1 405             121.0           25 700
             Crescent,
             Meyersdal
       21.   174 Visagie Street   174 Visagie Street, Pretoria               Office                13 537             119.7          222 000
       22.   Island Centre        24 Cumberland Road, Paarden Eiland,        Industrial            24 195              38.6           88 000
                                  Cape Town
       23.   Riverpark 1 and 2    Madiba Street, Nelspruit                   Motor retail           8 519             134.5          133 000
             and Riverview 1                                                 park and
             and 2                                                           Office
       24.   Atterbury House      2 Waterkant Street, Cape Town              Office                26 245             111.1          348 000
       25.   Surrey House         Cnr Rissik and Fox Streets,                Office                11 840             118.4          217 000
                                  Johannesburg
       26.   Game Building        Cnr Joubert and Pritchard Streets,         Office                21 438              98.3          250 000
                                  Johannesburg
       27.   Swiss House          86 Main Street Marshalltown                Office                 8 008              93.7          113 000


      *      Disposed of post 29 February 2016

      Independent valuations were carried out on each of the properties as at 29 February 2016 by LDM Valuation Solutions
      (Pty) Ltd, a registered professional valuer in terms of the Property Valuers Profession Act, No. 47 of 2000.

      Rebosis currently owns 59.01% of the total number of issued shares in Ascension. The value of the net assets of Ascension
      as at 29 February 2016 is R2 624 million. The value of the net assets being acquired by Rebosis is R1 076 million and the
      profits attributable to net assets being acquired is R146 million, which is 40.99% of the estimated profits of Ascension for
      the year ended 31 August 2016.

16.   Responsibility statements

      The Ascension independent board accepts responsibility for the information contained in this announcement insofar as it
      relates to Ascension. To the best of its knowledge and belief, the information contained in this announcement is true and
      this announcement does not omit anything likely to affect the import of the information.

      The Rebosis board accepts responsibility for the information contained in this announcement insofar as it relates to
      Rebosis. To the best of its knowledge and belief, the information contained in this announcement is true and the
      announcement does not omit anything likely to affect the import of the information.

27 October 2016


Corporate advisor and sponsor to Rebosis and Ascension
Legal Advisor


Legal advisor to Ascension and Rebosis
Cliffe Dekker Hofmeyr Inc

Date: 27/10/2016 02:54:00 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.

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