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Small related party transaction update
ARROWHEAD PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2011/000308/06)
JSE share code: AWA ISIN: ZAE000203105
(Approved as a REIT by the JSE)
(“Arrowhead” or “the company”)
SMALL RELATED PARTY TRANSACTION UPDATE
Shareholders are referred to the SENS announcement released jointly by Arrowhead, Synergy Income Fund Limited (“Synergy”) and
Vukile Property Fund Limited on 29 August 2016, in terms of which they advised that the parties had concluded a suite of agreements
which will, once implemented, effectively reposition Synergy as a specialist high yielding, high growth fund (the “Synergy
transaction”) (the “Synergy transaction announcement”). The Synergy transaction contemplates inter alia the acquisition by
Synergy of 100% of the issued shares in Cumulative Properties Limited (“Cumulative”), a wholly-owned subsidiary of Arrowhead,
in exchange for the issue to the shareholders of Cumulative (in proportion to their shareholding in Cumulative as at the
implementation date of the Synergy transaction) of 271 412 267 Synergy B ordinary shares.
As detailed in the Synergy transaction announcement, it has always been envisaged that, prior to the implementation of the Synergy
transaction, Mark Kaplan, Gerald Leissner, Imraan Suleman and any other Synergy executives appointed on or before the
implementation date of the Synergy transaction will subscribe for ordinary shares of no par value in Cumulative (“Cumulative
shares”), with the acquisition funded by way of a loan advanced by Cumulative.
In this regard, shareholders are advised that a loan and subscription agreement has been concluded between Gerald Leissner, Mark
Kaplan and Imraan Suleman (together, the “subscribers”) and Cumulative (the “loan and subscription agreement”), in terms of
which Cumulative will advance each subscriber a loan of R40 724 460.50 (the “subscription loan”), to be utilised to subscribe for
9 215 034 Cumulative shares (the “subscription shares”) at an issue price of R4.41935 each. In terms of the Synergy transaction, the
subscribers will dispose of all the subscription shares to Synergy, on and with effect from 1 October 2016, in consideration for which
they will each be issued 6 000 000 Synergy B ordinary shares (“Synergy B shares”) on the closing date of the Synergy transaction.
Notwithstanding the date of allotment of the subscription shares, all risk in and benefits attaching to the subscription shares will pass
to the subscribers with effect from 1 October 2016 (the “subscription date”). The subscription loans are advanced to the subscribers
on the following terms:
- The subscription loan shall bear interest at a rate equal to the dividend declared by Synergy for the twelve months ending
30 September 2017, with interest due and payable quarterly on receipt of payment by the subscribers of each such quarterly
dividend.
- The subscription loan is repayable in full on the tenth anniversary of the subscription date (the “repayment date”). Should a
subscriber dispose of any Synergy B shares acquired pursuant to the Synergy transaction prior to the repayment date, he will be
required to repay a pro rata portion of his subscription loan. A subscriber is entitled to pay the outstanding balance of his
subscription loan at any time before the payment date.
- If a subscriber ceases to be an employee of the Arrowhead group by reason of resignation or dismissal on grounds of
misconduct, the full balance outstanding in respect of such subscriber’s subscription loan will become payable.
- Each subscription loan will be secured by way of a pledge and cession in securitatem debiti of the relevant subscriber’s
Synergy B shares, until such time as the underlying subscription loan has been settled in full.
The loan and subscription agreement is subject to the condition precedent that on or before 30 November 2016, the agreement entered
into on 29 August 2016 between Arrowhead, Vividend Income Fund Limited, Cumulative, Synergy and the subscribers, relating to
the Synergy transaction, becomes unconditional in accordance with its terms.
As the subscribers are directors of Arrowhead, the loan and subscription agreement constitutes a small related party transaction by
Arrowhead in terms of section 10.7 of the JSE Listings Requirements. Mazars Corporate Finance Proprietary Limited (“Mazars”), an
independent expert acceptable to the JSE, has concluded that the terms of the transaction are fair as far as shareholders of Arrowhead
are concerned and a copy of its fairness opinion in this regard has been provided to the JSE. As required in terms of section 10.7(b) of
the JSE Listings Requirements, and having had regard to the fairness opinion provided by Mazars, the board of directors of
Arrowhead has declared the transaction to be fair as far as Arrowhead shareholders are concerned. Copies of the fairness opinion will
lie open for inspection at Arrowhead’s registered office (2 nd Floor, 18 Melrose Boulevard, Melrose Arch, 2196) for a period of 28
days from the date of this announcement.
28 October 2016
Sponsor
Java Capital
Date: 28/10/2016 04:55:00 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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