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Specific Issue of Shares for cash
SAFARI INVESTMENTS RSA LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 2000/015002/06
Approved as a REIT by the JSE Limited
Share code: SAR
ISIN number: ZAE000188280
(“Safari” or “the Company”)
SPECIFIC ISSUE OF SHARES FOR CASH
1. Background
1.1. Shareholders are referred to the SENS announcement released
on 19 October 2016, wherein the Company advised that it had
entered into various subscription agreements for the issue in
aggregate 96 381 576 ordinary shares for cash for a total
amount of R 726 500 000 (“the Original Subscription”).
1.2. One of the parties to the Original Subscription, U-REIT
Holdings (Proprietary) Limited (“U-REIT”) did not fulfil the
suspensive conditions to the subscription agreement timeously.
Safari and U-REIT have agreed to terminate the subscription
agreement.
2. New Subscription Agreement
2.1. Safari has been approached by Southern Palace Capital
Proprietary Limited (“Southern Palace”), a subsidiary of
Southern Palace Group of Companies Proprietary Limited (the
“Southern Palace Group”) to subscribe for shares in Safari.
Negotiations between the parties has been on ongoing from the
start of this capital raising process and Safari is pleased
to announce that it has entered into a conditional subscription
agreement with Southern Palace whereby Southern Palace will
subscribe for 66 million Safari shares at a price of R7.60 per
share for a total amount of R501 600 000 (“Specific Issue”).
After taking into account the Southern Palace Group’s
potential value-add as a strategic investor given their focus
on infrastructure development and real estate, their know-how
and the superior subscription offer Safari received from
Southern Palace Safari has decided to replace the U-REIT’s
subscription with the Southern Palace subscription based on
the Southern Palace Group’s value proposition.
2.2. The Specific Issue will be subject to the following suspensive
conditions:
2.2.1. Safari obtaining the necessary shareholder approval for
this specific issue of shares for cash;
2.2.2. all regulatory approvals including, inter alia, those
required in terms of the Listings Requirements of the
JSE Limited, the Competition Authorities and the
Companies Act, 2008, No. 71 of 2008, as amended, having
been obtained; and
2.2.3. Southern Palace confirming in writing that it has secured
the necessary funding.
2.3. As previously disclosed to shareholders, as part of the
Original Subscription, WDH Investment Holdings Proprietary
Limited (“WDBH”) will subscribe for 9 210 526 shares at a
price of R7.60 for an amount of R70 000 000. In terms of the
subscription agreement between the Company and WDBH, the
Company will provide a loan to WDBH for R50 000 000 under by
the following terms and conditions:
2.3.1. The interest rate applicable will be the Prime Interest
Rate of Absa Bank + 0.5% compounded monthly in arrears;
2.3.2. The loan with interest will be service by instalments
equal to the full dividend of WDBH’s total shareholding
in Safari, being 13 923 313 shares;
2.3.3. The total shareholding of WDBH in Safari, being
13 923 313 shares, will be held as surety for the
fulfilment of WDBH’s repayment obligations; and
2.3.4. The duration of the loan will be 7 years from date of
issuing the new shares in terms of the subscription
agreement with WDBH and any outstanding balance at the
end of the duration will be settled in full.
2.4. As previously announced, Safari had also entered into
subscription agreements with Stanlib Asset Management Limited
(“Stanlib”), Grindrod Asset Management Proprietary Limited
(”Grindrod”), the BMJ Trust (“BMJ”)and Safarihold Proprietary
Limited (“Safarihold”) to subscribe for an aggregate of
27 171 050 Safari shares at a subscription price of R7.60.
2.5. Shareholders are advised that the subscription agreements with
WDBH, Stanlib, Grindrod, BMJ and Safarihold remain subject to
their specific suspensive conditions.
2.6. In aggregate, subject to the fulfilment of the various
suspensive conditions, Safari will issue 102 381 576 shares
at a price of R7.60 for R778.1 million.
3. Rationale
The Rationale for the subscription is:
3.1 to enable Safari to settle most of its existing debt which
will result in lower gearing and a significant saving on
interest expense;
3.2 to improve the black ownership and empowerment credentials
of Safari;
3.3 to provide access to additional sources of capital in order
to support continued expansion into existing and new markets
as well as to fund Safari’s current development pipeline;
3.4 enable Safari to preserve its cash reserves which may be
used for organic growth or further acquisition purposes;
3.5 enhance the liquidity and tradability of ordinary Safari
shares on the JSE through greater spread and diversity of
investors through the expansion of its share capital;
3.6 enhance Safari’s public profile in the southern African
markets; and
3.7 enable Safari to accelerate its expansion on existing
centres in order to capture the regional markets.
4. Pro forma financial effects
4.1. The pro forma financial effects set out below have been
prepared for purposes of assisting the Company’s
shareholders to assess the impact of the Subscription on the
earnings per share (“EPS”), diluted EPS, headline earnings
per share (“HEPS”), diluted HEPS, net asset value per share
(“NAV”) and tangible net asset value per share (“TNAV”).
4.2. It is assumed for purposes of the pro forma financial
effects that the Subscription took place with effect from 1
April 2016 for purpose of EPS, diluted EPS, HEPS and
dilution HEPS and at 30 September 2016 for purposes of NAV
and TNAV.
4.3. The pro forma financial effects have been prepared for
illustrative purposes only and, because of their nature, may
not fairly present the Company’s financial position, results
of its operations, changes in equity or cash flows.
4.4. The pro forma financial effects are the responsibility of
the Board and have not been reviewed by the auditors of the
Company.
Unadjusted Pro forma Pro forma Percentage
financial adjustments financial change
information (2) information
(1)
R R R
Earnings per share 16 6 22 36%
Diluted earnings per 16 6 22 38%
share
Headline earnings per 16 6 22 36%
share
Diluted headline 16 6 22 38%
earnings per share
Net asset value per 837 (31) 806 -4%
share (cents)
Tangible net asset 837 (31) 806 -4%
value per share
(cents)
Ordinary shares in 186,870,651 102,381,576 289,252,227 55%
issue
Weighted average 183,101,788 106,150,439 289,252,227 58%
number of shares in
issue
1. The "unadjusted financial information" column is extracted from
the Safari Investments (RSA) Ltd consolidated reviewed interim
financial results for the six months ended 30 September 2016
2. The "Pro forma adjustments" column represents the Subscription,
assuming that 102,381,576 new Safari shares are issued.
The effect of the Subscription is based on the terms as set out
in this announcement whereby a total of R766,404,722 will be used
for the repayment of interest bearing liabilities.
It is assumed that once-off transaction costs of R11,7 million
will be paid and set off against the Subscription.
The "Pro forma adjustments" column represents the interest
reduction assuming an interest rate of 9,45% (prime lending rate
less 1.05%).
In terms of the share subscription agreement with WDBH Safari
will be entitled to interest income which will incur at an
interest rate of 11% (prime lending rate plus 0.5%)
3. There are no other post balance sheet events which necessitate
adjustment to the pro forma financial information.
4. All the adjustments are of a continuing nature except for once-
off transaction costs.
5. Safari General Meeting
5.1. A circular, including a notice convening the Safari General
Meeting, detailing the terms of the Specific Issue, as well
as the subscription agreements between Safari and WDBH,
Stanlib, Grindrod, BMJ and Safarihold as well as the action
required of the Company's shareholders will be posted to
shareholders in due course.
5.2. Further announcements concerning the relevant dates,
including the date of the Safari General Meeting, pertaining
to the Specific Issue will be released in due course.
Pretoria
17 November 2016
Corporate Advisor and Sponsor
PSG Capital Proprietary Limited
Southern Palace Share Subscription Deal Originator: DEA-RU
Proprietary Limited
Date: 17/11/2016 09:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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