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TOWER PROPERTY FUND LIMITED - Update on Agrokor and voluntary trading statement

Release Date: 25/07/2017 15:30
Code(s): TWR     PDF:  
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Update on Agrokor and voluntary trading statement

TOWER PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2012/066457/06)
JSE share code: TWR ISIN: ZAE000179040
(Approved as a REIT by the JSE)
(“Tower”)


UPDATE ON AGROKOR AND VOLUNTARY TRADING STATEMENT


Update on Agrokor

Shareholders are referred to the announcements released on SENS on 2 May 2017 and 26 June 2017 regarding Agrokor d.d
(“Agrokor”), the guarantor and parent company of Konzum d.o.o (“Konzum”), a major Croatian retailer and head-lease
tenant in respect of four retail properties acquired by Tower in Croatia in June 2016 (the “Konzum portfolio”) (the “Agrokor
SENS announcements”). As detailed in the Agrokor SENS announcements, the Lex Agrokor law was adopted on
6 April 2017 for the purposes of renegotiating Agrokor and its subsidiaries’ position with creditors and restructuring the
Agrokor business. As per the SENS announcements, the restructuring is proceeding well with additional liquidity, in the form
of new loans, secured for the business. The trading of the majority of Konzum stores is strong with non-core stores to be
closed shortly. Konzum has a twelve year head lease in respect of the Konzum portfolio in terms of which Agrokor guarantees
all rental payments in respect of the Konzum portfolio. The line shop rentals are paid directly to Tower by the tenants with
any rental shortfalls being topped up by Konzum. Claims for rental arrears prior to 9 April 2017 were required to be submitted
to the appointed administrator by 9 June 2017. Tower submitted its arrears which amounted to HRK 5.2 million
(R10.3 million) (the “Agrokor arrears”). This amount is slightly lower than the amount disclosed in the Agrokor SENS
announcements due to a portion being subsequently settled. Ongoing rentals are due and payable by Konzum and Tower is
pleased to report that all rentals from April 2017 onwards have been fully paid.

Konzum has confirmed to Tower that Tower’s properties are of critical importance to Konzum. Tower has engaged with other
retailers in the event of Konzum defaulting on its ongoing rental commitments and there is strong appetite for the Konzum
sites from competing retailers. Tower is confident that if it were to cancel the Konzum lease due to default on rental payments,
a strong international anchor tenant would replace Konzum.

Tower has met regularly with the Agrokor commissioner and representatives of Agrokor (as recently as 18 July 2017), to
ensure Konzum’s ongoing rental obligations are settled. After these meetings, Tower is confident about the current and future
performance of the Konzum stores in the Konzum portfolio.

Tower continues to utilise all methods at its disposal to recover the Agrokor arrears. Tower’s claim for the Agrokor arrears
has been combined with a number of other creditor claims and the settlement thereof is to be motivated by the Agrokor
commissioner and decided upon by the Agrokor credit committee

Voluntary trading statement

Due to the timing of the release of its annual results and the uncertainty regarding the quantum, method and timing of the
settlement of the Agrokor arrears, Tower believes it would not be prudent to distribute any of the Agrokor arrears at this time
and has therefore deducted this amount from its distributable income for the year ended 31 May 2017. Tower will include the
Agrokor arrears in its future distributions as and when they are settled by Agrokor.

Accordingly, shareholders are informed that Tower expects the distribution per share for the year ended 31 May 2017 to be
77.1 cents per share (“cps”), being between 3.6% and 6.0% lower than the distribution guidance for the year ended
31 May 2017 of 80 to 82 cps. The financial results on which this trading statement is based have not been reviewed or reported
on by Tower’s auditors.

Tower’s summarised audited consolidated annual results for the year ended 31 May 2017 will be released on SENS on or
about 31 July 2017.

25 July 2017


Sponsor
Java Capital

Date: 25/07/2017 03:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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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,
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