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Acquisition of Cumbrae , EEP 101 And Kuiseb by Trustco Property Holdings and Withdrawal of Cautionary Announcement
TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
Registered as an external company in South Africa
(External registration number 2009/002634/10)
NSX share code: TUC
JSE share code: TTO
ISIN Number: NA000A0RF067
(“Trustco” or “the Company”)
ACQUISITION OF CUMBRAE ISLAND INVESTMENTS, EEP 101 AND KUISEB COUNTRY ESTATE BY TRUSTCO
PROPERTY HOLDINGS (PTY) LTD AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. BACKGROUND INFORMATION
Trustco Property Holdings (Pty) Ltd (“Trustco Properties” or “the Purchaser”) entered into three
separate sale of shares agreements (“the Agreements”) with Nico van der Westhuizen (“the Seller”)
to acquire 100% of the shares and shareholders loans (if any) in Cumbrae Island Investments (Pty)
Ltd (“Cumbrae”) (“the Cumbrae Transaction”), Elisenheim Estate Property Number One Hundred
And One (Pty) Ltd (“EEP 101”) (“the EEP 101 Transaction”) and Kuiseb Country Estate (Pty) Ltd
(“Kuiseb”) (“the Kuiseb Transaction”) (collectively “the Transactions”).
The Agreements were all entered into on 19 December 2018.
2. DESCRIPTION OF THE BUSINESS CONDUCTED BY CUMBRAE, EEP101 AND KUISEB
2.1 Cumbrae is an investment holding company owning a number of properties (“Cumbrae Properties”)
forming part of the Lafrenz development which were originally disposed of by a subsidiary of the
Company, namely Trustco Group International (Pty) Ltd to Cumbrae on 2 June 2016. A number of
properties shall be retained by the Seller as per the sale of shares agreement entered into in respect
of the Cumbrae Transaction (“Cumbrae Retained Properties”).
2.2 EEP101 is an investment holding company owning a number of properties (“EEP 101 Properties”)
forming part of the Elisenheim development which were originally disposed of by a subsidiary of the
Company, namely Elisenheim Property Development Company Limited to EEP 101 on 27 June 2017.
2.3 Kuiseb is an investment holding company owning a property in the Windhoek District of Namibia
measuring 353.2588 Hectares and to be known as the Kuiseb Country Estate (“Kuiseb Properties”).
3. RATIONALE FOR THE TRANSACTION
3.1 The acquisition of the Cumbrae Properties and its shareholders loans, and the EEP 101 Properties
and its shareholders loans were funded via various loans provided to Cumbrae and EEP 101 by
Trustco Capital (Pty) Ltd (“Trustco Capital”).
3.2 The details of the loans referred to in 3.1 above are as follows:
3.2.1 The acquisition of the Cumbrae Properties by Cumbrae was funded via a loan from Trustco
Capital on 15 February 2017 in the amount of NAD 371 296 280 (“Cumbrae Acquisition
Loan”). A further loan was provided by Trustco Capital to Cumbrae on 22 March 2018 in the
amount of NAD 30 000 000 to fund part of the development costs of the Cumbrae Properties
(“Construction Loan”).
3.2.2 The acquisition of the EEP 101 Properties by EEP 101 was funded via a loan from Trustco
Capital on 28 June 2017 in the amount of NAD 465 102 375 (“EEP 101 Acquisition Loan”). A
further loan was provided by Trustco Capital to EEP 101 on 28 June 2017 in the amount of
NAD 371 296 280 to fund the acquisition of all of the issued share capital of Elisenheim
Estate Property Number One Hundred (Pty) Ltd (“EEP100 Acquisition Loan”).
3.3 The property market in Namibia experienced severe pressure due to the implementation of new
regulations issued by Bank of Namibia (“BoN”) determining loan to value restrictions when
commercial banks extend mortgage loans to customers, causing a change in the demand and
affordability for residential housing, with the result that it is no longer economically viable for the
Seller on a short term basis. The advantage of Trustco’s property division is the long-term view the
Group has towards property development in Namibia and the fact that the property portfolio is
extremely lowly geared.
3.4 The current economic constraints have not depleted the demand for serviced stands in Namibia and
Trustco’s s property prices across the Group’s portfolio have remained intact. With this transaction
and the Group’s long term view in investment property, Trustco would be well-positioned in
anticipation of the improved market liquidity and the recovery of the economy in future.
3.5 The Seller will not be pursuing any property developments in the foreseeable future and wishes to
dispose of his total property development portfolio and therefore the Purchaser has the opportunity
to acquire the Cumbrae Properties, EEP 101 Properties and Kuiseb Properties. As part of the
Transaction the Purchaser also took over some key employees.
3.6 A decision was made by Trustco Properties that, because the properties owned by Cumbrae and
EEP101 are situated so strategically within the Lafrenz and Elisenheim developments respectively,
the future value Trustco Properties can extract from the properties is worth more than the debt /
loan owed to Tustco Capital. Hence the decision to enter into the Cumbrae and EEP 101
Transactions with Trustco’s longer term view of providing serviced land and naturally to ensure that
the Lafrenz and the Elisenheim developments mature over time.
3.7 Following from the Seller’s intention to withdraw from the Namibian property development market,
certain properties in his development portfolio have become available for sale. Trustco Properties
has identified the Kuiseb Property as a development from which it can extract long-term value in
future.
4. PURCHASE CONSIDERATION
The total purchase consideration to be paid by the Purchaser to the Seller in respect of the
Transactions is NAD 56 898 882 as set out below:
4.1 The total purchase consideration in respect of the Cumbrae Transaction is NAD 28 566 380 made up
as follows:
4.1.1 A nominal value of NAD 1.00 per share, for 100 shares for a total amount of NAD 100.00;
plus
4.1.2 all costs related to the opening, upkeep and updating of the company secretarial records of
Cumbrae and all special purpose companies established and owned by Cumbrae, being not
more than NAD 457 380.00; plus
4.1.3 All costs related to the negotiation, drafting, and settling of the sale of shares agreement in
respect of the Cumbrae Transaction and the transfer of the issued share capital of Cumbrae,
being NAD 132 250.00.
4.1.4 The Cumbrae Retained Properties valued at NAD 27 976 650.
4.2 The total purchase consideration in respect of the EEP 101 Transaction is NAD 22 332 402 made up
as follows:
4.2.1 A nominal value of NAD 1.00 per share, for 100 shares for a total amount of NAD 100.00;
plus
4.2.2 All costs related to the negotiation, drafting, and settling of the sale of shares agreement in
respect of the EEP 101 Transaction and the transfer of the issued share capital of EEP 101,
being NAD 332 302.00; plus
4.2.3 such reasonable and agreed upon amounts as may be due to the auditors and company
secretaries of EEP 101 in respect of audit costs, annual duties and company secretary fees
but not more than NAD 1 000 000; plus
4.2.4 an amount of NAD 21 000 000 payable in sixty equal monthly instalments which shall accrue
interest at a rate of 8% per annum on all outstanding amounts.
4.3 The total purchase consideration in respect of the Kuiseb Transaction is NAD 6 000 100 made up as
follows:
4.3.1 A nominal value of NAD 1.00 per share, for 100 shares for a total amount of NAD 100.00;
plus
4.3.2 an amount of NAD 6 000 000 which shall be realised by the Seller via the disposal of the
Cumbrae Retained Properties. In the event the Cumbrae Retained Properties are disposed of
for more than NAD 6 000 000, the excess shall be refunded to the Purchaser.
5. WARRANTIES
5.1 The Agreements all contains legal warranties which are considered normal in respect of a
transaction of this nature.
6. INDEMNITIES
6.1 In terms of the Cumbrae Transaction, the Purchaser shall keep the Seller indemnified against all
liabilities that the Seller may incur, from whatsoever cause and howsoever arising, in respect of the
Acquisition Loan, the Construction Loan and outstanding audit costs, annual duties and company
secretarial costs up to a maximum amounts set out above.
6.2 In terms of the EEP 101 Transaction, the Purchaser shall keep the Seller indemnified against all
liabilities that the Seller may incur, from whatsoever cause and howsoever arising, in respect of the
EEP 101 Acquisition Loan and the EEP 100 Acquisition Loan.
7. SETTLEMENT OF THE TRANSACTION
The Purchase Consideration for the Transactions, will be funded from existing cash resources.
8. EFFECTIVE DATE
The effective date of the Transactions will be the fifth business day after all of the conditions
precedent have been fulfilled or waived.
9. NET ASSETS AND PROFITS OF CUMBRAE, EEP 101 AND KUISEB
The value of the net assets of Cumbrae which is a subject of the Transaction as at 19 December 2018
was negative NAD 180 067. The loss after tax attributable to the net assets that is a subject of the
Transaction for the period ended 30 September 2018 was NAD 0.
The value of the net assets of Cumbrae and the loss after tax attributable to such net assets has
been extracted from the management accounts as approved by the director of the Seller of Cumbrae
for the period ended 30 September 2018.
The value of the net assets of EEP 101 which is a subject of the Transaction as at 19 December 2018
was NAD 100. The profit after tax attributable to the net assets that is a subject of the Transaction
for the period ended 30 September 2018 was NAD 0.
The value of the net assets of EEP 101 and the profit after tax attributable to such net assets has
been extracted from the management accounts as approved by the director of the Seller of EEP 101
for the period ended 30 September 2018.
The value of the net assets of Kuiseb which is a subject of the Transaction as at 19 December 2018
was NAD 100. The profit after tax attributable to the net assets that is a subject of the Transaction
for the year ended 30 September 2018 was NAD 0.
The value of the net assets of Kuiseb and the profit after tax attributable to such net assets has been
extracted from the management accounts as approved by the director of the Seller of Kuiseb for the
year ended 30 September 2018.
10. CONDITIONS PRECEDENT
10.1 The Transactions are subject to the fulfilment or waiver, of the following conditions precedent
(“Conditions Precedent”) on or before the Effective Date (or such later date as the parties may agree
to):
10.1.1 approval by the Namibian Competition Commission and Bank of Namibia or similar
regulatory approvals, if required;
10.1.2 approval by the respective boards.
10.2 In addition to 10.1 above, the Kuiseb Transaction is also subject to a condition precedent that the
Cumbrae Retained Properties are disposed of.
11. MOI’S OF ACQUIRED COMPANIES
11.1 The memorandum of incorporation (“MOI”) of Cumbrae, EEP 101 and Kuiseb will be amended so as
to conform to Schedule 10.21 of the Listings Requirements, as required.
12. CLASSIFICATION OF THE TRANSACTIONS
The Transactions collectively are classified as a Category 2 transaction in terms of the Listing
Requirements of the JSE Limited (“Listings Requirements”). The total aggregate purchase
consideration for the Transactions and the total aggregate amounts to be indemnified by the
Purchaser were utilised for purposes of the categorisation calculation.
13. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Trustco shareholders are referred to the initial cautionary announcement, dated 28 September
2018, and the renewal of such cautionary announcement dated 19 November 2018 and are advised
that all negotiations in respect of the transactions which were the subject of the above cautionary
announcement have been concluded and as a result caution is no longer required to be exercised by
shareholders when dealing in the Company’s securities.
Windhoek, Namibia
20 December 2018
Amanda Bruyns
Company Secretary
Trustco Group Holdings Limited
JSE Sponsor
Vunani Corporate Finance
NSX Sponsor
Simonis Storm Securities Proprietary Limited
Date: 20/12/2018 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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