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Detailed Cautionary - Disposal of Stelledale Junction, Property Development Agreement & Cautionary Renewal
VISUAL INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2006/030975/06)
(“the Company”)
ISIN Code: ZAE000187407 Share code: VIS
DETAILED CAUTIONARY ANNOUNCEMENT REGARDING THE PROPOSED DISPOSAL OF
ERF 25312 KUILS RIVER, A PROPOSED PROPERTY DEVELOPMENT AGREEMENT AND
RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders are referred to the cautionary announcement published on SENS on
28 November 2018 and are advised that Visual International Proprietary Limited
(“Visual” or “the Seller”), a wholly-owned subsidiary of the Company is in advanced
negotiations regarding a disposal of land agreement (“Disposal” or “Disposal
Agreement”) and a property development management agreement (“Development
Management Agreement”) with Makoro Property Developers (Pty) Ltd (“Makoro” or
“the Purchaser”) in respect of the property described as Erf 25312 Kuils River, situated
in the registration division of Stellenbosch in extent of 2,77179 hectares (“Stellendale
Junction”).
In terms of the same negotiations, it is intended the Makoro will also conclude a loan
agreement with the Company, Visual and My Place Trust in terms of which it will lend
the Company an amount of R2 000 000 (R2 million), which amount will incur interest at
3% above the prime rate charged by ABSA Bank and is repayable on or before 31
January 2020 (“Loan Agreement”).
The effective date of the Disposal and the Development Management Agreement
will be the date of transfer of the Property into the name of the Seller (“Transfer”), whilst
the effective date of the Loan will be 5 (five) calendar days after the date of fulfilment
of the suspensive conditions to the Loan.
2. Terms of the Disposal and Application of Disposal Proceeds
The disposal consideration of R10 million, plus VAT (if applicable) will be paid to the
Seller against Transfer. The Purchaser will furnish the Seller with a guarantee of funds
within 7 (seven) calendar days after being requested to do so by the appointed
conveyancer, subject to such request not being made prior to the fulfilment of all the
suspensive conditions.
The proceeds of the Disposal together with the Loan will be utilised by the Company
for working capital purposes.
3. Rationale for the Disposal and the Development Management Agreement
The rationale for the Disposal is to enable the development of Stellendale Junction
(the “Project”). In terms of the Development Management Agreement, Makoro will
appoint the Company to manage and co-ordinate the implementation of the Project
on its behalf and the Company will be remunerated by Makoro for its development
management work on the Project as follows:
(i) 50% of the profit share before tax (after the deduction of development costs,
property recoupment and property interest) on apartments, units and/or erven
that are sold to third party investors and owner occupier buyers; and
(ii) In instances where Makoro or any fund, company or trust nominated buy it,
buys units or apartments:
(a) if the Company has sold 40 or more apartments or units to third parties
during the 12 months preceding the sale of any units to Makoro, the
average unit selling price achieved minus agent’s commission (if
applicable) and property recoupment and property interest; or
(b) in instances where less than 40 apartments or units were sold to third parties
during the 12 months preceding the sale of any units to Makoro, a flat fee
of R35 000 (thirty-five thousand Rand) per apartment or unit, which fee will
escalate at 5% per annum from the effective date.
4. Conditions precedent:
The Disposal and the Development Management Agreement are subject to the
following conditions precedent:
4.1 The simultaneous signature of the Disposal Agreement, the Development
Management and the Loan Agreement;
4.2 The Seller providing the Purchaser by no later than 5 (five) calendar days from
the date of signature of the Disposal Agreement and the Development
Management Agreement with:
4.2.1 resolutions by the Seller’s and the Company’s boards authorsing and
ratifying the Disposal Agreement and the Development Management
Agreement;
4.2.2 written approval by the auditors of the Company that the Disposal will
not constitute a disposal of all or the greater part of the assets of the
Company as defined in section 112 of the Companies Act, 71 of 2018;
4.2.3 confirmation by the Johannesburg Stock Exchange (“JSE”) that the
Disposal will not constitute a related party transaction as defined in the
JSE Listings Requirements; and
4.2.4 approval of the Disposal and the Development Management
Agreement, to the extent necessary, by the shareholders of the
Company.
5. Resolutive Conditions
5.1 The Disposal Agreement contains a resolutive condition in terms of which the
Seller is required to conclude an agreement with the Provincial Government of
the Western Cape in its department of Human Settlement for the purchase of the
Remainder Portion 4 of Farm 438 situated in the registration divisions of
Stellenbosch for approximately R3 831 100 (three million eight hundred and thirty-
one thousand one hundred Rand) and transfer thereof passing prior to the
Transfer within 9 (nine) months from the date of signature of the Disposal
Agreement.
5.2 The Development Management Agreement contains the following resolutive
conditions:
5.2.1 Transfer of the Property within 9 (nine) months from the date of Signature
of the Development Management Agreement; and
5.2.2 Approval of the Site Development Plan by the City of Cape Town within
9 (nine) months of the date of Transfer.
6. Property Specific Information
The Property, which is vacant, was initially acquired in approximately 2013 for a
consideration of R34 000 000 (thirty-four million Rand).
7. Financial information
The proposed disposal consideration of R10 000 000 (ten million Rand) is below the
value of R34 000 000 (thirty-four million Rand), attributed to the Property as at
29 February 2016 by independent professional valuer, Mr JF Cilliers, a professional
valuer of Adval Valuation Centre.
8. Categorisation
The Disposal will be classified as a Category 1 transaction in terms of section 9 of the
JSE Listings Requirements and will accordingly require shareholder approval. The
controlling shareholder has advised that it will vote in favour of the Disposal.
9. Cautionary Announcement and Renewal of Cautionary Announcement
Shareholders will be advised as soon as final agreements in respect of the above
proposed transactions have been concluded. Shareholders are furthermore referred
to the cautionary announcement issued on 28 November 2018 and are advised that
the Company continues in negotiations with other parties on various transactions.
Shareholders are accordingly advised to continue to exercise caution when dealing
in their shares until further announcements on all of the proposed transactions have
been made.
Johannesburg
28 December 2018
Designated Advisor
Arbor Capital Sponsors Proprietary Limited
Date: 28/12/2018 05:43:00 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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