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Firm intention announcement re Scheme of Arrangement, proposed delisting, posting of circ & notice of scheme meeting
ORION REAL ESTATE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/021085/06)
Share Code: ORE ISIN: ZAE000075651
("Orion" or “the Company” or “the Group”)
FIRM INTENTION ANNOUNCEMENT REGARDING:
• AN OFFER BY GMEINER INVESTMENT HOLDING PROPRIETARY LIMITED (“Gmeiner Investment Holding”
or “the Offeror”) TO ACQUIRE ALL THE ORION SHARES NOT ALREADY HELD BY THE OFFEROR BY WAY
OF A SCHEME OF ARRANGEMENT; AND
• THE PROPOSED DELISTING OF ORION;
AND POSTING OF CIRCULAR AND NOTICE OF SCHEME MEETING
1. INTRODUCTION
1.1 The board of directors of Orion (“Board”) advises shareholders that the Company has received
an offer from Gmeiner Investment Holding to acquire all of the ordinary shares in the Company
not already owned by it. The offer (“Offer”) will be implemented by way of a scheme of
arrangement (“Scheme”) in terms of section 114(1)(c) of the Companies Act, No. 71 of 2008, as
amended (“Companies Act”), to be proposed by the Independent Board (as defined in
paragraph 4.1 below) between Orion and its shareholders, and will be followed by the delisting
of the Company from the Main Board of the JSE Limited (“JSE”) in terms of paragraph 1.17(b) of
the JSE Listings Requirements (“Delisting”).
1.2 The contents of this announcement constitute a firm intention by the Offeror to make the Offer
as contemplated in Chapter 5 of the Companies Act and Chapter 5 of the Companies
Regulations, 2011, promulgated under the Companies Act (which includes the Takeover
Regulations issued pursuant to sections 120 and 223 of the Companies Act).
2. THE SCHEME
2.1 Salient terms of the Scheme
2.1.1 The consideration payable by the Offeror to eligible shareholders (being all Orion
shareholders, excluding Gmeiner Investment Holding) (“Eligible Shareholders”), if the
Scheme becomes operative, is 2 (two) cents per share (“Scheme Consideration”),
payable in cash on the date on which the Scheme becomes operative.
2.1.2 The Offeror is acting as principal and not as agent in respect of the Scheme and it is not
acting in concert with any parties for purposes of the implementation of the Scheme.
2.2 Rationale for the Scheme
2.2.1 Orion has experienced a number of difficulties during the past year, including a
substantial delay in the finalisation of its 2018 results, the appointment of a new Financial
Director and new auditors mid-audit, external delays in the transfer of properties that
would increase the shareholder spread of the Company, the recall of its facilities, an
application for the liquidation of the Company brought by Investec (as first announced
on SENS on 18 December 2018), and then later had to take a number of actions to
address these key issues.
2.2.2 During February 2019, despite signed agreements being in place to address the
shareholder spread requirements of the JSE, the JSE advised the Company that it would
no longer afford Orion REIT status. This was also based on the fact that the Company
could not submit its Annual Compliance Declaration to the JSE within 4 months of year
end due to the delays in finalising the audit. The JSE Listings Requirements preclude the
reissue of REIT status by the JSE for a period of 24 months.
2.2.3 All of the aforementioned matters are clearly set out in the Company’s Annual Report for
the year ended 30 June 2018, other than the shareholder spread requirement which was
in the process of being addressed. Despite the challenges, Orion produced solid results
for the year ended 30 June 2018 and declared a distribution of 2.5 cents subsequent to
its year end.
2.2.4 Orion’s status as a REIT is of paramount importance to the Company and its minority
shareholders in particular. One of the main impacts is the tax status of the Group,
whereby the Company will be liable for Capital Gains Tax on any future property
disposals. This will reduce the profits of the Group and remove the dividend distribution
to Shareholders for the foreseeable future. The impact of the loss of REIT status is reflected
in the reviewed results for the 12-month interim period ended 30 June 2019 as published
on SENS on 1 October 2019.
2.2.5 The Board is of the opinion that, without REIT status, the cost-benefit of a listing of the
Shares on the JSE is no longer warranted.
2.2.6 Accordingly, the rationale of the Scheme is to effect the Delisting.
2.2.7 The Board may consider a listing of the Shares on another licensed stock exchange in due
course in pursuit of Orion reacquiring its REIT status.
2.3 Mechanics of the Scheme
2.3.1 The Scheme constitutes an "affected transaction" as defined in section 117(1)(c) of the
Companies Act and accordingly will be regulated by the Companies Act, the
Companies Act Regulations and the Takeover Regulation Panel (“TRP”).
2.3.2 The Offer will be effected by way of a scheme of arrangement in terms of section
114(1)(c) of the Companies Act, proposed by the Independent Board, as defined in
paragraph 4.1 below, between the Company and its shareholders in terms of which, if
implemented, the Company will acquire all the shares held by its shareholders (except
the Controlling Shareholder) for the Scheme Consideration.
2.3.3 The Scheme is subject to the fulfilment or waiver (as the case may be) of the conditions
set out in paragraph 2.4 below.
2.3.4 In the event that the Scheme becomes operative, the listing of Orion’s shares on the
Main Board of the JSE will be terminated and Eligible Shareholders will be deemed to
have sold all of their Orion shares for the Scheme Consideration.
2.4 Conditions to the Scheme
2.4.1 The implementation of the Scheme is subject to the fulfilment or waiver, as the case may
be, of the following conditions precedent by no later than 14 November 2019, or such
later date as may be determined by the Company:
2.4.1.1 the Independent Board unanimously recommending to Orion shareholders,
without qualification, that they vote in favour of the Scheme;
2.4.1.2 the Independent Expert, as defined in paragraph 4.2 below, having issued its
report in terms of section 114(3) of the Companies Act (read with the
Companies Act Regulations) regarding the fairness and reasonableness of the
terms and conditions of the Scheme and the Offer, and such opinion not being
withdrawn or adversely amended;
2.4.1.3 all regulatory approvals and/or consents to give effect to the Scheme have
been obtained (either unconditionally or subject to conditions acceptable to
the Company), including, without limitation, the JSE, the TRP, and the Financial
Surveillance Department of the South African Reserve Bank (in each case to
the extent necessary);
2.4.1.4 approval of the Scheme by the requisite majority of eligible Orion shareholders,
as contemplated in section 114, read with section 115, of the Companies Act
(“Scheme Resolution”);
2.4.1.5 the Scheme Resolution has been passed and, to the extent required in terms
of section 115(3)(a) of the Companies Act, the implementation of the Scheme
Resolution is approved by the Court and, if applicable, the Company has not
elected to treat the Scheme Resolution as a nullity in terms of section 115(5) of
the Companies Act;
2.4.1.6 if the Scheme Resolution has been passed and any person who voted against
the Scheme Resolution applies to the Court within 10 (ten) business days after
the vote for a review of the Scheme in accordance with the requirements of
section 115(3)(b) of the Companies Act, (i) no leave is granted by the Court to
such person to apply to court for a review of the Scheme in accordance with
the requirements of section 115(6) of the Companies Act or (ii) if leave is
granted by the Court to apply to Court for a review of the Scheme in
accordance with the requirements of section 115(6) of the Companies Act,
the Court has not set aside the Scheme Resolution in terms of section 115(7) of
the Companies Act; and
2.4.1.7 the TRP has issued a compliance certificate in respect of the Scheme in terms
of section 119(4)(b) of the Companies Act.
2.4.2 The proposal of the Scheme Resolution is in anticipation of the Delisting which will follow
immediately after the Scheme becomes unconditional, as detailed in paragraph 2.5 below.
2.4.3 The conditions precedent stipulated in paragraphs 2.5.1.3 to 2.5.1.7 are regulatory in
nature and may not be waived.
2.4.4 An announcement will be published on SENS and in the press as soon as practicable
after all the conditions to the Scheme have been fulfilled or waived, as the case may
be.
2.5 Termination of Orion’s listing
Following the implementation of the Scheme and the Scheme becoming unconditional, the
listing of Orion’s shares on the Main Board of the JSE will be terminated in terms of section 1.17(b)
of the JSE Listings Requirements with effect from the operative date of the Scheme.
3. CONFIRMATION OF FINANCIAL RESOURCES
In accordance with Regulation 111(4) and Regulation 111(5) of the Companies Act Regulations,
Gmeiner Investment Holding has delivered to the TRP an unconditional cash confirmation issued
by Oosthuizens (Jhb) Attorneys that Gmeiner Investment Holding has sufficient cash resources
specifically allocated to secure the settlement of the Scheme Consideration, which is limited to
R877 755.
4. INDEPENDENT BOARD, INDEPENDENT EXPERT REPORT AND RECOMMENDATION
4.1 The Board has established an independent board ("Independent Board”), comprising Messrs
RS Wilkinson, AJ Ritzlmayr, MD Mthembu and TFJ Oosthuizen to consider the terms and conditions
of the Scheme and the Offer.
4.2 The Independent Board has, in accordance with section 114(3) of the Companies Act and
regulation 90 of the Companies Act Regulations, appointed Neema Capital Proprietary Limited
as the independent expert (“Independent Expert”) acceptable to the TRP to provide it with
independent advice in regard to the fairness and reasonableness of the terms and conditions
of the Scheme and the Offer, and to make appropriate recommendations to the Independent
Board, for the benefit of Orion shareholders.
4.3 The Independent Expert has issued a report in terms of section 114(3) of the Companies Act on
the Scheme Consideration, and the fairness and reasonableness thereof in which it opines that
the terms and conditions of the Offer and the Scheme Consideration are unfair and
unreasonable to Orion shareholders.
4.4 The Independent Board has considered the report of the Independent Expert and the members
of the Independent Board are unanimously of the opinion that the terms and conditions of the
Scheme and the Offer are unfair to Orion Shareholders. However, on the basis of the rationale
for the Scheme, as described in paragraph 2.2 above, and the terms of the Scheme, as
described in paragraph 4.2 of the circular referred to in paragraph 6 below, the Independent
Board are unanimously of the opinion that the terms and conditions of the Scheme and the
Offer are reasonable to Orion Shareholders and accordingly supports and recommends that
the Shareholders vote in favour of the resolutions to be proposed at the Scheme Meeting to
approve the Scheme.
4.5 The contents of the Independent Expert's advice and the final view and recommendation of the
Independent Board will be detailed in the circular referred to in paragraph 6 below.
4.6 The Independent Board confirms that no other offers were received by Orion in the period of six
months prior to the date of this announcement.
5. INTENTIONS REGARDING THE CONTINUATION OF THE BUSINESS AND THE BOARD
It is the intention of the Company that, pursuant to the implementation of the Scheme:
5.1 Orion and its subsidiaries shall continue with their businesses as currently conducted;
5.2 the directors of Orion shall continue in office; and
5.3 the remuneration of the directors of Orion will not be affected by the Scheme.
6. POSTING OF THE CIRCULAR
Shareholders are advised that the circular setting out the terms and conditions of the Scheme
and the Delisting (“the Circular”) and incorporating, inter alia, a notice convening a meeting of
Orion shareholders (“Scheme Meeting”) will be posted to Orion shareholders on Wednesday,
16 October 2019. The Circular will also be available on Orion’s website at https://www.oriongroup.co.za/orion-real-estate/
from 16 October 2019. Copies of the Circular may be obtained during normal business hours from the
registered office of Orion at the address provided in paragraph 7 below, from 16 October 2019 until
the date of the Scheme Meeting. Shareholders are advised to review the Circular for detailed information
regarding the Scheme and other related matters.
7. NOTICE CONVENING THE SCHEME MEETING
Notice is hereby given that the Scheme Meeting will be held at 10:00 on Wednesday,
13 November 2019 at Orion’s registered office, 3rd Floor, 26 Wellington Road, Parktown,
Johannesburg for the purpose of considering and, if deemed fit, passing, with or without
modification, the resolutions set out in the notice convening the Scheme Meeting.
8. IMPORTANT DATES AND TIMES
Shareholders are referred to the table below setting out the important dates and times in relation
to the Scheme. The definitions and interpretations commencing on page 5 of the Circular shall
apply mutatis mutandis to this table.
2019
Record date for Shareholders to be recorded in the Register in
order to receive the Circular Friday, 4 October
Circular distributed to Shareholders and Notice of Scheme
Meeting released on SENS Wednesday, 16 October
Notice of Scheme Meeting published in the press Thursday, 17 October
Last day to trade in Orion Shares in order to be recorded in the
Register to vote at the Scheme Meeting Tuesday, 5 November
Record date to be eligible to vote at the Scheme Meeting,
being the Scheme Voting Record Date, by close of trade Friday, 8 November
Proxy forms to be lodged at, posted, or emailed to the Transfer
Secretary by 10:00 on Monday, 11 November
Last date and time for Shareholders to give notice to Orion
objecting, in terms of section 164(3) of the Companies Act, to
the Scheme Resolution for purposes of the Appraisal Rights by
10:00 Wednesday, 13 November
Proxy forms not lodged with Transfer Secretary to be handed to
the Chairman of the Scheme Meeting before 10:00 on Wednesday, 13 November
Scheme Meeting to be held at 10:00 on Wednesday, 13 November
Results of Scheme Meeting released on SENS Wednesday, 13 November
Results of the Scheme Meeting published in the press Thursday, 14 November
The following dates assume that the Scheme is approved by Scheme Members at the Scheme
Meeting, and that neither Court approvals nor the review of the Scheme is required and will be
confirmed in the finalisation announcement if the Scheme becomes unconditional:
Receive compliance certificate from the TRP Thursday, 14 November
Scheme Finalisation Date announcement expected to be
released on SENS Friday, 15 November
Scheme Finalisation Date announcement expected to be
published in the press Monday, 18 November
Last day to trade in Orion Shares to be entitled to receive the
Scheme Consideration Tuesday, 26 November
Scheme Consideration Record Date, being the date on, and
time at, which all persons must be recorded in the Register in
order to receive the Scheme Consideration, at 17:00 on Friday, 29 November
Expected Scheme Implementation Date Monday, 2 December
Scheme Consideration will be sent by EFT or by cheque to
Certificated Shareholders who have lodged their Form of
Surrender and Transfer with the Transfer Secretary on or prior
to 12:00 on the Scheme Consideration Record Date, on or
about Monday, 2 December
Scheme Participants expected to have their accounts with their
CSDP or Broker credited with the Scheme Consideration on or
about Monday, 2 December
Expected termination of listing of Shares on the JSE at the
commencement of trade on or about Tuesday, 3 December
The following dates apply in the event of any Orion Shareholders objecting to the Scheme:
Last date for Orion Shareholders who voted against the Scheme
Resolution to require Orion to seek Court approval for the
Scheme in terms of section 115(3)(a) of the Companies Act, if
at least 15% of the total votes of Orion Shareholders at the
Scheme Meeting were exercised against the Scheme
Resolution Wednesday, 20 November
Last date for Shareholders who voted against the Scheme to
apply to Court for leave to apply for a review of the Scheme in
terms of section 164(3)(b) Wednesday, 27 November
Last date for Orion to send objecting Shareholders notices of
the adoption of the Scheme Resolution, in accordance with
section 164 of the Companies Act Wednesday, 27 November
Notes:
1. A Scheme Participant may, for a period of 6 (six) months from the date of the Delisting,
purchase his/her Shares back from the Offeror at the price at which such shares were
acquired by the Offeror in terms of the Scheme, without interest.
2. All dates and times are subject to change and/or may be subject to certain regulatory
approvals, including but not limited to that of the TRP and/or the JSE, being granted. Any
change will be released on SENS and published in the press.
3. Trade in the Company’s securities has been suspended since 1 November 2018.
4. Shareholders who wish to exercise their Appraisal Rights are referred to Annexure 7 to the
Circular for purposes of determining the relevant timing for the exercise of their Appraisal
Rights.
5. Dematerialised Shareholders, other than those with “own name” registration, must provide
their CSDP or Broker with their instructions for voting at the Scheme Meeting by the cut-off
time and date stipulated by their CSDP or Broker in terms of their respective custody
agreements.
6. No dematerialisation or rematerialisation of Shares may take place from the Business Day
following the Scheme Consideration LDT.
7. If the Scheme Meeting is adjourned or postponed, forms of proxy submitted for the initial
Scheme Meeting will remain valid in respect of any adjournment or postponement of the
Scheme Meeting.
8. Although the salient dates and times stated are subject to change, such statement may not
be regarded as consent or dispensation for any change to time periods which may be
required in terms of the Companies Act Regulations, where applicable, and any such
consents or dispensations must be specifically applied for and granted.
9. All times referred to above are references to South African time.
9. RESPONSIBILITY STATEMENT
The Board and the Independent Board each accepts responsibility for the information
contained in this announcement to the extent that it relates to Company. To the best of their
knowledge and belief, the information contained in this announcement is true and nothing has
been omitted which is likely to affect the importance of the information.
Johannesburg
14 October 2019
Sponsor Independent Expert
Arbor Capital Sponsors Proprietary Limited Neema Capital
Date: 14/10/2019 08:53:00
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