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Demand to call general meetings of shareholders
FORTRESS REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2009/016487/06)
JSE share codes: FFA ISIN: ZAE000248498
FFB ISIN: ZAE000248506
Bond Company code: FORI
LEI: 378900FE98E30F24D975
(Approved as a REIT by the JSE)
("Fortress" or "the Company")
DEMAND TO CALL GENERAL MEETINGS OF SHAREHOLDERS
Shareholders are referred to the Scheme Circular posted to shareholders on 19 July 2022. Unless otherwise stated, words
defined in the Scheme Circular bear the same meaning in this announcement.
Background
Fortress is required to submit a compliance declaration to the JSE within four months of its financial year-end, which
declaration must confirm that Fortress has complied with the JSE's requirements to remain a REIT, including the
Minimum Distribution Requirement. Fortress is required to meet the Minimum Distribution Requirement in respect of
its FY 2022 by 31 October 2022.
Fortress' MOI prevents the payment of a distribution where distributable earnings are less than the FFA Distribution
Benchmark in respect of that period, which was the case for both the interim and final six-month periods of FY 2022.
On 20 June 2022, Fortress released a firm intention announcement with regard to a proposed scheme of arrangement in
terms of which the Company offered to exchange FFA shares for FFB shares at a swap ratio of 3.01281 FFB shares for
each FFA share tendered (the "Proposed Scheme"), premised on FFA shareholders receiving 80% of Fortress'
distributions going forward with the remaining 20% benefitting FFB shareholders. The Proposed Scheme, had it been
successful, would have resulted in the collapse of the Company's dual share structure and the removal of the implications
of the FFA Distribution Benchmark, thereby enabling the Company to pay a distribution and meet its REIT obligations
in respect of FY 2022.
Although the Proposed Scheme was ultimately supported by more than 60% of both FFA and FFB shareholders, it did
not achieve the necessary approval thresholds of 75% and could not be implemented.
In the current circumstances, Fortress cannot pay a distribution meeting the Minimum Distribution Requirement for FY
2022.
Demand to call general meetings of shareholders
Shareholders are advised that the Board has received a demand to call general meetings of shareholders (the "General
Meetings") in terms of section 61(3) of the Companies Act, (the "Demand") from shareholders representing
approximately 59% of the total FFA share voting rights and 16% of the total FFB share voting rights (the
"Representatives"). The Representatives include but are not limited to:
• Meago Asset Managers;
• Coronation Fund Managers;
• M&G Investments;
• Foord Asset Management;
• Catalyst Fund Managers;
• Momentum Asset Management;
• Metal & Engineering Industries Benefit Funds; and
• Metope Investment Managers.
In terms of the Demand, the Representatives propose that Fortress’ MOI be amended to allow the declaration of
distributions on a split basis of 80:20 (FFA shares: FFB shares) for FY 2022, as well as for the financial years ending
30 June 2023 and 30 June 2024 (the “Proposal”). Distributions for the periods covered by the Proposal would be
determined, declared and paid in accordance with the Proposal and not in accordance with the current provisions of
Fortress' MOI, while distributions declared for periods subsequent to 30 June 2024 would be calculated in accordance
with the current provisions of Fortress' MOI.
The Board is satisfied the Demand is valid and intends to meet its obligations in terms of the Companies Act and convene
the General Meetings in order for Fortress shareholders to vote on the Proposal. A circular to shareholders in this regard
is in the process of being prepared, which circular shall contain the relevant notices of General Meetings and the full
details of the Proposal.
Shareholders are further advised that any amendments to the Company's MOI which alter the rights of both share classes
in the manner required to give effect to the Proposal require approval by at least 75% of Fortress shareholders in general
meetings of FFA shareholders and FFB shareholders, as well as in a combined general meeting of FFA and FFB
shareholders. If approved by the requisite percentage of shareholders, the amendments to the Company's MOI will
become effective from the date of registration of the resolutions by the Companies and Intellectual Properties
Commission ("CIPC"), whereafter Fortress will be in a position to declare a distribution in relation to FY 2022.
Fortress will expedite the preparation of the circular and notices of meetings and will hold the General Meetings as soon
as practically possible. However, even in the event the requisite shareholder approvals for the Proposal are received,
Fortress would only be in a position to meet the Minimum Distribution Requirement during January 2023. Accordingly,
Fortress has requested the JSE to approve a distribution timetable whereby Fortress publishes a distribution declaration
announcement immediately following receipt of CIPC confirmation of registration, with the record date and payment
date of the distribution being on or before 31 January 2023.
Conclusion
It is not certain that all conditions with regard to the Proposal (including securing necessary shareholder approvals) will
be met. However, in order to give full effect to the rights granted to shareholders in terms of the Companies Act and the
Company's MOI, Fortress believes it would serve both the Company and its shareholders to allow time for this formal
legal process to run its course.
Currently Fortress remains unable to comply with the Minimum Distribution Requirement for FY 2022 because of the
constraints in its MOI.
Further information will be released in due course.
24 October 2022
Lead sponsor Joint sponsor
Java Capital Nedbank Corporate and Investment Banking,
(a division of Nedbank Limited)
Date: 24-10-2022 04:22:00
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