Wrap Text
Octodec Invst Ltd \Premium Prop Ltd -Firm Intention announcment and withdrawal of cautionary announcement
Octodec Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1956/002868/06)
Share Code: OCT
ISIN Code: ZAE000005104
(“Octodec”)
REIT status approved
Premium Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/003601/06)
Share Code: PMM
ISIN Code: ZAE000009254
(“Premium”)
REIT status approved
Announcement of the firm intention of Octodec to acquire the entire linked unit capital of Premium
that it does not already own (“the Proposed Transaction”), and withdrawal of cautionary
announcement
1. Introduction
1.1. The Proposed Transaction
Linked unitholders of Octodec (“Octodec Unitholders”) and linked unitholders of Premium
(“Premium Unitholders”) (collectively, “Unitholders”) are referred to the joint announcement dated
30 October 2013, wherein Unitholders were advised that, pursuant to the introduction of the
Taxation Amendment Act (No. 22 of 2012) containing section 25BB Real Estate Investment Trusts tax
dispensation (“REIT tax dispensation”), the board of directors of Octodec (“Octodec Board”) and the
board of directors of Premium (“Premium Board”) (collectively, “the Boards”) were considering a
possible merger of the two companies, upon both companies being granted real estate investment
trust (“REIT”) status.
Unitholders are further referred to the joint cautionary announcement dated 7 April 2014, in which
Unitholders were advised that the Companies were in a position to advance the Proposed
Transaction.
Further to the above, the independent sub-committee of the Premium Board (“Premium
Independent Board”) and the independent sub-committee of the Octodec Board (“Octodec
Independent Board”) are pleased to announce that Premium and Octodec have entered into an
agreement, dated 9 June 2014 (“the Transaction Agreement”), in terms of which Octodec proposes
to acquire all of the issued linked units of Premium that it does not already own, in exchange for
Octodec no par value shares (“the Scheme Consideration”), in the ratio of 88.5 Octodec no par value
shares for every 100 Premium linked units held (“the Swap Ratio”), on the terms and conditions set
out in the Transaction Agreement and summarised below.
In terms of the Transaction Agreement, the Premium Board will propose a scheme of arrangement in
terms of section 114(1)(d) of the Companies Act (No. 71 of 2008) (“the Companies Act”) to its
Unitholders (“the Scheme”), of which further detail will be provided in a circular to be posted to
Premium Unitholders (“the Premium Circular”).
1.2. The Octodec Capital Restructure
Octodec currently has a linked unit capital structure in terms of which Octodec shares are
irrevocably linked to Octodec debentures in the ratio of one Octodec share with a par value of one
cent to one Octodec debenture, trading as linked units on the securities exchange operated by the
JSE Limited (“JSE”).
Pursuant to the recent conversion of Octodec to a REIT and for purposes of converting Octodec’s
capital structure into an equity-only capital structure, the Proposed Transaction is conditional upon
the implementation of a capital restructure of Octodec that entails:
(i) the delinking and cancellation of the Octodec debentures in terms of a scheme of
arrangement proposed by the Octodec Board in terms of section 114(1)(c) of the Companies
Act (“the Octodec Scheme”);
(ii) the conversion of Octodec’s par value shares to shares of no par value (“the Octodec Share
Conversion”); and
(iii) various amendments to Octodec’s memorandum of incorporation (“MOI”).
(“the REIT Restructure”)
In addition, the Proposed Transaction is conditional upon an increase in Octodec’s authorised share
capital being effected to enable Octodec to settle the Scheme Consideration (“Increase in Authorised
Share Capital”). In terms of the Increase in Authorised Share Capital, the Octodec Board is proposing
an increase in authorised share capital from 150 000 000 Octodec no par value shares (following the
Octodec Share Conversion) to 500 000 000 Octodec no par value shares.
The REIT Restructure and the Increase in Authorised Share Capital are collectively referred to as “the
Octodec Capital Restructure”.
2. Independent Board sub-committees
The Boards are aware of their fiduciary responsibilities to their respective Unitholders, and have
established sub-committees of independent board members to ensure sound corporate governance
practice.
As announced on 14 May 2014, the Octodec Board elected David Rose, Michael Holmes and Ian
Stern to form the Octodec Independent Board, and the Premium board elected Peter Goldhawk,
Mike Leeming and Stuart Morris to form the Premium Independent Board, (collectively “the
Independent Board Sub-Committees”).
The purpose of the Independent Board Sub-Committees is to consider the terms of the Proposed
Transaction and to provide their respective Unitholders with their opinions thereof.
3. The Proposed Transaction
3.1. Background
Octodec and Premium are both REITs listed in the “Real Estate Holdings” sector of the securities
exchange operated by the JSE. Octodec currently owns 14.19% of the Premium Linked Units in issue.
The asset management, property management and company secretarial functions for both Octodec
and Premium are contracted to City Property Administration Proprietary Limited (“City Property”),
one of South Africa’s leading property asset management companies. With the exception of the
Independent Board Sub-Committees, the Boards are comprised of the same members.
Octodec and Premium each own 50% of the issued share capital of IPS Investments Proprietary
Limited (“IPS”), an unlisted company that also derives its revenue predominantly from its property
investments.
If the Proposed Transaction is implemented, Premium and IPS will become wholly-owned
subsidiaries of Octodec (“the Enlarged Group”) and the property portfolio of the Enlarged Group will
comprise of 325 properties, valued at approximately R10.0 billion.
3.2. Rationale
In recent years, the profiles of Octodec and Premium’s property portfolios have become increasingly
similar, with both companies having adopted similar strategies of concentrating on high growth
areas such as the Johannesburg and Pretoria central business districts (“CBDs”). Given the
complementary nature of the property portfolios of Octodec and Premium, and the various services
that are shared by these companies, together with the conversion of both companies to REITs, the
Boards believe it is an opportune time to implement the Proposed Transaction.
The Proposed Transaction will result in Octodec having a significant residential property portfolio
relative to any other REIT that is listed on the JSE. It is anticipated that, Octodec will have a market
capitalisation in excess of R5 billion, which should result in the inclusion of Octodec in the FTSE/JSE
SA Listed Property Index. The increased size of Octodec is also expected to attract interest from a
wider group of investors, including tracker funds and international investors, and will likely result in
increased liquidity and trading volumes for Octodec, which could potentially result in a re-rating of
the Octodec share price.
Further, it is anticipated that Octodec’s increased size and diversification may result in more
advantageous funding rates and an improved credit rating being obtained, including the re-rating
ascribed to Premium’s bond program, which Octodec should be able to capitalise on within a
relatively short period of time post the Proposed Transaction. This may ultimately result in lower
funding costs for Octodec.
The Proposed Transaction is anticipated to result in Octodec having improved access to debt and
equity capital markets that could enhance Octodec’s current growth strategy and enable Octodec to
capitalise on prevailing growth opportunities more easily.
The Proposed Transaction will result in cost savings from operating efficiencies as well as a reduction
in the administrative costs of operating one listed company as opposed to two. These cost savings
include, inter alia, a reduction in JSE fees, audit fees and disclosure and reporting requirements.
Furthermore, the Proposed Transaction will result in more efficient use of management time
through the reduction of the administrative burden of operating two separately listed entities.
3.3. Mechanics and classification of the Proposed Transaction
The Proposed Transaction is proposed to be implemented by way of a scheme of arrangement in
terms of section 114(1)(d) of the Companies Act. Subject to the fulfilment or waiver of the conditions
precedent listed in paragraph 3.6 below by 31 August 2014, the effective date of the Proposed
Transaction will be 1 September 2014 (“the Effective Date”).
The Proposed Transaction is categorised as a category 1, related party transaction and a reverse
take-over for Octodec in terms of the JSE Listings Requirements (“Listings Requirements”).
Given that the Proposed Transaction is classified as a reverse take-over in terms of the Listings
Requirements, Octodec Unitholders are advised that the JSE will evaluate the continued listing of
Octodec as if Octodec was a new applicant. The Octodec Board has no reason to believe that the JSE
would not permit Octodec’s listing to continue once the Proposed Transaction is implemented, but
Octodec Unitholders are advised of the uncertainty thereof in compliance with section 9.24 of the
Listings Requirements.
3.4. The Scheme Consideration
The consideration to be received by Premium Unitholders, excluding Octodec (“Scheme
Participants”) pursuant to the Proposed Transaction is 88.5 Octodec no par value shares for every
100 Premium linked units held on the Scheme record date (“Scheme Consideration Shares”).
The Swap Ratio has been determined after taking into account inter alia:
3.4.1. the relative net asset values per Octodec linked unit and Premium linked unit calculated on
a fair value basis as at 28 February 2014;
3.4.2. the forecast distributions per Octodec linked unit and Premium linked unit for the twelve
month period ending 31 August 2015, and
3.4.3. the relative historical volume weighted average traded prices (“VWAPs”) of Octodec linked
units and Premium linked units.
The Scheme Consideration Shares will rank pari passu in all respects with the Octodec shares in issue
and will be issued ex-entitlement to the Octodec special distribution as detailed in paragraph 3.5
below. Similarly, the Premium linked units acquired by Octodec will be acquired ex-entitlement to
the Premium special distribution as detailed in paragraph 3.5 below.
3.5. Special Distributions
On 31 August 2014, being the date prior to the Effective Date, Octodec’s distributable earnings for
the period 1 March 2014 to 31 August 2014 (“the Period”) (the “Octodec Special Distribution”) and
Premium’s distributable earnings for the Period (the “Premium Special Distribution”) (collectively,
“the Special Distributions”) will have accrued to the Octodec linked units and the Premium linked
units, respectively, in issue at that date.
In order to ensure that the Scheme Consideration Shares are issued ex-entitlement to the Octodec
Special Distribution, and do not dilute the distributions to which existing Octodec Unitholders are
entitled for the Period, the Octodec Board will declare the Octodec Special Distribution to Octodec
Unitholders that are recorded as such on Friday, 29 August 2014.
Similarly, the Premium Board will declare the Premium Special Distribution to Premium Unitholders
that are recorded as such on Friday, 29 August 2014, to ensure that the Scheme Participants receive
the distributions that have accrued to them immediately prior to the Effective Date.
The Boards will declare the Special Distributions based on managements’ forecasts for the Period.
Once the historic financial statements of Octodec and Premium for the Period have been reviewed
by their respective auditors and published, which is anticipated to be at the end of October 2014,
Octodec and Premium will declare the final amounts of the Special Distributions. The Special
Distributions are anticipated to be paid to Unitholders on or about 17 November 2014.
3.6. Conditions precedent
The Proposed Transaction is subject to the fulfilment of the following conditions precedent, inter
alia:
3.6.1. the approval of the ordinary and special resolutions relating to the Octodec Capital
Restructure and the Proposed Transaction by the requisite majority of Octodec debenture
holders and Octodec shareholders at the general meetings of Octodec debenture holders
and Octodec shareholders, respectively (collectively, “the Octodec General Meetings”);
3.6.2. the approval of the ordinary and special resolutions relating to the Scheme by the requisite
majority of Premium Unitholders at the general meeting of Premium Unitholders
(“Premium General Meeting”);
3.6.3. the issue of a compliance certificate by the Takeover Regulation Panel in respect of:
3.6.3.1. the Octodec Scheme; and
3.6.3.2. the Scheme;
3.6.4. to the extent required, in terms of section 115(3) of the Companies Act, the approval of the
implementation of the Octodec Scheme by the High Court of South Africa (“the Court”) and
if applicable, Octodec not having treated the Octodec Scheme resolutions as a nullity, as
contemplated in section 115(5)(b) of the Companies Act;
3.6.5. to the extent required, in terms of section 115(3) of the Companies Act, the approval of the
implementation of the resolutions by the Court and if applicable, Premium not having
treated the resolutions referred to in paragraph 3.6.2 as a nullity (which Premium may not
do unless instructed to do so by Octodec), as contemplated in section 115(5)(b) of the
Companies Act;
3.6.6. the receipt of the unconditional approval in writing of the relevant South African
competition authorities, to the extent required in terms of the Competition Act (No. 89 of
1998), or if such approval is conditional, such conditions being acceptable to the party upon
whom they are imposed or upon whom they have an impact, in its sole and absolute
discretion;
3.6.7. the declaration of the Octodec Special Distribution by the Octodec Board;
3.6.8. the declaration of the Premium Special Distribution by the Premium Board;
3.6.9. the filing of the notice of amendment of Octodec’s MOI, pursuant to the approval of the
Octodec Capital Restructure, with the Companies and Intellectual Property Commission;
3.6.10. the approval of the listing of the Scheme Consideration Shares by the JSE;
3.6.11. all and any other regulatory approvals which may be required in order to permit the
implementation of the Octodec Scheme and the Scheme, being obtained;
3.6.12. as at 31 August 2014, none of the following events shall have occurred in respect of
Premium and Octodec:
3.6.12.1. any corporate action, legal proceedings or the other procedure or other step
(including an application to court, proposal of a resolution or convening of a
meeting of Premium Unitholders and/or Octodec Unitholders, directors or
other officers) is taken by any person with a view to:
3.6.12.1.1. a moratorium, compromise, composition, business rescue or similar
arrangement with any of its creditors;
3.6.12.1.2. its winding-up, dissolution or commencement of business rescue proceedings,
or for the seeking of relief under any applicable bankruptcy, insolvency,
company or similar law, or any such resolution; and
3.6.13. the management agreement concluded between Premium and City Property being
terminated by mutual agreement of those parties, conditional only on the approval and
implementation of the Proposed Transaction.
4. The Octodec Capital Restructure
4.1. Rationale
In terms of the Listings Requirements, the total consolidated liabilities of a REIT in terms of
International Financial Reporting Standards (“IFRS”) may not exceed 60% of its consolidated IFRS
assets.
The JSE has provisionally allowed all REITs, for the purposes of calculating the aforementioned
financial gearing ratio, to exclude debentures issued as part of listed linked units and the related
premium, from total consolidated liabilities, up until 1 July 2015. After that date, gearing ratios will
be based on the total consolidated liabilities as reflected in the financial statements as prepared in
terms of IFRS and no separate adjustment may be made for debentures, even if they are part of the
historic linked unit structure.
IFRS currently requires that the debenture component of a linked unit capital structure be included
in the calculation of the total consolidated liabilities of a company. Given Octodec’s current capital
structure, the presence of debentures will distort Octodec’s gearing ratios going forward. The
proposed equity-only capital structure will eliminate this distortion to the gearing ratios.
5. Opinions and recommendations
5.1. Octodec Independent Board
The Octodec Independent Board has appointed BDO Corporate Finance (“Octodec Independent
Expert” or “BDO”) to provide it with an opinion on whether or not:
1. the Proposed Transaction is fair to Octodec Unitholders; and
2. the Octodec Scheme is fair and reasonable to Octodec Unitholders.
The Octodec Independent Expert has advised the Octodec Independent Board that it has considered
the terms and conditions of the Proposed Transaction, and is of the opinion that the terms and
conditions of the Proposed Transaction are fair to Octodec Unitholders.
The Octodec Independent Expert has also advised the Octodec Independent Board that it has
considered the terms and conditions of the Octodec Scheme, and is of the opinion that the terms
and conditions of the Octodec Scheme are fair and reasonable to Octodec Unitholders.
In addition, each of the properties owned by Octodec, Premium and IPS were valued by independent
property valuers as at 28 February 2014 (“the Independent Property Valuations”).
Having considered, inter alia, the opinions of BDO and the Independent Property Valuations, the
Octodec Independent Board is of the opinion that the Proposed Transaction and the Octodec
Scheme are in the best interests of Octodec Unitholders and recommends that Octodec Unitholders
vote in favour of the resolutions to be proposed at the Octodec General Meetings.
The Octodec directors, who hold Octodec linked units, will vote in favour of the requisite resolutions
at the Octodec General Meetings.
5.2. Premium Independent Board
The Premium Independent Board has appointed FirstRand Bank Limited, acting through Rand
Merchant Bank Corporate Finance (“Premium Independent Expert”) to provide it with an opinion on
whether the Proposed Transaction is fair and reasonable to Premium Unitholders.
Having considered the opinion of the Premium Independent Expert and the Independent Property
Valuations, the Premium Independent Board is of the opinion that the Proposed Transaction is fair
and reasonable to Premium Unitholders. The Premium Independent Board accordingly, recommends
that Premium Unitholders vote in favour of the resolutions to be proposed at the Premium General
Meeting.
6. Indicative support
The Wapnick Family, namely S Wapnick (who is the chairman of the Octodec Board and the Premium
Board), JP Wapnick (who is the managing director of Octodec and Premium) and/or their associates,
holding c.43.0% of Octodec linked units in issue and c.29.9% of Premium linked units in issue, have
provided irrevocable undertakings to vote in favour of the resolutions necessary to implement the
Proposed Transaction and the Octodec Capital Restructure at the Octodec General Meetings. The
Wapnick Family is precluded, in terms of section 115(4) of the Companies Act, from voting at the
Premium General Meeting, but fully support the Scheme.
Further, Octodec directors and Premium directors (excluding directors who are members of the
Wapnick Family), who collectively hold 2.4% of Octodec and 1.9% of Premium, respectively, will vote
in favour of all the resolutions necessary to implement the Proposed Transaction and Octodec Capital
Restructure.
7. Forecast financial information
The information presented in the tables below is a summary of the forecast statements of
comprehensive income of Premium and Octodec that will be included in the circular to Octodec
Unitholders to be dated on or about 1 July 2014 (“Octodec Circular”) (“the Forecasts”). The Forecasts
have been prepared in accordance with Octodec’s accounting policies and in compliance with IFRS.
The Forecasts, including the assumptions on which they are based and the financial information
from which they are prepared, are the responsibility of the Octodec Board and have not been
reviewed or reported on by Octodec’s independent reporting accountants.
As a result of the implementation of the Proposed Transaction, Premium and IPS will become
wholly-owned subsidiaries of Octodec and their year-ends will be changed from 28 February to 31
August. The Forecasts have been prepared on the assumption that the effective date of the
Proposed Transaction and the Octodec Capital Restructure is 1 September 2014. The Forecasts
include:
1. the forecast results of Premium for the six month period ending 31 August 2014 and the twelve
month period ending 31 August 2015;
2. the forecast results of Octodec for the twelve month period ending 31 August 2014, which is
based on Octodec’s reviewed results for the six month period ended 28 February 2014 and
forecast results for the six month period ending 31 August 2014; and
3. the forecast results of the Enlarged Group for the twelve month period ending 31 August 2015.
Summarised Forecasts:
Premium Premium Octodec Enlarged
6 months to 12 months to 12 months to Group
31 August 31 August 31 August 12 months
2014 2015 2014 to 31 August
2015
Revenue (R’000) 365 842 732 835 553 727 1 597 386
Operating profit (R’000) 183 258 368 758 256 972 781 503
Total comprehensive income 80 941 253 877 251 408 734 896
(R’000)
Distributable earnings (R’000) 126 534 254 884 205 873 442 970
Distributable earnings per linked
unit / share (cents) 80.7 162.6 179.3 187.4
Diluted distributable earnings per
linked unit / share (cents) 80.7 162.6 175.4 187.4
Premium Premium Octodec Enlarged
6 months to 12 months to 12 months to Group
31 August 31 August 31 August 12 months
2014 2015 2014 to 31 August
2015
Basic earnings per linked unit /
share (cents) 131.9 161.9 347.9 310.9
Diluted earnings per linked unit /
share (cents) 131.9 161.9 340.3 310.9
Headline earnings per linked unit
/ share (cents) 72.6 161.8 188.0 184.8
Diluted headline earnings per
linked unit / share (cents) 72.6 161.8 183.9 184.8
Weighted linked units / shares in
issue ('000) 156 773 156 773 114 798 236 403
Linked units / shares in issue
('000) 156 773 156 773 117 348 236 403
Notes and assumptions:
1. Unitholders are referred to the forecast financial information contained in the Octodec Circular
for all assumptions on which the Forecasts have been derived.
2. The Forecasts incorporate the following material assumptions that can be influenced by the
directors:
2.1. The following developments will be completed by Octodec during the forecast period:
- City Place: September 2014
- Silver Place: October 2014
- Bosman Building: July 2015
2.2. The following developments will be completed by Premium during the forecast period:
- The Fields: March 2014
- City Place: September 2014
- Silver Place: October 2014
2.3. Contracted revenue is based on existing signed lease agreements with stipulated increases
taken into account.
2.4. Uncontracted revenue for Octodec comprises 26.5% and 51.3% of rental income for the six
months ending 31 August 2014 and the twelve months ending 31 August 2015, respectively.
The portfolio inherently contains leases of a short-term nature with the majority of leases
providing for a month-to-month arrangement at expiry. On the assumption that monthly
leases are contracted revenue, the uncontracted revenue amounts to 8.0% and 18.1% of
rental income for the six months ending 31 August 2014 and the twelve months ending 31
August 2015, respectively.
2.5. Uncontracted revenue for Premium comprises 29.9% and 54.3% of rental income for the six
months ending 31 August 2014 and twelve months ending 31 August 2015, respectively.
The portfolio inherently contains leases of a short-term nature with the majority of leases
providing for a month-to-month arrangement at expiry. On the assumption that monthly
leases are contracted revenue, the uncontracted revenue amounts to 6.7% and 21.8% of
rental income for the twelve month periods ending 31 August 2014 and 31 August 2015,
respectively.
2.6. Current vacant space has been forecast considering each rentable unit. Uncontracted
revenue has been forecast where it is deemed probable that the vacant space will be let. In
the case of residential buildings, an average historical vacancy rate has been applied.
2.7. Leases expiring during the forecast period have been forecast on a lease-by-lease basis. City
Property is in regular contact with tenants whose leases are coming up for renewal. Where
tenants have indicated an interest in renewal the space is included at current market
related rates. Where space is considered difficult to let, a vacancy has been forecast for the
Forecast period.
3. The Forecasts incorporate the following material assumptions that cannot be influenced by the
directors:
3.1. The prime overdraft rate as at 1 March 2014 is 9.0% increasing by 0.5% on 1 September
2014 and a further 0.5% on 1 February 2015.
3.2. There will be no unforeseen economic factors that affect the ability of lessees to meet their
current lease obligations.
3.3. The gain on acquisition of subsidiary and fair value adjustment to listed investment have
been forecast using an Octodec linked unit price of R21.15, and a Premium linked unit price
of R19.06 which represent the respective 5 day VWAPs at 3 June 2014.
3.4. Actual fair value movements will be based on market information available at the time of
preparing the valuations. Forecast fair value adjustments to investment properties have
been assumed to be nil for the six month period ending 31 August 2014 and the twelve
month period ending 31 August 2015.
8. Pro forma financial information
8.1. Pro forma financial effects for Octodec
The information presented in the table below is a summary of the pro forma financial effects of the
Proposed Transaction and the Octodec Capital Restructure on Octodec’s net asset value (“NAV”) and
tangible net asset value (“TNAV”) per linked unit (“Octodec Pro Formas”) that has been summarised
from the pro forma statement of financial position of Octodec that will be included in the Octodec
Circular.
The Octodec Pro Formas are the responsibility of the Octodec Board and have been presented for
illustrative purposes only, to provide information to Octodec Unitholders on how the
implementation of the Proposed Transaction and Octodec Capital Restructure may have impacted
on the financial position of Octodec had the Proposed Transaction been effected on 28 February
2014. Because of their nature, the Octodec Pro Formas may not fairly present Octodec’s financial
position after the Proposed Transaction and Octodec Capital Restructure.
The Octodec Pro Formas are based on Octodec’s published reviewed interim results for the six
months ended 28 February 2014 and have been prepared in accordance with Octodec’s accounting
policies and in compliance with IFRS. The Octodec Pro Formas have not been reviewed or reported
on by Octodec’s independent reporting accountants.
Before Proposed After Proposed Change (%)
Transaction and Transaction and
Octodec Capital Octodec Capital
(1) (2)
Restructure Restructure
Net asset value (“NAV”) and
tangible NAV (“TNAV”) per linked 2 274.5 2 385.2 4.9%
unit / share (cents)
Number of linked units / shares in
117 348 236 403 101.5%
issue (‘000)
Notes and assumptions:
Unitholders are referred to the pro forma financial information contained in the Octodec Circular for
all assumptions on which the Octodec Pro Formas have been derived.
1. The "Before Proposed Transaction and Octodec Capital Restructure" column has been extracted
without adjustment from the published interim results of Octodec at 28 February 2014 which
have been reviewed by Deloitte & Touche, and an unmodified review conclusion was issued.
2. The pro forma statement of financial position is prepared on the basis that the Proposed
Transaction took place on 28 February 2014.
8.2. Pro forma financial effects for Premium
The information presented in the table below is a summary of the pro forma financial effects of the
Proposed Transaction on Premium’s earnings, headline earnings, distributable earnings, net asset
value (“NAV”) and tangible net asset value (“TNAV”) per linked unit (“Premium Pro Formas”) that has
been summarised from the pro forma statement of financial position and statement of
comprehensive income of Premium that will be included in the Premium Circular.
The Premium Pro Formas are the responsibility of the Premium Board and have been presented for
illustrative purposes only, to provide information to Premium Unitholders on how the
implementation of the Proposed Transaction may have impacted on Premium Unitholders had the
transaction been effected on 28 February 2014 for statement of financial position purposes and 1
September 2013 for statement of comprehensive income purposes. Because of their nature, the
Premium Pro Formas may not fairly present the effect of the Proposed Transaction on Premium’s
Unitholders.
The Premium Pro Formas are based on Premium’s reviewed results for the six months ended 28
February 2014 and have been prepared in accordance with Premium’s accounting policies and in
compliance with IFRS. The Premium Pro Formas have not been reviewed or reported on by
Premium’s independent reporting accountants.
Before Proposed After Proposed Change (%)
(1) (2) (3)
Transaction Transaction
NAV and TNAV per linked unit /
2 010.4 2 385.2 18.6%
share (cents)
Distributable earnings per linked
84.5 87.1 3.1%
unit (cents)
Diluted distributable earnings per
84.5 85.2 0.8%
linked unit / share (cents)
Basic earnings per linked unit
(4) 79.3 494.7 523.8%
/share (cents)
Diluted earnings per linked unit /
(4) 79.3 483.9 510.2%
share (cents)
Headline earnings per linked unit
(4) 87.8 166.1 89.2%
/ share (cents)
Diluted headline earnings per
(4) 87.8 162.5 85.1%
linked unit / share (cents)
Weighted average number of
linked units / shares in issue 156 773 231 262 47.5%
(‘000)
Number of linked units / shares in
156 773 236 403 50.8%
issue (‘000)
Notes and assumptions:
Unitholders are referred to the pro forma financial information contained in the Premium Circular
for all assumptions on which the Premium Pro Formas have been derived.
1. The "Before Proposed Transaction" column has been extracted without adjustment from the
published provisional results of Premium at 28 February 2014 which have been reviewed by
Grant Thornton, and an unmodified review conclusion was issued.
2. The pro forma statement of comprehensive income is prepared on the basis that the Proposed
Transaction took place on 1 September 2013.
3. The pro forma statement of financial position is prepared on the basis that the Proposed
Transaction took place on 28 February 2014.
4. The undiluted and diluted “After Proposed Transaction” earnings and headline earnings per
linked unit are not comparable to the undiluted and diluted “Before Proposed Transaction”
earnings and headline earnings per linked unit, respectively, because they have been adjusted for
once-off items of a capital nature that are not distributable to Premium Unitholders, such as the
gain on acquisition of subsidiary and reversal of deferred tax.
9. Salient dates and times
2014
Record date to determine which Unitholders are eligible to receive the Friday, 20 June
Octodec Circular and Premium Circular (collectively, “Circulars”),
respectively
Circulars posted to Unitholders Tuesday, 1 July
Last day to trade in order to be eligible to vote at the Octodec General Friday, 18 July
Meetings and/or Premium General Meeting (collectively, “the General
Meetings”)
Record date for voting at the General Meetings Friday, 25 July
Forms of proxy to be received by 12h00 Tuesday, 29 July
General Meeting of Octodec debenture holders to be held at 12h30 Thursday, 31 July
General Meeting of Octodec shareholders to be held at 12h45 Thursday, 31 July
General Meeting of Premium Unitholders to be held at 13h30 Thursday, 31 July
Results of the General Meetings to be released on SENS Thursday, 31 July
Results of the General Meetings to be published in the press Friday, 01 August
Declaration date in respect of the Special Distributions Friday, 8 August
Last date to trade in order to be eligible to receive the Special Friday, 22 August
Distributions
2014
Last date to trade in order to be recorded in the Octodec register on the Friday, 22 August
record date for the Octodec Scheme
Last date to trade in order to be recorded in the Premium register on the Friday, 22 August
record date for the Scheme
Suspension of trading of Octodec linked units under the current ISIN Monday, 25 August
ZAE000005104, from the commencement of trade
Octodec shares of no par value listed on the JSE, to trade under the share Monday, 25 August
code OCT and new ISIN to be confirmed in the Octodec Circular
Suspension of trading of Premium Linked Units from the commencement Monday, 25 August
of trade
Scheme Consideration Shares listed on the JSE Monday, 25 August
Record date for the Special Distributions Friday, 29 August
Record date for the Octodec Scheme Friday, 29 August
Record date for the Proposed Transaction Friday, 29 August
Record date for the Scheme Friday, 29 August
Anticipated Effective Date of the Proposed Transaction Monday, 1 September
Scheme Participants’ CSDP or broker accounts credited with the Scheme Monday, 1 September
Consideration Shares
Termination of listing of Premium linked units on the JSE from the Monday, 1 September
commencement of trade
Finalisation date in respect of the Special Distributions, on or about Tuesday, 28 October
Payment date in respect of the Special Distributions, on or about Monday, 17 November
Notes:
1. All dates and times indicated in this Circular are South African dates and times.
2. These dates and times are subject to amendment. Any such amendment will be released on
SENS.
10. Posting of Circulars
The Octodec Circular, including the notices of the Octodec General Meetings and forms of proxy will
be posted to Octodec Unitholders on or about 1 July 2014.
The Premium Circular, including the notice of General Meeting, form of proxy, and the form of
transfer and surrender will be posted to Premium Unitholders on or about 1 July 2014.
The Octodec Circular will be made available on the Octodec website (www.octodec.co.za) and the
Premium circular will be made available on the Premium website (www.premiumproperties.co.za)
from the date of posting of the respective Circulars.
11. Directors’ responsibility
The Octodec Board and the Premium Board accept responsibility for the information contained in
this announcement, and confirm that, to the best of their respective knowledge and belief, the
information contained in this announcement is true and does not omit anything likely to affect the
importance of the information.
12. Withdrawal of cautionary announcement
Unitholders are referred to the joint cautionary announcement issued by Octodec and Premium on 7
April 2014.
Following this announcement of the terms of the Proposed Transaction, including the financial
information and salient dates, Unitholders are no longer required to exercise caution when dealing in
their linked units respectively.
Johannesburg
10 June 2014
Investment Bank, Corporate Advisor and Sponsor to Octodec and Premium
Nedbank Capital
Legal adviser to Octodec and Premium
Tugendhaft Wapnick Banchetti and Partners
Independent expert to Octodec
BDO Corporate Finance
Independent expert to Premium
FirstRand Bank Limited, acting through RMB Corporate Finance
Competition law advisor to Octodec and Premium
Vani Chetty Competition Law
Date: 10/06/2014 02:00:00 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.
Sharenet Sites 
