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Further distribution for 2020, settlement of 2020 distributions, posting of circular, trading statement
HYPROP INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/005284/06)
JSE share code: HYP ISIN: ZAE000190724
JSE bond issuer code: HYPI
(Approved as a REIT by the JSE)
(“Hyprop” or “the Company”)
This announcement is not for publication or distribution, directly or indirectly, in or into the United States or to any
U.S. person (as defined in Regulation S under the U.S. Securities Act (as defined below)). The distribution of this
announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or
other information referred to herein comes, should inform themselves about and observe any such restriction. Any
failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
DECLARATION OF A FURTHER DISTRIBUTION FOR THE 2020 FINANCIAL YEAR AND SETTLEMENT OF THE 2020 DISTRIBUTIONS, POSTING OF
A CIRCULAR AND TRADING STATEMENT
BACKGROUND
In fully considering the different ways of meeting the minimum distribution requirements for REITs provided for in the
JSE Listings Requirements (the “minimum distribution requirements”), Hyprop has taken extensive advice from its
sponsor, attorneys and senior counsel, and has engaged openly with the JSE.
This process commenced in August 2020 in advance of Hyprop’s notice of the annual general meeting (“AGM”) to be held
in November 2020, which notice included, inter alia, Special Resolution 4 to enable Hyprop to settle the 2020 interim
distribution by crediting a shareholder loan claim, provided that such indebtedness will be capable of being applied by
shareholders to subscribe for shares in terms of a dividend reinvestment mechanism or the like on such basis as the
directors may determine. Special Resolution 4 was passed by 98.3% of shareholders who voted at the AGM.
The process is now at the stage where the JSE has declined to approve a proposed circular to shareholders which would
have resulted in Hyprop settling its distributions for the 2020 financial year on credit (as contemplated in Special
Resolution 4) rather than in cash, while allowing shareholders to reinvest the dividend by electing to subscribe for new
shares in Hyprop under a dividend reinvestment plan. Hyprop has objected to the JSE’s decision, but the process to
resolution of this objection and the difference of opinion underlying it will not be concluded in time for Hyprop to
implement its distributions for the 2020 financial year in the manner it intended prior to 31 December 2020 (being the
deadline for Hyprop to comply with the minimum distribution requirements).
Against this background, Hyprop’s board of directors has resolved to declare a further distribution for the 2020 financial
year and to settle the distributions for the 2020 financial year as set out below.
DECLARATION OF A FURTHER DISTRIBUTION FOR THE 2020 FINANCIAL YEAR AND SETTLEMENT OF THE DIVIDEND
Shareholders are advised that:
– the Board has declared a further distribution of 66.26291 cents per Hyprop share for the year ended 30 June 2020;
– the further distribution, together with Hyprop’s interim distribution of 308.73709 cents per share, result in a total
distribution of 375.0 cents per share for the 2020 financial year (the “dividend”), equivalent to 76% of Hyprop’s
distributable income for the 2020 financial year, which will be settled in cash (“the cash dividend”);
– in accordance with the provisions of Hyprop’s memorandum of incorporation (as amended at the AGM)
shareholders will be entitled to retain the cash dividend or to reinvest the cash dividend in return for Hyprop shares
(the “share reinvestment alternative”), on the basis that the default is the share reinvestment alternative.
The number of shares to which shareholders are entitled will be determined with reference to the ratio that 375.0 cents per
share bears to the reinvestment price. The reinvestment price will be determined by Hyprop by no later than the finalisation
date with reference to market conditions at the time, including the spot price per Hyprop share (less the cash dividend)
and/or the volume weighted average trade price per Hyprop share for up to 30 days prior to the finalisation date (less the
cash dividend). The reinvestment price will be announced on the finalisation date, which will be no later than 11:00 (SA
time) on Tuesday, 12 January 2021.
The board of directors of Hyprop may, in its discretion, withdraw the share reinvestment alternative should market
conditions warrant such action. Any such withdrawal will be communicated to shareholders prior to the release of the
finalisation announcement on SENS by 11:00 (SA time) on Tuesday, 12 January 2021.
Circular to shareholders
A circular providing further information to shareholders in respect of the election between retaining the cash dividend and
receiving Hyprop shares pursuant to the share reinvestment alternative will be posted to shareholders who are residents of
South Africa on/about Monday, 21 December 2020. A copy of the circular is available on the Company’s website at
https://www.hyprop.co.za/circulars.php .
Shareholders who have dematerialised their shares through a Central Securities Depository Participant ("CSDP") or broker
should instruct their CSDP or broker with regard to their election, in accordance with the terms of the custody agreement
entered into between them and their CSDP or broker.
SALIENT DATES AND TIMES 2020
Circular and form of election posted to shareholders on/about, and announced on SENS on Monday, 21 December
2021
Finalisation information including the share ratio and reinvestment price per share
published on SENS by 11:00 (SA time) Tuesday, 12 January
Last day to trade in order to receive the dividend (“LDT”) Tuesday, 19 January
Shares trade ‘ex’ dividend Wednesday, 20 January
Listing of maximum possible number of shares under the share reinvestment alternative Friday, 22 January
Record date to receive the dividend (“record date”) Friday, 22 January
Last day to elect to retain the cash dividend or to receive the share reinvestment alternative
(no late forms of election will be accepted) at 12:00 (SA time) Friday, 22 January
Results of cash dividend and share reinvestment alternative published on SENS Monday, 25 January
Cash dividend paid to certificated shareholders by electronic funds transfer on or about Monday, 25 January
Cash dividend credited by CSDP or broker to dematerialised shareholders’ accounts Monday, 25 January
Share certificates posted to certificated shareholders on or about Wednesday, 27 January
Dematerialised shareholders’ accounts updated with the new shares (if applicable) by
CSDP or broker Wednesday, 27 January
Adjustment to shares listed on or about Friday, 29 January
Notes:
1. Shareholders electing the share reinvestment alternative are alerted to the fact that the new shares will be listed on
LDT + 3 and that these new shares can only be traded on LDT + 3 due to the fact that settlement of the shares will be
three days after the record date, which differs from the conventional one day after record date settlement process.
2. Shares may not be dematerialised or rematerialised between Wednesday, 20 January 2021 and Friday, 22 January 2021, both
days inclusive.
3. The above dates and times are subject to change. Any changes will be released on SENS.
FRACTIONS
Trading in the Strate environment does not permit fractions and fractional entitlements. Where a shareholder’s entitlement
to the shares in relation to the share reinvestment alternative calculated in accordance with the formula mentioned above
gives rise to an entitlement to a fraction of a new share, such fraction will be rounded down to the nearest whole number
with the balance of the cash dividend being retained by the shareholders.
TRADING STATEMENT
The dividend of 375.0 cents per share is 49.66% lower than the total distribution for the year ended 30 June 2019 of
744.89034 cents per share. The financial information contained in this trading statement has not been reviewed or reported
on by Hyprop’s auditors.
TAX IMPLICATIONS
Hyprop was granted REIT status by the JSE Limited with effect from 1 July 2013 in line with the REIT structure as provided
for in the Income Tax Act, No. 58 of 1962, as amended from time to time (the “Income Tax Act”) and, section 13 of the
JSE Listings Requirements.
The REIT structure is a tax regime that allows a REIT to deduct qualifying distributions to investors, in determining its
taxable income.
The dividend of 375.0 cents per share meets the requirements of a “qualifying distribution” for the purposes of section
25BB of the Income Tax Act (a “qualifying distribution”) with the result that:
- qualifying distributions received by resident Hyprop shareholders must be included in the gross income of such
shareholders (as a non-exempt dividend in terms of section 10(1)(k)(i)(aa) of the Income Tax Act), with the effect
that the qualifying distribution is taxable as income in the hands of the Hyprop shareholder. These qualifying
distributions are however exempt from dividends withholding tax, provided that the South African resident
shareholders provided the following forms to their CSDP or broker, as the case may be, in respect of uncertificated
shares, or the company, in respect of certificated shares:
- a declaration that the dividend is exempt from dividends tax; and
- a written undertaking to inform the CSDP, broker or the company, as the case may be, should the circumstances
affecting the exemption change or the beneficial owner cease to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Shareholders are advised
to contact their CSDP, broker or the company, as the case may be, to arrange for the abovementioned documents to
be submitted prior to payment of the dividend, if such documents have not already been submitted.
Shareholders who are South African residents are advised that in electing to participate in the share reinvestment
alternative, pre-taxation funds are utilised for reinvestment purposes and that taxation will be due on the total cash
dividend amount of 375.0 cents per share.
- qualifying distributions received by non-resident Hyprop shareholders will not be taxable as income and instead will
be treated as ordinary dividends but which are exempt in terms of the usual dividend exemptions per section 10(1)(k)
of the Income Tax Act. Any qualifying distribution is subject to dividends withholding tax, at 20%, unless the rate is
reduced in terms of any applicable agreement for the avoidance of double taxation (“DTA”) between South Africa
and the country of residence of the shareholder. Assuming dividends withholding tax will be withheld at a rate of
20%, the net dividend amount due to non-resident shareholders is 300.0 cents per share. A reduced dividend
withholding rate in terms of the applicable DTA, may only be relied upon if the non-resident shareholder has provided
the following forms to their CSDP or broker, as the case may be, in respect of uncertificated shares, or the company,
in respect of certificated shares:
- a declaration that the dividend is subject to a reduced rate as a result of the application of a DTA; and
- a written undertaking to inform their CSDP, broker or the company, as the case may be, should the
circumstances affecting the reduced rate change or the beneficial owner cease to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Non-resident shareholders
are advised to contact their CSDP, broker or the company, as the case may be, to arrange for the abovementioned
documents to be submitted prior to payment of the dividend if such documents have not already been submitted, if
applicable.
Non-resident shareholders are further advised that in participating in the share reinvestment alternative, post dividend
withholding tax funds are utilised for reinvestment purposes.
Other information:
- The ordinary issued share capital of Hyprop is 255 894 516 ordinary shares of no par value before the share
reinvestment alternative.
- Income Tax Reference Number of Hyprop: 9425177715.
The cash dividend or share reinvestment alternative may have tax implications for resident as well as non-resident
shareholders. Shareholders are therefore encouraged to consult their tax and/or professional advisors should they be in any
doubt as to the appropriate action to take.
INFORMATION RELATING TO FOREIGN SHAREHOLDERS
The release, publication or distribution of the circular and/or accompanying documents and the right to receive shares
pursuant to the share reinvestment alternative in jurisdictions other than the Republic of South Africa may be restricted or
affected by the laws of such jurisdictions, and a failure to comply with any of those restrictions may constitute a violation
of the securities laws of any such jurisdictions. The shares issued pursuant to the share reinvestment alternative may not be
offered, sold, taken up, exercised, resold, renounced, transferred or delivered within Australia, Canada, Hong Kong or
Japan.
United States of America
This circular and the shares issued pursuant to the share reinvestment alternative (the “Hyprop Shares”) have not been
approved or disapproved by the U.S. Securities and Exchange Commission, any state securities commission in the United
States or any other U.S. regulatory authority, nor have any of such regulatory authorities passed comment or opinion upon
or endorsed the merits of the share reinvestment alternative or the accuracy or adequacy of this circular. Any representation
to the contrary is a criminal offence in the United States.
Shareholders who are citizens or residents of the United States are advised that the Hyprop Shares have not been and will
not be registered under the U.S. Securities Act, or under any securities laws of any state or other jurisdiction of the United
States and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly,
within the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, the
registration requirements of the U.S. Securities Act and in compliance with applicable state and other securities laws of
the United States.
The Hyprop Shares have not been and will not be registered under the U.S. Securities Act or with any securities regulatory
authority of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold,
renounced, transferred or delivered, directly or indirectly, within the United States, except pursuant to an exemption from
or, in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any
applicable securities laws of any state or other jurisdiction of the United States.
Accordingly, the Company is not offering the Hyprop Shares into the United States unless an applicable exemption from
the registration requirements of the U.S. Securities Act is available and, subject to certain exceptions, this circular does
not constitute nor will it constitute an offer or an invitation to apply for, or an offer or an invitation to acquire, any
Hyprop Shares in the United States. Subject to certain exceptions, this circular will not be sent to any shareholder in, or
with a registered address in, the United States. Any person in the United States wishing to receive Securities must execute
and deliver to the Company an investor letter satisfactory to the Company to the effect that such person and any account for
which it is acquiring the shares is a QIB and satisfies certain other requirements. The investor letter may be requested or
obtained from Hyprop by emailing dripinfo@hyprop.co.za. For the avoidance of doubt, all shareholders located in the
United States are entitled to receive the cash dividend. US shareholders who elect to receive Hyprop Shares in lieu of the
cash dividend and do not deliver an investment letter, will be deemed to be excluded shareholders as defined below.
Subject to certain exceptions, any person who acquires Hyprop Shares will be deemed to have declared, warranted and
agreed, by accepting delivery of this circular, the share reinvestment alternative, selling or renouncing their Hyprop Shares
or accepting delivery of the Hyprop Shares that it is not, and that at the time of acquiring the Hyprop Shares, it will not be,
in the United States or acting on behalf of, or for the account or benefit of, a person on a non-discretionary basis in the
United States or any state of the United States.
In addition, until 9 March 2021 (40 days after posting of the certificated shares and updating with the new shares of the
accounts of dematerialised shareholders), an offer, sale or transfer of the shares within the United States by a dealer (whether
or not participating in the share reinvestment alternative transaction) may violate the registration requirements of the U.S.
Securities Act.
European Economic Area and United Kingdom
In relation to each member state of the European Economic Area and the United Kingdom (each a “Relevant State”), with
effect from and including the date of this circular, no shares have been offered pursuant to the share reinvestment alternative
to the public in that Relevant State. The offer of shares pursuant to the share reinvestment alternative contemplated by this
circular may not be made to the public in that Relevant State except that an offer to the public in that Relevant State of any
shares pursuant to the share reinvestment alternative may be made at any time under the following exemptions under the
Prospectus Regulation:
(A) to any legal entity which is a qualified investor as defined under the Prospectus Regulation;
(B) to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation),
as permitted under the Prospectus Regulation; or
(C) in any other circumstances falling within Article 1(4) of the Prospectus Regulation,
provided that no such offer of shares pursuant to the share reinvestment alternative shall require the Company to publish a
prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the
Prospectus Regulation.
For the purposes of this provision, the expression an “offer to the public” (and similar expressions) in relation to any shares
offered pursuant to the share reinvestment alternative in any Relevant State means the communication in any form and by
any means of sufficient information on the terms of the share reinvestment alternative and the shares to be offered pursuant
thereto so as to enable an investor to decide to purchase or subscribe for any shares pursuant to the share reinvestment
alternative, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.
Any person located in any Relevant State that elects to receive any shares pursuant to the share reinvestment alternative,
will be deemed to represent, warrant, agree and confirm that they are a qualified investor as defined under the Prospectus
Regulation. Any person located in any Relevant State that wishes to receive shares pursuant to the share reinvestment
alternative is requested to contact the Company by emailing dripinfo@hyprop.co.za. In the case of any shares pursuant to
the share reinvestment alternative being required by a financial intermediary as that term is used in Article 5(1) of the
Prospectus Regulation, such financial intermediary will be deemed to have represented, acknowledged and agreed that the
shares acquired by it pursuant to the share reinvestment alternative have not been acquired on a non-discretionary basis on
behalf of, nor have they been acquired with a view to their offer or resale to, persons in a Relevant State in circumstances
which may give rise to an offer of any shares issued pursuant to the share reinvestment alternative to the public other than
their offer or resale in a Relevant State to qualified investors as defined under the Prospectus Regulation.
The Company and its affiliates and others will rely upon the truth and accuracy of the foregoing representation, warranty,
acknowledgement and agreement.
United Kingdom
In the United Kingdom, this circular is only being distributed and communicated to, and any investment or investment
activity to which this circular relates is available only to, and will be engaged in only with, persons: (i) having
professional experience in matters relating to investments who fall within the definition of “investment professionals”
in Article 19(5) of the Financial Services and Markets Act, 2000 (Financial Promotion) Order 2005 (the “Order”); or
(ii) who are high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together being
referred to as “Relevant Persons”). Persons who are not Relevant Persons should not take any action on the basis of this
circular and should not act or rely on it. Relevant Persons that wish to receive shares pursuant to the share reinvestment
alternative are requested to contact the Company by emailing dripinfo@hyprop.co.za .
Excluded shareholders
Any foreign shareholder who has neither elected to retain the cash dividend nor to receive new Hyprop shares pursuant to
the share reinvestment alternative (“excluded shareholder”) including for the avoidance of doubt any shareholder located
in the United States which did not execute and deliver an investment letter certifying its eligibility to receive the Hyprop
Shares, will, by default, be subject to the share reinvestment. However, given that it may not be able to receive Hyprop
shares pursuant to the share reinvestment alternative on account of the laws of the jurisdiction to which such foreign
shareholder is subject, it will not receive Hyprop shares and all the Hyprop shares to which any excluded shareholders are
entitled will be issued and aggregated and disposed of on the JSE by the transfer secretaries for the benefit of such excluded
shareholders as soon as reasonably practicable following the implementation of the share reinvestment alternative, at the
best price that can reasonably be obtained at the time of sale. Excluded shareholders will receive the average consideration
per Hyprop share to which they are entitled (net of transaction and currency costs) at which all excluded shareholders’
Hyprop shares were disposed of. The average consideration will be calculated and the consideration due to each excluded
shareholder will only be paid once all shares have been disposed of.
All Hyprop shareholders who are resident or whose registered addresses are in any country other than South Africa are
deemed to be excluded shareholders unless such shareholders, on or before the record date:
- provide the transfer secretaries, either personally or through a representative or CSDP, with proof satisfactory to the
transfer secretaries and the Hyprop board that they are entitled to receive Hyprop shares pursuant to the share
reinvestment alternative and are therefore not an excluded shareholder; or
- contact the transfer secretaries to make an alternative arrangement.
Hyprop and/or CSDPs will be responsible for informing the transfer secretaries of all dematerialised shares held by them
on behalf of excluded shareholders. Hyprop and/or the transfer secretaries will determine which certificated shareholders
are excluded shareholders.
Disclaimer
This announcement does not constitute or form part of an offer to sell securities, or the solicitation of any offer to buy or
subscribe for any securities, to or from any person in the United States (or to, or for the account or benefit of, any such
person or any U.S. person, as defined in Regulation S under the U.S. Securities Act) or in any other jurisdiction in which,
or to or from any other person to or from whom, such offer or solicitation is unlawful. The securities referred to in this
announcement have not been and will not be registered under the U.S. Securities Act, and may not be offered or sold in the
United States or to, or for the account or benefit of, U.S. persons absent registration with the United States Securities and
Exchange Commission or an exemption from registration. There will be no public offer of the securities in the United States.
21 December 2020
Corporate advisor and sponsor
Java Capital
Legal advisor
Cliffe Dekker Hofmeyr
Date: 21-12-2020 08:00:00
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The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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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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