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Announcement regarding the renewal of a lease agreement with a related party
HUDACO INDUSTRIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1985/004617/06)
Share code: HDC & ISIN: ZAE000003273
(“Hudaco” or the “Company”)
ANNOUNCEMENT REGARDING THE RENEWAL OF LEASE AGREEMENTS WITH A RELATED PARTY
1. INTRODUCTION
Shareholders are advised that Hudaco Trading (Pty) Limited (“Hudaco Trading”), an 85% held subsidiary
of Hudaco, has renewed its lease agreements (“Lease Agreements”) with Dufomo Investments
Proprietary Limited (“Dufomo”) for a further period of three years in terms of which:
1.1 Gear Pump Manufacturing (“GPM”), a division of Hudaco Trading, will continue to lease
premises located at 15 Moody Avenue, Epping 1, Cape Town (the “GPM Premises”); and
1.2 Joseph Grieveson, a division of Hudaco Trading, will continue to lease the premises located at
332 Aberdare Drive, Phoenix Industrial Park, Phoenix, Durban (the “Joseph Grieveson
Premises”),
collectively “the Premises” from Dufomo as set out in paragraph 3 below (the "Lease Renewals”).
Mr GR Dunford, the chief executive officer of Hudaco, is an 82% shareholder of Dufomo, which owns
the Premises.
2. RATIONALE FOR THE LEASE RENEWALS
The rationale for the Lease Renewals is to provide continuity to the businesses mentioned in section
1 above, which have been renting these respective premises from Dufomo for over 17 years. The
buildings and structures on these premises were purposely built to suit the requirements of the
respective businesses and the businesses had already occupied these premises before being acquired
by Hudaco during 2013.
3. DETAILS AND TERMS OF THE LEASE RENEWALS
In terms of the Lease Agreements, GPM and Joseph Grieveson will lease the Premises for a further
period of 3 years from the commencement date of 1 July 2021. The monthly rentals payable in respect
of the Premises, which includes an annual escalation of 7%, are set out in the table below:
Period GPM Premises Joseph Grieveson Premises
Monthly rental Monthly rental
(excluding VAT) (excluding VAT)
1 July 2021 to 30 June 2022 R223 423.92 R291 863.91
1 July 2022 to 30 June 2023 R239 063.59 R312 294.38
1 July 2023 to 30 June 2024 R255 798.00 R334 155.00
The premises of GPM, a manufacturer and assembler of cast iron hydraulic gear pumps, comprise
373m² of offices, inclusive of offices located in the factory and 2 469m² of factory and warehouse,
828m² of foundry and 161m² of ablutions space.
The premises of Joseph Grieveson, a manufacturer of ferrous and non-ferrous castings, comprise
offices, warehouse and foundry space, measuring 3 661m².
There are no outstanding conditions precedent relating to the Lease Renewals.
4. FINANCIAL INFORMATION
Hudaco incurs lease expenses of the amount set out in paragraph 3 above. The rental payable is
deductible for tax purposes. Except for a right of use asset to be determined in terms of IFRS 16, there
are no assets attributable to the Lease Renewals.
5. CATEGORISATION AND SMALL RELATED PARTY TRANSACTION
The entering into of the Lease Renewals is considered a “small related party transaction” in terms of
section 10.7 of the JSE Listings Requirements as Hudaco will be transacting with a “related party”,
being Dufomo and accordingly no shareholder approval is required provided that an independent
expert has confirmed that the terms of the Lease Renewals are fair insofar as Hudaco shareholders
are concerned.
The board of directors of Hudaco has appointed Merchantec Capital (the “Independent Expert”) to
provide an independent fairness opinion on the Lease Renewals (the “Fairness Opinion”) in
compliance with paragraph 10.7(b) of the JSE Listings Requirements. The Independent Expert has
considered the terms and conditions of the Lease Renewals and is of the opinion that the Lease
Renewals are fair insofar as Hudaco shareholders are concerned. The Fairness Opinion is available for
inspection at the registered office of the Company, Building 9, Greenstone Hill Office Park, Emerald
Boulevard, Greenstone Hill, Edenvale, for a period of 28 days from the date of this announcement and
may be obtained on request from Hudaco’s Company Secretary at natashap@acorim.co.za
Johannesburg
23 July 2021
Corporate advisor and Sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Independent Expert
Merchantec Capital
Date: 23-07-2021 01:45:00
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