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HERIOT REIT LIMITED - Firm intention announcement regarding a general offer for Safari shares

Release Date: 03/06/2022 15:45
Code(s): HET     PDF:  
Wrap Text
Firm intention announcement regarding a general offer for Safari shares

HERIOT REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2017/167697/06)
(Approved as a REIT by the JSE)
JSE share code: HET ISIN: ZAE000246740
("Heriot" or "the Company")


FIRM INTENTION ANNOUNCEMENT REGARDING A GENERAL OFFER FOR SAFARI SHARES


1.    Introduction and rationale for the General Offer

      Heriot Properties Proprietary Limited ("Heriot Properties" or the "Offeror", a wholly-owned subsidiary
      of Heriot), together with two concert parties, Heriot Investments Proprietary Limited ("Heriot
      Investments") and Reya Gola Investments Proprietary Limited ("Reya Gola Investments") (the "Concert
      Parties"), hold 102 851 903 shares in Safari Investments RSA Limited ("Safari"), being 33.1% of all shares
      in issue.

      Heriot intends to increase its investment in Safari, which is strategic. To this end, Heriot has informed the
      Safari Board that Heriot Properties will make a general offer to purchase Safari shares at an offer price of
      R5.60 per Safari share (the "General Offer").

      The General Offer will afford Safari shareholders an opportunity to sell their Safari shares for a cash price
      that is at a premium to the recently traded price of Safari shares. In Heriot's view, the stand-alone prospects
      for Safari are constrained, given that investors generally prefer to invest in REITs that have larger market
      capitalisations and offer great liquidity to shareholders than Safari. Heriot notes that, as the largest
      shareholder in Safari, it would not support any proposal by Safari to make any acquisitions or issue new
      shares given that the market price for Safari shares is at a discount to Safari's NAV per share.

      The Offeror will make the General Offer in terms of section 117(1)(c)(v) of the Companies Act 71 of 2008
      (the "Companies Act") and regulation 102 of the Takeover Regulations promulgated thereunder (the
      "Takeover Regulations").

      This announcement constitutes a firm intention announcement in terms of regulation 101 of the Takeover
      Regulations.

2.    Terms and conditions of the General Offer

      The material terms of the General Offer will be as follows:

      2.1.   The General Offer and General Offer consideration

             The Offeror will make the General Offer for a cash consideration of R5.60 per Safari share payable
             against delivery of ownership of the relevant Safari shares into the Offeror's name.

             If Safari declares an ordinary dividend prior to the closing date of the General Offer, the timing of
             the delivery of ownership of the Safari shares in question will determine entitlement to the dividend.
             Either the Offeror or the registered shareholder accepting the General Offer will receive the dividend,
             depending on which is registered as the Safari shareholder at the record date for the dividend.

             The Concert Parties will not accept the General Offer.

             Southern Palace Capital Proprietary Limited ("Southern Palace") is the registered shareholder of
             53 000 000 Safari shares (the "SP Shares"). Safari holds the SP Shares as security for claims against
             Southern Palace and treats the SP Shares as treasury shares, including for accounting purposes, and,
             accordingly, Safari excludes the SP Shares from its calculations of distribution per share, earnings
             per share and net asset value per share. Safari has disclosed that it is considering its options regarding
             the SP shares and Heriot understands Safari may repurchase and cancel the SP shares in settlement
             or part settlement of the claims Safari has against Southern Palace.

             Consistent with Safari's treatment of the SP Shares as treasury shares, Heriot will exclude the
             SP shares from the General Offer.

      2.2.   Unconditional nature of General Offer

             The South African Competition Authorities have unconditionally approved a merger between Heriot
             and Safari, as announced by Safari on SENS on 3 March 2022.

             Accordingly, the General Offer is not subject to any suspensive conditions.

3.    Ability to proceed with the General Offer

      The Offeror has delivered an irrevocable unconditional guarantee to the Takeover Regulation Panel in
      accordance with regulations 111(4) and 111(5) of the Takeover Regulations and in favour of Safari
      shareholders for the sole purpose of fully satisfying the Offeror's cash commitments in respect of the
      General Offer.

4.    Beneficial interest in Safari of the Offeror, persons related to the Offeror and/or persons acting in
      concert with the Offeror

      The Offeror has disclosed the following beneficial interests in Safari held by the Offeror, persons related
      to the Offeror and/or persons acting in concert with the Offeror:

      Shareholder                                                     Number of shares    % of issued shares
      Heriot Properties                                                     59 631 630                  19.2
      Heriot Investments                                                    42 413 204                  13.6
      Reya Gola Investments                                                    807 069                   0.3
      Total                                                                102 851 903                  33.1

5.    No mandatory offer required

      The General Offer, if accepted by shareholders holding at least 5 937 203 Safari shares, will result in the
      Offeror and the Concert Parties acquiring Safari shares equal to or exceeding 35% of the issued shares of
      Safari. The Takeover Regulation Panel has confirmed that, if the Offeror and the Concert Parties reach or
      exceed the 35% threshold as a result of acceptances of the General Offer, the Offeror and the Concert
      Parties are not required to make a mandatory offer to Safari shareholders under Chapter 5 of the Companies
      Act and the Takeover Regulations.

6.    Information on Safari

      Safari is a JSE listed property owning company with a portfolio of retail, office and residential properties,
      with the majority of its assets being retail properties in and around Pretoria.

      The following profitability metrics are attributable to Safari for the six months ended 30 September 2021:

      Distributable earnings per share (cents)                                                            25.00
      Basic earnings per share (cents)                                                                    27.31
      Headline earnings per share (cents)                                                                 27.31

      The General Offer constitutes, on an aggregated basis, a category 2 transaction in terms of the JSE Listings
      Requirements and is therefore not subject to Heriot shareholder approval.

7.    Posting of circular and expected salient dates and times

      An offer circular, containing full details in respect of the General Offer as contemplated in regulations 102
      and 106 of the Takeover Regulations, is in the process of being prepared.

      Safari shareholders will be advised of the posting of the circular and the opening date of the General Offer
      by means of an announcement on SENS. The General Offer will remain open for acceptance for at least
      30 business days after the opening date of the General Offer.

      The expected headline salient dates and times relating to the General Offer are as follows:

                                                                                                          2022
      Circular posted to Safari shareholders on                                               Tuesday, 21 June

      Announcement relating to the issue of the circular and the General Offer
      released on SENS on                                                                     Tuesday, 21 June

      Offer opens at 09:00 on                                                               Wednesday, 22 June

      Date on which the General Offer closes at 12:00 on                                      Friday, 5 August
 
      Results of the General Offer announced on SENS on                                       Monday, 8 August

      Final payment to be made on                                                             Monday, 8 August
      
      Notes:
      1.     All dates and times in this circular are local dates and times in South Africa.
      2.     The above dates and times are subject to change. Any changes will be released on SENS and, if required,
             published in the press.
      3.     The offer must remain open for at least 30 business days after the opening date.
      4.     As the offer is unconditional, acceptance of the offer will be irrevocable.

8.    Responsibility statement

      The Offeror, to the extent that the information relates directly to the Offeror, accepts responsibility for the
      information contained in this announcement and certifies that, to the best of its knowledge and belief, the
      information contained in this announcement relating to the Offeror is true and this announcement does not
      omit anything that is likely to affect the import of such information.

3 June 2022


Corporate advisor and designated advisor
Java Capital

Date: 03-06-2022 03:45:00
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