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Proposed R2.8 billion investment by GEPF including acquisition of 30% of AWIC and cautionary announcement
ATTACQ LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/000543/06)
JSE share code: ATT ISIN: ZAE000177218
(Approved as a REIT by the JSE)
("Attacq" or "the Company" or "the Attacq Group")
PROPOSED R2.8 BILLION INVESTMENT BY THE GOVERNMENT EMPLOYEES PENSION FUND ("GEPF") INCLUDING THE
ACQUISITION OF 30% OF ATTACQ WATERFALL INVESTMENT COMPANY PROPRIETARY LIMITED ("AWIC") AND
CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are advised that Attacq ("Seller"), AWIC and the GEPF ("Purchaser"), represented by the
Public Investment Corporation (SOC) Limited ("PIC"), have concluded a non-binding term sheet ("Term
Sheet") in respect of the proposed acquisition by the GEPF of 30% of the ordinary shares and shareholder
loans in AWIC for an estimated cash consideration of R2.5 billion and the injection of a further
R300 million into AWIC as a shareholder loan ("Proposed Transaction"). The Proposed Transaction is
subject to the fulfilment of conditions precedent as outlined in paragraph 4 below.
2. RATIONALE
AWIC is a wholly owned subsidiary of Attacq, holding Attacq's completed real estate portfolio and
development and leasehold rights in Waterfall City (including developments under construction and
leasehold land). Waterfall City represents an exceptional diversified investment and development
opportunity, offering a "work, play, live" lifestyle within a smart, safe, sustainable environment.
If implemented, the Proposed Transaction will be transformative in furthering Attacq's strategic objectives,
which include (i) introducing a long-term investment partner to AWIC, thereby securing funding for its
ongoing Waterfall City development rollout; (ii) optimising AWIC and the Attacq Group's capital structure
by improving debt metrics and investment capacity; and (iii) enhancing the liquidity position of the Attacq
Group.
Attacq estimates that the proceeds of the Proposed Transaction, on implementation, will result in a
reduction in the Attacq Group's gearing from 37.2% at 30 June 2022 to c. 24.0% on a pro forma basis.
Should the Proposed Transaction be implemented, Attacq will retain control of AWIC with a majority
shareholding of 70%, with the GEPF holding a minority shareholding of 30%. Attacq will continue to
provide asset management and administration services to AWIC at market-related fees.
3. TERMS OF THE PROPOSED TRANSACTION
Acquisition of AWIC shares and consideration
Pursuant to the Proposed Transaction, the Purchaser will acquire 30% of the ordinary shares in AWIC by
way of a combination of (i) a sale of AWIC shares held by Attacq to the Purchaser ("Sale Shares") for
cash and (ii) a subscription for new AWIC shares for cash ("Subscription Shares") (collectively, the "Sale
Equity"). The Purchaser will also acquire from Attacq a corresponding percentage of all amounts owing
by AWIC to Attacq on loan account ("Sale Claims") as at the implementation date of the Proposed
Transaction ("Implementation Date").
The cash consideration payable by the Purchaser for the Sale Equity and the Sale Claims will be based on
the net asset value ("NAV") derived from the latest available consolidated AWIC management accounts as
at the Implementation Date, adjusted for certain agreed items, including expected credit loss adjustments
recognised in respect of loans to AWIC subsidiaries and associates and unrecognised profits in respect of
bankable residential pre-sales ("Adjusted AWIC NAV"). The Purchaser will acquire the Sale Equity and
Sale Claims at a c. 10% discount to the value of its proportionate share of the Adjusted AWIC NAV for an
estimated cash consideration of R2.5 billion ("Purchase Price"), subject to the potential Purchase Price
adjustment referred to below.
Additional Shareholder Loans
The Purchaser and Attacq will, upon receipt of the Purchase Price by Attacq and AWIC, advance
shareholder loans to AWIC in proportion to their post-transaction shareholding (up to a maximum of
R1 billion in aggregate) ("Additional Shareholder Loans").
Purchase Price adjustment
The parties have agreed to a potential adjustment to the Purchase Price on the second anniversary of the
Implementation Date. If, at that date, the aggregate of the Purchase Price and the GEPF's Additional
Shareholder Loan ("Purchaser's Initial Investment") exceeds the then value of the aggregate of the
Purchaser's proportionate share of AWIC's NAV adjusted for (i) any equity contributions by or repayments
to the Purchaser, (ii) dividends declared to or received by the Purchaser and (iii) the Purchaser's shareholder
loan ("Remeasured Total Investment"), Attacq will pay the excess (but limited to a maximum of 5% of
the Purchaser’s Initial Investment) to the Purchaser in cash as an adjustment to the Purchase Price.
Similarly, there is a mechanism to adjust the Purchase Price in favour of Attacq, which will be measured
on the second anniversary of the Implementation Date. If, at that date, the Remeasured Total Investment is
at least 20% higher than the Purchaser's Initial Investment, the Purchaser will make a cash payment (equal
to 5% of the Purchaser’s Initial Investment) to Attacq.
4. CONDITIONS PRECEDENT
The Proposed Transaction is subject to certain conditions precedent, including:
- the conclusion of legal agreements between the Seller, AWIC and the Purchaser;
- to the extent applicable, the approval of the Proposed Transaction by the landowner of AWIC's
leased property assets;
- the restructuring of AWIC's ultimate beneficial shareholding in MAS P.L.C such that it is held
elsewhere within the Attacq Group;
- the approval of the Proposed Transaction by AWIC's existing lenders, to the extent applicable;
- securing the written waiver of any pre-emptive rights held by tenants of the AWIC property
portfolio and the Seller in respect of the Proposed Transaction, to the extent required;
- securing the consent of counterparties to AWIC's material contracts in respect of the Proposed
Transaction, to the extent required;
- written confirmation from the Company's JSE sponsor that Attacq has complied with the JSE
Listings Requirements with regard to the Company's REIT status and that the Company's REIT
status is in force; and
- the approval of all regulatory authorities, as applicable, including, but not limited to, the
Competition Authorities, the JSE, and the approval of Attacq's shareholders, excluding the
Purchaser, in general meeting.
5. CATEGORISATION OF THE TRANSACTION
The Proposed Transaction will constitute a Category 1 transaction with a related party in terms of the JSE
Listings Requirements given its size relative to the market capitalisation of Attacq and the fact that the
Purchaser is a material shareholder in Attacq. Accordingly, the Proposed Transaction will be subject to the
approval of a majority of Attacq shareholders, excluding the Purchaser in general meeting.
6. FURTHER DETAILS AND CAUTIONARY ANNOUNCEMENT
Until such time as all legal agreements have been concluded and the Company is able to release an
announcement regarding the Proposed Transaction, which contains full disclosure, as required in terms of
the JSE Listings Requirements, including the financial effects on Attacq, shareholders are advised to
exercise caution when dealing in Attacq shares.
13 February 2023
Sponsor and corporate advisor
Java Capital
Date: 13-02-2023 08:45:00
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