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Joint announcement of Emira’s firm intention to make an offer to acquire all the issued shares of Transcend
Transcend Residential Property Fund Limited Emira Property Fund Limited
Approved as a REIT by the JSE Approved as a REIT by the JSE
(Incorporated in the Republic of South Africa) (Incorporated in the Republic of South Africa)
(Registration number 2016/277183/06) (Registration number 2014/130842/06)
Share code: TPF ISIN: ZAE000227765 JSE share code: EMI ISIN: ZAE000203063
(“Transcend” or "the Company”) JSE bond company code: EMII
(“Emira” or “the Offeror”)
JOINT ANNOUNCEMENT OF EMIRA’S FIRM INTENTION TO MAKE AN OFFER TO ACQUIRE ALL OF THE
ISSUED SHARES OF TRANSCEND BY WAY OF A SCHEME OF ARRANGEMENT
1. Introduction
Shareholders of Transcend (“Transcend Shareholders”) and shareholders and noteholders of Emira are
advised that, on 17 August 2023, Transcend and Emira (“the Parties”) concluded a scheme implementation
agreement (“Implementation Agreement”) pursuant to which Emira intends to make an offer (the “Offer”) to
acquire all of the issued ordinary shares in the share capital of Transcend (“Transcend Shares”) from the
Transcend Shareholders by way of a scheme of arrangement (“Scheme”) in terms of section 114 of the
Companies Act, 71 of 2008, as amended (“Companies Act”) and the “Takeover Regulations”, being the
regulations published in terms of sections 120 and 223 of the Companies Act and set out in Chapter 5 of the
Companies Regulations, 2011, promulgated under the Companies Act.
In terms of the Implementation Agreement, Emira has agreed to make the Offer to acquire the Transcend Shares
from Transcend Shareholders for a consideration of R6.30 per Transcend Share, payable in cash (“Scheme
Consideration”), subject to the fulfilment or waiver, as applicable, of the conditions precedent to the Scheme
(“Conditions Precedent”) as set out in paragraph 3.2 below. Upon implementation of the Scheme, it is proposed
that all of the Transcend Shares will be delisted from the JSE in terms of paragraph 1.17(b) of the Listings
Requirements of the JSE Limited.
The purpose of this announcement (“Firm Intention Announcement”) is to advise Transcend Shareholders of
Emira’s firm intention to proceed with the Offer and to provide information on the terms and conditions of the
Scheme.
2. Rationale for the Scheme
Transcend listed on the JSE in 2016. Its reasons for listing included, inter alia, access to institutional investment
funding and the potential to use its shares as acquisition currency in order to facilitate growth of its property
portfolio and enhance shareholder returns.
Transcend’s ability to meet its objectives is hampered by the lack of investment appetite for small, illiquid
counters. In addition, Transcend Shares trade at a discount to their underlying net asset value, which results in
any capital raise at market value being highly dilutive to existing Transcend Shareholders.
Under these circumstances, the board of directors of Transcend (“the Transcend Board”) and Emira believe
that Transcend’s continued listing on the JSE is not justified and that the limitations imposed by the regulatory
processes and costs associated with a JSE listing outweigh the benefits thereof in the current environment.
The Transcend Board has therefore resolved to propose the Scheme to provide Transcend Shareholders with
the ability to realise their investment in Transcend at a price that represents, in its view, fair value.
3. Terms and conditions of the Scheme
3.1. Scheme Consideration
The Scheme will, if implemented, result in the payment of the Scheme Consideration to Transcend
Shareholders, being a cash consideration of R6.30 per Transcend Share.
3.2. Conditions Precedent
The implementation of the Scheme will be subject to the fulfilment and/or waiver (in whole or in part where
capable of waiver) of the following Conditions Precedent:
- the approval by the requisite majority of Transcend Shareholders of the special resolution to be
proposed in accordance with sections 114 and 115 of the Companies Act for the approval of the
Scheme, as contemplated in section 115(2) of the Companies Act (“Scheme Resolution”), and:
- to the extent required, the approval of the implementation of such resolution by the Court; and
- if applicable, Transcend not treating the Scheme Resolution as a nullity, as contemplated in section
115(5)(b) of the Companies Act.
The implementation of the Scheme is subject to a compliance certificate being issued by the TRP in
respect of the Scheme in terms of section 119(4)(b) of the Companies Act, which compliance certificate
will only be issued by the TRP once the Conditions Precedent have been fulfilled, or waived, as the case
may be.
4. Funding of the Scheme Consideration and confirmation of financial resources
In accordance with regulation 111(4) and regulation 111(5) of the Takeover Regulations, ABSA Bank Limited
has provided an unconditional and irrevocable bank guarantee to the TRP and for the benefit of Transcend
Shareholders, confirming that, in aggregate, the Offeror has sufficient cash resources available to it to satisfy
payment of the aggregate Scheme Consideration.
5. Clean-out Distribution
In terms of the Implementation Agreement, the Transcend Board shall, subject to its obligations in terms of
section 46 of the Companies Act as they pertain to the declaration of dividends, declare and pay a dividend for
the financial period which commenced on 1 April 2023 and ending on 30 September 2023 plus an additional
amount, calculated in accordance with the following formula (“the Clean-out Distribution”):
A = B + ((B/183) x C)
where:
A = Clean-out Distribution per Transcend Share;
B = Distribution per Transcend Share for the six-month period from 1 April 2023 to 30 September 2023; and
C = Additional distribution days,
and C is calculated as follows:
C = (D - 30 days) - E
where:
D = Date of implementation of the Scheme; and
E = Transcend’s interim reporting date, being 30 September 2023.
The Clean-out Distribution will be determined on the following basis:
- the distributable income on which the Clean-out Distribution is based will be determined in accordance
with the accounting and financial reporting practices adopted for purposes of Transcend’s most recent
published audited financial statements and the “Best Practice Recommendations” in relation to the
calculation of distributable income as published by the SA REIT Association;
- the quantum of the Clean-out Distribution shall be determined by the Transcend Board in accordance
with Transcend’s distribution policy and in keeping with guidance provided to Shareholders in the
announcement of Transcend’s financial results for the 15 months ended on 31 March 2023 and
published on SENS on 29 May 2023; and
- all transaction costs shall be funded out of available capital of Transcend, and not by reducing the
distributable income upon which the Clean-out Distribution is based. To the extent that such costs
reduce the distributable income then such amount shall be added back for purposes of calculating the
quantum of the Clean-out Distribution.
All Transcend Shareholders, including Emira, will participate in the Clean-out Distribution. The declaration and
payment of the Clean-out Distribution will not result in a reduction of the Scheme Consideration.
6. Shareholding of the Offeror in Transcend
As at the date of this announcement, the Offeror holds 111 717 213 Transcend Shares, representing 68.15% of
the total issued share capital of Transcend. Emira is not acting in concert with any other person.
7. Irrevocable undertakings to vote in favour of the Scheme
The following shareholders have given irrevocable undertakings to vote in favour of the Scheme:
Shareholder Number of % of issued % of issued
Shares Shares Shares
(excluding
Emira)
SA Corporate Real Estate Limited 8 267 220 5.04% 15.83%
International Housing Solutions (RF) 15 010 006 9.16% 28.75%
Proprietary Limited
IHS (SAWHF Interest) Proprietary Limited 7 222 812 4.41% 13.83%
Total 30 500 038 18.61% 58.41%
8. Appointment of Independent Board and Independent Expert
The Transcend Board has, in accordance with regulation 108 of the Takeover Regulations, constituted an
independent board of directors comprising of Mr Michael Aitken, Mr Tshepisho Makofane and Mr Shaun Stewart,
(“Independent Board”) to, amongst others, consider the terms of the Scheme and make a recommendation to
the Transcend Shareholders in respect thereof.
Transcend has appointed Valeo Capital Proprietary Limited (the “Independent Expert”) as the independent
expert in terms of section 114(2) of the Companies Act and regulation 90 of the Takeover Regulations to provide
the Independent Board with an opinion in relation to the Scheme Consideration. The Independent Expert’s full
report (“Independent Expert’s Report”) will be included in the circular to be distributed to Transcend
Shareholders in relation to the Scheme (“Circular”).
9. Categorisation for Emira and financial information
The Scheme, when aggregated with the offer by Emira to Transcend shareholders announced on SENS on
13 July 2022, is categorised as a Category 2 transaction for Emira in terms of the JSE Listings Requirements
and as such is not subject to Emira shareholder approval.
The following financial information has been extracted from the audited annual financial statements of Transcend
for the fifteen months ended 31 March 2023 (prepared in accordance with International Financial Reporting
Standards):
Net operating income (R’000) 250 027
Profit for the period (R’000) 116 982
Dividend per share (cents) 72.34
Basic earnings per share (cents) 71.36
Headline earnings per share (cents) 85.80
Net asset value per share (cents) 823
10. Responsibility statements
The Independent Board accepts responsibility for the information contained in this Firm Intention Announcement
insofar as it relates to Transcend. To the best of its knowledge and belief, the information contained in this Firm
Intention Announcement is true and correct and the announcement does not omit anything likely to affect the
importance of the information.
The board of directors of Emira accepts responsibility for the information contained in this Firm Intention
Announcement insofar as it relates to Emira. To the best of its knowledge and belief, the information contained
in this Firm Intention Announcement is true and the announcement does not omit anything likely to affect the
importance of the information.
11. Posting of Circular and notice of Scheme Meeting
A Circular providing full details of the Scheme and containing, inter alia, a notice of the Scheme Meeting, the
Independent Expert's Report, recommendations of the Independent Board and the Transcend Board, and the
salient dates and times relating to the Scheme is expected to be distributed to Transcend Shareholders on or
about Thursday, 14 September 2023.
A further announcement setting out details of the salient dates and times will be published in due course.
Bryanston
18 August 2023
Corporate Advisor and Transaction Sponsor Independent Expert
Questco Proprietary Limited Valeo Capital Proprietary Limited
Debt Sponsor to Emira
Rand Merchant Bank, a division of FirstRand
Bank Limited
Date: 18-08-2023 08:00:00
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