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Proposed conditional disposal of Capital & Regional Plc (“Capital & Regional”) to NewRiver REIT Plc (“NewRiver”)
Growthpoint Properties Limited
Approved as a REIT by the JSE
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Share code: GRT
ISIN ZAE000179420
("Growthpoint")
PROPOSED CONDITIONAL DISPOSAL OF CAPITAL & REGIONAL PLC ("CAPITAL & REGIONAL") TO
NEWRIVER REIT PLC ("NEWRIVER")
Capitalised terms not defined in this announcement have the meanings attributed to them in the Rule 2.4
and Rule 2.7 Announcements published by NewRiver and Capital & Regional on 18 September 2024 and
24 September 2024, respectively.
1. INTRODUCTION AND BACKGROUND
1.1. Shareholders are advised that Growthpoint has conditionally agreed to dispose of its entire
shareholding in Capital & Regional, comprising 160,648,081 Capital & Regional shares (the
"Disposal"), which represents approximately 69 per cent of Capital & Regional's issued ordinary
share capital as of 23 September 2024 being the last Business Day immediately prior to the date
of the Rule 2.7 Announcement (the "Last Practicable Date").
1.2. Capital & Regional is a United Kingdom ("UK") focused retail REIT, with a primary listing on the
Main Market of the London Stock Exchange ("LSE") and a secondary listing on the Main Board of
the stock exchange operated by JSE Limited ("JSE"), specialising in community shopping centres
that provide needs-based, non-discretionary and value-oriented goods and services to their local
communities.
1.3. The Disposal forms part of a broader transaction whereby NewRiver intends to make an offer for
all the issued and to be issued ordinary share capital of Capital & Regional for a total
consideration of GBP147 million, comprised of a combination of cash and new NewRiver shares
("Purchase Consideration") (the "Transaction"). Under the terms of the Transaction, Capital &
Regional Scheme Shareholders will be entitled to receive for each Capital & Regional share:
- 31.25 pence in cash; and
- 0.41946 new NewRiver shares
implying an offer price of 62.5 pence per Capital & Regional ordinary share (the "Offer Price") on
the basis of the Closing Price per NewRiver share of 74.5 pence on 22 May 2024 (being the last
Business Day before the Offer Period commenced (the "Offer Period Last Practicable Date")).
1.4. Growthpoint has irrevocably undertaken to vote, or procure the vote, in favour of the Scheme at
the Court Meeting and of the Capital & Regional Resolution(s) to be proposed at the Capital &
Regional General Meeting (or, in the event that any Combination would be implemented by way
of a Takeover Offer, to accept, or procure the acceptance of, such Takeover Offer). The obligations
of Growthpoint under its irrevocable undertaking shall lapse and cease to have effect in certain
customary circumstances.
1.5. Growthpoint will receive approximately 69 per cent of the Purchase Consideration, being
approximately GBP101.4 million (approximately GBP50.7 million in cash and 67.4 million new
NewRiver shares, representing an approximately 14 per cent interest in the issued share capital
of NewRiver (as enlarged by the acquisition of Capital & Regional) (the "Combined Group"), (the
"Combination"). Following the completion of the Transaction, Capital & Regional will be delisted
from the LSE and the JSE.
1.6. Given that the Purchase Consideration includes a share portion, Growthpoint is expected to hold
approximately 14 per cent of the issued ordinary share capital of the Combined Group on
implementation of the Transaction. Growthpoint has undertaken not to sell any new NewRiver
Shares which may be issued to it under the Transaction: (i) for a period of five months following
the Combination becoming effective without the prior written consent of NewRiver and other
than through NewRiver's financial advisor; and (ii) for a further period of four months thereafter,
without first giving NewRiver reasonable written notice of any such sale, in both cases subject to
certain customary exceptions.
2. RATIONALE FOR THE DISPOSAL
2.1. Growthpoint undertook a detailed, group-wide strategic and capital allocation review with the
aim of simplifying its business, identifying assets that are deemed to be non-core and directing
its focus to its core assets. Whilst Growthpoint maintains its belief that Capital & Regional is an
attractive platform with a high-quality portfolio of assets and strong prospects, Capital & Regional
was identified by Growthpoint as a non-core asset. This is in line with Growthpoint's recently
communicated strategy to simplify its business, including optimising its international
investments.
2.2. Following the receipt of certain unsolicited expressions of interest by Growthpoint and Capital &
Regional by parties interested in exploring possible offers for the shares in Capital & Regional, the
Growthpoint board of directors decided to pursue the potential disposal of Growthpoint's stake
in Capital & Regional.
2.3. The Purchase Consideration offered by NewRiver under the terms of the Transaction represents
a favourable premium to Capital & Regional's closing price on the Offer Period Last Practicable
Date, as detailed in paragraph 4.2 below.
2.4. The cash proceeds from the Disposal will be used by Growthpoint to strengthen its current
balance sheet position and/or pursue select investment opportunities in line with its
communicated strategy.
3. DESCRIPTION OF CAPITAL & REGIONAL
3.1. Capital & Regional is a UK-focused retail property REIT, owning a portfolio of tailored and centrally
located community shopping centres in Edinburgh, Hemel Hempstead, Ilford, Maidstone,
Walthamstow and Wood Green. Additionally, Capital & Regional owns 100 per cent of Snozone
Limited, Europe's largest indoor ski slope operator. Further details of Capital & Regional's
property portfolio are provided in paragraph 8 below.
4. PURCHASE CONSIDERATION
4.1. As part of the Transaction, NewRiver will make an offer for 100 per cent of Capital & Regional's
issued and to be issued ordinary shares for the Purchase Consideration, comprising:
- 31.25 pence per share in cash; and
- 0.41946 newly issued NewRiver ordinary shares
per Capital & Regional ordinary share, implying an Offer Price of 62.5 pence per Capital &
Regional ordinary share based on the undisturbed share price of a NewRiver ordinary share of
74.5 pence as at the Offer Period Last Practicable Date.
4.2. The Transaction values the fully diluted ordinary share capital of Capital & Regional at
approximately GBP147 million. This represents a premium of approximately:
4.2.1. 21 per cent to the undisturbed closing price of a Capital & Regional share of 51.5 pence on
the Offer Period Last Practicable Date;
4.2.2. 21 per cent to the three-month volume weighted average price ("VWAP") of 51.7 pence
per Capital & Regional share on the Offer Period Last Practicable Date; and
4.2.3. 18 per cent to the six-month VWAP of 53.0 pence per Capital & Regional share on the Offer
Period Last Practicable Date.
4.3. Under the terms of the Transaction, Capital & Regional shareholders will, in aggregate, receive
approximately 98,527,475 new NewRiver shares and, immediately following completion of the
Transaction, will own approximately 21 per cent of the issued ordinary share capital of the
Combined Group (based on the existing issued ordinary share capital of NewRiver and the issued
ordinary share capital of Capital & Regional as at the Last Practicable Date).
4.4. The Transaction will result in Growthpoint receiving approximately GBP50.7 million in cash
together with a 14 per cent interest in the issued share capital of the Combined Group.
4.5. The cash consideration payable by NewRiver pursuant to the terms of the Transaction will be
funded from NewRiver's existing cash resources, including the net proceeds of the Placing (as
announced on 18 September 2024, pursuant to which NewRiver raised net proceeds of GBP48.6
million, in aggregate). The cash consideration is priced in pounds sterling.
4.6. In addition, pursuant to the terms of the Transaction:
4.6.1. Capital & Regional shareholders will be entitled to receive and retain an interim dividend
declared by Capital & Regional in respect of the six-month period to 30 June 2024 of 2.85
pence per Capital & Regional Share, which is expected to be paid on 27 September 2024;
and
4.6.2. Capital & Regional shareholders will, once they have become NewRiver shareholders
following completion of the Transaction, be entitled to receive an interim dividend to be
declared by NewRiver in respect of the six-month period to 30 September 2024 of no less
than 3.0 pence per NewRiver share, which is equivalent to 1.3 pence per Capital & Regional
share. In the event that NewRiver's dividend record date falls before the effective date of
the Transaction, Capital and Regional will be entitled to declare and pay a further interim
dividend of 1.3 pence per Capital & Regional share without any reduction being made to
the Offer Price.
5. INTENTIONS FOR RESIDUAL STAKE IN NEWRIVER
5.1. Growthpoint has undertaken not to sell any new NewRiver shares which may be issued to it under
the Transaction (i) for a period of five months following any Combination becoming effective
without the prior written consent of NewRiver and other than through NewRiver's financial
adviser; and (ii) for a further period of four months thereafter, without first giving NewRiver
reasonable written notice of any such sale, in both cases subject to certain customary exceptions.
5.2. Following the expiry of the above period, Growthpoint may look to sell down its residual stake,
in line with its communicated strategy to simplify its business and optimise its international
investments.
6. CONDITIONS PRECEDENT TO THE TRANSACTION
6.1. The Combination will be subject to the Conditions and the further terms referred to in Appendix
1 of the Rule 2.7 Announcement and the full terms and conditions to be set out in the Scheme
Document, and will only become effective if, among other things, the following events occur on
or before the Long Stop Date 30 April 2025 (or such later date as NewRiver and Capital & Regional
may, with the consent of the Panel, agree and, if required, the Court may allow):
6.1.1. The receipt of approval from the Financial Conduct Authority ("FCA") to the proposed
change of control of a regulated entity within the Capital & Regional Group;
6.1.2. A resolution to approve the Scheme is passed by a majority in number of the Scheme
Shareholders present and voting (and entitled to vote) at the Court Meeting (or at any
adjournment thereof), whether in person or by proxy, representing 75 per cent or more in
value of each class of the Scheme Shares held by those Scheme Shareholders;
6.1.3. The Capital & Regional Resolution(s) are passed at the Capital & Regional General Meeting
by the requisite majorities, whether in person or by proxy;
6.1.4. The NewRiver Combination Resolution(s) is or are passed at the NewRiver General Meeting
by simple majority votes cast, whether in person or by proxy;
6.1.5. The FCA having acknowledged to NewRiver or its agent (and such acknowledgement not
having been withdrawn) that the application for the admission of the new NewRiver shares
to the Equity Shares (Commercial Companies) category of the Official List has been
approved and (after satisfaction of any conditions to which such approval is expressed to
be subject) will become effective as soon as a dealing notice has been issued by the FCA
and any listing conditions having been satisfied;
6.1.6. The LSE having acknowledged to NewRiver or its agent (and such acknowledgement not
having been withdrawn) that the new NewRiver shares will be admitted to trading on the
Main Market of the LSE;
6.1.7. Following the Capital & Regional Meetings and the NewRiver General Meeting, the Scheme
is sanctioned by the Court (without modification, or with modification on terms agreed by
NewRiver and Capital & Regional with the consent of the Panel); and
6.1.8. Following such sanction, a copy of the Scheme Court Order is delivered to the Registrar of
Companies.
7. EFFECTIVE DATE OF THE DISPOSAL
7.1. The Combination and Disposal will become effective following the satisfaction or waiver (as
applicable) of the conditions precedent referred to above on or before the Long Stop Date. It is
expected that the Combination will become effective in early 2025.
8. IMMOVABLE PROPERTIES
Details of Capital & Regional's Immovable Properties are as follows:
Property value
Gross lettable Gross rental as at 30 June
Effective date of area (annum/m2) 2024(1)
Property name Location acquisition (m2) (GBP) (GBP'm)
Hemel London 05 February 2016 31 587 90.56 9.8
Hempstead
Ilford London 07 March 2017 28 800 158.76 62.3
Maidstone London 14 July 2014 39 948 97.55 31.3
Gyle Edinburgh 06 September 2023 38 462 143.42 42.0
Walthamstow London 14 July 2014 26 942 172.41 77.0
Wood Green London 14 July 2014 58 529 185.35 152.5
Total 224 268 145.73 374.9
1. Property values are as per Capital & Regional's June 2024 annual financial results. As part of the Transaction, Independent Valuations were
performed by Knight Frank and CBRE, which each valued the properties in the portfolio. The total Capital & Regional portfolio valuation derived by
CBRE was GBP374.9 million.
9. FINANCIAL INFORMATION
9.1. As at 30 June 2024, being the date of the last published interim financial results of Capital &
Regional, prepared in accordance with International Financial Reporting Standards ("IFRS"), the
value of the net assets and profit after tax attributable to Capital & Regional was GBP204 million
and GBP4.5 million, respectively.
9.2. As at 30 June 2024, 100 per cent of the consolidated total property assets of Capital & Regional,
as reflected in Growthpoint's annual financial statements, was ZAR9.2 billion, accounted for
according to International Accounting Standards ("IAS") 21 The Effects of Changes in Foreign
Exchange Rates. The statement of financial position includes 100 per cent of the assets and
liabilities of Capital & Regional, converted at the closing exchange rate of ZAR23.01:GBP1 at 30
June 2024 (Growthpoint's financial year end).
9.3. As at 30 June 2024, Growthpoint's distributable income attributable to its investment in Capital
& Regional of ZAR173.9 million (ZAR103.6 million at 30 June 2023), included a dividend from
Capital & Regional of 5.8 pence per share (5.5 pence per share for 30 June 2023).
10. CATEGORISATION OF THE DISPOSAL
10.1. The Disposal constitutes a Category 2 transaction for Growthpoint in accordance with the JSE
Limited Listings Requirements, and no related parties are involved in the Disposal. Accordingly, it
does not require the approval of Growthpoint shareholders.
Sandton
25 September 2024
Lead Financial Advisor and Transaction Sponsor to Growthpoint
Rand Merchant Bank, a division of FirstRand Bank Limited
Joint Financial Advisor to Growthpoint
Dial Partners LLP
Date: 25-09-2024 09:48:00
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