TIDMBWO
RNS Number : 7305V
Barloworld Limited
10 April 2019
Barloworld Limited Khula Sizwe Property Holdings (RF)
(Incorporated in the Republic of South Limited
Africa) (formerly Main Street 1646 (RF) Limited)
(Registration number: 1918/000095/06) (Incorporated in the Republic of South
(Income tax registration number: 9000/051/71/5) Africa)
(Share code: BAW) (Registration number: 2018/546305/06)
(JSE ISIN: ZAE000026639) (Income tax registration number: 9157114241)
(Share code: BAWP) (ISIN: ZAU000016586)
(JSE ISIN: ZAE000026647) ("Khula Sizwe")
(Namibian Stock Exchange share code:
BWL)
("Barloworld")
Opening of the Khula Sizwe Black Public Offer
1. Background
In the furtherance of its broad-based black economic empowerment
objectives and as previously described in, inter alia, the
following Barloworld announcements: Proposed Broad-Based Black
Economic Empowerment Transaction dated 19 November 2018, Results of
General Meeting dated 15 February 2019 (indicating that
shareholders of Barloworld approved the broad-based black economic
empowerment transaction on 14 February 2019) and Amendment to the
Terms of the B-BBEE Transaction dated 9 April 2019, Barloworld has
entered into the broad-based black economic empowerment transaction
which incorporates the public offer to black people and black
groups as more fully described in the prospectus to be issued
today, 10 April 2019 ("Prospectus"). Terms defined in the
Prospectus shall have the same meaning in this announcement unless
otherwise defined.
The salient features of the B-BBEE Transaction, which is still
subject to various conditions precedent, are set out further below,
being:
-- the Specific Issue of Shares to the Foundation;
-- the sale of the Properties by Barloworld to Khula Sizwe for
the Acquisition Consideration (including the assignment by
operation
of law of the Property Lease Agreements);
-- participation in the B-BBEE Transaction by Employees and
Management of the Barloworld Group;
-- Financial Assistance to the Foundation, Barloworld Employees
and the Management to enable them to participate in the B-BBEE
Transaction;
-- the External Loan to Khula Sizwe of up to 80% of the
Acquisition Consideration; and
-- the Public Offer by Khula Sizwe to the Black Public. This
announcement outlines the Public Offer and the opening thereof.
Barloworld has entered into the Property Sale Agreement to sell
a portion of the Group's South African property portfolio (subject
to the Lease, which will assign to Khula Sizwe by operation of law
pursuant to the Sale) to Khula Sizwe, which is a Black Company, for
the Acquisition Consideration. Khula Sizwe is a company established
for the initial purpose of acquiring the Properties and leasing
these to the Lessees and other parties in the normal and ordinary
course of its business as a property holding and management
company. Khula Sizwe will not be prohibited from acquiring other
properties from third parties.
The Properties will be sold by Barloworld as a Qualifying
Transaction, as contemplated under Statement 102 of the BEE Codes.
Khula Sizwe will be entitled, in its sole discretion, to dispose of
any of the Properties, after the expiry of three years from the
Implementation Date, subject to Barloworld having a right of first
refusal to purchase the Properties, provided that they obtain any
regulatory and/or Shareholder approvals required at the time. The
right of first refusal is granted to Barloworld to ensure its
business sustainability insofar as it relates to the operation of
its business from the Properties.
The Acquisition Consideration is R2.716 billion, which will be
paid in cash by Khula Sizwe on the Implementation Date and/or
against transfer of the Properties.
Khula Sizwe will fund the Acquisition Consideration using a
combination of the External Loan (80%) and equity (20%) pursuant to
the subscriptions for Khula Sizwe Shares by the Management Trust,
the Employee Trust and the Black Public (through the Public Offer).
Refer to paragraph 6 below for sources of funding.
Rental income collected from the Lessees on a monthly basis,
will be applied to reducing the External Loan over its 10-year
term.
2. Public Offer
The purpose of the Public Offer is to raise R163.4 million (i.e.
the Target Equity Raise) to be applied towards funding a portion of
the Acquisition Consideration for the Properties. The reason it is
considered necessary to raise the Target Equity Raise through the
Public Offer is to provide members of the Black Public with an
opportunity to participate in the indirect ownership of the
Properties.
The Public Offer will open on Wednesday, 10 April 2019 at 09:00
and close on Friday, 31 May 2019 at 16:00.
Class of Khula Sizwe Shares forming the subject matter of the
Public Offer:
Ordinary no par value shares (Khula Sizwe Shares)
Price per Khula Sizwe Share: R10
Number of Khula Sizwe Shares offered: 16 340 000
The Khula Sizwe Shares allotted and issued pursuant to the
Public Offer will rank pari passu (equally) to each other in all
respects. The Khula Sizwe Shares will not be listed on any stock
exchange for the first five years and restrictions will apply to
the Encumbrance, Disposal of and trading in these Khula Sizwe
Shares. It is anticipated that Khula Sizwe may be listed on the
B-BBEE segment after the expiry of the Lock-in Period.
The Public Offer is dependent on Khula Sizwe raising a minimum
cash amount of at least R120 million (i.e. the Minimum Subscription
Amount). If it does not raise the Minimum Subscription Amount, then
the Public Offer will be deemed unsuccessful and thus not proceed.
In such a case, the entire Target Equity Raise of R163.4 million
will be subscribed for by the Management Trust.
In the event that the aggregate money raised from the Black
Public pursuant to the Public Offer is at least R120 million, but
is less than R163.4 million, the difference will be subscribed for
by the Management Trust.
Applicants are required to apply for a minimum of 250 Khula
Sizwe Shares amounting to R2 500.
No maximum subscription limit has been set for any one
Applicant, and Applicants can therefore apply for as many Khula
Sizwe Shares as are available in the Public Offer. Khula Sizwe
retains all rights to allocate the shares to Applicants.
Only Black People and Black Groups qualify to participate in the
Public Offer.
3. Management Trust and Employee Trust
Management Trust
All eligible Junior Managers and Senior Managers are
beneficiaries of the Management Trust. It is anticipated that the
Management Trust will hold a minimum of 38% of the Khula Sizwe
Shares or up to a maximum of 68% in the event that the Public Offer
is not implemented in full.
Employee Trust
All eligible Employees participate in the Employee Trust. It is
anticipated that the Employee Trust will hold 32% of the entire
issued share capital of Khula Sizwe (following the issue of the
Khula Sizwe Shares to the Management Trust and/or pursuant to the
Public Offer).
4. Company information
Khula Sizwe Property Holdings (RF) Limited (Registration number:
2018/546305/06) (formerly Main Street 1646 (RF) Limited), was
registered and incorporated as a public company with the CIPC on 16
October 2018.
Khula Sizwe was incorporated for the specific purpose of
facilitating the achievement by Barloworld of its empowerment
objectives as contemplated in the B-BBEE Transaction.
5. Nature of business
The main objects of Khula Sizwe shall be to:
-- acquire, own, hold and lease immovable fixed properties
(including, without limitation, the Properties), initially as part
of the B-BBEE Transaction in respect of Barloworld, and to manage
such properties (including, without limitation, receiving rental
therefrom) for the benefit of Black People, in the normal and
ordinary course of its business as a property holding and
management company, and to engage in capital raising from time to
time for these purposes (whether through debt or equity);
-- acquire, own and hold the Barloworld Shares (and receive and
distribute dividends and other distributions from Barloworld in
respect of the Barloworld Shares) utilising, the available cash and
to manage such for the benefit of Khula Sizwe Shareholders; and
-- negotiate, conclude, implement and exercise its rights and
perform its obligations in terms of the Transaction Agreements and
such other agreements as may be necessary to establish the business
of Khula Sizwe as a Black Company.
Khula Sizwe may also acquire, lease and manage such other
properties as may be determined by Khula Sizwe from time to
time.
The Properties comprise commercial, industrial and retail
properties situated throughout South Africa:
Lease
Properties' tenure
Property type Market Value Yield Year one rental years GLA Vacancies
---------------------------------- -------------- ----- --------------- ------- ------- ---------
Motor retail R1.68 billion 8.83% R148 million 10 128 913 0%
Industrial R914 million 9.26% R85 million 10 140 995 0%
Commercial R95 million 9.00% R9 million 10 9 150 0%
Mixed - commercial and industrial R13 million 9.00% R1 million 10 5 264 0%
Residential R29 million 9.38% R3 million 10 595 0%
---------------------------------- -------------- ----- --------------- ------- ------- ---------
Total R2.73 billion 9.10% R246 million 284 917
---------------------------------- -------------- ----- --------------- ------- ------- ---------
Development properties R130 million R32 million 6 899
---------------------------------- -------------- ----- --------------- ------- ------- ---------
Total R2.86 billion 9.74% R278 million 291 816
---------------------------------- -------------- ----- --------------- ------- ------- ---------
6. Funding of the Acquisition Consideration
Sources of funding R'm %
------------------------------------------------------------------- ----- ------
External Loan (including service fee of R10 million including VAT) 2 183 80.00
Equity contribution from Public Offer 163 6.00
Equity contribution from Management Trust 207 7.60
----- ------
- Contributed by Senior Management 8 0.29
- Funded by Barloworld 199 7.32
----- ------
Equity contribution from Employee Trust 174 6.40
------------------------------------------------------------------- ----- ------
Total sources 2 727 100.00
------------------------------------------------------------------- ----- ------
Uses of funding
Acquisition of Barloworld Properties 2 716 100.00
Service fee for loan 10
Cash on balance sheet 1
------------------------------------------------------------------- ----- ------
Total uses 2 727 100.0
------------------------------------------------------------------- ----- ------
7. Directors and management
Khula Sizwe currently has a unitary board structure comprising
only of three Khula Sizwe non-executive Directors whose details are
set out below:
Name and nationality Occupation Qualification Business address
-------------------------------- ---------------------- ------------- --------------------
Tantaswa Fubu (South African) Non-Executive Director CA(SA) 61 Katherine Street,
Sandton
Rebecca Louise Pole (Australian) Non-Executive Director CA(SA) 61 Katherine Street,
Sandton
Gugu Jonitha Sepamla (South Non-Executive Director MBA 61 Katherine Street,
African) Sandton
-------------------------------- ---------------------- ------------- --------------------
Following the implementation of the B-BBEE Transaction and the
Public Offer, the Khula Sizwe Board will be reconstituted in
accordance with the applicable provisions of the Khula Sizwe MOI,
which will include the appointment of up to four independent Khula
Sizwe non-executive Directors. In terms of the Khula Sizwe MOI, the
composition of the Khula Sizwe Board is to be constituted as
follows:
-- the majority of Khula Sizwe Directors must be independent of
Barloworld, the Management Trust and the Employee Trust;
-- at least 80% of the Khula Sizwe Directors (and their Khula
Sizwe alternate Directors), who shall be entitled to exercise at
least 80% of the voting rights of Directors at meetings of the
Board, shall be Black Persons;
-- in excess of 25% of the Khula Sizwe Directors (who shall be
entitled to exercise in excess of 25% of the voting rights of Khula
Sizwe Directors at meetings of the Khula Sizwe Board) shall be
Black People who are women; and
-- the number of Khula Sizwe Directors shall not be less than four and not more than seven.
8. Share capital
At incorporation, Khula Sizwe had one issued ordinary share,
which was issued to Barloworld in order to facilitate the
incorporation of the entity. The share issued to Barloworld was
acquired by the Management Trust from Barloworld on 21 February
2019, resulting in the Management Trust being the current sole
shareholder of Khula Sizwe.
Current authorised and issued share capital
Number of Shares Stated capital
------------------------------------------- --------------
1 000 000 000 ordinary no par value shares 1 000 000 000
------------------------------------------- --------------
Total stated capital 1 000 000 000
------------------------------------------- --------------
Issued share capital
1 ordinary no par value share 1
------------------------------------------- --------------
Total issued share capital 1
------------------------------------------- --------------
Following the subscriptions by the Black Public, the Employee
Trust and the Management Trust on the Implementation Date, the
Khula Sizwe Shares will be held as follows:
-- Black Public - 30% (16 340 000 shares);
-- Employee Trust - 32% (17 430 400 shares); and
-- Management Trust - 38% (20 698 600 shares) or up to a maximum
of 68% should the Public Scheme not be implemented in full.
Authorised and issued share capital on Implementation Date
Number of Shares Stated capital
------------------------------------------- --------------
1 000 000 000 ordinary no par value shares 1 000 000 000
------------------------------------------- --------------
Total stated capital 1 000 000 000
------------------------------------------- --------------
Issued share capital
54 469 000 ordinary no par value shares 54 469 000
------------------------------------------- --------------
Total issued share capital 54 469 000
------------------------------------------- --------------
9. Copies of the Prospectus
This announcement does not, nor is it intended to, constitute a
prospectus prepared and registered under the Companies Act. Copies
of the Prospectus, which has been approved and registered with the
CIPC, may be obtained from 09:00 on Wednesday, 10 April 2019 until
16:00 on Friday, 31 May 2019 from:
Electronic copies:
-- the Khula Sizwe website on www.barloworldkhulasizwe.com
Physical copies during normal business hours from 09:00 until
16:00, from:
-- Gauteng:
- Velocity Trade: Corner 2 Payne Road and Main Office Park,
Bryanston, Johannesburg, South Africa; and
-- Western Cape:
- Velocity Trade: 1st Floor, 200 on Main, 200 Main Road,
Claremont, Cape Town, South Africa.
Johannesburg
10 April 2019
Company Secretary
A Ndoni
Corporate Adviser to Khula Sizwe
Tamela Holdings Proprietary Limited
Independent Registered Auditors to Khula Sizwe
SNG Grant Thornton
Legal Adviser to Khula Sizwe
Poswa Incorporated
Arranger and Funder to Khula Sizwe
Nedbank CIB
Share Administration and Custody Agent
Velocity Trade
Corporate Adviser and Transaction Sponsor to Barloworld
Tamela Holdings Proprietary Limited
Independent Property Valuer to Barloworld
Broll Valuation and Advisory Services Proprietary Limited
Legal Adviser to Barloworld
Dentons
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCGGUQUCUPBUQU
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