Wrap Text
Small related party transaction in relation to the acquisition of shares in Hospitality Property Fund
Tsogo Sun Hotels Limited
(previously known as Southern Sun Hotels Proprietary Limited)
Incorporated in the Republic of South Africa
Registration number 2002/006356/06
Share Code: TGO ISIN:ZAE000272522
(“Tsogo Sun Hotels” or “the Group” or “the Company”)
SMALL RELATED PARTY TRANSACTION IN RELATION TO THE ACQUISITION OF SHARES IN HOSPITALITY PROPERTY FUND
1. INTRODUCTION
Shareholders are referred to the announcement released on SENS on 3 July 2020 advising shareholders that the
Company was considering acquiring additional ordinary shares (“Hospitality Shares”) in Hospitality Property Fund
Ltd (“Hospitality”) by way of an acquisition issue in terms of the JSE Listings Requirements, whereby ordinary shares
in the share capital of the Company will be issued in exchange for Hospitality Shares.
Shareholders are advised that the Company has entered into a share for share agreement with the trustees of the
HCI Foundation to acquire 32,808,173 Hospitality Shares (“HCI Foundation Sale Shares”) constituting 5.67% of
Hospitality’s issued share capital (the “HCI Foundation Transaction”).
2. DESCRIPTION OF THE ASSETS
Hospitality is a specialised REIT on the JSE investing in the hospitality industry, providing investors with exposure to
income streams from the hospitality sector. Hospitality’s portfolio comprises 54 properties with more than 9,000
rooms in South Africa.
3. RATIONALE FOR THE ACQUISITION
Hospitality has consistently traded at a substantial discount to its net asset value. Furthermore, the nature of the
business of Tsogo Sun Hotels and Hospitality are substantially similar and have in-principle the same economic
drivers. Hotels owned by Hospitality and operated by Tsogo Sun Hotels make up the majority of both Groups’
economic value and therefore the acquisition of Hospitality shares in exchange for the issue of shares in the Company
results in the new Tsogo Sun Hotels shareholders being exposed to substantially the same industry risks and rewards.
4. PURCHASE CONSIDERATION
The HCI Foundation Sale Shares will be acquired in exchange for the issue and allotment of 58,070,467 Tsogo Sun
Hotels ordinary shares (“HCI Foundation Subscription Shares”) at an exchange ratio of 1.77 Tsogo Sun Hotels shares
for every 1 Hospitality Share acquired, which is the same exchange ratio as applied to previous transactions
concluded with other Hospitality shareholders since 3 July 2020, including the transactions notified to shareholders
on SENS on 20 July 2020.
If prior to the date that is six months after the signature date of the transaction agreement in respect of the HCI
Foundation Transaction, the Company concludes an agreement with any Hospitality shareholder pursuant to which
the consideration payable exceeds 1.77 Tsogo Sun Hotel shares, the Company will issue additional shares to the HCI
Foundation such that the HCI Foundation will in aggregate have received the same number of shares as if the ratio
was equal to the ratio of Tsogo Sun Hotels shares to Hospitality shares in the relevant transaction.
5. EFFECTIVE DATE
The HCI Foundation Transaction is subject to the fulfilment of the condition precedent (“Condition Precedent”) that
the Company notifies the HCI Foundation that the requisite number of shareholders of the Company have approved
special resolution number 1 contained in the notice of submission of proposed resolutions to the Company’s
shareholders to be adopted in terms of section 60 of the Companies Act, dated 3 July 2020. This notification has
been given today, 11 August 2020 and accordingly, the HCI Foundation Transaction is now unconditional.
The effective date of the HCI Foundation Transaction will be four business days after the date on which the JSE
approves of the listing of the HCI Foundation Subscription Shares, which approval is anticipated to be obtained on
or about 12 August 2020.
6. FINANCIAL INFORMATION
The value of the net assets of Hospitality as at 31 March 2020, being the date of the last audited annual financial
statements, was R7,673,768,000.
The audited net loss of Hospitality for the 12 months ended 31 March 2020, per the last audited financial statements
was R1,988,171,000. The audited financial statements were prepared in terms of IFRS.
7. WARRANTIES
The HCI Foundation Transaction agreement contains representations and warranties which are standard for
transactions of this nature.
8. GENERAL
The terms contained in the HCI Foundation Transaction agreement are no more favourable to the HCI Foundation
than the terms contained in any of the share for share agreements concluded between the Company and other
Hospitality shareholders prior to the date of this announcement, including the transactions referred to in the SENS
announcement published by the Company on 20 July 2020.
Pursuant to the implementation of the HCI Foundation Transaction, Tsogo Sun Hotels will hold 74.88% of the issued
share capital of Hospitality.
9. CATEGORISATION
The HCI Foundation is a Hospitality shareholder and controlled by Hosken Consolidated Investments Limited, a
material shareholder of Tsogo Sun Hotels. The HCI Foundation is therefore a related party to Tsogo Sun Hotels. The
HCI Foundation Transaction has been categorised as a small related party transaction in terms of the JSE Listings
Requirements.
In terms of the JSE Listings Requirements, the board of directors of the Company (the “Board”) is required to provide
the JSE with written confirmation from an independent professional expert confirming that the terms of the
Proposed Transaction is fair insofar as Shareholders are concerned.
BDO Corporate Finance Proprietary Limited were appointed as the independent professional expert by the Board
and provided the Board with a fairness opinion with regard to the HCI Foundation Transaction (“Fairness Opinion”)
in which they have advised the Board that they believe that the terms of the Proposed Transaction are fair to
Shareholders.
The Fairness Opinion will lie open for inspection at the registered office of the Company for a period of 28 days from
the date of this announcement.
Fourways
11 August 2020
Financial advisor: Investec Bank Limited
Sponsor: Investec Bank Limited
Legal advisors: Edward Nathan Sonnenbergs Incorporated
Date: 11-08-2020 02:51:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
