ATTACQ LIMITED - Disposal of interest in Ikeja City Mall

Disposal of interest in Ikeja City Mall

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")


DISPOSAL OF INTEREST IN IKEJA CITY MALL


1.    INTRODUCTION

      Shareholders are advised that AIH International Limited ("AIHI") (a wholly owned subsidiary of Attacq) and
      Hyprop Investments (Mauritius) Limited ("Hyprop Mauritius") (a wholly owned subsidiary of Hyprop
      Investments Limited ("Hyprop")) (collectively the "sellers") have concluded an agreement ("SPA") to dispose
      of their indirect shareholding and shareholder loans in Gruppo Investment Nigeria Limited ("Gruppo") which
      owns Ikeja City Mall, Nigeria (the "property"), to AIH No 6 Limited (which will assign its rights and novate
      its obligations in terms of the SPA to Actis Africa Sustainable Real Estate Income Fund ("AREIF")) and Actis
      West Africa REIF LP ("NREIF") (collectively the "purchasers") (the "transaction" or "disposal").

      AIHI holds 25% of the shares in Gruppo through its wholly owned subsidiary, AIHI Ikeja ("AIHI Ikeja").
      Similarly, Hyprop Mauritius holds 75% of the shares in and shareholder loans advanced to Gruppo through
      Hyprop Ikeja Mall Limited ("Hyprop Ikeja").

2.    RATIONALE FOR THE DISPOSAL

      The disposal of its interest in Ikeja City Mall is in accordance with Attacq’s stated intention of exiting its Rest
      of Africa retail investments in an orderly fashion. Attacq has no debt against its Rest of Africa retail
      investments and the proceeds of the transaction will be used to settle existing interest-bearing debt.

3.    TERMS OF THE DISPOSAL

      The aggregate purchase consideration payable in terms of the transaction is US$115 million (the "purchase
      consideration"), which will be adjusted up or down depending on the working capital, cash and debt of Hyprop
      Ikeja, AIHI Ikeja and Gruppo (collectively the "Ikeja Group") on the implementation date (the "completion
      date") of the transaction. Gruppo has senior debt of c.US$55 million, which should result in a net purchase
      consideration ("the net purchase consideration") of c.US$60 million, of which c.US$15 million is attributable
      to AIHI’s effective 25% interest in Gruppo and the balance is attributable to Hyprop Mauritius.

      70% of the estimated net purchase consideration will be paid on the completion date (with adjustments for
      actual debt, working capital and cash to be determined within 80 days of implementation of the transaction).
      The remaining 30% (the "deferred consideration") is payable on or before the fourth anniversary of the
      completion date unless one of the options referred to below is exercised by the sellers. The deferred
      consideration will bear interest at a rate of 8% per annum NACQ. The purchasers are entitled to pay any or all
      of the deferred consideration at any time after completion of the transaction. The deferred consideration must
      be paid in full by the fourth anniversary of the completion date unless one of the options is exercised by AIHI
      and Hyprop Mauritius.

      In terms of the option agreement to be concluded between the purchasers and the sellers (the "parties"), to the
      extent that the deferred consideration remains outstanding after the second anniversary of the completion date,
      the sellers will be entitled to either (i) subscribe for shares in AREIF; (ii) respectively, acquire shares in Hyprop
      Ikeja and AIHI Ikeja, to be transferred from AREIF; (iii) acquire shares in Gruppo to be transferred from
      NREIF, Hyprop Ikeja and AIHI Ikeja, all at market value, in settlement of the deferred consideration; or (iv)
      retain the status quo and continue to earn interest on the outstanding deferred consideration.

      As security for the obligations of the purchasers, including payment of the deferred consideration, the parties
      will enter into a cession and pledge agreement in terms of which the issued shares of the Ikeja Group will be
      ceded and pledged to the sellers (but subordinated behind any security in favour of the senior lenders to
      Gruppo). In addition, the sellers have the right to require that Gruppo creates and registers a second mortgage
      in favour of the sellers over the property as security for the obligations of the purchasers in terms of the
      disposal.

      The disposal is subject to the fulfilment (or waiver) of the following conditions precedent:
      -        no person having commenced proceedings prohibiting the disposal, taken steps to wind-up the Ikeja
               Group, or enacted any legislation which would prohibit or restrict the disposal;
      -        to the extent required, the senior debt funders of Gruppo and the lenders of Hyprop Mauritius consenting
               to the disposal;
      -        the purchasers having received in aggregate, unconditional capital commitments, subscription
               considerations or partnership contributions from their investors of at least US$150 million;
      -        the cession and pledge agreement referred to above being concluded by the parties and becoming
               unconditional;
      -        the parties agreeing the form of the second mortgage;
      -        the sellers' representatives confirming that all certificates of capital importation relating to the Ikeja
               Group are correct and dematerialised;
      -        AIH No 6 Limited assigning its rights and benefits and novating its obligations in terms of the SPA to
               AREIF; and
      -        to the extent required, the purchasers receiving approval from the relevant competition / merger control
               authorities and the parties being satisfied with the outcome of a limited due diligence in relation to certain
               specified issues.

      The SPA contains undertakings, warranties and indemnities which are normal for a transaction of this nature.

4.    PROPERTY SPECIFIC INFORMATION

      The property is a retail shopping centre situated in Lagos, Nigeria. In determining the carrying value of its
      shares in and shareholder loan advanced to Gruppo, the property was valued by the directors of the company at
      US$115 million on 30 June 2020, based on the anticipated sales proceeds of the transaction, which is
      considered to be its fair market value. The directors of the company are not independent and are not registered
      as professional valuers or as professional associate valuers in terms of the Property Valuers Profession Act, No.
      47 of 2000.

      As at 30 June 2020, the weighted average monthly rental per square metre of the property amounts to US$42
      and gross lettable area was 22,223 m2. The attributable loss (after fair value adjustments and interest incurred
      on shareholders' loans) of Gruppo, based on the audited consolidated financial statements of Attacq for the year
      ended 30 June 2020 (prepared in terms of International Financial Reporting Standards) is US$7,023,380.

5.    CATEGORISATION OF THE TRANSACTION

      The transaction is categorised as a Category 2 transaction in terms of the JSE Listings Requirements and as such
      is not subject to shareholder approval.

9 November 2020


Sponsor
Java Capital

Date: 09-11-2020 04:41:00
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