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TRADEHOLD LIMITED - Proposed Disposal and Cautionary Announcement

Release Date: 23/05/2022 12:47
Code(s): TDH TDHBP     PDF:  
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Proposed Disposal and Cautionary Announcement

Tradehold Limited
(Registration number: 1970/009054/06)
Incorporated in the Republic of South Africa
JSE Share code: TDH ISIN: ZAE000152658
JSE B Preference Share code: TDHBP ISIN: ZAE000253050
("Tradehold" or the "the Company" or “the Group”)


PROPOSED DISPOSAL AND CAUTIONARY ANNOUNCEMENT


1. INTRODUCTION

Tradehold shareholders are advised that the Company's wholly owned subsidiary, Tradehold S.à.r.l.
("Tradehold S.à.r.l.") intends to enter into an agreement relating to a potential disposal of its entire
shareholding in Moorgarth Holdings (Luxembourg) S.à.r.l. (a wholly owned subsidiary of Tradehold)
(“Moorgarth”), as well as all of Tradehold S.à.r.l.’s loan claims against Moorgarth and certain of its
subsidiaries, to Moorgarth Group Holdings Limited (the “Purchaser”), for a fixed cash consideration of
GBP102,500,000 (the “Proposed Disposal Consideration” and the “Proposed Disposal”). Moorgarth is
the current holding company of all the Group's interests in the United Kingdom (“U.K.”)

The Purchaser is a company, which was incorporated in the U.K. for the purpose of the Proposed Disposal.
Entities associated with Dr CH Wiese, Mr KR Collins, Mr FH Esterhuyse, Mr TA Vaughn and Ms KL Nordier,
all directors of Tradehold, collectively hold 67.2% of the issued shares of the Company and are
shareholders of the Purchaser (“the Related Parties”). The Proposed Disposal will therefore be a related
party transaction for purpose of the JSE Limited (“JSE”) Listings Requirements.

The Proposed Disposal will be commercially effective from 1 March 2022, and consequently all income
earned after this date will be retained in Moorgarth save for certain payments made by Moorgarth and any
of its subsidiaries in respect of the repayment of the principal amount and the payment of interest owing in
respect of the loan claims owing to Tradehold S.à.r.l. made thereafter.

2. RATIONALE FOR THE DISPOSAL

Tradehold has a relatively complex corporate structure that has served the Group well in the past. However,
the structure is now considered to be unnecessarily complex in the current investment market. It is therefore
envisaged that, after the implementation of the Proposed Disposal, the Company will assume South African
tax residency, change its reporting currency to ZAR, and will be able to reduce its head office overheads
and costs through a simplified, South African-based group structure.

In addition to the simplification of the Group’s structure and the reduction of associated overheads, the
Proposed Disposal is intended to address the market’s negative perception of the Group, in relation to its
business in the U.K., in particular arising from:
– general structural changes in the U.K. retail property sector; and
– the high level of gearing, coupled with the impending maturity of certain of the funding facilities that
    were used to fund the Group’s U.K. acquisitions.

It is envisaged that on implementation of the Proposed Disposal, Tradehold’s primary investment focus will
be its portfolio of industrial and logistics properties held through its 74.3% investment in Collins Property
Projects Proprietary Limited and that it will make application to the JSE for classification as a Real Estate
Investment Trust, as defined in the JSE Listings Requirements .

The directors of Tradehold who are independent of the Purchaser are of the view that all of the
aforementioned factors will contribute to providing a basis for a potential rerating of Tradehold shares and
a reduction of the discount to the net asset value per share at which the shares currently trade.

3. USE OF PROCEEDS

It is the Company’s intention that the Proposed Disposal Consideration (net of taxes and transaction costs)
be used to redeem the Company’s preference shares (“Preference Shares”) held by Rand Merchant Bank,
a division of First Rand Bank Limited (“RMB”), and that the balance of the Proposed Disposal Consideration
be used to fund the payment of a special dividend to Tradehold shareholders in an amount of approximately
ZAR 4.00 per share (exchange rate dependant), the declaration and payment of which would be conditional
upon the implementation of the Proposed Disposal.

4. CONDITIONS PRECEDENT

The implementation of the Proposed Disposal will be subject to the fulfilment and / or waiver of, inter alia,
the following conditions precedent:

–   disinterested Shareholders approving the Proposed Disposal by way of an ordinary resolution, as
    required in terms of Section 9 and Section 10 of the JSE Listings Requirements;
–   RMB, as agent for the holders of the Preference Shares has, to the extent required, provided such
    consents or approvals, in writing, as may be required under the documentation pertaining to the
    Preference Shares for a prior capitalisation of certain loan claims owing by members of the Group to
    Tradegro S.à r.l;
–   the Purchaser securing the requisite financing to pay the Proposed Disposal Consideration; and
–   the exchange control authorities of the South African Reserve Bank having granted any approvals that
    may be required in connection with the Proposed Disposal or the financing thereof.

5. TIMING AND CAUTIONARY ANNOUNCEMENT

Shareholders are advised that the proposed agreements pertaining the Proposed Disposal are expected
to be signed by close of business on Friday, 27 May 2022. The Company will then issue a circular to
shareholders containing the terms and details of the Proposed Disposal during July and the Proposed
Disposal will be voted on by disinterested shareholders only, at a general meeting to be held during August
2022. The Related Parties will not participate in the aforesaid vote at the general meeting. A number of
major Disinterested shareholders who have been engaged to date have indicated their support for the
Proposed Disposal. If successfully concluded, the Proposed Disposal may have a material effect on the
price at which Tradehold shares trade and shareholders are therefore advised to exercise caution when
dealing in their Tradehold shares until a further announcement, containing the full terms of the Proposed
Disposal, is made.

Cape Town
23 May 2022


JSE Sponsor and Joint Corporate Advisor                  Joint Corporate Advisor
Questco Corporate Advisory Proprietary Limited           Mettle Corporate Finance Proprietary Limited


Legal Advisor
Cliffe Dekker Hofmeyr

Date: 23-05-2022 12:47:00
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