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TOWER PROPERTY FUND LIMITED - RDC to make offer to acquire Tower issued share capital, general offer, proposed delisting, withdrawal of cautionary

Release Date: 07/10/2021 11:30
Code(s): TWR     PDF:  
Wrap Text
RDC to make offer to acquire Tower issued share capital, general offer, proposed delisting, withdrawal of cautionary

TOWER PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2012/066457/06)
JSE share code: TWR ISIN: ZAE000179040
(Approved as a REIT by the JSE)
("Tower”)


FIRM INTENTION BY RDC PROPERTIES LIMITED TO MAKE AN OFFER TO ACQUIRE ALL OF THE TOWER ISSUED SHARE CAPITAL NOT 
ALREADY OWNED BY RDC, GENERAL OFFER, THE PROPOSED DELISTING OF TOWER FROM THE JSE AND WITHDRAWAL OF CAUTIONARY 
ANNOUNCEMENT


1.    INTRODUCTION

      Shareholders of Tower are referred to the various announcements published by RDC Properties Limited ("RDC")
      on the Botswana Stock Exchange news service and by Tower on the Johannesburg Stock Exchange (“JSE”)
      news services, the most recent of which was published on 24 and 7 September 2021, respectively (the
      “Announcements”).

      The Announcements referred to, inter alia, a potential transaction which, if implemented, would result in the
      acquisition of all, or the majority, of Tower shares not already owned by RDC, and the potential delisting of Tower
      shares from the JSE (the “Potential Transaction”). The Potential Transaction contemplates:

      -   a scheme of arrangement in terms of section 114 of the Companies Act, No. 71 of 2008 (“Companies Act”)
          to be proposed by Tower to its shareholders, and to which RDC will be a party, in terms of which RDC (or a
          nominated RDC group company) shall acquire all of the issued ordinary shares in Tower that RDC does not
          already own, for a purchase consideration of R3.776 per Tower share, on a cum distribution basis (“Cash
          Consideration”) (the “Scheme”);

      -   a concurrent, but separate, standby general offer by RDC to Tower shareholders (the “General Offer”), to
          acquire their Tower shares for the Cash Consideration, which General Offer is conditional on, inter alia, (i) the
          Scheme failing to become operative and (ii) a sufficient number of acceptances of the General Offer being
          received to result in RDC obtaining control of the majority of the Tower shares in issue; and

      -   the delisting of all Tower shares from the JSE pursuant to the Scheme becoming operative; or the potential
          delisting of all Tower shares from the JSE pursuant to the General Offer being implemented and the delisting
          being approved by Tower shareholders,

      (collectively the "Offer").

      Tower shareholders are advised that Tower has received written confirmation from RDC that the pre-conditions
      in respect of the Offer, have been fulfilled. Accordingly, RDC will proceed to make the Offer, the salient terms and
      conditions of which are set out in paragraphs 2 and 3 below, for a purchase consideration of R3.776 per Tower
      share, on a cum distribution basis.

2.    TERMS AND CONDITIONS OF THE SCHEME

      2.1.     Terms of the Scheme

      2.1.1.      The Scheme will be proposed by the independent board of directors of Tower (“Independent Board”)
                  between Tower and the shareholders of Tower, and RDC (or its nominated RDC group company, if
                  applicable) shall be a party thereto.
      2.1.2.      The Scheme will be subject to, inter alia, the conditions set out in paragraph 2.3 below.
      2.1.3.      In the event the Scheme becomes operative, RDC (or its nominated RDC group company, if applicable)
                  will acquire all of the Tower ordinary shares not already held by any RDC group company and the listing
                  of all ordinary shares of Tower on the JSE will be terminated by operation of the Scheme.

      2.2.     Scheme Consideration

               If the Scheme becomes operative, the amount payable by RDC (or its nominated RDC group company, if
               applicable) shall be the Cash Consideration per Tower share acquired pursuant to the Scheme, provided
               that if and to the extent that, in addition to the dividend declared by Tower and referred to in the Tower
               SENS announcement published on 20 August 2021 (the "Declared Dividend"), (i) Tower declares any
               distribution in favour of the Tower shares and (ii) the record date for participating in such declared
               distribution occurs prior to the operative date of the Scheme, then the consideration of R3.776 per Tower
               share shall be reduced by an amount equal to the gross amount of such distribution accruing in respect of
               each Tower share.

      2.3.     Scheme Conditions

               The implementation of the Scheme will be subject to, inter alia, the fulfilment or waiver, as the case may
               be, of the following conditions:

      2.3.1.      all approvals, consents and waivers from regulatory authorities as may be necessary for the Scheme to
                  be implemented, including the JSE, Takeover Regulation Panel and the relevant Competition
                  Authorities are obtained;
      2.3.2.      all shareholder approvals necessary to give effect to the Scheme have been obtained; and
      2.3.3.      shareholder appraisal rights in respect of not more than 5% of all the Tower shares have been validly
                  exercised in terms of section 164(3) to (7) of the Companies Act.

3.    TERMS AND CONDITIONS OF THE GENERAL OFFER

      3.1.     Terms of the General Offer

      3.1.1.      Simultaneously with the Scheme, Tower will make a separate but concurrent standby General Offer to
                  Tower shareholders in terms of section 117(1)(c)(v) of the Companies Act.
      3.1.2.      For the avoidance of doubt, implementation of the General Offer will be conditional on, inter alia, the
                  Scheme not becoming operative. In the event that the Scheme does become operative, the General
                  Offer will lapse and be of no force or effect.
      3.1.3.      In the event that the General Offer is implemented and accepted in respect of at least 90% of Tower
                  shares in issue (excluding those Tower shares held by RDC group companies and held in treasury),
                  then RDC may, at its election, invoke the provisions of section 124 of the Companies Act, to compulsorily
                  acquire all of the General Offer shares not tendered by Tower shareholders as part of the General Offer.

      3.2.     General Offer Consideration
 
               If the General Offer is implemented, RDC shall pay the Cash Consideration per General Offer share
               acquired pursuant to the General Offer, provided that if and to the extent that, in addition to the Declared
               Dividend, (i) Tower declares any distribution in favour of the Tower shares and (ii) the record date for
               participating in such declared distribution occurs prior to the General Offer payment date, then the
               consideration of R3.776 per General Offer share shall be reduced by an amount equal to the gross amount
               of such distribution accruing in respect of each General Offer share.

      3.3.     General Offer Conditions

               The implementation of the General Offer is subject to, inter alia, the fulfilment or (where appropriate) waiver
               of the following conditions:

      3.3.1.      the Scheme does not become operative;
      3.3.2.      all approvals, consents and waivers from regulatory authorities as may be necessary for the General
                  Offer to be implemented, including the JSE, Takeover Regulation Panel and the relevant Competition
                  Authorities, are obtained;
      3.3.3.      the General Offer has been accepted in respect of such number or Tower shares as, taken together
                  with those Tower shares held by RDC group companies, constitutes more than 50% of the Tower shares
                  in issue; and
      3.3.4.      the resolution to approve the delisting of the Tower shares from the JSE has been approved by the
                  requisite majority of Tower shareholders.

4.    PROPOSED GROUP RESTRUCTURE

      4.1.     General

               In order to create a more efficient corporate structure for the enlarged RDC group post-implementation of
               the Scheme, RDC wishes to procure the implementation of a group restructure (the "Group Restructure").
               The transactions comprising the Group Restructure will only be implemented after the Scheme has become
               unconditional and as a precursor to the Scheme becoming operative.

               While the transactions comprising the Group Restructure will be conditional upon the Scheme being
               rendered unconditional, the Scheme will not be conditional upon (or otherwise contingent on) the Group
               Restructure becoming unconditional or being implemented.

               The Group Restructure will be implemented by way of the following asset transfer transactions:
               - RDC Properties International Proprietary Limited ("RDC Properties") (being a RDC group company)
                 will purchase from Tower International Treasury Proprietary Limited ("Tower International") (being a
                 Tower group company) all the shares held by Tower International in TPF International Limited ("TPFI")
                 (the "TPFI Shares") (the "Asset Transfer (Mauritius)"); and
               - RDC Properties South Africa Proprietary Limited ("RDC SA") (being a RDC group company) will
                 purchase from Tower all the shares held by Tower in Lucky Bean Property Investments Proprietary
                 Limited (the "Lucky Bean Shares") (the "Asset Transfer (South Africa)"),
                 (collectively the "Asset Transfers").

               The applicable Tower and RDC group companies have entered into agreements in respect of the Asset
               Transfers.

      4.2.     Terms of the Asset Transfers

      4.2.1.   Asset Transfer (Mauritius)
      4.2.1.1.    RDC Properties shall purchase from Tower International the TPFI Shares, constituting 74% of the
                  issued share capital of TPFI for the market value of the TPFI shares.
      4.2.1.2.    The purchase consideration payable by RDC Properties shall be settled by way of the creation of a
                  loan account in the books of RDC Properties in favour of Tower International in a principal capital
                  amount equal to the purchase consideration.
      4.2.1.3.    The implementation of the Asset Transfer (Mauritius) shall be subject to the fulfilment or, where
                  applicable, waiver of the conditions precedent contemplated in paragraph 4.3.
      4.2.1.4.    Provided that the Asset Transfer Agreements are unconditional, the sale of the TPFI Shares shall
                  be implemented on the operative date of the Scheme ("Scheme Operative Date") and immediately
                  prior to the Scheme being implemented.
      4.2.1.5.    The sale of the TPFI Shares is subject to the resolutive condition contemplated in paragraph 4.4.

      4.2.2.   Asset Transfer (South Africa)
      4.2.2.1.    RDC SA shall purchase from Tower the Lucky Bean Shares, constituting 100% of the issued share
                  capital of Lucky Bean for the market value of the Lucky Bean shares.
      4.2.2.2.    The purchase consideration payable by RDC SA shall be settled by way of the creation of a loan
                  account in the books of RDC SA in favour of Tower in a principal capital amount equal to the
                  purchase consideration.
      4.2.2.3.    The implementation of the Asset Transfer (South Africa) shall be subject to the fulfilment or, where
                  applicable, waiver of the conditions precedent contemplated in paragraph 4.3.
      4.2.2.4.    Provided that the Asset Transfer Agreements are unconditional, the sale of the Lucky Bean Shares
                  shall be implemented on the Scheme Operative Date, immediately after the implementation of the
                  Asset Transfer (Mauritius) and immediately prior to the Scheme being implemented.
      4.2.2.5.    The sale of the Lucky Bean Shares is subject to the resolutive condition contemplated in paragraph
                  4.4.

      4.3.     Suspensive conditions to the Asset Transfers

               The implementation of the Asset Transfers are subject to the fulfilment or, where applicable, waiver of the
               following conditions:

      4.3.1.      The Scheme has not lapsed and all the Scheme Conditions have all been fulfilled or waived (as
                  applicable);
      4.3.2.      To the extent required, the Tower shareholders have approved the Asset Transfers in terms of the Asset
                  Transfer Agreements by way of special resolution in accordance with section 112 read with 115(2) of
                  the Companies Act;
      4.3.3.      Both Asset Transfer Agreements have been concluded and have become unconditional in accordance
                  with their respective terms;
      4.3.4.      All regulatory approvals legally necessary for the implementation of the Asset Transfers have been
                  obtained; and
      4.3.5.      The Tower Independent Board, acting in good faith, has confirmed to RDC that it has no reason to
                  believe that the Scheme Operative Date will not occur on the scheduled date as contemplated in the
                  finalisation announcement released by Tower.

      4.4.     Resolutive condition

               The Asset Transfers are subject to a resolutive condition, in terms of which in the event that the Scheme
               has not become operative and been implemented within 1 business day of the date on which the earlier of
               the Asset Transfers has been implemented, then the Asset Transfer/s having been so implemented shall
               be immediately and automatically resolved such that the Asset Transfers shall automatically lapse with
               retrospective effect and the status quo ante will be restored ("Rescission").

               In order to ensure that the Rescission is expeditiously administered, should it become required, the TPFI
               Shares and the Lucky Bean Shares will be held by Tower in escrow from the implementation of the Asset
               Transfers until the Scheme has been implemented.

5.    RDC SHAREHOLDING IN TOWER

      RDC, through its wholly owned subsidiary RDC SA, holds 7 200 000 (2.1%) shares in Tower.

      Save for the above, RDC does not hold or control (directly or indirectly) any Tower shares and does not have any
      arrangement (whether by option or otherwise) to acquire Tower shares, other than pursuant to the Offer.

6.    CONCERT PARTY ARRANGEMENTS

      RDC confirms that it is the ultimate purchaser of the Tower shares pursuant to the Scheme or General Offer, as
      the case may be, and is not acting in concert with any other party in relation to the Offer.

7.    INDEPENDENT EXPERT AND FAIR AND REASONABLE OPINION

      The Independent Board has appointed Questco Corporate Advisory Proprietary Limited (“Independent Expert”)
      as the independent expert to provide it with external advice in connection with the Scheme, General Offer and
      Group Restructure, in the form of the fair and reasonable opinion as required by and in compliance with the
      Companies Act, Takeover Regulations and the JSE Listings Requirements (“Listings Requirements”), and the
      fairness opinion as required by and in compliance with the Listings Requirements.

      The full substance of the Independent Expert report will be included in the circular to be posted Tower
      shareholders as referred to in paragraph 11 below.

8.    SHAREHOLDER SUPPORT

      The following Tower shareholders have provided irrevocable undertakings to vote either as a principal or on behalf
      of clients, in favour of the Scheme and resolutions to be proposed to implement the Offer:

                                                                        Number of          Percentage of
       Shareholder                                                   Tower shares          Tower Shares1
       Allan Gray Clients                                              98,205,050                  29.8%
       Prescient Fund Managers                                         49,818,534                  15.1%
       Counterpoint Asset Management                                   46,503,400                  14.1%
       Total                                                          194,562,984                  59.0%
       1 – the percentage of Tower shares represents those eligible to vote on the Offer

9.     RESPONSIBILITY STATEMENTs

       The Independent Board and board of Tower, individually and collectively, accepts responsibility for the information
       contained in this announcement and, to the best of Tower’s knowledge and belief, that information is true and this
       announcement does not omit anything likely to affect the importance of the information included.

10.    CASH CONFIRMATON

       The Cash Consideration required to settle the Scheme or General Offer is in place and, in accordance with
       Regulation 111(4) and 111(5) of the Takeover Regulations, RDC has obtained and delivered to the TRP (i) an
       irrevocable unconditional guarantee from Investec Bank Limited; and (ii) an irrevocable unconditional confirmation
       of funds held in escrow from Fluxmans Inc that, together, will satisfy the maximum possible Cash Consideration.

11.    POSTING OF THE CIRCULAR

       Tower will issue a circular to shareholders, containing full terms and conditions of the Scheme, General Offer and
       Group Restructure and containing a notice to convene a general meeting, the Independent Expert report, the
       recommendations of the Independent Board and board of Tower and the pertinent dates relating to the Offer and
       necessary forms to give effect to the Offer (“Circular”).

       The Circular is expected to be distributed to Tower shareholders within 20 business days after the date of this
       announcement (or such longer period as allowed by the TRP).

12.    WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

       Post the release of this announcement, Tower shareholders are advised that caution is not longer required to be
       exercise when dealing in Tower shares.

7 October 2021

Corporate advisor to Tower                                Corporate advisor to RDC
Ferryman Capital Partners                                 Investec Bank Limited

Legal advisor to Tower                                    Legal advisor to RDC
Cliffe Dekker Hofmeyr Inc                                 Fluxmans

Sponsor to Tower                                          Independent expert
Java Capital                                              Questco Corporate Advisory Proprietary Limited


Date: 07-10-2021 11:30:00
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.

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