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Update Regarding Empowerment Related Party Transaction Concluded by Grit
GRIT REAL ESTATE INCOME GROUP LIMITED
(previously known as Mara Delta Property Holdings
Limited)
(Registered by continuation in the Republic of Mauritius)
(Registration number: C128881 C1/GBL)
SEM share code: DEL.N0000
JSE share code: GTR
ISIN: MU0473N00036
(“Grit” or “the Company”)
UPDATE REGARDING EMPOWERMENT RELATED PARTY TRANSACTION CONCLUDED BY GRIT
1. Introduction
1.1. Shareholders of Grit are referred to the announcement released by the Company on the Stock Exchange News
Service of the JSE Limited (“JSE”) and the website of the Stock Exchange of Mauritius Ltd (“SEM”) on 12
September 2017 relating to inter alia the put option agreement entered into between Grit and the Government
Employees Pension Fund in South Africa (“GEPF”) represented by the Public Investment Corporation Limited
(“PIC”) (“Put Option Agreement”), in terms of which Grit agreed to limit the GEPF’s exposure under a contingent
repurchase obligation provided by the GEPF to Bank of America, N.A. (“BoAML”) (“CRO”) by granting the GEPF
an irrevocable and unconditional option to require Grit, on the occurrence of a put option event under the Put
Option Agreement, to purchase from the GEPF 50% of all amounts due to BoAML under the CRO up to a
maximum of USD17 500 000 (“Original Transaction”).
1.2. Shareholders are hereby advised that the parties to the Original Transaction have entered into a guarantee
agreement on 11 December 2017 (“Guarantee Agreement”), in terms of which the parties inter alia agreed to
terminate the Put Option Agreement and in terms of which Grit now provides the GEPF with an irrevocable and
unconditional guarantee for 50% of all losses suffered by the GEPF following the occurrence of a trigger event
under the agreement recording the CRO (“CRO Agreement”) after the GEPF has enforced all of the underlying
security granted to the GEPF by Drive in Trading Proprietary Limited (“Drive in Trading”) (as security for the
obligations assumed by GEPF under the CRO Agreement, Drive in Trading pledges its rights, to its Grit shares in
favour of GEPF (“Pledged Shares”)) for the obligations assumed by the GEPF under the CRO Agreement
(“Revised Transaction”), subject to a maximum liability of 50% of the all amounts due by Drive in Trading to
BoAML, limited to USD17 500 000 (“Guaranteed Amount”). The background to the Original Transaction, as
contained in the 12 September 2017 announcement remains the same for the Revised Transaction.
2. Rationale for the Revised Transaction
Grit is committed to supporting the underlying economies of its operations and to being a responsible corporate
citizen of these economies in Africa. As a large portion of Grit’s shareholders and debt financiers are based in
South Africa, and Grit is listed on the main board of the JSE, it is imperative that the Company abides by the
principles of Black Economic Empowerment (“BEE”) in South Africa. Accordingly, in partnership with the PIC, Grit
wishes to implement the Revised Transaction in order to ensure a long term sustainable funding solution for its BEE
partner, Drive in Trading.
3. Guarantee Amount and Guaranteed Obligations
3.1. Should a a trigger event under the CRO Agreement occur and the enforcement of the CRO is triggered by BoAML,
the Guarantee Amount is to be paid by Grit into a cash collateral account held by the GEPF upon receipt of a
written demand from the GEPF.
3.2. Grit shall be required to maintain the cash collateral account with a minimum balance equal to 50% of the total
facility liabilities as contemplated in the CRO Agreement, subject to a maximum of USD17 500 000.
3.3. Following the enforcement and realisation of the Pledged Shares, the actual guaranteed obligations payable by
Grit to the GEPF shall be calculated as 50% of the actual total facility liabilities as contemplated in the CRO
Agreement less the net proceeds of all amounts received pursuant to the sale or other realisation of the Pledged
Shares plus the costs of enforcement incurred by the GEPF (“Guarantee Obligation”).
3.4. Grit shall be required to pay the Guarantee Obligations, following the determination of same. Payment of the
Guarantee Obligations in terms of the Guarantee Agreement will be settled by netting the Guarantee Obligations
off against the balance in the cash collateral account.
4. Conditions Subsequent
4.1. The Revised Transaction is subject to the condition subsequent that, by no later than 120 business days
commencing on (and including) 18 August 2017, Grit procures unconditional shareholder approval for entering
into the Guarantee Agreement, up to a maximum liability of USD17 500 000.
4.2. If the condition in paragraph 4.1 is not fulfilled, then the Guarantee Agreement will remain in full force and effect,
save that Grit’s maximum liability in terms of the Guarantee Agreement shall be limited to USD12 500 000, being
equal to or less than 4.9% of Grit’s USD market capitalization on the business day immediately preceding the
date on which the Guarantee Agreement was concluded.
5. Other Material Terms of the Revised Transaction
The obligations of Grit in terms of the Guarantee Agreement shall commence on the date of signature of the
Guarantee Agreement and shall continue in full force and effect until the date on which the PIC notifies Grit that all
sums due from Grit in respect of the total facility liabilities as contemplated in the CRO Agreement have been paid
in full, and all other actual or contingent liabilities or payment obligations of Grit thereunder or in respect thereof
have been satisfied and fully and finally discharged.
6. Financial Effects
6.1. Should Grit receive a notice to fund the cash collateral account in terms of the Guarantee Agreement from the
GEPF, Grit will cash collateralize 50% of the total financial liability at the date of notification up to a maximum
amount of USD17 500 000. The Guarantee Obligation to the GEPF will be crystalized following the sale of
Pledged Shares. As at the date of this announcement, a trigger event under the CRO Agreement has not occurred
and accordingly there is no entitlement on the part of BoAML to enforce its rights under the CRO.
6.2. The impact on the statement of financial position of Grit as at 30 June 2017 has been calculated as the net position
following:
6.2.1. the total financial liability is assumed to be the BoAML loan amount of USD33,400,000, less cash held by Drive
in Trading (USD92,000), resulting in net debt of USD33,308,000. 50% of the portion of the total financial liability,
being USD16,654,000 is recognised and accounted for by Grit, being the Guarantee Amount;
6.2.2. recognition of a financial asset measured at fair value through profit or loss, being the amount receivable should
GEPF dispose of the Pledged Shares. This will be re-measured at the closing share price of Grit as at each
reporting date. On 11 December 2017, Grit’s share price on the SEM was USD 1.35, resulting in the recognition
of a financial asset of USD15,693,750; and
6.2.3. accordingly, the net effect on the pro-forma statement of financial position is USD960,250, being a reduction of
the net asset value.
6.3. The loss is recognised directly in the statement of comprehensive income, as it is a financial instrument recognised
through profit and loss.
6.4. The costs incurred in entering into the Gurantee Agreement are regarded as sunk costs and as such have not
been included in the above analysis. These costs are expected to be c. USD106,500 (USD103,290 after tax) and
relate to professional services.
The full pro forma financial effects of the Revised Transaction will be contained in the circular that will be distributed
to shareholders in due course.
7. Categorisation of the Revised Transaction
The Revised Transaction has been deemed to be a related party transaction by the JSE and accordingly requires
the approval of the shareholders of Grit.
The Revised Transaction is also deemed to be a related party transaction by the SEM but requires no shareholders’
approval. Following representations made by Grit, the Listing Executive Committee of the SEM had approved the
related party transaction amounting to USD17 500 000, subject to the Company filing a copy of the relevant signed
agreements relating to the Revised Transaction upon execution and also including details of the Revised
Transaction in Grit’s next published Annual Report, including identities of the related parties and the value of the
consideration for the Revised Transaction.
By order of the Board
12 December 2017
JSE sponsor and transaction advisor to Grit: PSG Capital Pty Limited
SEM authorised representative & sponsor and Mauritian transaction advisor to Grit: Perigeum Capital Limited
Directors: Sandile Nomvete (chairman), Bronwyn Corbett*, Peter Todd (lead independent), Chandra Gujadhur, Ian Macleod, Leon
van de Moortele*, Matshepo More, Nomzamo Radebe, Catherine McIlraith and Maheshwar Doorgakant# (*executive director)
(#alternate to Mr Gujadhur)
Company secretary: Intercontinental Fund Services Limited
Registered address: c/o Intercontinental Fund Services Limited, Level 5, Alexander House, 35 Cybercity, Ebène 72201, Mauritius
Transfer secretary (South Africa): Computershare Investor Services Proprietary Limited
Registrar and transfer agent (Mauritius): Intercontinental Secretarial Services Limited
Transaction advisor and JSE sponsor: PSG Capital Proprietary Limited
Sponsoring Broker: Axys Stockbrokering Limited
SEM authorised representative & sponsor and Mauritian transaction advisor: Perigeum Capital Ltd
This notice is issued pursuant to the JSE Listings Requirements, SEM Listing Rule 11.3 and Rule 5(1) of the Securities (Disclosure
Obligations of Reporting Issuers) Rules 2007. The board of directors of the Company accepts full responsibility for the accuracy of
the information contained in this communiqué.
Date: 12/12/2017 01:00:00 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,
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