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Detailed Cautionary Announcement - Acquisition of a Rental Business and a Property and Renewal of Cautionary
PEMBURY LIFESTYLE GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/205899/06)
(“PL Group” or “the Company”)
ISIN Code: ZAE000222949 JSE Code: PEM
DETAILED CAUTIONARY ANNOUNCEMENT RELATING TO THE ACQUISITION OF A RENTAL ENTERPRISE AND A
PROPERTY BY PLG PROPERTIES PROPRIETARY LIMITED (“PLG PROPERTIES”) AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
1. Background
Shareholders are advised that PLG Properties, a wholly owned subsidiary of PL Group (“Purchaser”),
has entered into an agreement (conditional) with Zephan Properties Proprietary Limited (“Seller”) to
acquire the rental income stream (“Rental Enterprise”) and a property in Sandton (“Property”) from
which the Rental Enterprise receives its rental income, for a total consideration of R159 000 000
(“the Acquisition”). The Seller is not a related party to PL Group and PL Group is not a property
entity as defined in the JSE Listings Requirements. The Property is currently leased by PLG
Retirement Villages Proprietary Limited (“PLG Retirement Villages”), a wholly owned subsidiary of
the Company.
It is noted that, as at the date of this announcement, the Seller is not yet the registered owner of the
Property; however, the Seller is in the process of taking transfer of the Property by virtue of a sale
agreement between the Seller and the third party who currently owns the Rental Enterprise and the
Property (“First Sale Agreement”).
Shareholders are reminded that, as announced on 16 May 2017, PL Group acquired the business of
Pembury Retirement Lodges through PLG Retirement Villages Proprietary Limited from Mr Andrew
Mclachlan, with effect from 1 July 2017. The Property is one of the original Pembury Retirement
Lodges and has been leased for a number of years.
2. Effective date
The effective date of the Acquisition is 1 February 2018.
3. Terms of the Acquisition
3.1 The purchase consideration of R159 000 000 (“Purchase Consideration”) is payable to the Seller by
way of a loan from the Seller (“the Loan”), which will be interest bearing and payable in cash within
seven years of the date of transfer of the Property into the name of the Purchaser.
3.2 The Loan will be secured through:
3.2.1 the registration of a first mortgage bond over the Property in favour of the Seller for the full
amount of the Purchase Consideration; or
3.2.2 in the event that a mortgage bond is granted by another bank or financial institution
(“Financial Institution”), a second covering bond will be granted for any remaining portion
of the Purchase Consideration
(collectively “the Bond”).
3.3 Interest on the Loan is payable monthly in arrears to the Seller on the balance of the Purchase
Consideration a rate of:
3.3.1 7% in the first year from the Effective Date;
3.3.2 7.5% in the second year from the Effective Date;
3.3.3 8% in the third year from the Effective Date;
3.3.4 8.5% in the fourth year from the Effective Date;
3.3.5 9% in the fifth year from the Effective Date;
3.3.6 9.5% in the sixth year from the Effective Date; and
3.3.7 10% in the seventh year from the Effective Date.
3.4 Any capital repayments are at the discretion of the Purchaser during the seven-year period, in
multiples of R100 000.
3.5 In the event that a mortgage bond is granted by a Financial Institution, the Loan will be reduced
and interest on the mortgage bond will be payable in accordance with the terms approved by the
Financial Institution.
4 Description of the Property
The Property houses a retirement village known as Pembury Sandton and is located on Katherine
Street in Sandton on the remaining extent of Erf 22 Sandown and Erf 23 Sandown, both covering
approximately 8 922 square meters.
Pembury Sandton offers retirement apartments to rent in various sizes of accommodation which
includes single rooms with en-suite bathrooms, studio/bachelor apartments, one-bedroom suites
(which include a separate bedroom with en-suite bathroom with shower and bath, a separate
lounge area and kitchenette area), and double suites (which include a lounge cum kitchenette
area with a bedroom on either side with en suite bathrooms).
The retirement village also offers comfortable frail care apartments.
5 Property specific information
Property specific information is detailed below:
Property Name Address Location Sector
Erf Number 84 Katherine Street Sandton, Gauteng Retirement village
22 and remaining (residential)
extent of Erf 23
Rentable Area Weighted Average Rental Tenant Profile
(Square meters) Per m2
8 922 R119.84 PLG Retirement Villages
6 Rationale for the Acquisition
The rationale for the Acquisition is based on PL Group’s strategy to, where practical and
reasonable, own and be in control of the properties from which its subsidiaries operate, be it its
schools or retirement villages.
7 Conditions precedent
The Acquisition is subject to the following conditions precedent:
7.1 Approval of the Acquisition by the board of directors of PL Group on or before 27 February
2018; and
7.2 Registration of transfer of the Property in the name of the Seller within 120 days from 1 February
2018, which is subject to the First Sale Agreement.
8 Classification of the transaction
The Acquisition is classified as a Category 1 transaction in terms of the JSE Listings Requirements,
and therefore shareholder approval is required. Accordingly, a summary circular, incorporating
revised listing particulars, will be posted to shareholders within 60 days of this announcement in
accordance with the JSE Listings Requirements. Due to the nature of the Acquisition, the
transaction does not constitute a reverse takeover as defined in the JSE Listings Requirements. The
shareholder approval will either be by way of Section 60 of the Companies Act, 71 of 2008 or by
way of a General Meeting, the notice of which will be enclosed with the circular.
9 Financial information
The Purchase Consideration for the Property is R159 000 000. The Property will be independently
valued and details will be included in the circular to shareholders.
Rental received by the Seller in relation to the Property is R1 069 200 per month, excluding VAT, and
is paid by PLG Retirement Villages, a wholly owned subsidiary of PL Group. The lease agreement is
a triple-net lease and thus no additional material costs are expected to be incurred in relation to
the Property.
Pursuant to the Acquisition, the rental paid by PLG Retirement Villages to PLG Properties will be
eliminated on consolidation in the group results. No third-party income will be received on the
Property. Interest will be payable as detailed in paragraph 3 above.
10 Renewal of cautionary announcement
Shareholders are referred to the renewal of cautionary announcement dated 2 February 2018 and
are advised that the Company remains under cautionary in respect of the following:
- The successful conclusion of the First Sale agreement and related transfer of the Property to be
able to implement the Acquisition as announced above; and
- the receipt and publication of the financial information (i.e. the net asset value and the profit)
attributable to the Acquisition, as previously announced,
Accordingly, shareholders are advised to continue to exercise caution when dealing in the
Company’s securities until a further announcement is made.
BY ORDER OF THE BOARD
21 February 2018
Johannesburg
Designated Advisor
Arbor Capital Sponsors Proprietary Limited
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