Wrap Text
Pipeline Acquisitions Update
GRIT REAL ESTATE INCOME GROUP LIMITED
(Registered by continuation in the Republic of Mauritius)
(Registration number: C128881 C1/GBL)
SEM share code: DEL.N0000
JSE share code: GTR
LSE share code: GR1T
ISIN: MU0473N00036
("Grit" or the "Company" or the "Group")
PIPELINE ACQUISITIONS UPDATE
Further to the Company's Trading Update on 26 June 2019 and the circular distributed
to Grit shareholders ("Shareholders") on 11 September 2019 ("Circular"), the board
of Directors (the "Board") is pleased to announce further details pertaining to the
Group's attractive pipeline of potential investment opportunities with existing tenants
and other multi-national companies operating across the African continent.
("Investment Pipeline").
Grit has concluded commercially binding, but conditional, agreements
on a number of target acquisitions ("Target Acquisitions"), most of which are
regarded as category 2 transactions in terms of the JSE Listing Requirements, and,
as such, the Company is required to announce salient details which are included
below. These Target Acquisitions will facilitate further diversification of the
Company's portfolio and exposure to high-quality multi-national tenants, underpinned
by predominantly US$ and Euro denominated long-term leases.
Announcements related to these Target Acquisitions and the remainder of the
Investment Pipeline, as described in the Circular, will be made in due course.
Investments that form part of this announcement, of which Grit's proportionate
investment value is US$ 103.5 million, are summarised below.
Total Asset
Weighted Value/Dev.
average gross Weighted Cost *
rental ** average lease Net Property Interest (US$M)
Property name Country Sector Type expiry (years) Yield acquired
PwC Head Office Ghana Corporate offices Sale and
leaseback US$28.00 11.9 8.5% 50.0% 20.3
Huawei Head Office Ghana Corporate offices Sale and
leaseback US$27.00 4.2 9.0% 50.0% 13.6
St Helene Hospital Mauritius Healthcare Pre-funded
acquisition US$20.31 15.0 10.5% 86.6% 13.3
Coromandel Hospital Mauritius Healthcare Pre-funded
acquisition US$20.52 15.0 10.5% 86.6% 23.4
Orbit Warehouse Kenya Light Industrial Sale and
leaseback US$7.12 25.0 9.24% 80.0% - 100.0% 32.2
Orbit Warehouse Kenya Light Industrial Pre-funded
development US$8.00 25.0 11.1% 80.0% - 100.0% 8.0
VDE Housing (development) Mozambique Corporate Accom Pre-funded
acquisition US$19.82 5.0 11.9% 100.0% 13.7
*excluding VAT and transfer costs, ** per m2 per month
The Target Acquisitions are subject to various conditions precedent described in
Annexure A, and as such, there is no guarantee that they will ultimately be concluded.
Funding strategies related to these and other recently announced investments will be
communicated in due course.
Bronwyn Corbett, Chief Executive Officer of Grit, commented:
"The acquisitions are in line with Grit's strategy of acquiring superior quality assets
tenanted by blue-chip multi-national companies under long-term, hard currency
leases, whilst further enhancing the quality and diversification of the portfolio in terms
of tenant, geographic and sector exposures.
The transactions are accretive and will result in economies of scale by utilising Grit's
existing extensive infrastructure across the countries we already operate in, while
providing excellent opportunities to strengthen partnerships with key international tenants.
They also reflect Grit's evolved business strategy, which now includes prefunding of
selected risk mitigated developments, and which is expected to deliver accelerated
medium-term net asset value growth.
The acquisitions are expected to provide investors with further diversified, secure and
growing index-linked income and attractive capital growth potential from across Grit's
high-quality portfolio, which continues to deliver attractive returns to our shareholders."
By order of the Board
25 October 2019
FOR FURTHER INFORMATION PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Corbett, Chief Executive Officer +230 269 7090
Darren Veenhuis, Head of Investor Relations +44 779 512 3402
Morne Reinders, Investor Relations +27 82 480 4541
Maitland/AMO - Communications Adviser
James Benjamin +44 20 7379 5151
Vikki Kosmalska Grit-maitland@maitland.co.uk
Jason Ochere
finnCap Ltd - UK Financial Adviser
William Marle / Scott Mathieson / Matthew Radley +44 20 7220 5000
(Corporate Finance)
Mark Whitfeld (Sales) +44 20 3772 4697
Monica Tepes (Research) +44 20 3772 4698
Perigeum Capital Ltd - SEM Authorised
Representative and Sponsor
Shamin A. Sookia +230 402 0894
Kesaven Moothoosamy +230 402 0898
PSG Capital - JSE Sponsor and Corporate Adviser
David Tosi +27 21 887 9602
The Company's LEI is: 21380084LCGHJRS8CN05
NOTES:
Grit Real Estate Income Group Limited is a leading pan-African real estate company
focused on investing in and actively managing a diversified portfolio of assets in
carefully selected African countries (excluding South Africa). These high-quality
assets are underpinned by predominantly US$ and Euro denominated long-term
leases with a wide range of blue-chip multi-national tenant covenants across a diverse
range of robust property sectors.
The Company is committed to delivering strong and sustainable income for
shareholders, with the potential for income and capital growth. The Company is
targeting a net total shareholder return inclusive of net asset value growth of
12.0%+ per annum.*
The Company currently holds primary listings on both the Main Market of the London
Stock Exchange (LSE: GR1T) and on the Main Board of the Johannesburg Stock
Exchange (JSE: GTR), while its listing on the Official Market of the Stock Exchange of
Mauritius Ltd is termed as a secondary listing (SEM: DEL.N0000).
Further information on the Company is available at http://grit.group/
* This is a target only and not a profit forecast and there can be no assurance that it will be met.
Any forward-looking statements and the assumptions underlying such statements are the responsibility
of the Board of Directors and have not been reviewed or reported on by the Company's external auditors
Directors:
Peter Todd+ (Chairman), Bronwyn Corbett (Chief Executive Officer)*, Leon van de
Moortele (Chief Financial Officer)*, Ian Macleod+, Nomzamo Radebe, Catherine
McIlraith+, David Love+, Sir Samuel Esson Jonah+, and Bright Laaka (Permanent
Alternate Director to Nomzamo Radebe)
(* Executive Director) (+ independent Non-Executive Director)
Company secretary: Intercontinental Fund Services Limited
Registered address: c/o Intercontinental Fund Services Limited, Level 5, Alexander
House, 35 Cybercity, Ebene, 72201, Mauritius
Transfer secretary (South Africa): Computershare Investor Services Proprietary Limited
Registrar and transfer agent (Mauritius): Intercontinental Secretarial Services Limited
Corporate advisor and JSE sponsor: PSG Capital Proprietary Limited
SEM authorised representative and sponsor: Perigeum Capital Ltd
This notice is issued pursuant to the LSE Listing Rules, JSE Listings Requirements,
SEM Listing Rule 11.3 and the Mauritian Securities Act 2005. The Board of the Company
accepts full responsibility for the accuracy of the information contained in this communique.
ACQUISITION OF 50% OF PWC HEAD OFFICE, ACCRA AND HUAWEI HEAD OFFICE, ACCRA, GHANA
1. INTRODUCTION
1.1. Shareholders are advised that on 24 October 2019 -
1.1.1. the Company entered into heads of terms ("Infinity HoT") with
CH Group Limited ("CH Group"), Goldkey Properties Limited ("Goldkey"),
Cantonments City Limited ("Cantonments City") and Infinity Tower Limited
("Infinity Tower"), the owner of the property known as PwC Ghana Head
Office, a 9-storey, Grade A office building measuring approximately 5,176 sqm
of gross lettable area currently under development by Goldkey and located on
0.45 acres of land in Rangoon Lane, Cantonment, Accra, Ghana ("Infinity
Tower Property"). The Infinity HoT sets out the main terms and conditions on
and subject to which the Company (or one of its wholly-owned subsidiaries)
("Acquirer") is willing to acquire 50% of the issued ordinary share capital of
Infinity Tower ("Infinity Acquisition Shares") from Cantonments City, the
legal and beneficial holder of all of the issued ordinary shares of Infinity Tower
("Infinity Tower Acquisition") and
1.1.2. the Company entered into heads of terms ("Portman House
HoT") with CH Group, Goldkey, Cantonments City and Portman House
Limited ("Portman House"), the owner of the property known as CH Building,
a 7-storey, Grade A completed office building measuring approximately 3,913 sqm
of gross lettable area and located on 0.67 acres of land in Rangoon Lane,
Cantonments, Accra, Ghana ("Portman House Property"). The Portman
House HoT sets out the main terms and conditions on and subject to which
the Acquirer is willing to acquire 50% of the issued ordinary share capital of
Portman House ("Portman House Acquisition Shares") from Cantonments
City, the legal and beneficial holder of all of the issued ordinary shares of
Portman House ("Portman House Acquisition"),
(the "Infinity Tower Acquisition" and the "Portman House Acquisition",
hereinafter being referred to as the "Acquisitions"; and the "Infinity Tower
Property" and the "Portman House Property" hereinafter being referred to as
the "Properties").
1.2. The Infinity Tower Property is currently let to PricewaterhouseCoopers (GH)
Limited for approximately 4,086 sqm of gross lettable area on an initial lease term
of 15 years ("PwC Lease") commencing on completion of the development of
the Infinity Tower Property which is expected in the fourth quarter of 2019. The
Infinity Tower Property's remaining gross lettable area measuring approximately
1,074 sqm will be let by Infinity Tower to CH Group in terms of a triple net
corporate lease ("Infinity Head Lease") starting from the date of acquisition for
a period of 5 years.
1.3. The Portman House Property is currently let to Huawei Technologies (Ghana)
Limited for approximately 2,855 sqm of gross lettable area on an initial lease term
of 8 years commencing 1 March 2016 ("Huawei Lease"). The Portman House
Property's remaining gross lettable area measuring approximately 1,057 sqm,
currently occupied by CH Group, will be let by Portman House to CH Group in
terms of a triple net corporate lease starting from the date of acquisition for a
period of 5 years ("Portman House Head Lease").
2. RATIONALE FOR THE ACQUISITIONS
2.1. Through these Acquisitions, Grit is entering into a strategic joint venture with
Goldkey, one of the leading developers in Ghana.
2.2. Goldkey, established in 1997, is one of the leading Real Estate development
companies in Ghana. It is renowned for its proven competencies in commercial
and residential developments both for sales and rental of space in prime
locations. They specialise in master-planned residential, mixed-use and
commercial developments. It has so far developed an area of approximately
40,000sqm for rental purposes in prime locations around Accra including Airport,
Cantonments, the Ridge, Labone, Abelemkpe and East Legon. Goldkey is
currently developing Cantonments City; a mixed-use development with a green
park which is set to be the capital's commercial node while promoting work life
balance. It has managed to secure multi-national and blue-chip tenants like PwC,
Huawei, ENS Africa and VIVO Energy Ghana, amongst others. Both Properties
are located in Cantonment City.
2.3. The Infinity Tower Property, an A-Grade building, currently under development,
shall only be acquired on the completion and handover of the construction which
is expected by mid December 2019. The property is anchored by PWC for a
lease period of 15 years. The Portman House Property, an existing A-Grade
building, is anchored by Huawei. This is an opportunity for Grit to consolidate its
existing list of blue-chip tenants and partner with these tenants to meet their
multi-jurisdictional corporate real estate needs.
2.4. The Acquisitions complement the existing Ghanaian portfolio. These additions
bring diversification not only to Grit's local portfolio but also to the Company-wide
geographical spread. These Acquisitions are in line with Grit's strategy to achieve
a reasonable operational size in Ghana to achieve sufficient economies of scale
and to maximise efficiency in country.
2.5. In addition to the security of the anchor covenants in the PWC Lease and the
Huawei Lease forming part of the Acquisitions, the remaining gross lettable area
will be secured by means of lease terms being entered into with the CH Group.
The CH Group, incorporated in 2012, provides additional strength and substance
to the Acquisitions as the parent company of certain of Ghana's most successful
businesses. The company operates in diverse industries such as real estate,
energy, petroleum, agriculture, telecommunications and business advisory
services. In recent years, the CH Group has grown tremendously, leading to the
birth of industry leaders such as Goldkey Properties, Blackwell Realty and
Denton Property Managers (Real Estate), Tema Tank Farm (Petroleum), and
Goldkey Telecoms (Telecommunications).
3. TERMS OF THE INFINITY TOWER ACQUISITION
3.1. Purchase Consideration for the Infinity Acquisition Shares
3.1.1. The purchase consideration payable by the Acquirer for the Infinity Tower Acquisition Shares
is estimated to be US$10,157,738 ("Estimated Infinity Purchase Consideration"),
based on an agreed net acquisition yield of 8.50% applicable to the Infinity Tower Acquisition.
3.1.2. The Estimated Infinity Purchase Consideration is subject to adjustment,
pending final confirmation of the recoverable value of working capital
balances, provided that such adjustment shall not increase the Estimated
Purchase Consideration by more than 10%. Accordingly, the maximum
purchase consideration payable by the Acquirer for the Infinity Acquisition
Shares is US$11,173,512
3.1.3. The purchase consideration payable by the Acquirer for the Infinity Acquisition
Shares will be paid by the Acquirer by way of an interbank transfer on the
Infinity Tower Acquisition Completion Date (as defined below).
3.1.4. Cantonments City is currently considering the gearing of Infinity Tower and a distribution
to Cantonments City prior to the implementation of the Infinity Tower Acquisition. Should
this occur, it is anticipated to reduce the Estimated Infinity Purchase Consideration to
approximately USD6,094,643, subject to a maximum adjustment of 10% on the basis detailed in
paragraph 3.1.2 above. The above will be addressed in the Infinity Tower Investment Agreement
(as defined in Annexure A below) and will be confirmed by the Company on SENS.
3.2. Conditions precedent applicable to the Infinity Tower Acquisition are contained in
Annexure A to this announcement ("Infinity Tower Conditions Precedent")
3.3. Completion date of the Infinity Tower Acquisition
The completion date of the Infinity Tower Acquisition will be the date on which all
the Infinity Tower Acquisition Conditions Precedent have been fulfilled (or waived),
which is expected to occur no later than 31 December 2019 (the "Infinity Tower Acquisition Completion Date").
3.4. Representations and Warranties granted in respect of the Infinity Tower Acquisition
The Infinity HoT provides that the Infinity Tower Investment Agreement (as
defined below) will contain representations and warranties by the Infinity HoT
parties (other than Grit) to Grit which are standard for a transaction of this nature.
3.5. Other significant terms of the Infinity Tower Acquisition
In terms of the Infinity HoT, Goldkey will provide Infinity Tower a rental
withholding guarantee (details of which will be included in the Infinity Tower
Investment Agreement as defined in Annexure A) ("Rental Withholding
Guarantee"). This means that Goldkey will pay to Infinity Tower an amount equal
to the shortfall in the total rental amount arising from PwC, as a tenant,
withholding tax of 7.5 per cent. of the total rental amount payable under the PwC
Lease. For instance, for every US$1 that PwC pays as rent, PwC is required to
withhold US$0.075 from the landlord as rental withholding tax; Goldkey would
therefore have to pay US$0.075 to Infinity Tower to compensate for this shortfall.
The Rental Withholding Guarantee will be for a period of one year starting from
the Infinity Tower Acquisition Completion Date but will be waived in the event
that Infinity Tower obtains a withholding tax exemption.
3.6. Financial information on Infinity Tower
3.6.1. The value of the net assets of Infinity Tower as at 31 December 2018, being
the date of the last audited annual financial statements, was a negative
amount of US$161,366
3.6.2. The audited loss after tax attributable to Infinity Tower for the year ended
31 December 2018, was US$163,407.
3.6.3. On completion of the Infinity Tower Acquisition, the one year forward annual
net operating income of Infinity Tower will be approximately US$1,727,210.
3.7. Exclusivity
3.7.1. Infinity Tower, Cantonments City, Goldkey and CH Group agreed that for the
period commencing from the signature date of the Infinity HoT and ending on
31 December 2019, or such later date which the Infinity HoT Parties agree in
writing, they will transact with Grit on the Infinity Tower Acquisition on an
exclusive basis.
3.7.2. If any of Infinity Tower, Cantonments City, Goldkey or CH Group breaches
any of the exclusivity undertakings provided to Grit in term of the Infinity HoT,
they will indemnify Grit for an amount equal to all reasonable costs, fees,
disbursements and expenses which have been or will be incurred by Grit in
connection with its investigation, evaluation and negotiation of the Infinity
Tower Acquisition.
4. TERMS OF THE PORTMAN HOUSE ACQUISITION
4.1. Purchase Consideration for the Portman House Acquisition Shares
4.1.1. The purchase consideration payable by the Acquirer for the Portman House
is estimated to be US$6,775,748 ("Estimated Portman House Purchase
Consideration"), based on an agreed net acquisition yield of 9.00 percent
applicable to the Portman House Acquisition.
4.1.2. The Estimated Portman House Purchase Consideration is subject to
adjustment, pending final confirmation of the recoverable value of working
capital balances, provided that such adjustment shall not increase the
Estimated Portman House Purchase Consideration by more than 10 percent
Accordingly, the maximum purchase consideration payable by the Acquirer for
the Portman House Acquisition Shares is US$7,453,323
4.1.3. The purchase consideration payable by the Acquirer for the Portman House
Acquisition Shares will be paid by the Acquirer by way of an interbank transfer
on the Portman House Acquisition Completion Date (as defined below).
4.1.4. Cantonments City is currently considering the gearing of Portman House and a distribution
to Cantonments City prior to the implementation of the Portman House Acquisition. Should
this occur, it is anticipated to reduce the Estimated Portman House Purchase Consideration
to approximately USD4,065,449, subject to a maximum adjustment of 10% on the basis detailed
in paragraph 4.1.2 above. The above will be addressed in the Portman House Investment Agreement
(as defined in Annexure A below) and will be confirmed by the Company on SENS.
4.2. Conditions precedent applicable to the Portman House Acquisition are
contained in Annexure A to this Announcement ("Portman House Acquisition Conditions Precedent")
4.3. Completion date of the Portman House Acquisition
The completion date of the Portman House Acquisition will be the date on which
all the Portman House Acquisition Conditions Precedent have been fulfilled (or waived),
which is expected to occur no later than 31 December 2019 (the "Portman House Acquisition Completion Date").
4.4. Representations and Warranties granted in respect of the Portman House Acquisition
The Portman House HoT provides that the Portman House Investment Agreement
(as defined below) will contain representations and warranties by the
Portman House HoT parties (other than Grit) to Grit which are standard for a
transaction of this nature.
4.5. Other significant terms of the Portman House Acquisition
In terms of the Portman House HoT, Goldkey will provide Portman House a rental
withholding guarantee (details of which will be included in the Portman House
Investment Agreement as defined in Annexure A) ("Rental Withholding
Guarantee"). This means that Goldkey will pay to Portman House an amount
equal to the shortfall in the total rental amount arising from Huawei withholding
7.5 per cent. of the total rental amount payable under the Huawei Lease. For
instance, for every $1 that Huawei pays as rent, Huawei is required to withhold
$0.075 from the landlord as rental withholding tax; Goldkey would therefore have
to pay $0.075 to Portman House to compensate for this shortfall. The Rental
Withholding Guarantee will be for a period of one year starting from the Portman House
Acquisition Completion Date but will be waived in the event that Portman House
obtains a withholding tax exemption.
4.6. Financial information of Portman House
4.6.1. The value of the net assets of Portman House as at 31 December 2018, being
the date of the last audited annual financial statements, was US$7,731,778.
4.6.2. The audited profit after tax attributable to Portman House for the year ended
31 December 2018, was US$1,445,519.
4.6.3. The audited annual financial statements of Portman House for the year ending
31 December 2018, were prepared in terms of IFRS.
4.6.4. On completion of the Portman House Acquisition, the annual net operating
income of Portman House will be approximately US$1,220,437 per annum.
4.7. Exclusivity
4.7.1. Portman House, Cantonments City, Goldkey and CH Group agreed that for
the period commencing from the signature date of the Portman House HoT
and ending on 31 December 2019, or such later date which the Portman
House HoT Parties agree in writing, they will transact with Grit on the Portman
House Acquisition on an exclusive basis.
4.7.2. If any of Portman House, Cantonments City, Goldkey or CH Group breaches
any of the exclusivity undertakings provided to Grit in term of the Portman
House HoT, they will indemnify Grit for an amount equal to all reasonable
costs, fees, disbursements and expenses which have been or will be incurred
by Grit in connection with its investigation, evaluation and negotiation of the
Portman House Acquisition.
5. THE PROPERTIES
5.1. Details of the Properties are as follows:
Gross lettable Weighted average gross
Property name and address Country Sector area(m2) rental (m2 per month)
PwC Head Office, located at No.1 in Rangoon Lane,
Cantonment, Accra, Ghana Ghana Corporate offices 5,176 US$28.00
Huawei Head Office (CH Building), located at No.1 in
Rangoon Lane, Cantonments, Accra, Ghana Ghana Corporate offices 3,913 US$27.00
5.2. Details regarding the Properties, as at the anticipated Completion Date, are set out below:
Weighted average Weighted average Vacancy by gross
Property name and address Acquisition yield annual rental escalation lease expiry (years) lettable area
PwC Head Office located at No.1 in
Rangoon Lane, Cantonment, Accra, Ghana 8.5% 1.64% 11.9 0%
CH Building, located at No.1 in Rangoon
Lane, Cantonments, Accra, Ghana 9.0% 2.38% 4.2 0%
Notes:
a) In addition to the purchase consideration payable in respect of the Infinity Tower
Acquisition, the costs associated with the Infinity Tower Acquisition are estimated
at US$127,600. No agents' commission is payable in respect of the Infinity Tower Acquisition.
b) The purchase consideration payable in respect of the Infinity Tower Property is
considered to be its fair market value, as determined by the directors of the
Company. 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. Preliminary independent
valuations obtained support the directors appraisals.
c) In addition to the purchase consideration payable in respect of the Portman House
Acquisition, the costs associated with the Portman House Acquisition are
estimated at US$88,693. No agents' commission is payable in respect of the
Portman House Acquisition.
d) The purchase consideration payable in respect of the Portman House Property is
considered to be its fair market value, as determined by the directors of the
Company. 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. Preliminary independent
valuations obtained support the directors appraisals.
6. CLASSIFICATION OF THE ACQUISITIONS
6.1. The Acquisitions have been aggregated and accordingly constitute a category 2
transaction in terms of the JSE Limited Listings Requirements.
6.2. The Acquisitions constitute an undertaking in the ordinary course of business of
Grit and therefore does not fall under the scope of Chapter 13 of the SEM Listing
Rules or under any of the LSE reporting requirements.
DEVELOPMENT FUNDING AND ACQUISITION OF ST HELENE HOSPITAL AND COROMANDEL HOSPITAL MAURITIUS
1. TRANSACTION SUMMARY
1.1. Shareholders are advised that on 24 October 2019, the Company, through its wholly-
owned subsidiary Grit Services Limited ("GSL"), contracted to pre-fund the development
and subsequent purchase of (on completion) two private hospitals in Mauritius. The
assets will be tenanted by Polyclinique de L'Ouest Ltee. ("PDL"), at an initial annual
gross rental yield of 10.5%, on a triple net basis for a term of 15 years by way of Euro-
based rentals escalating annually at a minimum rate of 2.0% and guaranteed by Fonds
de Solidarite Africain ("FSA").
1.2. FSA is a multilateral financial institution established in 1976 and consisting of 14
member states, including Mauritius. The FSA (total asset value of c.US$110
million) facilitates productive investment projects in the public and private sectors
by means of providing the necessary access to finance and guarantees.
1.3. PDL have signed an operations and management agreement with Artemis
Medicare Services Ltd ("Artemis"), a well-established and recognised company
established by the Apollo Tyres Group in India, to operate the St Helene and
Coromandel Hospitals. Artemis currently owns a 400 bed multi-speciality state-
of-the-art hospital in Delhi that holds a Joint Commission International (JCI)
accreditation and which was established and has been operating successfully
since 2007. Artemis Hospital is considered a pioneer of healthcare systems in
India, led by top of the line medical technology and equipment. It was also the
first hospital in Delhi to get NABH accreditation within 3 years of its start up.
Artemis will be the operator for both hospitals.
1.4. PDL, to which Grit will contract as lessee (in conjunction with Artemis as
management operator) was initially incorporated in 2007 and comprises of long-
standing medical practitioners and industry professionals with a deep knowledge
of and successful track record in the Mauritian healthcare sector.
1.5. The transaction includes pre-funding in the delivery phase of the project, thereby
enabling the Company to secure attractive upfront acquisition prices to be
effective upon each asset's successful completion. This strategy forms a key part
of the Group's target to achieve increased net asset value growth over the
medium term.
1.6. The total build cost for both hospitals is expected to equate to US$36,654,938
with Grit pre-funding a total of US$31,623,005 and Hodari, as the developer,
funding up to US$5,031,933. Upon completion, Grit will acquire up to 86.6% of
both assets with prefunding loans being repaid, refinanced or restructured
1.7. Given the lack of fully-fledged cancer treatment services locally, the Coromandel
Hospital (as defined below) is targeting a unique offering with a specialised
state-of-the-art oncology unit. Under the partnership with Artemis, Mauritian patients
will have access to medical support related to Oncology treatment of an international
standard, and which is currently not available locally.
1.8. The transaction was achieved through GSL:
1.8.1. entering into a forward share subscription agreement ("St Helene
Subscription Agreement") with Falcon Property Holdings Co Limited
("FPH"), and St Helene Clinic Co Ltd ("St Helene"), a wholly-owned subsidiary
of FPH and the owner of the property situated in the district of Plaines
Wilhems, at a place called Curepipe of sixty two Perches measuring 2 616.94 square meters,
as evidenced by title deed registered and transcribed in
TV1423/04 ("St Helene Land"); and
1.8.2. entering into a forward share subscription agreement ("Coromandel
Subscription Agreement") with FPH, and Coromandel Hospital Co Ltd
("Coromandel"), a wholly-owned subsidiary of FPH and the owner of the
leasehold land known as Lot No. B measuring 8 968 square meters, as
denoted by PIN 1714610183.2019 by the Ministry of Housing and Lands, in
the Plaines Wilhems District known as Coromandel Industrial Estate
("Coromandel Land"). The leasehold land is held by the Development Bank
of Mauritius ("DBM") and was leased to Coromandel effective as from 29th August 2019,
with lease reference number IE1444.
1.9. In addition to the St Helene Subscription Agreement and the Coromandel
Subscription Agreement, the Company, through GSL, also -
1.9.1. entered into a loan agreement ("St Helene Loan Agreement") with St Helene
in terms of which the Company agreed to provide St Helene with a loan in the
amount of US$10,905,759 ("Grit St Helene Loan") for the purpose of
developing the St Helene Land by constructing a private hospital ("St Helene
Hospital") on the St Helene Land ("St Helene Development"); and
1.9.2. entered into a loan agreement ("Coromandel Loan Agreement") with
Coromandel in terms of which the Company agreed to provide Coromandel
with a loan in the amount of US$20,717,246 ("Grit Coromandel Loan") for
the purpose of developing the Coromandel Land by constructing a private
hospital ("Coromandel Hospital") on the Coromandel Land ("Coromandel
Development").
1.10. Both St Helene and Coromandel will appoint Altus Investments Limited, a
member of the Hodari Africa Proprietary Limited ("Hodari") group of companies,
as development manager ("Development Manager") responsible for the
execution of the St Helene Development and the Coromandel Development
(together, the "Developments or Projects"). The Development Manager will
also partially fund the St Helene Development and the Coromandel Development
through two separate loans totalling up to US$5,031,933 million.
1.11. The Development Manager and FPH will assume the primary delivery risk
associated with the Projects as per the agreed scope and upon terms as
contained in the Development Management Agreements ("Development
Agreements") signed between the Development Manager, FPH, St Helene and
Coromandel. The Development Agreements contain key commercial terms
related to the management and handover of the Projects by the Development
Manager and FPH, which successfully mitigate the delivery risk on the Projects.
Grit will take up ownership upon successful completion of the St Helene
Development and the Coromandel Development according to the terms of these
Development Agreements.
1.12. In terms of the St Helene Subscription Agreement, the Company will subscribe
for 86.6% of the issued share capital of St Helene for a subscription price of
US$6,470,000 ("St Helene Subscription Consideration") once the St Helene
Development has been completed ("St Helene Subscription"). The balance
(13.4%) of the issued share capital of the St Helene will be held by FPH and
represents the St Helene land contribution by FPH, which has been assigned a
value of $1,000,000.
1.13. The St Helene Subscription Consideration will be used to repay the loan from
Hodari in full (related to the St Helen Development) and to repay a portion of the
Grit St Helene Loan. The remaining balance of the Grit St Helene Loan will be
settled through refinanced bank debt targeting an LTV of 40%.
1.14. Similarly, in terms of the Coromandel Subscription Agreement, the Company will
subscribe for 86.6% of the issued share capital of Coromandel for a subscription
price of US$647 ("Coromandel Subscription Consideration"), once the
Coromandel Development has been completed ("Coromandel Subscription").
The balance (13.4%) of the issued share capital of Coromandel will be held by
FPH through nominal shares worth US$100.
1.15. The Grit Coromandel Loan and the loan from Hodari (pertaining to the
Coromandel Development) will be refinanced in full through either bank debt,
targeting an LTV of 40%, and a Grit shareholder loan.
1.16. FPH will have an option to increase its stake in St Helene and Coromandel to a
maximum of 25 percent within 2 years of completion of the Developments
through the contribution of additional equity.
1.17. Once the St Helene Development and the Coromandel Development (together,
the "Developments or Projects") are completed, St Helene and Coromandel,
will, respectively, lease the St Helene Hospital and the Coromandel Hospital to
PDL, at a gross initial yield of 10.5 percent on a triple net basis for a term of
15 years ("St Helene Lease Agreement" and "Coromandel Sub-Lease
Agreement", respectively). The St Helene and Coromandel Lease Agreements
will be renewable for a further 15 years. The Euro-linked rental payments will
escalate annually at a minimum rate of 2.0%.
1.18. FSA will provide a three-year rolling guarantee to St Helene and Coromandel,
over the full initial 15-year term of the lease, until a minimum earnings before
interest, tax, depreciation and amortisation ("EBITDA") to rental cover ratio of
3 (three) times is sustained on an annual basis. The FSA Guarantee being
provided in a form acceptable to Grit is a material condition of the transaction,
and provides additional security behind the lease covenant from PDL. Latest
publicly available financial results show FSA with a total asset value of c. US$110
million, out of which cash and liquid securities amounts to c. US$36 million, i.e.
32 percent of the balance sheet size, and c. US$38 million of shareholder's
equity. The size and liquidity of the FSA balance sheet alongside the
unconditional guarantee to be provided with the FSA is a key risk mitigant to the
St. Helene Lease Agreement and the Coromandel Sub-lease Agreement.
1.19. The Developments are expected to start in the first quarter of 2020 and be
completed within 18-24 months. The Projects will have a combined gross lettable
area of approximately 15,688 m2 and an estimated combined capacity of 190 beds.
2. RATIONALE FOR THE ACQUISITION
2.1. The Projects are expected to provide added diversification to Grit's overall
portfolio and an entry into the healthcare asset class, which is in line with the
long-term view of Grit taking on a measured amount of exposure to the education
and healthcare sectors. Within the healthcare space in Mauritius, the capacity
shortage is conservatively estimated at approximately 380 beds, which supports
the ability to achieve the required occupancy rates within the first months of
operation.
2.2. The Projects will be secured at an initial annual gross rental yield of 10.5 percent,
which will provide a significant income return to Grit shareholders and also the
potential for attractive net asset value growth following the acquisition.
2.3. The Projects meet the demand for additional private general healthcare in
Mauritius, as well as the critical need for international standard private oncology
treatment. Grit's involvement in the Projects is therefore very much aligned to the
Group's ongoing commitment towards corporate social investment (CSI)
initiatives across Africa.
2.4. FSA will provide St Helene and Coromandel with a rental guarantee to de-risk
the payments under the St Helene Lease Agreement and the Coromandel Sub-
Lease Agreement. The FSA, in its capacity as guarantor, will sign a definitive
guarantee agreement to the benefit of St Helene and Coromandel over the 15-
year term of the lease. The final guarantee amount will correlate with the final
lease amount that PDL will pay to St Helene and Coromandel under the St
Helene Lease Agreement and the Coromandel Sub-Lease Agreement, which will
in turn depend on the final total development costs for both hospitals. The
guarantee provides a rolling 3-year rental cover and is available for the full initial
15 years of the lease.
3. TERMS OF THE ST HELENE SUBSCRIPTION
3.1. St Helene Subscription Consideration
The St Helene Subscription Consideration of US$6,470,000 payable by the
Company to St Helene for the subscription for 86.6% of the issued share capital
of St Helene, shall be paid in cash. This will be used to partly repay the
development costs funded by the Company.
3.2. Conditions precedent to the St Helene Subscription are contained in
Annexure A to this Announcement ("St Helene Subscription Conditions Precedent")
3.3. Completion date of the St Helene Subscription
The completion date of the St Helene Subscription will be the first business day
in Mauritius following the day on which all the St Helene Subscription Conditions
Precedent have been fulfilled.
3.4. Warranties and indemnities granted in respect of the St Helene Subscription
The St Helene Subscription Agreement contains warranties and indemnities by
St Helene in favour of the Company which are standard for a transaction of this nature.
3.5. Financial information of the St Helene Subscription
3.5.1. St Helene is a special purpose vehicle which was incorporated for the sole
purpose of owning the St Helene Land.
3.5.2. The St Helene Land is currently a vacant plot of land. There is therefore no
income attributable to the St Helene Land.
3.5.3. The total development cost for the St Helene Development is estimated to be
US$13.3 million, excluding value added tax ("VAT").
4. TERMS OF THE COROMANDEL SUBSCRIPTION
4.1. Coromandel Subscription Consideration
The Coromandel Subscription Consideration of US$647 payable by the
Company to Coromandel for the subscription for 86.6% of the issued share
capital of Coromandel, shall be paid in cash. Further equity will be injected as
shareholder loans to repay the development costs funded by the Company.
4.2. Conditions precedent to the Coromandel Subscription are contained in Annexure A
to this Announcement ("Coromandel Subscription Conditions Precedent")
4.3. Completion date of the Coromandel Subscription
The completion date of the Coromandel Subscription will be the first business
day in Mauritius following the day on which all the Coromandel Subscription
Conditions Precedent have been fulfilled.
4.4. Warranties and indemnities granted in respect of the Coromandel Subscription
The Coromandel Subscription Agreement contains warranties and indemnities
by Coromandel in favour of the Company which are standard for a transaction of
this nature.
4.5. Financial information of the Coromandel Subscription
4.5.1. Coromandel is a special purpose vehicle which was incorporated for the sole
purpose of owning the Coromandel Land.
4.5.2. The Coromandel Land is vacant. There is therefore no income attributable to
the Coromandel Land.
4.5.3. The total development cost for the Coromandel Development is estimated to
be US$23.4 million, excluding VAT.
5. THE PROPERTIES
5.1. Details of the Properties are as follows:
Gross lettable Weighted average gross
Property name and address Country Sector area (m2) rental (m2 per month)
St Helene Clinic Curepipe, Mauritius Healthcare 5,727 US$20.31
Coromandel Hospital Coromandel, Mauritius Healthcare 9,961 US$20.52
5.2. Details regarding the Properties, as at the anticipated Completion Date, are set out below:
Property name and Property yield at Weighted average Weighted average lease Vacancy by gross
address Acquisition annual rental escalation expiry (years) lettable area
St. Helene Clinic 10.5% Minimum 2.0% 15.0 0%
Coromandel Hospital 10.5% Minimum 2.0% 15.0 0%
Notes:
e) In addition to the St Helene Subscription Consideration and the Coromandel
Subscription Consideration, the costs associated with the St Helene
Subscription is estimated at US$202,047 and the costs associated with the
Coromandel Subscription is estimated at US$ 354,953. No agents' commission
is payable in respect of the Acquisition.
f) The St Helene Subscription Consideration and the Coromandel Subscription
Consideration payable in respect of the St Helene Land and the Coromandel
Land, respectively, are considered to be its fair market value, as determined
by the directors of the Company. 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.
6. CLASSIFICATION OF THE ACQUISITION
6.1. The St Helene Subscription and the Coromandel Subscription have been
aggregated and accordingly constitute a category 2 transaction in terms of the
JSE Limited Listings Requirements.
6.2. The St Helene Subscription and the Coromandel Subscription constitute an
undertaking in the ordinary course of business of Grit and therefore does not fall
under the scope of Chapter 13 of the SEM Listing Rules or under any of the LSE
reporting requirements.
7. TRANSACTION ADVISOR
7.1. Safyr Capital Partners Ltd ("SCP") is a corporate finance and advisory firm
regulated by the Financial Services Commission of Mauritius and provides a
range of financial services encompassing mergers and acquisitions and capital
raising activities, including acting as sponsors and authorised representative for
IPO's and seasoned equity offerings.
7.2. SCP acted as transaction advisor to PDL, FPH, St Helene and Coromandel.
7.3. SCP has also led the discussions with the FSA in respect of the rental guarantee
to be provided to St Helene and Coromandel.
ACQUISITION OF UP TO 100% OF ORBIT WAREHOUSE, NAIROBI, KENYA
1. INTRODUCTION
1.1. Shareholders are advised that on 24 October 2019, the Company, through its
wholly-owned subsidiary Grit Services Limited (the "GSL"), entered into
heads of terms ("Orbit Heads of Terms") with Stellar Investments
Holdings Africa Limited ("Stellar Holdco"), Stellar Manufacturing Holdings Africa
Limited ("Stellar Manufacturing"), a wholly-owned subsidiary of Stellar Holdco,
and Orbit Products Africa Limited ("OPAL"), a wholly-owned subsidiary of Stellar
Manufacturing and owner of a piece of land known with the local land registry as
Land Reference Number 14817, measuring approximately 8.057 hectares,
located at Mombasa Road, Mlolongo, Nairobi, pursuant to a lease from the
Government of Kenya for a period of 99 years from 1 July 1988 (the "Property"),
with a building on the Property measuring approximately 29 243m2 ("Orbit
Manufacturing Facility").
1.2. OPAL, who will tenant the asset on a 25-year, triple net, US dollar denominated
lease, is principally involved with the manufacturing of well renowned personal
and home care products including soaps, detergents, chemicals and cleaning
solutions for blue-chip clients, including Unilever, EcoLab, Reckitt Benckiser,
Colgate-Palmolive, Clorox, PZ Cussons, Henkel and Diversey. OPAL, originally
established as a family business, has been in existence since 1977 and has
become a leading manufacturing enterprise in East Africa. Stellar HoldCo, the
parent company, is domiciled in Mauritius and is a diversified manufacturing,
trading and distribution group of significant strength and substance with a focus
on servicing the East African region.
1.3. Stellar Manufacturing is considering retaining a maximum of 20% of the issued
shares of PropCo Mauritius ("Retained Shares") in which case GSL will only
acquire 80% of the Sale Shares. Stellar Manufacturing is required to notify the
parties to the Heads of Terms in writing as to whether or not the Retained Shares
will form part of the Sale Shares, at least 15 business days prior to the Closing
Date (as defined below) for a purchase consideration as set out in paragraph 3 below.
1.4. If Stellar Manufacturing -
1.4.1. opts to retain the Retained Shares, then the Acquisition will, at closing of the
Acquisition, create a venture between GSL and Stellar Manufacturing as
shareholders of PropCo Mauritius; or
1.4.2. opts to sell 100% of the Sale Shares to GSL, then, Stellar Manufacturing will
have an option for the period between the date on which GSL becomes the
registered legal and beneficial owner of 100% of the Sale Shares ("Share
Registration Date") and the date falling one business day prior to the 11th
anniversary of the Share Registration Date, to buy back a maximum of 20%
of the issued shares in PropCo Mauritius for a consideration not exceeding
US$90,000,000, being an amount equal to or less than 29.9% of Grit's market
capitalisation as at the date of signature of the Heads of Terms ("First
Option").
2. RATIONALE FOR THE ACQUISITION
2.1 The Orbit Acquisition will provide Grit's shareholders with further diversification into
a single tenanted, light industrial real estate asset in a key market in East Africa
with the backing of a 25-year, triple net, hard currency denominated lease. East
Africa focused light industrial and logistics opportunities will form a significant focus
for the Group in the short to medium term, as Grit looks to bolster its exposure to
this asset class and region.
2.2 The Orbit Acquisition displays Grit's ability to partner with established regional
businesses who have the ability to provide strong lease covenants, with OPAL's
financial strength being supported by US dollar based manufacturing contracts with
leading blue-chip clients. The sale and lease back opportunity allows these
businesses to reinvest in their core activities and expand their product lines, driving
further efficiencies and scale to their operations.
2.3 Grit will provide asset management solutions and provide further development
capital to refurbish and expand the existing facility for OPAL. Once development is
complete, the property will be well suited to the modern requirements of the
burgeoning fast-moving consumer goods industry in Kenya, and well placed to
service OPAL's blue-chip clients in East Africa. The site is located on the southern
side of the Nairobi metropolitan area, in close proximity to the Inland Container
Depot as well as the International Airport.
3. PURCHASE CONSIDERATION
3.1. The purchase consideration payable by GSL for 100% of the Sale Shares is
US$32,207,027, exclusive of VAT, subject to adjustment as set out in paragraph
3.4 below ("Purchase Consideration").
3.2. The Purchase Consideration comprises -
3.2.1. the value of the Orbit Manufacturing Facility, being US$27,027,072, exclusive
of VAT; and
3.2.2. the value of the undeveloped land ("Undeveloped Land"), being
US$5,180,000, exclusive of VAT (if applicable), and upon which the expansion
project will be undertaken.
3.3. In the event that Stellar Manufacturing retains the Retained Shares and GSL
acquires not less than 80% of the Sale Shares or if, upon verification, the gross
lettable area of the Orbit Manufacturing Facility or the Undeveloped Land is less
than recorded in the Heads of Terms, then GSL shall reduce the value ascribed
to the Purchase Consideration proportionately and pro rata to the percentage of
all the shares in PropCo Mauritius to be acquired by it. Accordingly, if GSL
acquires only 80% of the Sale Shares, the Purchase Consideration shall be
reduced to US$25,765,621.
3.4. If the assumptions on which the Purchase Consideration is based are incorrect,
then the parties to the Orbit Heads of Terms ("Party" or "Parties", as applicable)
may agree a revised purchase consideration that shall not be more than
US$43,479,486.45, being an amount equal to 135% of the Purchase
Consideration, or to terminate the Orbit Heads of Terms after which neither Party
will have a claim against the other.
3.5. Conditions precedent applicable to the Orbit Acquisition are contained in
Annexure A to this Announcement
4. CLOSING DATE OF THE ACQUISITION
In terms of the Orbit Heads of Terms, the Orbit Acquisition will be implemented by
31 March 2020 ("Closing Date").
5. REPRESENTATIONS AND WARRANTIES
The Orbit Heads of Terms contains representations and warranties by the Parties
in favour of each other which are standard for a transaction of this nature.
6. OTHER SIGNIFICANT TERMS
6.1. Stellar Holdco will issue a 3 year rolling guarantee ("Stellar Corporate
Guarantee") to PropCo Kenya for the obligations of OPAL under the OPAL
Existing Facility Triple Net Lease (as defined below), the OPAL additional facility
Triple Net Lease and the triple net lease to be granted by PropCo Kenya as as
landlord to OPAL as tenant over the Undeveloped Land. The Stellar Corporate
Guarantee will remain in full force and effect until such time that OPAL's EBITDA
is three times the aggregate rental payable by OPAL to PropCo Kenya for the
remainder of the respective terms under the aforementioned leases. If OPAL's
EBITDA falls below three times the aggregate rental, Stellar Holdco shall
immediately re-issue the Stellar Corporate Guarantee to PropCo Kenya. OPAL
will have an obligation to report its EBITDA to GSL annually and the requirement
for Stellar Holdco to retain, cancel or reinstate the Stellar Corporate Guarantee
will be communicated annually, in writing, by GSL to OPAL and Stellar Holdco.
6.2. Stellar Manufacturing and Stellar Holdco agreed that for a period of 90 days from
the date of signature of the Orbit Heads of Terms, they will not -
6.2.1. enter into any agreement with any person (other than GSL or an entity
controlled by Grit) regarding the acquisition of the Sale Shares and
development of the Additional Facility (as defined below in Annexure A); or
6.2.2. make available any information relating to the Orbit Acquisition to any person
(other than its advisors), including any prospective purchaser or developer.
6.3. GSL shall grant Stellar Manufacturing an option to buy back the Sale Shares for
a consideration not exceeding US$90,000,000, as at the date of signature of the
Orbit Heads of Terms, which option may only be exercised during the period
falling between the 11th anniversary of the Closing Date and the date falling 180
calendar days thereafter ("Second Option").
6.4. Subject to PropCo Kenya and OPAL entering into the OPAL Additional Facility
Triple Net Agreement for Lease (as defined below) and subject to GSL being
satisfied with the commercial feasibility for the Additional Facility, the Parties
agree in principle, that GSL will provide the development financing for the
intended development of the Additional Facility, in the proposed amount of
US$8,000,000, exclusive of VAT, by way of a shareholders' loan.
7. THE PROPERTY
7.1. Details of the Property are as follows:
Gross lettable Weighted average gross
Property name and address Country Sector area (m2) rental (m2 per month)
Plot No LR 1504/12, Registration District of Machakos,
locality of NW of Athi River, Mombasa Road, Mlolongo, Nairobi Kenya Light industrial 29 243 US$7.12
7.2. Details regarding the Property, as at the anticipated Closing Date, are set out below:
Property yield Weighted average annual Weighted average Vacancy by gross
Property name and address at Acquisition rental escalation lease expiry (years) lettable area
Plot No LR 1504/12, Registration District of
Machakos, locality of NW of Athi River, Mombasa
Road, Mlolongo, Nairobi 9.25% 2% per annum 25 0%
Notes:
g) In addition to the Purchase Consideration, the costs associated with the
Acquisition are estimated at US$5,600,000, comprising primarily of the VAT
becoming payable under such Purchase Consideration. No agents' commission is
payable in respect of the Acquisition.
h) The Purchase Consideration payable in respect of the Property is considered to
be its fair market value, as determined by the directors of the Company. 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.
8. FINANCIAL INFORMATION OF THE ACQUISITION
8.1. PropCo Mauritius is a special purpose vehicle which was incorporated for the
sole purpose of holding 100% of the shares in PropCo Kenya who, in turn, will
acquire the Property and therefore has no trading history or asset value.
8.2. Accordingly, the value attributable to the Property by Grit for purposes of the
Acquisition is US$32,207,027.
8.3. OPAL has been conducting its business on the Property since it acquired the
Property. The Property has therefore not generated any income or realised any profits.
9. CLASSIFICATION OF THE ACQUISITION
9.1. The Acquisition, First Option and Second Option constitutes category 2 transactions
in terms of the JSE Limited Listings Requirements.
9.2. The Acquisition, First Option and Second Option constitute undertakings in the
ordinary course of business of Grit and therefore does not fall under the scope
of Chapter 13 of the SEM Listing Rules or under any of the LSE reporting requirements.
VOLUNTARY ANNOUNCEMENT: DEVELOPMENT OF ADDITIONAL UNITS AT VDE HOUSING ESTATE IN TETE, MOZAMBIQUE
Grit through its subsidiary company, Delta Tete Limitada, is the owner of 142
corporate accommodation units over 25 hectares in Tete, Mozambique. These
units were originally developed by Vale Dos Embondeiros Limitada ("VDE") and
are now fully occupied and leased by Vale Mocambique Limitada ("Vale") (102 units)
and Barloworld (40 units).
Due to additional demand from Vale, Grit has appointed VDE as development
manager on a turnkey development contract to construct an additional 60
accommodation units on available land already owned by Grit and included within
the above 25 hectares ("Development"). The contract has a total development
value of US$13.7 million. Based on the agreement between Grit and VDE, the
Company is only obliged to take transfer of the units once it is satisfied that the
units are of an acceptable standard.
Furthermore, on 30 August 2019, Vale signed a 5 year US dollar lease on the
additional units. The first 20 of the units were completed and delivered to Vale on
1 September 2019 with the remaining units to be delivered over the course of the
fourth quarter of 2019.
The Development is not considered a transaction and not categorizable in terms
of the JSE Limited Listings Requirements and the information contained in this
announcement has been voluntarily disclosed by the Company.
The Development constitutes an undertaking in the ordinary course of business of
Grit and therefore does not fall under the scope of Chapter 13 of the SEM Listing
Rules or under any of the LSE reporting requirements.
ANNEXURE A: CONDITIONS PRECEDENT
Acquisition of 50% of PWC and Huawei Head Office conditions precedent:
1. The Infinity Tower Acquisition is subject to the fulfilment of the following
conditions ("Infinity Tower Conditions Precedent") -
1.1. Grit conducting a legal, financial, taxation and commercial due diligence
investigation on Infinity Tower and providing a letter confirming that it is
satisfied with the outcome of the due diligence investigation;
1.2. the completion of a formal valuation by an independent third party RICS-
approved valuer acceptable to the CH Group, Goldkey, Cantonments City,
Infinity Tower and Grit (together the "Infinity Tower HoT Parties") confirming
that the open market value of the Infinity Tower Property is equal to or more
than the value attributed to it by Grit in computing the purchase consideration;
1.3. the Infinity Tower HoT Parties agreeing, signing and exchanging a detailed and
legally binding investment agreement incorporating all the terms of the Infinity
Tower Acquisition ("Infinity Tower Investment Agreement");
1.4. the Infinity Tower HoT Parties agreeing, signing and exchanging a detailed and
legally binding joint venture agreement to regulate their relationship with each
other and certain aspects of Infinity Tower's dealings;
1.5. Grit successfully managing to raise the requisite funds required to implement
the Infinity Tower Acquisition on terms and conditions acceptable to Grit;
1.6. the Infinity Tower HoT Parties mutually agreeing an adjustment to the
purchase consideration determined (if any) in light of the completion of the due
diligence investigation that Grit wishes to conduct for an amount up to 10% of
the purchase consideration;
1.7. the Infinity Head Lease being entered into between Infinity Tower (as landlord)
and CH Group (as tenant) in a form acceptable to the Infinity Tower HoT
Parties;
1.8. the appointment of Grit or a nominee of Grit, effective post the implementation
of the Infinity Tower Acquisition, to provide strategic asset management
services to Infinity Tower at a net rate of 0.1 per cent. of Infinity Tower's gross
asset value to be paid by Denton Property Management Service, the property
manager for the Infinity Tower Property, to Grit pursuant to an agreement in a
form acceptable to the Infinity Tower HoT Parties;
1.9. external bank debt being raised to refinance Infinity Tower's existing external
debt on terms and condition acceptable to the Infinity Tower HoT Parties;
1.10. approval of the final form of the documents in connection with the Infinity
Tower Acquisition by the board of directors and investment committee of Grit;
1.11. approval of the final form of the documents in connection with the Infinity
Tower Acquisition by the board of directors and investment committee of each
of CH Group, Goldkey, Cantonments City and Infinity Tower;
1.12. each of the Infinity HoT Parties' (other than Grit's) warranties provided
in the Infinity Tower Investment Agreement being true and accurate at the
Infinity Tower Acquisition Completion Date and each Infinity Tower HoT Party
(other than Grit) not otherwise being in breach of its obligations under the
Infinity Tower Investment Agreement;
1.13. there being no material adverse change in the business, operations,
assets, position (financial, trading or otherwise), profits or prospects of Infinity
Tower between the date of signature of the Infinity HoT and the Infinity Tower
Acquisition Completion Date;
1.14. no contract, licence or financial agreement that materially affects the business
of Infinity Tower being terminated or materially amended between the date of
signature of the Infinity HoT and the Infinity Tower Acquisition Completion
Date;
1.15. the resignation of directors of Infinity Tower with effect from the Infinity Tower
Acquisition Completion Date, without compensation for loss of office or
otherwise and the appointment of 2 directors as representatives of Grit (or
such other number which results in each of Cantonments City and Grit having
the same number of representatives as directors of Infinity Tower immediately
following the Infinity Tower Acquisition Completion Date);
1.16. Cantonments City providing Grit with forecast management accounts for
Infinity Tower in respect of the period to the Infinity Tower Acquisition
Completion Date, and such accounts being satisfactory to Grit;
1.17. each of the Infinity HoT Parties (other than Grit) delivering an independent
legal opinion, in a form satisfactory to Grit, confirming that it has the requisite
capacity to enter into the Infinity Tower Investment Agreement;
1.18. any shareholder resolutions and board resolutions required for the allotment
and issue of the Infinity Acquisition Shares being duly passed by
Cantonments City in its capacity as the sole shareholder of Infinity Tower, or
the board of directors of Infinity Tower (as applicable);
1.18.1. no government or other person having -
1.18.2. commenced, or threatened to commence, any proceedings or
investigation for the purpose of prohibiting or otherwise challenging or
interfering with the Infinity Tower Acquisition;
1.18.3. taken or threatened to take any action as a result, or in anticipation, of
the Infinity Tower Acquisition that would be inconsistent in any material
respect with any of the warranties in the Infinity Tower Investment
Agreement; or
1.18.4. enacted or proposed any legislation (including any subordinate
legislation) or order, or imposed any condition which would prohibit,
materially restrict or materially delay the implementation of the Infinity
Tower Acquisition; and
1.19. Cantonments City successfully completing the development of the Infinity
Tower Property in line with international construction best practices and
commercially acceptable industry standards, and according to a development
handover checklist which shall be agreed between the Infinity Tower HoT
Parties and annexed to the Infinity Tower Investment Agreement.
1.20. In terms of the Infinity HoT, the Infinity Tower Acquisition Conditions
Precedent must be fulfilled (or waived) by no later than 31 December 2019
(or any such future date that will be mutually agreed by the Infinity Tower HoT
Parties. If the Infinity Tower Acquisition Conditions Precedent are not duly
fulfilled (or waived) by 31 December 2019, Grit may terminate negotiations in
relation to the Infinity Tower Acquisition without incurring any liability to the
other Infinity Tower HoT Parties in relation to such termination.
1.21. The Infinity HoT are intended to create a commercially binding
obligation to proceed with the Infinity Tower Acquisition. However, the
obligation to proceed with the Infinity Tower Acquisition will not arise if the
Infinity Tower Acquisition Conditions Precedent have not been fulfilled.
Conditions precedent applicable to the Portman House Acquisition
2. The Portman House Acquisition is subject to the fulfilment of the following
conditions ("Portman House Acquisition Conditions Precedent") -
2.1. Grit conducting a legal, financial, taxation and commercial due diligence
investigation on Infinity Tower and providing a letter confirming that it is
satisfied with the outcome of the due diligence investigation;
2.2. the completion of a formal valuation by an independent third party RICS-
approved valuer acceptable to the CH Group, Goldkey, Cantonments City,
Portman House and Grit (together the "Portman House HoT Parties")
confirming that the open market value of the Portman House Property is equal
to or more than the value attributed to it by Grit in computing the purchase
consideration;
2.3. the Portman House HoT Parties agreeing, signing and exchanging a detailed
and legally binding investment agreement incorporating all the terms of the
Portman House Acquisition ("Portman House Investment Agreement");
2.4. the Portman House HoT Parties agreeing, signing and exchanging a detailed
and legally binding joint venture agreement to regulate their relationship with
each other and certain aspects of Portman House's dealings;
2.5. Grit successfully managing to raise the requisite funds required to implement
the Portman House Acquisition on terms and conditions acceptable to Grit;
2.6. the Portman House HoT Parties mutually agreeing an adjustment to the
purchase consideration for the Portman House Acquisition Shares in light of
the completion of the due diligence investigation that Grit wishes to conduct for
an amount up to 10% of the purchase consideration;
2.7. the Portman House Head Lease being entered into between Portman House
(as landlord) and CH Group (as tenant) in a form acceptable to the Portman
House HoT Parties;
2.8. the appointment of Grit or a nominee of Grit, effective post the implementation
of the Portman House Acquisition, to provide strategic asset management
services to the Portman House at a net rate of 0.1 per cent. of Portman House's
gross asset value to be paid by Denton Property Management Service, the
property manager for the Portman House Property, to Grit pursuant to an
agreement in a form acceptable to the Portman House HoT Parties;
2.9. external bank debt being raised to refinance Portman House's existing external
debt on terms and condition acceptable to the Portman House HoT Parties;
2.10. approval of the final form of the documents in connection with the Portman
House Acquisition by the board of directors and investment committee of
Grit;
2.11. approval of the final form of the documents in connection with the Portman
House Acquisition by the board of directors and investment committee of
each of CH Group, Goldkey, Cantonments City and Infinity Tower;
2.12. each of the Portman House HoT Parties' (other than Grit's) warranties
provided in the Portman House Investment Agreement being true and
accurate at the Portman House Acquisition Completion Date and each
Portman House HoT Party (other than Grit) not otherwise being in breach of
its obligations under the Portman House Investment Agreement;
2.13. there being no material adverse change in the business, operations, assets,
position (financial, trading or otherwise), profits or prospects of Portman
House between the date of signature of the Portman House HoT and the
Portman House Acquisition Completion Date
2.14. no contract, licence or financial agreement that materially affects the
business of Portman House being terminated or materially amended
between the date of signature of the Portman House HoT and the Portman
House Acquisition Completion Date;
2.15. the resignation of directors of Portman House with effect from the Completion
Date without compensation for loss of office or otherwise and the
appointment of 2 directors as representatives of Grit (or such other number
which results in each of Cantonments City and Grit having the same number
of representatives as directors of Portman House immediately following the
Portman House Acquisition Completion Date);
2.16. Cantonments City providing Grit with forecast management accounts for
Portman House in respect of the period to the Portman House Acquisition
Completion Date and such accounts being satisfactory to Grit;
2.17. each of the Portman House HoT Parties (other than Grit) delivering an
independent legal opinion, in a form satisfactory to Grit, confirming that it has
the requisite capacity to enter into the Portman House Investment
Agreement;
2.18. any shareholder resolutions and board resolutions required for the allotment
and issue of the Portman House Acquisition Shares being duly passed by
Cantonments City in its capacity as the sole shareholder of Portman House,
or the board of directors of Portman House (as applicable); and
2.18.1. no government or other person having -
2.18.1.1. commenced, or threatened to commence, any proceedings or
investigation for the purpose of prohibiting or otherwise challenging
or interfering with the Portman House Acquisition;
2.18.1.2. taken or threatened to take any action as a result, or in
anticipation, of the Portman House Acquisition that would be
inconsistent in any material respect with any of the warranties in
the Portman House Investment Agreement; or
2.18.1.3. enacted or proposed any legislation (including any subordinate
legislation) or order, or imposed any condition which would
prohibit, materially restrict or materially delay the implementation
of the Portman House Acquisition.
2.19. In terms of the Portman House HoT, the Portman House Acquisition
Conditions Precedent must be fulfilled (or waived) by no later than 31
December 2019 (or any such future date that will be mutually agreed by the
Portman House HoT Parties. If the Portman House Acquisition Conditions
Precedent are not duly fulfilled (or waived) by 31 December 2019, Grit may
terminate negotiations in relation to the Portman House Acquisition without
incurring any liability to the other Portman House HoT Parties in relation to
such termination.
2.20. The Portman House HoT are intended to create a commercially
binding obligation to proceed with the Portman House Acquisition. However,
the obligation to proceed with the Portman House Acquisition will not arise if
the Portman House Acquisition Conditions Precedent have not been fulfilled.
Conditions precedent to the St Helene Subscription
3. The St Helene Subscription is subject to the fulfilment or waiver of the following
conditions precedent ("St Helene Subscription Conditions Precedent"):
3.1. the final development handover checklist being submitted to and approved by
the Company;
3.2. the St Helene Lease Agreement with PDL being effective and having commenced;
3.3. the requisite approvals from the Prime Minister's Office and the Economic
Development Board having been duly received in relation to shareholding by
non-Mauritian nationals;
3.4. written confirmation having been received from St Helene that the St Helene
Lease Agreement has come into effect following the issuance of the taking
over certificate by the Development Manager;
3.5. the Company and FPH entering into a shareholders' agreement in respect of
St Helene, concurrent with execution of the St. Helene Subscription;
3.6. Artemis, as operator of the St Helene Hospital, and St Helene being granted,
to the satisfaction of the Company, all regulatory clearances and operating
licenses for Artemis to operate the St Helene Hospital;
3.7. St Helene having been granted and issued with an occupancy license for
Artemis and PDL to be in a position to legally occupy the St Helene Hospital;
3.8. St Helene holding valid insurance policies, on terms and conditions acceptable
to the Company, covering the risks associated with the ownership and
operation of the St Helene land and St Helene Hospital and the medical
equipment of the St Helene Hospital; and
3.9. completion of a due diligence exercise in respect of St Helene to the
satisfaction of the Company.
3.10. Should the St Helene Subscription Conditions Precedent not be fulfilled
or waived, St Helene and FPH agree that the St Helene Subscription
Agreement shall not become effective and shall be not enforceable.
Conditions precedent to the Coromandel Subscription
4. The Coromandel Subscription is subject to the fulfilment or waiver of the following
conditions precedent ("Coromandel Subscription Conditions Precedent"):
4.1. the final development handover checklist being submitted to and approved by
the Company;
4.2. the Coromandel Sub-Lease Agreement with PDL being effective and having
commenced;
4.3. the requisite approvals from the Prime Minister's Office and the Economic
Development Board having been duly received in relation to shareholding by
non-Mauritian nationals;
4.4. written confirmation between Coromandel and the sub-lessee having been
received confirming that the Sub-Lease Agreement has come into effect
following the issuance of the taking over certificate by the Development
Manager;
4.5. the Company and FPH entering into a shareholders' agreement in respect of
Coromandel;
4.6. in terms of the land lease agreement over the Coromandel Land between
Coromandel and DBM, DBM acknowledges that it has no objection to
Coromandel entering into the Sub-Lease Agreement with PDL and/or the
design documents upon which the Coromandel Hospital will be constructed;
4.7. Artemis, as operator of the Coromandel Hospital, and Coromandel being
granted, to the satisfaction of the Company, all regulatory clearances and
operating licenses for Artemis to operate the Coromandel Hospital;
4.8. Coromandel holding valid insurance policies, on terms and conditions
acceptable to the Company, covering the risks associated with the ownership
and operation of the Coromandel land and St Helene Hospital and the medical
equipment of the St Helene Hospital; and
4.9. completion of a due diligence exercise in respect of Coromandel to the
satisfaction of the Company.
4.10. Should the Coromandel Subscription Conditions Precedent not be fulfilled or
waived, Coromandel and FPH agree that the Coromandel Subscription
Agreement shall not become effective and shall be not enforceable
Conditions Precedent to the Orbit Warehouse Transaction
5. The Orbit Heads of Terms is subject to the fulfilment or waiver of the following
conditions precedent ("Orbit Warehouse Conditions Precedent") by no later than
30 November 2019 or such other date that may be agreed to in writing by the
Parties ("First Long Stop Date") -
5.1. GSL providing its written confirmation that it has satisfactorily completed a
technical, legal, financial, tax and corporate due diligence on PropCo
Mauritius, PropCo Kenya, OPAL, Stellar Manufacturing, Stellar Holdco and the
Property;
5.2. any lenders (including NCBA Bank Kenya Limited) to Orbit Chemicals
Industries Limited, having issued a confirmation by way of a signed letter, that
they have no objection to the Acquisition, with any conditions that they may
have set out in such letter being reasonably acceptable to GSL;
5.3. GSL successfully raising the requisite funds required to implement the
Acquisition on terms and conditions acceptable to it and GSL issuing a letter
to Stellar Manufacturing undertaking to pay the Purchase Consideration to
Stellar Holdco on the Closing Date (as defined below);
5.4. PropCo Kenya, GSL and OPAL agreeing in writing to -
5.4.1. the designs and specifications of the refurbishment of the Orbit
Manufacturing Facility (together with the total cost (including all applicable
taxes) of undertaking such refurbishment, it being agreed that such
refurbishment shall relate to replacement of the roof of the Orbit
Manufacturing Facility;
5.4.2. the designs and specifications of an additional industrial warehouse
facility and/or office buildings to be developed on the Undeveloped Land
comprising of approximately 15 185 sqm of gross lettable area
("Additional Facility"), it being agreed that changes to such designs and
specifications may be mutually agreed between the Parties prior to PropCo
Kenya applying for all necessary approvals required from any competent
authority or applying for extension of any existing approvals from the
relevant competent authority (together with the total cost of undertaking
the development of such Additional Facility) provided that such changes
will not reduce the yield targeted to be achieved by GSL;
with such designs and specification being attached as appendices to the
applicable agreement to lease to be granted by PropCo Kenya (as landlord)
to OPAL (as tenant) over the Undeveloped Land and on which PropCo
Kenya will develop the Additional Facility ("OPAL Additional Facility
Triple Net Agreement for Lease") and the triple net lease to be granted
by PropCo Kenya (as landlord) to OPAL (as tenant) over the Orbit
Manufacturing Facility ("OPAL Existing Facility Triple Net Lease");
5.4.3. the Parties agreeing the form and content of the documents and
agreements to be entered into by the relevant parties thereto for purposes
of effecting the Acquisition ("Transaction Documents"); and
5.4.4. the board of directors of GSL, Stellar Holdco, Stellar Manufacturing,
PropCo Mauritius, PropCo Kenya and OPAL, approving the Acquisition
and the Transaction Documents to which they are a party.
5.5. If any of the Heads of Terms Conditions Precedent is not fulfilled or waived by
the First Long Stop Date, or such further date as may be mutually agreed in
writing between the Parties, then -
5.5.1. the Heads of Terms will not come into force or effect and the status quo
ante will be restored as near as may be; and
5.5.2. no Party will have a claim against the other except for such claims which
may arise from a breach of any other provisions of the Heads of Terms by
which they remain bound.
5.5.3. The Parties shall, within 14 days of the First Long Stop Date, execute
the Transaction Documents.
5.6. Conditions Precedent to the implementation of the Orbit Acquisition
5.6.1. The Orbit Acquisition is subject to the conditions precedent ("Orbit
Acquisition Conditions Precedent") that by no later than 31 March 2020
or such other date that may be agreed to in writing by the Parties ("Second
Long Stop Date"), Stellar Manufacturing and GSL procuring the
Competition Authority of Kenya's (and if necessary the approval of the
COMESA Competition Authority and the East African Community
Competition Authority) approval for the transfer of the Sale Shares to GSL,
it being agreed by the Parties that if the approval of the COMESA
Competition Authority is deemed necessary, then to the extent permitted
by law, the Parties shall obtain such approval as a condition subsequent,
as soon as practicably possible following closing of the Acquisition.
5.6.2. If the Orbit Acquisition Condition Precedent is not fulfilled or waived by
the Second Long Stop Date, or such further date that may be mutually
agreed in writing between the Parties, then -
5.6.2.1. the Transaction Documents will not come into force or effect, save
to the extent necessary and expressly set out therein; and
5.6.2.2. no Party shall have a claims against the other.
Date: 25/10/2019 09:30:00
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