THIS ANNOUNCEMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
The definitions and interpretations commencing on page 4 of this Announcement apply to this entire document, including the cover page, except where the context indicates a contrary intention.
TURNSTAR HOLDINGS LIMITED
Incorporated in the Republic of Botswana
UIN: BW00000973397
ANNOUNCEMENT
relating to the Related Party Transaction arising from Turnstar Holdings' acquisition of the Lotsane Junction Mall from G.H. Group Proprietary Limited.
Independent Expert
Legal Advisor&Broker
Reporting Accountants
Date of issue: 04 June 2024
CORPORATE INFORMATION
Company Secretaries | Registered Offices | Principal Place of Business |
Grant Thornton Business | Grant Thornton Business | Centre Management Offices, |
Services (Pty) Ltd | Services (Pty) Ltd | Game City Retail Centre, |
Plot 50370, Acumen Park, | Plot 50370, Acumen Park, | Gaborone, Botswana |
Fairgrounds | Fairgrounds | |
P O Box 1157, Gaborone, | P O Box 1157, Gaborone, | |
Botswana | Botswana |
Legal Advisor | Independent Expert | Broker |
Mckee Commercial Law (in | Crowe Goel & Associates | Imara Capital Securities (Pty) |
association with Akheel | Plot 122, Unit 2, Gaborone | Ltd |
Jinabhai & Associates) | International Finance Park, | Plot 54353, 3rd Floor, Office |
Plot 2542, Extension 9, | Kgale Hill | 3a, Central Business District |
Gaborone | P O Box 60552, Gaborone, | Private Bag 173, Gaborone, |
P.O Box 404185, Metsef, | Botswana | Botswana |
Botswana |
Date of Incorporation: 07 November 2000 Place of Incorporation: Botswana
DEFINITIONS
Announcement | means this announcement |
Board | means the board of directors of the Company |
BURS | means the Botswana Unified Revenue Service |
BSE | means the Botswana Stock Exchange |
Cautionary Statement | means the cautionary statement issued by Turnstar and |
published by the BSE on 26 February 2024 | |
Company or Turnstar | means Turnstar Holdings Limited (BW00000973397) |
Conditions Precedent | means the conditional terms or conditions under the Sale |
Agreement which must be satisfied to make the Sale | |
Agreement effective | |
Company Secretaries | means Grant Thornton Business Services Proprietary Limited |
(BW00000054968) | |
Consideration | means BWP P123,000,000.00 (One Hundred and Twenty- |
Three Million Pula) | |
Directors | Means the Directors of Turnstar, as more fully set out in |
Annexure 9 hereto | |
Due Diligence | means the due diligence conducted by the Chief Financial |
Officer and Chief Operating Officer of Turnstar, as is more | |
fully set out in Annexure 5 hereto | |
General Meeting | means the general meeting, as is more fully set out in Clause |
6 hereto | |
GHG | means G.H. Group Proprietary Limited (BW00000593092) |
Listings Requirements | means the equity listings requirements as published by the |
BSE | |
Lotsane Junction Mall | means the Properties and related commercial letting |
enterprise, being sold by GHG and purchased by Turnstar |
Lotsane Mixed Design | means the area development plan, as is more fully set out in |
Brief or Palapye Authority | Annexure 3 hereto |
Master Plan | |
Properties | means collectively Tribal Lot 19668 Palapye and Tribal Lot |
19674 Palapye | |
Reporting Accountant | means the reporting accountant as set out in paragraph 8 |
below. | |
Sale Agreement | has the meaning set out in paragraph 1.1 of Section A |
Shareholder | means a shareholder of Turnstar |
Transaction | means the proposed acquisition of Lotsane Junction Mall by |
Turnstar from GHG |
SECTION A - THE TRANSACTION
1. INTRODUCTION AND PURPOSE OF THIS ANNOUNCEMENT
- In the Cautionary Statement, the Shareholders were advised that Turnstar and GHG had entered into a conditional agreement, in terms of which Turnstar had offered to acquire a commercial letting enterprise from GHG and it's two underlying assets. A copy of the conditional agreement is annexed hereto and marked Annexure 1 ("Sale Agreement")
- The proposed Transaction is subject to the fulfilment, or waiver (where applicable), of certain Conditions Precedent including, inter alia, those as set out in paragraph 3.2.
- As at the date of this Announcement:
- GHG is a material Shareholder in Turnstar holding 80,148,355 shares which represents a 14% interest in the issued share capital of the Company.
- Mr. Gulaam Abdoola, being the Managing Director of Turnstar, is a shareholder and director in GHG .
- The BSE has determined that Transaction will be a Related Party Transaction as defined in Listing Requirement 7.1
- In terms of 7.5 of the BSE Equity Listings Requirements the Company is required to issue an Announcement setting out the details of the Transaction as more fully prescribed therein.
- In terms of the 7.4 (b) BSE Equity Listings Requirements, the independent Shareholders must approve the proposed Transaction by way of an ordinary resolution prior to the completion of the Transaction.
- The purpose of this Announcement is to provide sufficient information to the BSE and to the general public to evaluate the effects of the proposed related party Transaction on the Company and to make a properly informed decision thereon.
2. RATIONALE FOR THE TRANSACTION
2.1. The Board, for the reasons set out below, is confident that the proposed Transaction is fair and reasonable as far as the Shareholders are concerned, and will benefit Turnstar.
2.2. The Consideration that will be paid for Lotsane Junction Mall represents good value as more fully demonstrated by reference to the independent valuation report attached hereto marked Annexure 2. More specifically in reference thereto:
- the Consideration is less than the open market valuation of Lotsane Junction Mall by BWP 3, 200,00.00 (Three Million Two Hundred Thousand Pula) as determined by the said valuation, to the benefit of Turnstar.
- the insurance replacement cost, as determined by the said valuation, is BWP 184,000,000.00 (One Hundred and Eighty-Four Million Pula) and represents a 61,000,000.00 (Sixty-One Million Pula) difference as against the Consideration, to the benefit of Turnstar.
- the costs of removal and disposal of sewage, being an annual amount of BWP 800,000 (Eight Hundred Thousand Pula) per annum, and which was identified in the valuation report as a negative factor affecting the open market value of Lotsane Junction Mall, will be resolved in future when Lotsane Junction Mall is connected to the municipal sewage system. In this respect the Board has been advised by the Central District Council that it has begun laying sewerage pipelines in the area in which the Lotsane Junction Mall is situate which in future will allow for connection to municipal sewerage disposal system. This connection to the municipal sewage system will result in an annual saving of BWP 800,000.00 (Eight Hundred Thousand Pula) per annum for Lotsane Junction Mall and will represent an upside or benefit to the business and ultimately the Shareholders.
- The combined properties at Lotsane Junction Mall currently boast an impressive 92% tenancy rate, which exceeds market standards. This high occupancy rate is anticipated to yield substantial rental income. Additionally, Lotsane Junction Mall has attracted solid interest from reputable international brands for the establishment and operation of a drive-through restaurant franchise and a motor vehicle tire and fitment centre, and which such establishment are planned to be situated outside the main mall area, thereby expanding the tenantable space and contributing to increased rental revenue.
- The Lotsane Junction Mall is placed in an area of prime potential, which according to paragraph 8.1 of the Lotsane Mixed Design Brief (also known as the Palapye Master Plan) will be adjacent to the proposed Palapye Central Business District. A copy of the Lotsane Mixed Design Brief is contained in Annexure 3 of this Announcement.
- The Board further believes that the proposed Transaction provides a unique opportunity to acquire an exceptional quality asset that rarely comes to market.
2.6. The proposed Transaction will grow Turnstar's portfolio value to over BWP 2.850 billion and increase its total portfolio size to approximately 160,000 m2 of gross lettable area. This will ultimately benefit the Company and Shareholders through an increase in revenue to the Company as more fully demonstrated by the profit projections set out in paragraph 7 below.
3. DETAILS OF THE TRANSACTION
- The Properties together, comprise the Lotsane Junction Mall, a commercial letting enterprise with an 92% rate of occupancy, per the latest valuation report available as at the date of this Announcement.
- In terms of the Sale Agreement, the Company will acquire the Properties and related commercial letting enterprise by way of an asset sale and on a going concern basis.
- The acquisition price for Lotsane Junction Mall will be the Consideration and the Transaction is subject to satisfaction or waiver of a number of conditions precedent including but not limited to;
- approval by the Shareholders
- approval by the Competition and Consumer Authority;
- requisite approvals under the Tribal Land Act;
- the passing of all necessary Board resolutions;
- the issuance of BURS tax clearance certificates for both parties; and
- the completion of a due diligence to the satisfaction of Turnstar(as is more fully set out in Clause 5 hereunder).
- Implementation of the proposed Transaction will not result in any changes to the Board or the terms of service of the Directors.
- The proposed Transaction is subject to the normal provisions, terms and warranties used in a sale of business assets.
- The salient details of Properties are, as follows:
Properties | Salient Details |
Plot No. | Tribal Lot 19668 |
Land Tenure | Memorandum of Agreement of Lease |
Property Size | 1,7836 Ha |
Plot No. | Tribal Lot 19674 |
Land Tenure | Memorandum of Agreement of Lease |
Property Size | 1,5036 Ha |
- The acquisition will be funded through a loan from a commercial bank.
- The closing date for the proposed Transaction will be the Closing Date as defined in Annexure 1.
4. RELATED PARTY TRANSACTION
- GHG is a Shareholder holding 14% shareholding in the Company.
- The BSE has deemed the proposed Transaction to be a Related Party Transaction for the purposes of the Listings Requirements.
- In terms of 7.4 of the Listings Requirements, a fairness opinion must be obtained by the Board and must be included in this Announcement to Shareholders regarding the proposed Transaction. Therefore, the Board has requested Crowe Goel & Associates to act as independent expert in terms of the Listings Requirements to provide an opinion as to whether the terms and conditions for the proposed Transaction are fair to Shareholders. The Fairness Opinion is contained in Annexure 4 of this Announcement.
- The Independent Expert opinion was authored by Mr. Sanjay Goel, a certified Auditor of Public Interest Entities, on 10 April 2024, and was authored to be incorporated into this Announcement.
- The Independent Expert has, as at the date of this Announcement, granted and has not subsequently withdrawn its' consent for the Announcement to contain the Independent Expert opinion, and for disclosure thereof to the BSE, the Shareholders and the general public as may be required. A copy of the Independent Expert's consent is annexed hereto and marked Annexure 10.
- Neither the Independent Expert nor its shareholders have any interest in Turnstar, nor in GHG. The Independent Expert does not have any right/s to subscribe for or to nominate persons to subscribe for securities in Turnstar.
4.7. GHG and its associates will be taken into account in determining a quorum at the General Meeting, but they will not exercise any votes in respect of the resolutions to be proposed at the General Meeting.
5. OPINIONS AND RECCOMMENDATIONS IN RESPECT OF THE TRANSACTION
- An independent expert, namely Crowe Goel & Associates, has, pursuant to examining all relevant and salient details of the proposed Transaction, issued an independent opinion in full support of implementation of the proposed Transaction and further confirming that the proposed Transaction is fair and reasonable in so far as the Shareholders are concerned. The independent expert's opinion is annexed hereto and marked Annexure 4.
- The Board confirms that its Chief Financial Officer and Chief Operations Officer (the "Turnstar Officers") have conducted a Due Diligence, the details of which are set out in Annexure 5 to this Announcement, in respect of the proposed Transaction. As part of the Due Diligence the Turnstar Officers submitted in respect of Lotsane Junction, to the Board for scrutiny; income and expenditure accounts for 2021-2023; a five-year financial forecast prepared over contracted leases, rental escalations and historical expense trends; a schedule of current lease and rentals; a sensitivity analysis of financial forecasts in the event of incremental increases to occupancy rates; and a brochure of Lotsane Junction.
- Per 7.4 of the Listings Requirements, the Board confirms that its investment committee (the "Investment Committee") has reviewed the Due Diligence and the terms of the proposed Transaction and have recommended same for approval. An extract of the Investment Committee's recommendation is annexed hereto as Annexure 6.
- The Board has considered the terms and conditions of the Transaction and, taking into account the opinion of the Independent Expert, the text of which is set out in Annexure 4 to this Announcement, is of the opinion that the terms and conditions of the proposed Transaction are fair to Shareholders and unanimously recommends that Shareholders vote in favour of the Transaction at the General Meeting to be convened for the purposes of considering, and, if deemed fit, approving the proposed Transaction. All of the Directors who own Shares intend to vote in favour of the resolutions to be proposed at the General Meeting.
6. GENERAL MEETING
- The General Meeting will take place at Centre Management Offices, 1st Floor, Game City Retail Mall, Gaborone, Botswana at 12 noon on 05 July 2024 to enable Shareholders to vote on the proposed resolutions contained in the Notice of General Meeting which is annexed hereto and marked Annexure 7.
- GHG will be taken into account in determining a quorum at the General Meeting but will not exercise any votes in respect of the resolutions proposed thereat.
7. FINANCIAL INFORMATION RELATING TO THE TRANSACTION
- Turnstar's auditors, who have issued the published annual reports of Turnstar for the previous three years are Ernst & Young, more particularly Mr. Francois Roos from Ernst & Young, who holds the qualification of a Certified Auditor and who is a member of the Botswana Institute of Chartered Accountants.
- The table below details the financial position of Turnstar, its prospects and the impact of the proposed Transaction on Turnstar's Statement of Profit or Loss and Statement of Financial Position.
- The Directors, collectively and individually accept full responsibility for the accuracy of all pro-forma financial information given and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made.
- The purpose of the pro-forma financial information given below, is to provide investors with information about the impact of the proposed Transaction, by illustrating how the proposed Transaction might affect the reported financial information, had the proposed Transaction taken place as at the dates provided below.
- Though every effort has been undertaken by the Directors to ensure accuracy of the pro forma financial information, such financial information ,by its nature, may not fairly present the Turnstar's financial position, changes in equity, results of operations or cash flows.
- The pro forma financial information presented is not intended to be misleading, rather it is intended to assist investors in analysing future prospects in Turnstar.
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Turnstar Holdings Limited published this content on 12 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 June 2024 13:48:05 UTC.