Listed property loan stock company ApexHi Properties on Tuesday announced the creation of a new unit structure that will result in empowerment unit holders owning 10% of the company.
ApexHi CEO Gerald Leissner said the new unit structure would introduce new C class units and provide empowerment unit holders an interest in the company at a cost of R150m.
This is a substantial saving on the R800m it would cost them if they had to buy the stake on the open market.
There would be no dilution for ApexHi's existing A and B unit holders, said Leissner.
ApexHi would issue 250-million C units to existing A and B unit holders.
"For every 100 A units we are issuing 45 C units, and for every 100 B units we are issuing 55 C units," said Leissner.
The new C units would be given to the A and B unit holders, who will be obliged to sell 30% to black economic empowerment unit holders at R2 a unit.
This would result in a black empowerment group acquiring 75-million units for R150m.
Leissner said a voting right on 30% of the C units equated to a 10% interest in ApexHi. A third of this would be sold to an empowered charitable trust.
ApexHi's total market capitalisation is about R8bn, while its A and B units are trading at a low yield in the R32 band. The same 10% interest bought on the open market would have cost an empowerment unit holder R800m.
"At present the units are trading at such a premium in relation to borrowing costs for a black empowerment transaction that it is not feasible," said Leissner.
"The only other way to do the transaction will be for current unitholders to sell a stake at a discount or the issuing of new units at a discount."
No empowerment partners had been chosen but ApexHi was in negotiations with two parties.
Leissner said the 10% acquisition was ApexHi's black economic empowerment deal at ownership level.
"We are also looking at joint ventures at property level, meaning that there may be property transactions involving a joint venture with a black economic empowerment shareholder," said Leissner.
ApexHi said it expected the C units to be created early in July.
Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge
