Tax queries delay ApexHi empowerment deal
Nick Wilson

LISTED property loan stock company ApexHi Properties said yesterday that its new C unit structure and empowerment deal had been delayed because it needed to seek clarity on the tax consequences of the new structure, as well as finalise terms of funding for empowerment.

The group said it would make an announcement about the transaction within the next two weeks.

ApexHi executive director Deon Feinblum said yesterday that the company had planned to send out a circular this week giving details of the new structure and the deal.

However, Feinblum said this had been delayed as it needed information from the South African Revenue Service (SARS) on the tax consequences of the creation of the C units for its A and B unitholders.

In addition, ApexHi also had to finalise the funding for the empowerment transaction, he said. “We’re close to a final agreement with SARS on the funding issue. SARS has indicated that it will not give rise to a capital gains tax issue,” he said.

Feinblum said ApexHi could not yet name the proposed partners in the empowerment transaction.

ApexHi announced in May that it would create a new unit structure that would result in the group’s empowerment unitholders owning 10% of the company. It said the new structure would introduce C-class units and give empowerment unit-holders the opportunity to acquire an interest in the company for R150m.

According to the proposed structure, new C units would be given to A and B unitholders who would then be obliged to sell 30% of the units to black economic empowerment unitholders at R2 a unit.

This would give an empowerment group 75-million units in the company for R150m. ApexHi said a voting right on 30% of the C units equated to a 10% interest in the company. It said the acquisition would be ApexHi’s empowerment deal at ownership level and that it would also be looking at exploring joint ventures at a property level.

This means there may be property transactions involving a joint venture with an empowerment shareholder.