TIDMGR1T
RNS Number : 0454T
Grit Real Estate Income Group
22 November 2021
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN
OR ANY OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR
RELEASE OF THIS ANNOUNCEMENT WOULD BE UNLAWFUL. PLEASE SEE THE
SECTION ENTITLED "DISCLAIMER" TOWARDS THE OF THIS ANNOUNCEMENT.
This announcement is an advertisement and does not constitute a
prospectus and investors must subscribe for or purchase any shares
referred to in this announcement only on the basis of information
contained in the prospectus to be published by Grit Real Estate
Income Group Limited (the "Prospectus") and not in reliance on this
announcement. A copy of the Prospectus will, subject to certain
access restrictions, be available for inspection on the Company's
website: www.grit.group and at the registered office of the
Company. A copy of the Prospectus will be made available for
viewing at the National Storage Mechanism at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.This
announcement does not constitute, and may not be construed as, an
offer to sell or an invitation to purchase, investments of any
description, or a recommendation regarding the issue or the
provision of investment advice by any party.
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE
REGULATION (EU NO. 596/2014) (AS AMED) AS IT FORMS PART OF UK
DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018
AND OTHER IMPLEMENTING MEASURES. UPON THE PUBLICATION OF THIS
ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN
THE PUBLIC DOMAIN.
Terms not otherwise defined in this announcement have the
meanings given to them in the Prospectus.
GRIT REAL ESTATE INCOME GROUP LIMITED
(Registered in Guernsey)
(Registration number: 68739)
LSE share code: GR1T
SEM share code: DEL.N0000
ISIN: GG00BMDHST63
LEI: 21380084LCGHJRS8CN05
("Grit" or the "Company" and, together with its subsidiaries, the "Group" )
Proposed Open Offer and Placing for up to 414,647,283 New
Ordinary Shares at US$0.52 per New Ordinary Share
Proposed acquisition of majority stakes in Gateway Real Estate
Africa Limited ("GREA") and Africa Property Development Managers
Limited ("APDM") (the "Proposed Acquisition") and connected smaller
related party transaction
and
Notice of General Meeting
The board of Directors (the "Board" or "Grit Board") of Grit
Real Estate Income Group Limited , a leading pan-African real
estate company focused on investing in and actively managing a
diversified portfolio of assets underpinned by predominantly US$
and Euro denominated long-term leases with high quality
multi-national tenants, today announces:
-- Proposed Open Offer and Placing for up to 414,647,283 New
Ordinary Shares at US$0.52 per New Ordinary Share (the " Open Offer
and Placing "), the Open Offer being on the basis of 1.3011 New
Ordinary Shares for every 1 Existing Ordinary Share held at the
Record Date (the "Open Offer Entitlement");
-- Proposed Acquisition of majority stakes in Gateway Real
Estate Africa Limited (" GREA ") and Africa Property Development
Management Limited ("APDM") (together the " Proposed Acquisition ")
and connected smaller related party transaction; and
-- the convening of a general meeting to be held on 14 December
2021 at which Shareholders will be asked to approve the Proposed
Acquisition (the " General Meeting ").
Key highlights
-- The Company is targeting an issue to raise approximately
US$215.6 million (gross) through the issue of up to 414,647,283 New
Ordinary Shares by way of the Open Offer and Placing (together, the
"Issue") at US$0.52 per New Ordinary Share (the "Issue Price").
o The Issue Price represents a premium of approximately 4 per
cent. to the average closing price across the LSE and SEM for an
Ordinary Share on 19 November 2021 (LSE: GBP0.3468; SEM: US$0.53).
The Issue Price has been set by the Directors following their
assessment of the prevailing market conditions and anticipated
demand for the New Ordinary Shares, as well as taking into account
the commercial requirements and positive financial impact on the
Grit Group of implementing the deleveraging strategy and
undertaking the Proposed Acquisition. The Grit Board believes that
the Issue Price (including the premium) is appropriate in the
circumstances.
o As at 19 November 2021, Grit had already received written
confirmation from existing Shareholders and new investors of their
intention to subscribe, in aggregate, for in excess of US$65
million pursuant to the Open Offer and Placing, and when combined
with Grit's ability to deliver Ordinary Shares in consideration for
the Proposed Acquisition, in aggregate, demand for approximately 68
per cent. of the total target Issue has been indicated.
-- The net proceeds of the proposed Open Offer and Placing are
expected to reduce Grit's overall indebtedness and leverage levels
and provide future capital for further expansion in its core and
expanded business.
o The Grit Group LTV ratio will fall from 53.1 per cent. as at
30 June 2021 to a pro forma level of 41.3 per cent. if the Issue is
subscribed to the level of the Indicated Minimum Proceeds and 33.6
per cent. if the Issue is fully subscribed.
-- For the year ended 30 June 2021, as a result of slow progress
towards the near term 45% LTV target, the Grit Board withheld the
final dividend. Should the contemplated Issue and the Proposed
Acquisition be successful, the Grit Board expects to resume
dividend payments, distributing out of net operating income
generated from its existing property assets, in line with its
stated policy of paying out at least 80 per cent. of distributable
earnings and is targeting paying a dividend in the current
financial year of between US cents 5 to 6 per share. 1
-- The proceeds of the Issue will also enable Grit to acquire a
controlling shareholding in GREA and a majority shareholding in
APDM, GREA's external management company.
o Following completion of the Proposed Acquisition, Grit will
own a combined direct and indirect majority interest in GREA (51.66
per cent.) and a direct majority interest in APDM (78.95 per
cent.).
o The Proposed Acquisition is expected to materially accelerate
Grit's ability to access development returns from risk mitigated
development projects from GREA's attractive pipeline of development
opportunities and give Grit the additional management resources and
control required to lead the further development of GREA, via APDM.
The acquisition of a controlling interest in APDM offers Grit the
potential for new revenue and fee income streams, asset and
facilities management with respect to OBO and other discrete asset
classes and accelerates Grit's strategy of increasing its exposure
to the provision of professional services to its clients and other
third parties.
o Although Grit remains confident of delivering superior total
returns in the medium to longer term and is well positioned to
capitalise on the significant recovery potential across its unique
high-quality property portfolio, the Grit Board additionally sees
significant further potential value creation through increasing its
capital allocation to limited, risk mitigated development returns
and would expect these to increase the Grit Group's total targeted
shareholder return over time from 12 per cent. to 13 to 15 per
cent. per annum. 2
o Shareholders and other investors should note that completion
of the Proposed Acquisition is conditional on, amongst other
things, the passing of the Proposed Acquisition Resolution at the
General Meeting of the Company and Admission.
o The Company has already received written confirmation from
existing Shareholders, who in aggregate represent greater than 53
per cent. of those entitled to vote at the General Meeting, of
their intention to support the Proposed Acquisition.
Notes
1 Investors should note that the target dividend is a target
only and is not a profit forecast. There may be a number of factors
that adversely affect the Company's ability to achieve its target
dividend and there can be no assurance that it will be met. The
target dividend should not be seen as an indication of the
Company's expected or actual results or returns. Accordingly,
investors should not rely on these targets in deciding whether to
invest in the New Ordinary Shares or assume that the Company will
make any distributions at all.
2 This is a target only and is not guaranteed. It is based on a
number of bases and assumptions which may or may not
materialise.
Reasons for the Issue
The Board is of the opinion that the Grit Group should take
action now to improve the Grit Group LTV and to proactively enhance
the position of the Company for the expected post-pandemic recovery
opportunities rather than wait for the natural recovery of
valuations. This view is based on the following key
considerations:
(a) Grit's debt funders are currently imposing onerous dividend
and debt repayment restrictions on the Grit Group while the LTV
remains elevated, which will continue to constrain the Board in
meeting its distribution targets out of ongoing operational
cashflows;
(b) with the exception of the retail portfolio and slow
collections in the hospitality sector, the current asset portfolio
performed well throughout the COVID-19 pandemic period and
continues to produce strong rent collections and robust operational
and asset performance;
(c) a reduced Grit Group LTV would allow management to focus its
attention on further key operational initiatives to support its
tenants, increase occupancy and maintain strong cash collections
without the constant distraction of managing (non-cash) covenant
considerations;
(d) the Board believes the medium term NAV growth prospects of
the Grit Group can be significantly improved when taking into
account the Proposed Acquisition and further future pipeline
opportunities;
(e) the Board believes that there are significant opportunities
- particularly when taking into account the Proposed Acquisition -
to secure and lock-in longer-term, more cost-effective debt funding
through a consolidated debt strategy (for example, potentially
tapping into the global bond markets) that should be capitalised on
in the short-term (before interest rates potentially rise in the
medium-term) and will be facilitated by a larger, stronger and
pre-emptively corrected balance sheet;
(f) capitalising on these opportunities now is expected to
establish a more sustainable, longer-term capital structure for
Grit (including GREA) that will facilitate multi-year growth;
and
(g) finally, the Grit Group's strengthened balance sheet is
expected to be well positioned for any further known or unforeseen
shocks and/or liabilities arising directly and indirectly as a
result of the pandemic; this includes the potential need to fund
future liabilities and obligations of the Drive in Trading ("DiT")
guarantee.
The Board also reiterates its belief that, over time, the
depressed valuations in the retail and hospitality sectors will
recover. Therefore, the Board views this immediate need to
deleverage the balance sheet as an interim measure as the Grit
Group rides out the remnants of the pandemic.
Benefits of the Proposed Acquisition
The Grit Board believes that the Proposed Acquisition brings the
following benefits for the Grit Group:
-- GREA is the only development company covering every region in
Africa and with a multi asset class focus delivering real estate
solutions for international global tenants within Grit's existing
and target client lists. Gaining control in one transaction
materially accelerates the Grit Group's ability to access
development returns from risk mitigated development projects;
-- GREA's existing pipeline is fully funded through the existing
shareholders' equity contributions (as well as secured construction
debt facilities) and is expected to deliver strong NAV growth as
projects are completed over the next 24 to 36 months;
-- GREA has access to an extensive further pipeline of OBO (US
diplomatic housing) and data centre development opportunities which
are expected to be accretive to NAV, are extremely resilient asset
classes and offer exposure to highly rated tenants to underpin
future income levels;
-- the Proposed Acquisition cements a key strategic relationship
with Africa's largest pension fund, Public Investment Corporation
("PIC"), which has a long-term investment horizon on the continent,
as co investor into GREA;
-- acquiring a majority stake in APDM offers Grit the potential
for new revenue and fee income streams, asset and facilities
management with respect to OBO and other discrete asset classes and
accelerates Grit's strategy of increasing its exposure to the
provision of professional services to its clients and other third
parties;
-- the Proposed Acquisition would further diversify the Grit
Group's geographic exposure (and, in particular, will reduce the
Company's current overexposure to Mozambique);
-- the transaction builds upon an already close working
relationship between the management teams of Grit, GREA and APDM;
however significant benefits may arise under a streamlined group
structure because of current "duplicate functions" within each
business; and
-- debt funding for the Enlarged Group could be further
optimised due to increased geographic and sector diversity and
balance sheet size.
Upon gaining control of GREA, Grit would have the ability to
execute additional value creating activities which include:
-- Grit balance sheet optimisation and disposal of non-core assets
Grit continues to pursue strategies to reduce consolidated
exposures to the retail segment and would look to use its greater
influence in GREA to push through such asset disposals. Such asset
recycling would be expected to free up capital that can be recycled
into new project opportunities within GREA. When combined with
Grit's balance sheet upon consolidation, GREA's current low
leverage is expected to result in a material reduction in
consolidated Grit Group LTV metrics from Completion.
Whilst GREA is expected to remain relatively lowly geared, its
construction debt facilities will be amortising and are relatively
expensive compared to Grit's debt facilities and a consistent and
consolidated Grit Group approach will provide GREA with cheaper
debt funding and, crucially, the ability to recycle operational
cashflow into new projects rather than debt repayments, thereby
securing enhanced levels of growth.
-- Potential for significant Enlarged Group debt restructure
Following completion of the Issue, implementation of the
above-mentioned deleveraging strategy and the Proposed Acquisition,
the Enlarged Group's combined LTV would reduce significantly. The
larger scale and reduced dependence on hospitality and retail,
together with a reduced overall exposure to Mozambique, would
facilitate the possible issuance of a corporate bond by Grit in the
near future, terming out the maturity profile and reducing costs.
Grit is exploring, with its advisers, the possibility of effecting
such a bond issue following completion of the Proposals.
-- Cost savings
Elimination of dual cost structures and redeploying staff could
yield cost savings.
Recommendation and voting intentions
The Board of Grit considers the Issue and the Proposed
Acquisition to be in the best interests of the Grit Group and its
Shareholders as a whole.
Grit's entry into the Interested Party Share Purchase Agreements
is classed as a smaller related party transaction under the Listing
Rules. The Grit Board, which has been so advised by finnCap,
believes that the terms of the Proposed Acquisition and the entry
into the Interested Party Share Purchase Agreements are fair and
reasonable so far as Shareholders are concerned. finnCap has taken
into account the Grit Board's commercial assessment of the effect
of the Proposed Acquisition.
Accordingly, the Directors unanimously recommend Shareholders to
vote in favour of the Proposed Acquisition Resolution, as those
Directors who hold Ordinary Shares intend to do in respect of their
own holdings of Ordinary Shares, representing approximately 7.35
per cent. Of the Existing Ordinary Shares.
The Board has received written confirmations from Shareholders
holding, in aggregate, 53 per cent. Of the Company's issued share
capital as at the date of the Prospectus and Circular, of their
intention to vote in favour of the Proposed Acquisition
Resolution.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Knight, Chief Executive Officer +230 269 7090
Darren Veenhuis, Chief Strategy Officer
and Investor Relations +44 779 512 3402
Maitland/AMO - Communications Adviser
James Benjamin +44 7747 113 930
Grit-maitland@maitland.co.uk
finnCap Ltd - Sponsor, Sole Global Coordinator
and Bookrunner
William Marle / Teddy Whiley (Corporate
Finance) +44 20 7220 5000
Mark Whitfeld / Pauline Tribe (Sales) +44 20 3772 4697
Monica Tepes (Research) +44 20 3772 4698
Platform 3 - Corporate Adviser
Oliver Hare, Managing Partner oliver.hare@platform3.org
Perigeum Capital Ltd - SEM Authorised
Representative and Sponsor and Mauritian
Transaction Adviser and Placing Agent
Shamin A. Sookia +230 402 0894
Kesaven Moothoosamy +230 402 0898
Baden Hill (a trading name of Northland
Capital Partners) - Bookrunner
Roy Campbell rcampbell@badenhill.northlandcp.co.uk
Matthew Wakefield mwakefield@badenhill.northlandcp.co.uk
NOTES:
Grit Real Estate Income Group Limited is the 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 net total shareholder return
inclusive of NAV growth of 12.0%+ p.a.*
The Company holds its primary listing on the Main Market of the
London Stock Exchange (LSE: GR1T and a secondary listing on the
Stock Exchange of Mauritius (SEM: DEL.N0000).
Further information on the Company is available at
http://grit.group/
* These are targets only and not a profit forecast and there can
be no assurance that they 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 Knight (Chief
Executive Officer)*, Leon van de Moortele (Chief Financial
Officer)*, David Love+, Sir Samuel Esson Jonah+, Nomzamo Radebe,
Catherine McIlraith+, Jonathan Crichton+, Cross Kgosidiile (+) and
Bright Laaka+ (Permanent Alternate Director to Nomzamo Radebe).
(* Executive Director) (+ independent Non-Executive
Director)
Company secretary : Intercontinental Fund Services Limited
Registered address : PO Box 186, Royal Chambers, St Julian's
Avenue, St Peter Port, Guernsey GY1 4HP
Registrar and transfer agent (Mauritius) : Intercontinental
Secretarial Services Limited
UK Transfer secretary : Link Asset Services Limited
SEM authorised representative and sponsor : Perigeum Capital
Ltd
Mauritian sponsoring broker : Capital Markets Brokers Ltd
This notice is issued pursuant to the FCA Listing Rules and SEM
Listing Rule 15.24 and the Mauritian Securities Act 2005. The Board
of the Company accepts full responsibility for the accuracy of the
information contained in this communiqué.
ADDITIONAL INFORMATION
Introduction
Grit's investment strategy of owning high quality real estate
assets across multiple African geographies (excluding South Africa)
and across diversified asset classes has proven to be a robust and
resilient approach. Grit is the only listed real estate owner and
asset management company operating at scale across Africa
(excluding South Africa) offering "cradle to grave" real estate
solutions to multinational tenants. More recently, with the step up
to a premium listing on the Official List of the FCA, Grit has
created a strongly governed investment platform for the further
deployment of capital onto the African continent.
The challenging operating environment and severe
COVID-19-induced lockdowns imposed by national governments in many
countries (in Africa and beyond) have directly impacted the
Company's retail and hospitality assets, which has resulted in
significant asset valuation pressure and in turn a direct impact on
the Company's loan-to-value metrics.
Grit has been reviewing and refining its business model and
strategy to navigate effectively the current environment and to
best position itself for post-pandemic opportunities. The Grit
Board and management have focused on factors within their control,
which have included cost management (with a significant reduction
in operating and administrative costs), the stabilisation of
revenues and the effective management of collections and vacancies.
Management further extensively engaged with the Company's
financiers to ensure the business has sufficient covenant headroom
and cashflow and has successfully agreed the extension of a large
number of its debt facilities. The Company has also aligned with
key tenants to ensure the sustainability and longevity of both
their leases and revenue streams over the course of the pandemic
and into the future.
The Company's near term capital allocation strategies are being
impacted by the following considerations:
-- the Company's need for an immediate reduction in the Grit
Group's LTV, which will allow further time for the recovery of its
property portfolio valuations and also the ability to refinance
certain debt facilities for an extended period;
-- the desire to resume dividend and distribution payments out
of net operating income generated from its property assets;
-- a resolution to the guarantees provided to the Grit Group's
Black Economic Empowerment partners with respect to the original
financing of their Grit share equity ownership;
-- Grit's continued intention to reduce its exposure to the
retail sector and to achieve its asset recycling targets; and
-- the ability to redeploy the Company's capital into net asset
value growth opportunities and to leverage off the asset management
platform that has been created.
Accordingly, Grit has today announced an Open Offer and Placing
to raise up to approximately US$215.6 million. As at the Latest
Practicable Date, Grit had already received written confirmation
from existing Shareholders and new investors of their intention to
subscribe, in aggregate, for in excess of US$65 million pursuant to
the Open Offer and Placing. The proceeds of the proposed Open Offer
and Placing (together, the "Issue") are expected to reduce Grit's
overall indebtedness and leverage levels and provide future capital
for further expansion in its core and expanded business. The
proceeds of the Issue will also enable Grit to acquire a
controlling shareholding in GREA and a majority shareholding in
APDM, GREA's external management company (the "Proposed
Acquisition").
Following completion of the Proposed Acquisition, Grit will own
a combined direct and indirect majority interest in GREA (51.66 per
cent.) and a direct majority interest in APDM (78.95 per cent.).
The Proposed Acquisition will provide Grit with access to GREA's
attractive pipeline of accretive development opportunities and give
Grit the additional management resources and control required to
lead the further development of GREA, via APDM. The acquisition of
a controlling interest in APDM is expected to further allow Grit to
earn substantial development and asset management fees into the
future from internal and third party clients and joint venture
partners. Shareholders and other investors should note that
completion of the Proposed Acquisition is conditional on, amongst
other things, the passing of the Proposed Acquisition Resolution
and Admission.
For the year ended 30 June 2021, as a result of slow progress
towards the near term 45 per cent. LTV target, the Grit Board
withheld the final dividend. Should the contemplated Issue and the
Proposed Acquisition be successful, the Grit Board expects to
resume dividend payments, distributing out of net operating income
generated from its existing property assets, in line with its
stated policy of paying out at least 80 per cent. of distributable
earnings and is targeting paying a dividend in the current
financial year of between US cents 5 to 6 per share*.
* Investors should note that the target dividend is a target
only and is not a profit forecast. There may be a number of factors
that adversely affect the Company's ability to achieve its target
dividend and there can be no assurance that it will be met. The
target dividend should not be seen as an indication of the
Company's expected or actual results or returns. Accordingly,
investors should not rely on these targets in deciding whether to
invest in the New Ordinary Shares or assume that the Company will
make any distributions at all.
The Prospectus and Circular provides further information on the
Issue, the planned deleveraging strategy, the Proposed Acquisition
and related party aspects of the Proposed Acquisition, and also
convenes the General Meeting required to approve the Proposed
Acquisition.
Background to and reasons for the Issue
Deleveraging and asset recycling strategy
As stated ahead of its admission to the main market of the
London Stock Exchange on 31 July 2018 (the "IPO"), Grit's revised
medium-term debt strategy was to reduce its overall LTV to below 40
per cent. and part of the proceeds from the IPO were deployed
towards that strategy. In the 18 months following the IPO, Grit
continued to make good progress on that strategy, with a reported
Grit Group LTV as at 31 December 2019 of 43.9 per cent. (30 June
2018: 51.4 per cent.). As progress was made, Grit further committed
to deliver a revised Grit Group LTV target of 35 per cent. to 40
per cent.
However, the onset of the COVID-19 pandemic has regrettably
reversed that progress. Whilst Grit's geographic footprint has been
far less affected by direct COVID-19 caseloads, and the broader
African continent has significantly lower death rates than Europe,
Asia and North America, the continent has nevertheless borne the
economic impacts felt worldwide and remains vulnerable to broader
global economic developments associated with COVID-19. This
increased risk has been reflected in valuers' assumptions on
property discount rates, capitalisation rates and re-let
assumptions, which in turn has resulted in portfolio valuation
pressures.
Grit's office, light industrial and corporate accommodation
sector assets, which collectively account for more than 50 per
cent. by value of the Grit Group's property portfolio, have
remained relatively unaffected by the pandemic. However, travel and
economic disruption across Africa has inevitably led to depressed
property valuations predominantly in retail and, to a limited
extent, in hospitality sector assets.
As a result, the impact of COVID-19 was to reduce Grit's overall
reported portfolio valuations by over US$114 million since the
onset of the pandemic (as at 30 June 2021), which represents a 14.2
per cent. (like-for-like) reduction compared to 31 December 2019.
Consequently, Grit Group LTV increased to 53.1 per cent. as at 30
June 2021, predominantly as a result of this decrease in
valuations.
Whilst the Grit Group's cash collections as a percentage of
contracted lease income have remained strong throughout the last 18
months, the Grit Group has never expected a rapid recovery in
affected valuations and has not budgeted for such - indeed, the
Grit Group, cautiously, does not expect a rebound in retail
valuations until the financial year ending 30 June 2023 at the very
earliest. The Board does, however, take note of positive trends,
such as reduced vacancies and increased footfall in its retail
assets and the re-opening of the Mauritian borders to overseas
tourists.
The Group has defined an asset recycling strategy whereby it
aims to realise property assets at, or as close as practically
possible to, their fair values and apply these proceeds to further
reduce debt and gearing. The Board has set an asset recycling
target of 20 per cent. of the value of its property portfolio by 31
December 2023 and, to this end, has recently announced the granting
of an exclusivity period for final stage due diligence over
AnfaPlace Mall, the Grit Group's largest retail asset. Further
disposal announcements are expected in due course, and such
disposals are expected to contribute to the reduction of reported
LTV as at 30 June 2021.
Despite the recent positive rent collection trends and
notwithstanding raising gross proceeds of approximately US$9.8
million of fresh equity in late 2020, the other initiatives by the
Grit Group (such as a reduction in operating expenses and the
inherently more medium-term activities associated with asset
recycling) have so far yet to have a positive impact on the Grit
Group LTV. The Grit Group has also taken on additional short-term
working capital facilities to fund rental deferrals provided to
tenants in the hospitality sector, and also to fund capital
expenditure in the normal course of business and GREA capital
calls.
Grit has successfully engaged with its debt providers and has
both increased its lowest applied LTV and interest service cover
ratio covenants and more recently secured maturity extensions for
the bulk of the Grit Group's US$410 million outstanding debt to
beyond April 2023.
The Board is of the opinion that the Grit Group should take
action now to improve the Grit Group LTV and to proactively enhance
the position of the Company for the expected post-pandemic recovery
opportunities rather than wait for the natural recovery of
valuations. This view is based on the following key
considerations:
(a) Grit's debt funders are currently imposing onerous dividend
and debt repayment restrictions on the Grit Group while the LTV
remains elevated, which will continue to constrain the Board in
meeting its distribution targets out of ongoing operational
cashflows;
(b) with the exception of the retail portfolio, the current
asset portfolio performed well throughout the COVID-19 pandemic
period and continues to produce strong rent collections and robust
operational and asset performance;
(c) a reduced Grit Group LTV would allow management to focus its
attention on further key operational initiatives to support its
tenants, increase occupancy and maintain strong cash collections
without the constant distraction of managing (non-cash) covenant
considerations;
(d) the Board believes the medium-term NAV growth prospects of
the Grit Group can be significantly improved when taking into
account the Proposed Acquisition and further future pipeline
opportunities;
(e) the Board believes that there are significant opportunities
- particularly when taking into account the Proposed Acquisition
(further details of which are set out below) - to secure and
lock-in longer-term, more cost-effective debt funding through a
consolidated debt strategy (for example, potentially tapping into
the global bond markets) that should be capitalised on in the
short-term (before interest rates rise in the medium-term) and will
be facilitated by a larger, stronger and pre-emptively corrected
balance sheet;
(f) capitalising on these opportunities now is expected to
establish a more sustainable, longer-term capital structure for
Grit (including GREA) that will facilitate multi-year growth;
and
(g) finally, the Grit Group's strengthened balance sheet is
expected to be well positioned for any further known or unforeseen
shocks and/or liabilities arising directly and indirectly as a
result of the pandemic; this includes the potential need to fund
future liabilities and obligations of the Drive in Trading ("DiT")
guarantee, further details of which are set out below.
The Board also reiterates its belief that, over time, the
depressed valuations in the retail and hospitality sectors will
recover. Therefore, the Board views this immediate need to
deleverage the balance sheet as an interim measure as the Grit
Group rides out the remnants of the pandemic.
The Proposed Acquisition - GREA and APDM
Grit co-founded its development associate GREA, formerly Gateway
Delta, in 2018. At its inception, GREA secured US$175 million of
equity commitments from its four principal shareholders. The
current shareholders of GREA are as follows:
1 Public Investment Corporation of South Africa: 48.52 per cent.
2 Gateway Partners: 28.54 per cent.
3 Grit*: 19.98 per cent.
4 Prudential Investors: 2.85 per cent.
5 Dorado 1 Limited: 0.1 per cent.
* All shareholders are fully paid up on equity commitments
except for Grit, which has until 10 December 2021 to make its
remaining US$17.5 million capital contribution (excluding
interest).
GREA was founded to focus on providing turnkey development and
construction real estate solutions in select African countries for
multinational and Africa-based companies and supranational
institutions and targets internal rates of returns in excess of 16
per cent. GREA does not develop speculatively but rather aligns
with specific tenant requirements and therefore does not hold land
bank or other speculative investments. Projects typically involve
securing land in conjunction with a tenant's lease commitments to
such location, prior to acquisition and development. GREA
materially transfers construction risk to professional construction
partners through fixed price or turnkey contracts and therefore
largely only retains timing and final delivery risks.
GREA was established together with an external management
company, APDM, to which it outsourced the implementation and
management of GREA's full investment mandate and charter. APDM is
owned by:
1 Public Investment Corporation of South Africa: 21.05 per cent.
2 Gateway Partners: 31.58 per cent.
3 Management and Staff (including Greg Pearson, Grit co-founder
and GREA's CEO): 26.32 per cent.
4 Dorado 1 Limited*: 21.05 per cent.
* Dorado 1 Limited is owned 50 per cent. by Grit CEO Bronwyn
Knight and 50 per cent. by Greg Pearson. In total, Greg Pearson
owns (directly and indirectly) 16.05 per cent. of APDM.
APDM provides the full management of GREA and carries the full
operating costs of GREA's operations, which is compensated through
ongoing development management and asset management fees and a 10
per cent. equity carry in GREA which crystalises upon the
achievement of certain targets. The acquisition of a controlling
interest in GREA by Grit crystalises this carry. Grit therefore
believes it is essential that a controlling interest in APDM is
acquired at the same time as the acquisition of a controlling
interest in GREA so that Grit is able to both direct the future
development and management of GREA and maintain a combined direct
and indirect GREA stake greater than 50 per cent. post the dilution
derived from the exercise of APDM's 10 per cent. equity carry.
Furthermore, APDM has the ability to provide development and asset
management services to a range of third party clients and joint
venture partners and is therefore expected to generate significant
additional fee income for the Grit Group into the future.
GREA, through the APDM team, has been very successful at
securing an accretive pipeline of development opportunities, most
notably providing the United States Bureau of Overseas Buildings
Operations ("OBO") with embassy housing across Africa and
developing data centres for leading IT services and solutions
providers in select African countries. GREA has recently called for
the final payment from its shareholders under the original US$175
million equity commitment but now needs to put in place funding for
the next stage in its development. Should Grit not meet its capital
commitment it will be diluted under the terms of the shareholders'
agreement and could be forced to sell its remaining interest in
GREA. As part of the future expansion, and in order to protect its
current interests, the Grit Board believes it appropriate to make
its capital contribution but also to take a controlling
shareholding in GREA (and its manager, APDM) so that Grit can lead
the next stage of GREA's development and benefit from the fully
funded strong asset growth that GREA is expected to generate over
the coming three years.
As a consequence, and after discussion with the other GREA and
APDM shareholders, Grit has agreed to purchase all of the shares in
GREA (28.54 per cent.) and APDM (31.58 per cent.) held by Gateway
Partners, all of the shares in GREA (0.1 per cent.) and APDM (21.05
per cent.) held by Dorado 1 Limited and all of the shares held in
APDM (26.32 per cent.) by the GREA Executive Share Trust (Gateway
Partners, Dorado 1 Limited and the GREA Executive Share Trust
together being the "Selling Shareholders").
The PIC wishes to maintain an on-going involvement directly with
GREA (alongside its investment in Grit) as its investment mandate
includes direct real estate development and investment across
Africa which is why it originally invested in GREA (and Grit). The
Grit Board is pleased to continue its close working relationship
with PIC within GREA.
Summary of GREA's portfolio
In summary, to date, GREA has undertaken (or is about to
undertake), in aggregate, 12 risk mitigated projects on the back of
strong tenant demand across nine African countries which are either
completed, under construction/development or about to begin
construction. In addition, GREA holds a 46.55 per cent. interest in
Acacia Estate, a 76-unit luxury housing complex in Maputo,
Mozambique tenanted by the US Embassy and the oil and gas company
Total and a 39.5 per cent. interest in the AnfaPlace Shopping Mall
in Morocco.
Set out in the table below is a summary of GREA's portfolio of
projects, anchor tenants and estimated
stabilised valuations as at the date of the Prospectus and
Circular:
Completed % of
Projects project Completion Completion/
cost to
be
GREA Project equity value Acquisition
Property Country Sector Anchor Site GBA (m2) GLA (m2) ownership cost (US$ funded** (US$ million) date
tenant area million)
Diplomatic October
OBO Ethiopia Ethiopia Residential US Embassy 6,439 18,215 15,419 50% 52.4 64% 78.9 2021
AnfaPlace Mall
Redevelopment Morocco Retail Carrefour 56, 000 45, 619 31,808 39.5% 23.7 100% 79.5 August 2019
Metroplex
Redevelopment October
Carrefour, 2020
Uganda Retail Woolworths 25,090 16,089 12,994 100% 20.3 49% 25.9 (additional
Halliburton works
Liquid ongoing)
Mud Plant Mozambique Industrial Halliburton 4,877 1,350 1,350 100% 1.5 100% N/A*** March 2019
Under % of project Projected
Construction cost to Completion Target
GREA Project be equity value completion
Property Country Sector Anchor Site GBA (m2) GLA (m2) ownership cost (US$ funded* (US$ million) date
tenant area million)
LOS1.1 Data
Centre Africa Data
Project Nigeria Data centre Centres 4,946 1,168 994 100% 22.64 40% 24.5 Q4 2021
The Precinct
Office Corporate Grit Real (Phase I)
Complex Mauritius Offices Estate 35,932 12,631 8,594 50% 27.1 40% 30.4 Q4 2022
Multi-speciality Polyclinique
St Helene Clinic Mauritius hospital de L'Ouest 3,134 6,087 6,087 48.25% 19.9 32% 24.3 Q1 2023
Ltée
Bollore
Bollore Africa
Warehouse Mozambique Industrial Logistics 11,960 7,883 7,324 0% 5.1 100% N/A**** Q2 2022
Redevelopment
OBO Kenya
Diplomatic Diplomatic
Housing Kenya Residential US Embassy 29,762 22,767 16,038 50% 48.5 48% 56.0 Q3 2022
(Rosslyn Grove)
Adumuah Place
(Rendeavour Ghana Corporate Rendeavour 4,047 2,414 1,996 100% 3.4 56% 3.9* Q1 2022
Group Head offices & Retail Group
Office)
Approved % of project
Projects cost to Target
GREA Project be equity completion
Property Country Sector Anchor Site GBA (m2) GLA (m2) ownership cost (US$ funded* date
tenant area million)
Coromandel
Hospital
Oncology Hospital Polyclinique
OBO Mali Mauritius de L'Ouest 8,968 10,085 10,085 48.25% 38.6 40% Q4 2023
Diplomatic Diplomatic Ltée
Housing Mali Residential US Embassy 9,475 12,362 7,402 92% 52.2 50% Q3 2023
Completion values have been independently prepared by Knight
Frank LLP (except * which is as per a Directors' valuation) and
are
based on ownership of 100 per cent. of an asset.
** Once all of the above projects are complete and based on
stabilised valuations and levels of net debt after completion,
GREA's consolidated
group LTV is expected to be approximately 17-19 per cent .
*** In 2019, GREA (as lessor) entered into a finance leasing
arrangement with Halliburton (as lessee) for the development of a
liquid mud plant in Pemba, Mozambique.The lease term is for 5.5
years, expiring in August 2024. The finance lease income is
allocated to accounting
periods so as to reflect a constant periodic rate of return on
GREA's net investment outstanding in respect of the lease.
Amounts due from the lessee under the finance lease are
recognised as receivables at the amount of GREA's net investment in
the lease.
**** In 2020, Grit Services Ltd, a wholly owned subsidiary of
Grit, appointed Boyzana International Ltd, a wholly owned
subsidiary of GREA,
to manage the execution of the redevelopment of Bollore
Warehouse in Pemba, Mozambique. GREA has no ownership in the asset
being redeveloped.
GREA has visibility for further accretive pipeline development
opportunities, most notably with providing the US Government with
additional embassy housing across Africa and developing further
data centres for leading IT services and solutions providers in
select African countries.
APDM renders asset management, advisory and administrative
services to GREA pursuant to an asset management and advisory
services agreement entered into between GREA and APDM. The APDM
team has over 50 years of collective experience in the development
of real estate across the African continent in over 40 countries,
making it a world-class team backed by extensive experience.
The principal activities of APDM include: (i) considering and,
if considered appropriate, making investments within the ambit of
GREA's investment charter as agent for and on behalf of GREA; (ii)
providing recommendations and advice to the GREA Board with respect
to investments and disposals in accordance with the terms of its
appointment; (iii) making recommendations to the GREA Board on
investment decisions that do not fall within the investment
charter; and (iv) monitoring and reporting to GREA shareholders and
the GREA Board on the performance of investments.
Upon gaining control, Grit intends to use APDM to provide such
development and asset management services to third parties and to
further its fee income generating activities as a trusted supplier
across the African continent.
Further detailed information on GREA and APDM is set out in
Parts III (Business Overview of GREA and APDM) and VII (Financial
Information on GREA) of the Prospectus and Circular.
Drive in Trading - update
By virtue of the Grit Group's historic listing on the
Johannesburg Stock Exchange, and in conjunction with its largest
shareholder, the South African Government Employee Pension Fund
("GEPF") represented by the PIC, the Company facilitated its black
economic empowerment and transformation partner, DiT, in the
acquisition of 23.25 million Ordinary Shares in June 2017.
DiT secured a loan facility, with an initial break clause on 14
August 2020, from the Bank of America Merrill Lynch ("BoAML") with
the PIC providing a guarantee to BoAML in the form of a contingent
repurchase obligation ("CRO"). Separately, Grit indemnified the PIC
for up to 50 per cent. of any potential losses suffered by PIC,
capped at US$17.5 million.
In August 2020, the PIC assumed the position of lender to DiT
following the expiry of the initial BoAML loan facility and
exercise of the CRO by BoAML. Whilst reserving their rights, the
PIC continues to advise Grit that it does not intend calling on the
Grit guarantee at this time, giving DiT the opportunity to conclude
discussions with further potential lenders.
As at 30 June 2021, the value of the residual exposure is
provided for as USD$5.4 million in the Grit 2021 Annual Financial
Statements.
Grit and the PIC remain in negotiations and a proposal has been
put to the PIC for their consideration. The PIC has advised that it
will consult internally about this proposal but that their reply
may take some time. A further announcement regarding the DiT
arrangements will be made in due course.
Rationale for the Proposed Acquisition
Background
The Grit management team has sought to improve the growth rate
of Grit, and specifically views incremental risk mitigated
development returns, limited to no greater than 20 per cent. of the
Grit Group's gross asset value, as being key to achieving this
goal.
Grit's ability to control its own pipeline and fully service its
tenants' needs ranging from real estate conceptualisation,
development, ownership and property management continues to be a
strategic objective of the Company. Although Grit remains confident
of delivering superior total returns in the medium to longer term
and is well positioned to capitalise on the significant recovery
potential across its unique high-quality property portfolio, the
Grit Board additionally sees significant further potential value
creation through increasing its capital allocation to limited, risk
mitigated development returns and would expect these to increase
the Grit Group's total targeted shareholder return over time from
12 per cent. to 13 to 15 per cent. per annum*.
* This is a target only and is not guaranteed. It is based on a
number of bases and assumptions which may or may not
materialise.
APDM has a team of highly skilled development staff and has the
ability to develop in over 15 African countries. With extensive
experience delivering projects across the continent, there exists
opportunities to provide fee generating professional services to
clients external to GREA and to further deliver value to its
shareholders.
The Grit Board believes that the Proposed Acquisition therefore
brings the following benefits for the Grit Group:
-- GREA is the only development company covering every region in
Africa and with a multi asset class focus delivering real estate
solutions for international global tenants within Grit's existing
and target client lists. Gaining control in one transaction
materially accelerates the Grit Group's ability to access
development returns from risk mitigated development projects;
-- GREA's existing pipeline is fully funded through the existing
shareholders' equity contributions (as well as secured construction
debt facilities) and is expected to deliver strong NAV growth as
projects are completed over the next 24 to 36 months;
-- GREA has access to an extensive further pipeline of OBO (US
diplomatic housing) and data centre development opportunities which
are expected to be accretive to NAV, are extremely resilient asset
classes and offer exposure to highly rated tenants to underpin
future income levels;
-- the Proposed Acquisition cements a key strategic relationship
with Africa's largest pension fund, PIC, which has a long-term
investment horizon on the continent, as co investor into GREA;
-- acquiring a majority stake in APDM offers Grit the potential
for new revenue and fee income streams, asset and facilities
management with respect to OBO and other discrete asset classes and
accelerates Grit's strategy of increasing its exposure to the
provision of professional services to its clients and other third
parties;
-- the Proposed Acquisition would further diversify the Grit
Group's geographic exposure (and, in particular, will reduce the
Company's current overexposure to Mozambique);
-- the transaction builds upon an already close working
relationship between the management teams of Grit, GREA and APDM;
however significant benefits may arise under a streamlined group
structure because of current "duplicate functions" within each
business; and
-- debt funding for the Enlarged Group could be further
optimized due to increased geographic and sector diversity and
balance sheet size.
Acquisition benefits and further opportunities
Upon gaining control of GREA, Grit would have the ability to
execute additional value creating activities which include:
-- Grit balance sheet optimisation and disposal of non-core assets
Grit continues to pursue strategies to reduce consolidated
exposures to the retail segment and would look to use its greater
influence in GREA to push through such asset disposals. Such asset
recycling would be expected to free up capital that can be recycled
into new project opportunities within GREA. When combined with
Grit's balance sheet upon consolidation, GREA's current low
leverage is expected to result in a material reduction in
consolidated Grit Group LTV metrics from completion of the Proposed
Acquisition.
Whilst GREA is expected to remain relatively lowly geared, its
construction debt facilities will be amortising and are relatively
expensive compared to Grit's debt facilities and a consistent and
consolidated Grit Group approach will provide GREA with cheaper
debt funding and, crucially, the ability to recycle operational
cashflow into new projects rather than debt repayments, thereby
securing enhanced levels of growth.
-- Potential for significant Enlarged Group debt restructure
Following completion of the Issue, implementation of the
above-mentioned deleveraging strategy and the Proposed Acquisition,
the Enlarged Group's combined LTV would reduce significantly. The
larger scale and reduced dependence on hospitality and retail,
together with a reduced overall exposure to Mozambique, would
facilitate the possible issuance of a corporate bond by Grit in the
near future, terming out the maturity profile and reducing costs.
Grit is exploring, with its advisers, the possibility of effecting
such a bond issue following completion of the Proposals.
-- Cost savings
Elimination of dual cost structures and redeploying staff are
expected to yield cost savings.
Summary of the principal terms of the Proposed Acquisition
Under the terms of the Proposed Acquisition, Grit will become
the holding company of the Enlarged Group, which will include GREA
and APDM.
The consideration due to the Selling Shareholders pursuant to
the terms of the Share Purchase Agreements may be satisfied by the
issue to each Selling Shareholder of such number of New Ordinary
Shares at the Issue Price as is equal to the US Dollar amount of
the consideration payable to such Selling Shareholder pursuant to
the terms of its Share Purchase Agreement. Any New Ordinary Shares
issued to Selling Shareholders will be issued at the same price per
New Ordinary Share as New Ordinary Shares are issued pursuant to
the Open Offer and Placing.
Applications will be made for any New Ordinary Shares issued to
any of the Selling Shareholders pursuant to the Share Purchase
Agreements to be listed on the premium segment of the Official List
and to be admitted to trading on the premium segment of the main
market of the LSE, in each case, upon Completion. Such New Ordinary
Shares will also be admitted to trading on the SEM.
Certain New Ordinary Shares to be issued to the Selling
Shareholders will be subject to lock-up provisions, as more fully
described in the summaries of the Share Purchase Agreements in Part
IV (Terms of the Proposed Acquisition) of the Prospectus and
Circular.
Completion is conditional on, among other things, (i) the
approval of the Proposed Acquisition Resolution; and (ii)
Admission.
As at 30 June 2021, GREA had unaudited net assets of US$193
million, gross assets of US$199 million and pre-tax profits for the
six months ended 30 June 2021 of US$5.7 million. Since that date,
GREA has completed and handed over the OBO US Embassy compound in
Ethiopia which has therefore increased in value from its
construction cost carrying value as at 30 June 2021 of US$34.9
million to a current investment value of US$38.3 million (based on
a completion value for 100 per cent. of the asset of US$76.6
million, as shown in Part IX, Section B (Property Valuation Report
prepared by Knight Frank LLP in respect of certain assets in the
New Portfolio) of the Prospectus and Circular). In addition, GREA
has continued with the construction of the six projects shown as
"Under Construction" in the GREA projects table above. As at 31
October 2021, the carrying value of these projects had increased in
value to US$50.0 million from a carrying value of US$40.3 million
as at 30 June 2021.
In the view of the Grit Board, the impact of these developments
within GREA's portfolio will be to increase GREA's unaudited net
asset value to approximately US$197.2 million by 31 December 2021,
the agreed effective date of the Proposed Acquisition. Accordingly,
Grit has agreed to purchase an additional 25.78 per cent. of GREA's
shares (equal to 50,175,000 GREA Shares) based upon a valuation for
100 per cent. of GREA of US$197.2 million.
In addition, Grit has agreed to purchase 78.95 per cent. of APDM
for US$29.8 million, valuing 100 per cent. of APDM at US$37.7
million. This represents a small discount to Grit's internal
valuation for APDM of US$38.1 million, with its major assets being
a 10 per cent. interest in GREA (valued at US$19.7 million) and its
evergreen contract to manage GREA's assets for a fee of 1.5 per
cent. of gross asset value, in perpetuity (with an estimated value
of US$18.4 million).
Therefore, the aggregate consideration payable by Grit in
connection with the acquisition of GREA and APDM is US$80.61
million.
The Grit Board believes that the consideration payable for GREA
and APDM is appropriate for the following reasons:
-- as shown in Parts IX (Property Valuation Reports prepared by
Knight Frank LLP in relation to certain assets in the Existing
Portfolio and in the New Portfolio) and X (Property Valuation
Report prepared by REC - Real Estate Consulting, LDA in relation to
certain assets in the Existing Portfolio and in the New Portfolio)
of the Prospectus and Circular , the GREA Portfolio has a
stabilised value following completion of the developments of US$280
million compared to a book value as at 30 June 2021 of US$177
million. Grit is therefore acquiring an attractive and accretive
(in the medium term) development portfolio at a valuation that
represents a discount of US$103 million to their completed value in
circumstances where this completion is fully funded by GREA's
existing capital resources and with recourse to only modest levels
of leverage;
-- it delivers control of GREA and APDM to Grit;
-- through the acquisition of APDM, Grit is not only getting
access to an existing contractual income stream but also a
management team with depth of experience in the development of real
estate across the African continent, a team which has already
proven the value of this expertise through its delivery of projects
on behalf of GREA to date; and
-- although there is no committed pipeline beyond the
development projects described in the Prospectus and Circular, the
APDM team has developed the relationships and credentials to secure
potential significant pipeline in the future (both with existing
and potentially new tenants), negotiations towards which are
ongoing.
Gateway Partners has stated that it wishes to remain invested in
the Enlarged Group and has committed to accept, by way of
consideration in settlement for the exchange of its shareholding in
GREA and APDM, a maximum of 137.5 million New Ordinary Shares,
representing an aggregate capital commitment equal to US$71.5
million at the Issue Price. The Grit Board believes that this
commitment demonstrates Gateway's faith in GREA and its pipeline
and welcomes its continued investment. To the extent that
Qualifying Shareholders take up their Open Offer Entitlements in
full, then the consideration payable to Gateway may be satisfied in
Ordinary Shares from a secondary purchase.
The selected financial information for GREA set out above has
been extracted without material adjustment from the unaudited
interim financial information of GREA set out in Part VII
(Financial Information on GREA) of the Prospectus and Circular
.
The Company will announce Completion of the Proposed Acquisition
through an RIS and a SEM announcement as soon as practicable
following Admission.
Further information about the terms of the Proposed Acquisition
is set out in Part IV (Terms of the Proposed Acquisition) of the
Prospectus and Circular. The Share Purchase Agreements are
inter-conditional and each is subject to the satisfaction or, where
applicable, waiver of conditions, including regulatory and
competition approvals, the Placing and Open Offer raising a minimum
of US$135 million and the passing of the Proposed Acquisition
Resolution. There can be no guarantee that the Proposed Acquisition
will proceed if all conditions are not satisfied or, where
applicable, waived.
The entry by the Company into the Dorado Share Purchase
Agreement and GREA Executive Share Trust Share Purchase Agreement
each constitutes a smaller related party transaction (as defined in
the Listing Rules) by virtue of the direct and indirect interests
in GREA and APDM held by Bronwyn Knight (a Director of Grit and a
director of Dorado 1 Limited, one of the Selling Shareholders) and
Greg Pearson (CEO of GREA (in which Grit owns a 19.98 per cent.
interest), a director of several Grit subsidiaries and a director
of Dorado 1 Limited) (Bronwyn Knight and Greg Pearson together
being the "Interested Parties" and each an "Interested Party" and
the Dorado Share Purchase Agreement and the GREA Executive Share
Trust Share Purchase Agreement together being the "Interested Party
Share Purchase Agreements").
The consideration payable (directly and indirectly) to Bronwyn
and Greg pursuant to the Interested Party Share Purchase Agreements
is as follows:
Bronwyn Knight US$2.69 million
Greg Pearson US$4.80 million
Shareholders should note that the consideration payable to them
is expected to be satisfied by way of the issue and allotment of
such number of New Ordinary Shares at the Issue Price as is equal
to the US Dollar amount of the consideration stated above, which
Grit intends to facilitate from any New Ordinary Shares that are
not taken up by Qualifying Shareholders pursuant to the Open Offer.
Such New Ordinary Shares will be subject to lock-up arrangements,
as more fully described in paragraph 2 of Part IV (Terms of the
Proposed Acquisition) of the Prospectus and Circular.
The fundraising
As stated above, it is possible that the Proposed Acquisition
will not complete because the Placing and Open Offer does not raise
the necessary fresh equity capital for Grit and therefore the
conditions attached to the Proposed Acquisition are not satisfied.
Accordingly, Grit has sought and received written confirmations
from certain existing Shareholders and new investors of their
intention to subscribe pursuant to the Placing and Open Offer (the
"Indicated Minimum Proceeds"). These written confirmations, as at
the Latest Practicable Date, total in excess of US$65 million.
However, the written confirmations do not constitute a legally
binding agreement and as such there is a risk that the Indicated
Minimum Proceeds are not ultimately received by the Company.
If the Placing and Open Offer only raises US$65 million and the
Proposed Acquisition does not proceed, Grit intends to use the net
proceeds of the Placing and Open Offer to:
-- make the payment of US$17.9 million for the final capital
contributions in respect of GREA's capital call due in December
2021;
-- seek to resolve matters with the PIC regarding the DiT
guarantee as set out above, where the net exposure to Grit is US$11
million; and
-- reduce Grit's level of indebtedness.
A fuller breakdown of the use of the net proceeds is set out in
paragraph 2 of Part V (The Issue) of the Prospectus and
Circular.
However, it is possible that the Placing and Open Offer will not
raise Indicated Minimum Proceeds of US$65 million required and
therefore neither the Placing and Open Offer nor the Proposed
Acquisition will proceed. Grit would then need to pursue
alternative actions to rectify its working capital position,
including but not limited to the following:
-- Grit would continue its dialogue with PIC in respect of the
DiT obligations, and in particular seek continued assurances from
PIC that it does not intend calling on the Grit Group
guarantee;
-- Grit would seek agreement from GREA to settle the US$17.9
million final capital contribution in respect of GREA's capital
call due in December 2021 by way of a transfer of certain property
assets, instead of by settlement in cash;
-- Grit would continue to seek to refinance the Grit Group's
debt facility due in April 2022 for a net amount of US$47.1
million, for which negotiations are on-going with the relevant
lender as well as other potential lenders; and
-- Grit would seek alternative new debt facility and equity
fundraising opportunities, for which it has certain on-going
discussions with certain potential providers of new debt facilities
and/or new equity fundraisings.
Further details on the above alternative actions are set out in
paragraph 11.2 of Part XII (Additional Information) of the
Prospectus and Circular.
Financial effects of the Proposed Acquisition
Set out in Part VIII ( Unaudited Pro Forma Financial Information
on the Enlarged Group ) of the Prospectus and Circular, the pro
forma statement of net assets shows net assets of the Enlarged
Group, assuming commitments to subscribe for US$140.0 million under
the Open Offer and Placing are received, of US$475.0 million as at
30 June 2021 and the pro forma income statement shows a loss before
tax of the Enlarged Group for the period to 30 June 2021 of US$25.6
million. If the Issue is fully subscribed, the pro forma net assets
will be US$540.2 million as at 30 June 2021.
Post-acquisition integration
GREA has a strong board and, through APDM, an equally strong
executive management team and investment committee comprising
individuals with exceptional track records in creating, raising and
managing property development and investment companies. This will
be supplemented by Grit senior management following completion of
the Proposed Acquisition.
The APDM team is led by Chief Executive Officer, Greg Pearson.
Greg is a co-founder of Grit and was instrumental in sustaining its
rapid growth from its inception in 2014 through to 2018, when he
left Grit to focus his attention on GREA. As a founder of Grit,
Greg recognised the significant demand from multinational companies
looking for quality real estate solutions in Africa and the limited
supply of experienced developers to fulfil their requirements,
which led to the creation of GREA. Greg has successfully completed
a series of developments across the office, retail, leisure,
education and healthcare sectors and also sits on the Board of GREA
as its sole director and de facto CEO.
Further information on the GREA and APDM management team is
contained in paragraph 2.3 of Part III (Business overview of GREA
and APDM) of the Prospectus and Circular, and information on the
revised senior management team structure and responsibilities at
Grit following Completion is set out in Part II (Business Overview
of Grit) of the Prospectus and Circular. Shareholders should note
that all of APDM's management team and staff will become employees
of the Enlarged Group on, essentially, the same employment terms as
they currently enjoy at APDM. The consideration payable by Grit to
the GREA Executive Share Trust pursuant to the GREA Executive Share
Trust Share Purchase Agreement shall be settled by Grit issuing
shares in the issued share capital of Grit equal to the amount of
the consideration. Such shares are to be retained by the GREA
Executive Share Trust, for the benefit of designated participants
under a long-term incentive plan, vesting on a future date or
earlier if sufficient value is achieved in GREA. Certain
participants will also be enrolled to the Grit long-term incentive
plan and awarded shares upon the fulfilment of specific key
performance indicators.
The Issue
Introduction
The Company is targeting an issue of approximately US$215.6
million (gross) through the issue of 414,647,283 New Ordinary
Shares by way of the Open Offer and Placing at US$0.52 per New
Ordinary Share.
The Issue Price represents a premium of approximately 4 per
cent. to the average closing price across the LSE and SEM for an
Ordinary Share on 19 November 2021 (LSE: GBP0.3468; SEM: US$0.53).
The Issue Price has been set by the Directors following their
assessment of the prevailing market conditions and anticipated
demand for the New Ordinary Shares, as well as taking into account
the commercial requirements and positive financial impact on the
Grit Group of implementing the deleveraging strategy and
undertaking the Proposed Acquisition, as described above. The Grit
Board believes that the Issue Price (including the premium) is
appropriate in the circumstances.
The actual number of New Ordinary Shares to be issued pursuant
to the Issue, and therefore the Gross Issue Proceeds, is not known
at the date of the Prospectus and Circular but will be notified by
the Company via an RIS and a SEM announcement prior to Admission.
Following Admission, the New Ordinary Shares to be issued pursuant
to the Issue will rank pari passu in all respects with the Existing
Ordinary Shares and will carry the right to receive all dividends
and distributions declared, made or paid on or in respect of the
Ordinary Shares by reference to a record date after Admission.
It is important to the Grit Board that Shareholders are given
the opportunity to participate in the Issue. Therefore, priority
will be given to applications from Qualifying Shareholders under
the Open Offer. Thereafter, any New Ordinary Shares not taken up
pursuant to Shareholders' applications for their Open Offer
Entitlements will be made available to Qualifying Shareholders
through the Excess Application Facility, to Placees under the
Placing and/or to Selling Shareholders in consideration for Grit's
acquisition of their GREA Shares and/or APDM Shares (as applicable)
pursuant to the terms of the Share Purchase Agreements.
The Open Offer and Placing are conditional on, inter alia, (a)
the Placing and Offer Agreement becoming wholly unconditional (save
as to Admission) and not having been terminated in accordance with
its terms prior to Admission; and (b) Admission occurring by 8.00
a.m. (GMT) on 21 December 2021 or such later time and/or date
(being no later than 7 January 2022) as the Company and finnCap may
agree). If any such conditions are not satisfied or, if applicable,
waived, the Issue will not proceed and application monies will be
refunded to the applicants, by cheque (at the applicant's risk),
without interest as soon as practicable thereafter.
The Open Offer
The Grit Board is offering Qualifying Shareholders the
opportunity to subscribe for New Ordinary Shares on a pre-emptive
basis through the Open Offer pro rata to their holdings as at the
Record Date at the Issue Price on the basis of 1.3011 New Ordinary
Shares for every 1 Existing Ordinary Share held (the "Open Offer
Entitlement"). Fractions of New Ordinary Shares will be disregarded
in calculating Qualifying Shareholders' Open Offer Entitlements and
each Qualifying Shareholder's entitlement to New Ordinary Shares
will be rounded down to the nearest whole number.
The Open Offer provides an opportunity for Qualifying
Shareholders to participate in the fundraising by subscribing for
their respective Open Offer Entitlements. Valid applications under
the Open Offer will be satisfied in full up to applicants' Open
Offer Entitlements. Qualifying Shareholders who wish to subscribe
for more New Ordinary Shares than their Open Offer Entitlement
should make an application under the Excess Application
Facility.
Any New Ordinary Shares not issued to Qualifying Shareholders to
satisfy their Open Offer Entitlements may, at Grit's discretion, be
apportioned between those Qualifying Shareholders who have applied
under the Excess Application Facility, Placees pursuant to the
Placing and/or Selling Shareholders in accordance with the terms of
the Share Purchase Agreements. Applications under the Excess
Application Facility may be scaled back at the Grit Board's
discretion and therefore no assurance can be given that such
applications by Qualifying Shareholders will be met in full or in
part or at all.
Shareholders should note that the Open Offer is not a rights
issue. As such, Qualifying Non-CREST Shareholders should note that
their Open Offer Application Forms are not negotiable documents and
cannot be traded. Qualifying CREST Shareholders should further note
that, although the Open Offer Entitlements and Excess Open Offer
Entitlements will be admitted to CREST and be enabled for
settlement, the Open Offer Entitlements and Excess Open Offer
Entitlements will not be tradeable or listed and applications in
respect of the Open Offer may only be made by the Qualifying
Shareholder originally entitled or by a person entitled by virtue
of a bona fide market claim.
The terms and conditions which apply to the Open Offer are set
out in Part XV (Terms and Conditions of Application under the Open
Offer) of the Prospectus and Circular.
The Placing
finnCap, Baden Hill and Perigeum Capital have each agreed to use
their respective reasonable endeavours to procure subscribers
pursuant to the Placing for the New Ordinary Shares on the terms
and subject to the conditions set out in Part XIV (Terms and
Conditions of Application under the Placing) of the Prospectus and
Circular.
The Placing will close at 3.00p.m. (GMT) in the UK / 3.00p.m.
(MUT) in Mauritius on 17 December 2021 (or such later date as the
Company, finnCap and Baden Hill may agree). If the Placing is
extended, the revised timetable will be notified through an
RIS.
Commitments under the Placing, once made, may not be withdrawn
without the consent of the Grit Board. However, as described above,
the allocation of New Ordinary Shares to investors pursuant to the
Placing will be at Grit's discretion. Under the Issue, priority
will be given to applications for New Ordinary Shares received from
Shareholders pursuant to the Open Offer. If 100 per cent. of
Qualifying Shareholders elect to take up their Open Offer
Entitlement of New Ordinary Shares pursuant to the Open Offer then
no New Ordinary Shares will be placed pursuant to applications
received in connection with the Placing.
As at the Latest Practicable Date, Grit had already received
written confirmation from existing Shareholders and new investors
of their intention to subscribe, in aggregate, for in excess of
US$65 million pursuant to the Open Offer and Placing (including
from certain Shareholders and other investors intending to
subscribe for more than 5 per cent. of the maximum amount of the
Issue). The Company therefore expects to raise a minimum of
approximately US$145.6 million (assuming those indicative
commitments are met and the full consideration for the Proposed
Acquisition of US$80.6 million is satisfied by the issue of New
Ordinary Shares. Dependent upon the level of take up under the Open
Offer and the Placing, Grit may raise additional capital up to the
maximum amount of the Issue, being approximately US$215.6
million.
The terms and conditions which shall apply to any subscription
for New Ordinary Shares procured by finnCap, Baden Hill or Perigeum
Capital are set out in Part XIV (Terms and Conditions of
Application under the Placing) of the Prospectus and Circular.
Dilution
Assuming 125,000,000 New Ordinary Shares are issued, being the
minimum amount to be issued pursuant to the Issue:
-- Qualifying Shareholders who take up their full Open Offer
Entitlement (excluding any New Ordinary Shares acquired through the
Excess Application Facility) will not suffer any dilution to their
ownership and voting interests in the Company by virtue of the
issue of New Ordinary Shares pursuant to the Issue; and
-- Qualifying Shareholders who do not take up any of their Open
Offer Entitlement and Shareholders who are not eligible to
participate in the Open Offer will suffer a maximum dilution of
approximately 27.4 per cent. to their ownership and voting
interests in the Company by virtue of the issue of New Ordinary
Shares pursuant to the Issue.
Assuming that 414,647,283 New Ordinary Shares are issued, being
the maximum amount to be issued pursuant to the Issue:
-- Qualifying Shareholders who take up their full Open Offer
Entitlement (excluding any New Ordinary Shares acquired through the
Excess Application Facility) will not suffer any dilution to their
ownership and voting interests in the Company by virtue of the
issue of New Ordinary Shares pursuant to the Issue; and
-- Qualifying Shareholders who do not take up any of their Open
Offer Entitlement and Shareholders who are not eligible to
participate in the Open Offer will suffer a maximum dilution of
approximately 55.6 per cent. to their ownership and voting
interests in the Company by virtue of the issue of New Ordinary
Shares pursuant to the Issue.
Costs and expenses
The total costs, charges and expenses payable by the Company in
connection with the Proposed Acquisition, the Issue and Admission
are expected to be approximately US$10.4 million. There are no
commissions, fees or expenses to be charged to investors by the
Company.
Risk factors
Investors should consider fully and carefully the risk factors
associated with the Grit Group, the Proposed Acquisition, the New
Ordinary Shares, the Issue and Admission, which are set out on
pages 11 to 34 of the Prospectus and Circular.
Taxation
Certain information about UK and Mauritius taxation is set out
in Part XI (Taxation) of the Prospectus and Circular. Such
information is intended only as a general guide to the current UK
and Mauritius tax position. If you are in any doubt as to your tax
position, or if you are subject to tax in a jurisdiction other than
the United Kingdom or Mauritius, you should consult your own
independent tax adviser without delay.
General Meeting
As a result of the size of GREA when compared to the Grit Group,
the proposed acquisition of an additional 25.78 per cent.
shareholding in GREA is classified under Chapter 10 of the Listing
Rules as a Class 1 transaction and its implementation requires the
approval of Shareholders at the General Meeting. Although the size
of APDM when compared to the Grit Group means that the acquisition
by Grit of a 78.95 per cent. shareholding in APDM is not a
significant transaction for the purposes of the Listing Rules
requiring Shareholder approval, as the acquisition of the increased
stake in GREA and the stake in APDM are linked transactions, the
Board believes it appropriate to enable Shareholders to vote on the
transactions taken as a whole. The Grit Board is therefore seeking
approval of Shareholders at the General Meeting to approve the
Proposed Acquisition.
As the Open Offer is being made to all Shareholders on a
proportionate basis to their existing shareholdings and the issue
of New Ordinary Shares pursuant to the Placing will only be in
respect of any New Ordinary Shares not taken up by Shareholders
pursuant to their Open Offer Entitlements, there is no requirement
to waive the pre-emption rights in the Articles. Further, there is
no requirement from a Guernsey law perspective for Shareholder
approval to issue and allot the New Ordinary Shares as the Articles
provide the Grit Board with the authority to issue shares at their
discretion in such circumstances.
The Proposed Acquisition Resolution seeks approval for the
Proposed Acquisition and authorises the Directors to take all steps
and enter all agreements and arrangements necessary or appropriate
to implement the Proposed Acquisition. In accordance with the
Listing Rules, the Proposed Acquisition Resolution will be proposed
as an ordinary resolution; requiring a simple majority of votes in
favour in order to be passed. The Board has received written
confirmations from Shareholders holding, in aggregate, 53 per cent.
of the Company's issued share capital as at the date of the
Prospectus and Circular, of their intention to vote in favour of
the Proposed Acquisition Resolution.
A notice convening a general meeting to be held at 10.00 a.m.
(GMT) / 2.00 p.m. (MUT) on 14 December 2021, at which the Proposed
Acquisition Resolution will be proposed, is set out at the end of
the Prospectus and Circular.
The results of the votes cast at the General Meeting will be
announced as soon as possible, once known, through a Regulatory
Information Service, and on Grit's website at
https://grit.group/regulatory-news- announcements/.com.
Completion of the Proposed Acquisition is conditional, inter
alia, on the Proposed Acquisition Resolution being passed.
Further information
Your attention is drawn to the further information set out in
the Prospectus and Circular. Shareholders should read all of the
information contained in the Prospectus and Circular before
deciding on the action to take in relation to the General
Meeting.
Recommendation and voting intentions
The Board of Grit considers the Issue, the Proposed Acquisition
and the passing of the Proposed Acquisition Resolution to be in the
best interests of the Grit Group and its Shareholders as a
whole.
As referred to above, under the Listing Rules, Grit's entry into
the Interested Party Share Purchase Agreements is classed as a
smaller related party transaction under the Listing Rules. The Grit
Board, which has been so advised by finnCap, believes that the
terms of the Proposed Acquisition and the entry into the Interested
Party Share Purchase Agreements are fair and reasonable so far as
Shareholders are concerned. finnCap has taken into account the Grit
Board's commercial assessment of the effect of the Proposed
Acquisition.
Accordingly, the Directors unanimously recommend Shareholders to
vote in favour of the Proposed Acquisition Resolution, as those
Directors who hold Ordinary Shares intend to do in respect of their
own holdings of Ordinary Shares, representing approximately 7.35
per cent. of the Existing Ordinary Shares.
The Board has received written confirmations from Shareholders
holding, in aggregate, 53 per cent. of the Company's issued share
capital as at the date of the Prospectus and Circular, of their
intention to vote in favour of the Proposed Acquisition
Resolution.
Expected Timetable
2021
------------------------------------------------ -------------------------
Record Date for entitlements under the close of business on 19
Open Offer Nov
-------------------------
Publication of the Prospectus, posting 22 Nov
of the Notice of General Meeting and the
Open Offer Application Forms and Issue
opens
-------------------------
Ex entitlement date for the Open Offer 7.00a.m. (GMT) on 22 Nov
-------------------------
Prospectus & Circular deemed posted - GM 25 Nov
notice period begins
-------------------------
Open Offer Entitlements and Excess CREST as soon as possible on
Open Offer Entitlements enabled in CREST 25 Nov
and credited to stock accounts of Qualifying
CREST Shareholders
-------------------------
Latest time and date for receipt of Forms 10.00 a.m. (GMT) / 2.00
of Proxy and CREST voting instructions p.m. (MUT) on 10 Dec
-------------------------
Recommended latest time and date for requesting 04:30 p.m. (GMT) on 10
withdrawal of Open Offer Entitlements and Dec
Excess CREST Open Offer Entitlements from
CREST
-------------------------
Recommended latest time and date for depositing 3.00 p.m. (GMT) on 13
Open Offer Entitlements and Excess CREST Dec
Open Offer Entitlements into CREST
-------------------------
General Meeting 10.00 a.m. (GMT) / 2.00
p.m. (MUT) on 14 Dec
-------------------------
Announcement of the results of the General 14 Dec
Meeting
-------------------------
Latest time and date for splitting Open 3.00 p.m. (GMT) 14 Dec
Offer Application Forms (to satisfy bona
fide market claims only)
-------------------------
Latest time and date for receipt of completed 11.00 a.m. (GMT) in the
Open Offer Application Forms and payment UK / 11.00 a.m. (MUT)
in full under the Open Offer or settlement in Mauritius on 16 Dec
of relevant CREST instructions
-------------------------
Latest time and date for commitments under 03.00 p.m. (GMT) in the
the Placing UK / 03.00 p.m. (MUT)
in Mauritius on 16 Dec
-------------------------
Announcement of result of Open Offer and 20 Dec
Placing
-------------------------
Admission and dealings in New Ordinary 8.00 a.m. (GMT) on 21
Shares commence* Dec
-------------------------
CREST accounts and CDS accounts credited as soon as possible on
with uncertificated New Ordinary Shares 21 Dec
in respect of the Issue
-------------------------
Where applicable, definitive share certificates within 15 Business Days
in respect of the New Ordinary Shares issued of Admission
pursuant to the Issue despatched by post
-------------------------
* Shareholders and prospective investors should note that the Share Purchase Agreements are inter-conditional and are subject to the satisfaction, or waiver, of a number of conditions. There can therefore be no guarantee that the Proposed Acquisition will complete. Subject to the satisfaction or waiver of the conditions, the Proposed Acquisition is expected to complete later than Q4 2021. Accordingly, Admission of those New Ordinary Shares to be issued to the Selling Shareholders will take place subsequent to Admission of those New Ordinary Shares to be issued pursuant to the Open Offer and Placing and an announcement relating to such Admission will be made by the Company through a Regulatory Information Service and a SEM announcement.
The dates and times specified above are subject to change.
SHARE CAPITAL
Number of issued Ordinary Shares at the Latest
Practicable Date 331,235,546
Maximum number of New Ordinary Shares to be issued 414,647,283
---------------
Price at which the New Ordinary Shares will be US$0.52
issued
---------------
Maximum number of Ordinary Shares in issue immediately
following Admission* 745,882,829
---------------
Estimated market capitalisation of the Company US$387,859,071
at Completion*
---------------
New Ordinary Shares as a percentage of the Enlarged Approximately
Share Capital immediately approximately following 56 per cent.
Completion*
---------------
* Assuming 414,647,283 New Ordinary Shares are issued in
connection with the Proposed Acquisition and pursuant to the Open
Offer and Placing and that no additional Ordinary Shares are issued
by the Company between the Latest Practicable Date and
Completion.
DEALING CODES
ISIN - Open Offer Entitlement GG00BPBJRL02
SEDOL - Open Offer Entitlement BPBJRL0
-------------
ISIN - Excess CREST Open Offer Entitlement GG00BPBJRM19
-------------
SEDOL - Excess CREST Open Offer Entitlement BPBJRM1
-------------
ISIN - Ordinary Shares GG00BMDHST63
-------------
SEDOL - Ordinary Shares BMDHST6
-------------
LSE Share Code - Ordinary Shares GR1T
-------------
SEM Share Code - Ordinary Shares DEL.N0000
-------------
Disclaimer
This announcement is an advertisement and does not constitute a
prospectus and investors must subscribe for or purchase any shares
referred to in this announcement only on the basis of information
contained in the Prospectus to be published by the Company (and in
any supplementary prospectus) and not in reliance on this
announcement. This announcement does not constitute, and may not be
construed as, an offer to sell or an invitation to purchase
investments of any description or a recommendation regarding the
issue or the provision of investment advice by any party. No
information set out in this announcement is intended to form the
basis of any contract of sale, investment decision or any decision
to purchase shares in the Company.
Each of finnCap Limited ("finnCap") and Baden Hill, a trading
name of Northland Capital Partners Limited ("Baden Hill") is
authorised and regulated in the United Kingdom by the FCA and is
acting for the Company and no other person in connection with the
matters described in this announcement. finnCap and Baden Hill will
not be responsible to any person other than the Company for
providing any of the protections afforded to clients of finnCap or
Baden Hill, nor for providing any advice in relation to any matter
referred to in this announcement.
Perigeum Capital Ltd ("Perigeum Capital"), which is regulated in
Mauritius by the Mauritian Financial Services Commission, is acting
for the Company and no other person in connection with the matters
described in this announcement and will not be responsible to any
other person for providing the protections afforded to clients of
Perigeum Capital or for providing advice in connection with the
matters described in this announcement. Perigeum Capital is not
responsible for the contents of this document.
The shares of the Company have not been, and will not be,
registered under the U.S. Securities Act of 1933 (as amended) (the
"Securities Act") or with any securities regulatory authority of
any state or other jurisdiction of the United States, and may not
be offered or sold in the United States or to, or for the account
or benefit of, U.S. Persons absent registration or an exemption
from registration under the Securities Act. Moreover, the shares of
the Company have not been, nor will they be, registered under the
applicable securities laws of Australia, Canada, the Republic of
South Africa or Japan. Further, the Company is not, and will not
be, registered under the US Investment Company Act of 1940, as
amended. The shares of the Company will be offered and sold outside
of the United States to non-U.S. Persons in reliance on the
exemption from the registration requirements of the Securities Act
provided by Regulation S thereunder. The Issue and the distribution
of this announcement in certain jurisdictions may be restricted by
law and accordingly persons into whose possession this announcement
is received are required to inform themselves about and to observe
such restrictions.
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "may", "might", "will" or
"should" or, in each case, their negative or other variations or
similar expressions. All statements other than statements of
historical facts included in this announcement, including, without
limitation, those regarding the Company's financial position,
strategy, plans, proposed acquisitions and objectives, are
forward-looking statements.
Forward-looking statements are subject to risks and
uncertainties and, accordingly, the Company's actual future
financial results and operational performance may differ materially
from the results and performance expressed in, or implied by, the
statements. These factors include but are not limited to those
described in the Prospectus. These forward-looking statements speak
only as at the date of this announcement and cannot be relied upon
as a guide to future performance. Subject to their respective legal
and regulatory obligations (including under the Prospectus
Regulation Rules), the Company, finnCap and Baden Hill expressly
disclaim any obligations or undertaking to update or revise any
forward-looking statements contained herein to reflect any change
in expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based
unless required to do so by law or any appropriate regulatory
authority, including FSMA, the Listing Rules, the Prospectus
Regulation Rules, the Disclosure Guidance and Transparency Rules,
the UK Prospectus Regulation and the UK Market Abuse
Regulation.
None of the Company, finnCap, Baden Hill, Perigeum Capital or
any of their respective affiliates, accepts any responsibility or
liability whatsoever for, or makes any representation or warranty,
express or implied, as to this announcement, including the truth,
accuracy or completeness of the information in this announcement
(or whether any information has been omitted from the announcement)
or any other information relating to the Company or associated
companies, whether written, oral or in a visual or electronic form,
and howsoever transmitted or made available or for any loss
howsoever arising from any use of the announcement or its contents
or otherwise arising in connection therewith. The Company, finnCap,
Baden Hill, Perigeum Capital and their respective affiliates
accordingly disclaim all and any liability whether arising in tort,
contract or otherwise which they might otherwise have in respect of
this announcement or its contents or otherwise arising in
connection therewith.
Information to Distributors
Solely for the purposes of the product governance requirements
of Chapter 3 of the PROD Sourcebook (the "UK Product Governance
Requirements"), and disclaiming all and any liability, whether
arising in tort, contract or otherwise, which any "manufacturer"
(for the purposes of the UK Product Governance Requirements) may
otherwise have with respect thereto, the New Ordinary Shares have
been subject to a product approval process, which has determined
that the New Ordinary Shares are: (i) compatible with an end target
market of retail investors and investors who meet the criteria of
professional clients and eligible counterparties, each as defined
in Chapter 3 of the FCA's Conduct of Business Sourcebook; and (ii)
eligible for distribution through all permitted distribution
channels (the "Target Market Assessment").
Notwithstanding the Target Market Assessment, distributors
should note that: the market price of the New Ordinary Shares may
decline and investors could lose all or part of their investment;
the New Ordinary Shares offer no guaranteed income and no capital
protection; and an investment in the New Ordinary Shares is
compatible only with investors who do not need a guaranteed income
or capital protection, who (either alone or in conjunction with an
appropriate financial or other adviser) are capable of evaluating
the merits and risks of such an investment and who have sufficient
resources to be able to bear any losses that may result therefrom.
The Target Market Assessment is without prejudice to the
requirements of any contractual, legal or regulatory selling
restrictions in relation to the Issue. Furthermore, it is noted
that, notwithstanding the Target Market Assessment, finnCap and
Baden Hill will only procure investors who meet the criteria of
professional clients and eligible counterparties.
For the avoidance of doubt, the Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness
for the purposes of Chapters 9A or 10A of the FCA's Conduct of
Business Sourcebook; or (b) a recommendation to any investor or
group of investors to invest in, or purchase, or take any other
action whatsoever with respect to the New Ordinary Shares.
Each distributor is responsible for undertaking its own target
market assessment in respect of the New Ordinary Shares and
determining appropriate distribution channels.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IOEPPGWUGUPGPGG
(END) Dow Jones Newswires
November 22, 2021 02:00 ET (07:00 GMT)
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