Grit concludes empowerment transaction
BUSINESS REPORT / 12 SEPTEMBER 2017 / ROY COKAYNE
JOHANNESBURG - Listed Grit Real Estate Income Group, which was previously named Mara Delta, has in a related party empowerment transaction sold 11.15% of the company to Drive in Trading, a black empowered investment holding company investing in listed property stocks.
Drive in Trading subscribed for 23.25 million ordinary shares in Grit as part of the successful rights offer by Grit in June. Drive in Trading’s subscription for Grit shares was originally funded by a $32.55m short term loan advanced by the Public Investment Corporation (PIC) and the company subsequently secured a senior term loan facility with Bank of America of $33.4m to settle the short term loan.
Listed Grit Real Estate Income Group, which was previously named Mara Delta, has in a related party empowerment transaction sold 11.15% of the company to Drive in Trading, a black empowered investment holding company investing in listed property stocks.
As security for the bank loan, the PIC has agreed to repurchase all the present and future liabilities and obligations of Drive in Trading under the loan facility, up to an amount of $35m, should a trigger event occur in terms of the contingency repurchase obligation (CRO) agreement. The PIC and Grit in turn entered into a Put Option Agreement in terms of which Grit agreed to limit the PIC’s exposure under the CRO by granting the PIC an irrevocable and unconditional option to require Grit, on the occurrence of a put option event under the Put Option Agreement, to purchase 50 percent of the CRO exposure up to a maximum of $17.5m.
Bronwyn Corbett, the chief executive of Grit, which is listed on the JSE and Stock Exchange of Mauritius and the only income group focused on real estate in Africa excluding South Africa, said yesterday (tues) that apart from successfully raising $121.2 million, Grit’s rights offer in June enabled the company to introduce new strategic shareholders to the group.
“Since a large portion of Grit’s shareholders are based in South Africa, and Grit is listed on the main board of the JSE, it is imperative that the company abides by the principles of Black Economic Empowerment (BEE) in South Africa,” she said.
Corbett said Grit would ensure a long term, sustainable funding solution for its BEE partners through its collaboration with the PIC and the support of their other shareholders in implementing this transaction.
“We are therefore very excited to conclude this funding transaction that will not only cement Drive in Trading as a strategic funding partner but will deepen the board’s skill and know-how, especially regarding empowerment initiatives in the communities where we operate,” she said. Drive in Trading’s directors are Yolanda Miya, Nomzamo Radebe, Neo Mokhobo, Sakhepi Mhlongo and Nchaupe Bright Laaka.
The company will be a strategic partner to Grit in terms of the transaction and be invited to nominate a non executive director to the board of Grit to spearhead the company’s commitment to empowering local communities in the areas of investment. Members of the consortium would also lead Grit’s efforts to internalise the property and facilities management within the group.
The transaction still requires the approval of shareholders of Grit but the company has received irrevocable undertakings to vote in favour of the transaction from shareholders holding 51.2 percent of the shares in the company who were eligible to vote on the transaction. The PIC and Drive in Trading will not be eligible to vote on the transaction.
- BUSINESS REPORT
LINK - https://www.iol.co.za/business-report/grit-concludes-empowerment-transaction-11184499