DURBAN - Pepkor Holdings and two of its subsidiaries, Ultimo Properties and JD Consumer Electronics and Appliances, said on Friday they have entered into a framework agreement with Steinhoff Africa Holdings to acquire 10 properties and an undivided half share in another property for R1.05 billion.
Pepkor said the related party transaction will be settled by issuing 70 million new Pepkor shares to the respective Steinhoff subsidiaries.
“It is considered appropriate to issue new Pepkor shares in order to preserve cash resources. The Pepkor consideration shares equates to 1.91 percent of the issued share capital of Pepkor prior to issuing the Pepkor consideration shares,” the group said.
The Pepkor consideration shares will be issued at an issue price of R15 a share, which represents a premium of 16 percent to the volume weighted average trading price of Pepkor’s shares traded on the JSE over the 30 trading days up to and including November 19, being the date prior to the board of directors of Pepkor approving the key terms of the transaction.
The entities within the Pepkor group of companies currently lease these 11 properties and this amount to R111 million rental as disclosed during Pepkor’s 2020 financial year results.
Pepkor said the rationale behind the acquisition is that the properties are predominantly used by its operating entities as distribution centres with one property being used as a corporate head office and one property being used as a call centre.
“The board believes that the transaction will result in operational cost savings, as the rental expenses relating to the properties rented by the Pepkor Group from the Steinhoff subsidiaries amounted to R111m during Pepkor’s 2020 financial year, is expected to be accretive on an earnings per share basis (without taking IFRS16 into account) and results in a cash saving for Pepkor,” the group said.
The group said another benefit is that it will secure ownership of high roof distribution centre buildings for Ackermans, Pepkor Speciality and JD Group that are strategically important to their businesses and it will secure ownership of Tenacity’s call centre and JD Group’s corporate head office, the locations of which are ideally suited to cater for their operational needs.
However, the transaction is subject to a number of conditions which include that it must be concluded by or before March 15, 2021.
The transaction must be in compliance with the approvals as required by the Competition Act, Pepkor shareholders approval and the Steinhoff subsidiaries must obtain consent of Steinhoff’s creditors under the written contingent payment undertaking.
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