Grit Real Estate Income Group (formerly Mara Delta) has announced the successful conclusion of a related party empowerment transaction.
“Apart from successfully raising US$121.2 million in June this year, our rights offer enabled us to introduce new strategic shareholders to the group,” commented CEO Bronwyn Corbett.
“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 in South Africa,” she added.
“Our collaboration with the PIC and through the support of our other shareholders to implement this transaction, we will ensure a long term, sustainable funding solution for our black economic empowerment partners.”
“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,” Corbett concluded.
Under the directorship of Yolanda Miya, Nomzamo Radebe, Neo Mokhobo, Sakhepi Mhlongo and Nchaupe Bright Laaka, Drive in Trading is a black empowered investment holding company investing in listed property stocks. Having subscribed for 23 250 000 ordinary shares in Grit as part of the rights offer, Drive in Trading now owns 11.15% of the Company.
In terms of the transaction, Drive in Trading will be a strategic partner to Grit going forward and will 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. In addition, members of the consortium will lead Grit’s efforts to internalise the property and facilities management within the group.
Drive in Trading’s subscription for Grit shares was originally funded by a US$32 550 000 short-term loan advanced by the Public Investment Corporation. Subsequently, Drive in Trading secured a senior term loan facility with Bank of America (BAML) of US$33 400 000 to settle the short-term loan.
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 US$35 000 000, should a trigger event occur in terms of the contingency repurchase obligation (CRO) agreement.
In turn, the PIC and Grit entered into the 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% of the CRO exposure up to a maximum of US$17 500 000.
The Transaction has been deemed to be a related party transaction by the JSE Limited and accordingly requires the approval of the shareholders of Grit. The Company has received irrevocable undertakings to vote in favour of the Transaction from shareholders holding 51.2% of the shares in the Company that are eligible to vote on the Transaction. PIC and Drive in Trading will not be eligible to vote on the Transaction.