Redefine Properties has proposed a share-for-share offer to acquire all remaining shares in EPP it does not already own.
If approved, the transaction will see EPP delist from the Johannesburg and Luxembourg Stock Exchanges and operate as a subsidiary of Redefine Properties, which holds a 45.4% interest in EPP with a R6.5 billion carrying value.
EPP’s high level of gearing (c.55.6%) and liquidity challenges, including significant loan maturities in 2022 and 2023, have prevented the REIT from paying dividends since mid-2019. Besides impacting Redefine Properties’ distributable income, the loss of dividend income from EPP has also negatively impacted on Redefine’s interest cover ratio and corresponding loan covenant headroom.
EPP’s board has unanimously agreed that the proposed delisting and Redefine Properties’ offer is in the best interest of the company.
Without intervention, the prospect of EPP resuming regular dividend payments in the short to medium-term are slim, creating the possibility for a longer-term dividend drought which will have a material adverse effect on Redefine Properties.
Redefine Properties’ offer will be made to all EPP shareholders (except IGroup) at a swap ratio of 2.70 Redefine shares for each EPP share held. Should EPP’s shareholders approve the transaction, Redefine Properties will issue up to 1 135 037 043 new Redefine shares.
The transaction is subject to various conditions precedent.
