TIDMGR1T
RNS Number : 9979H
Grit Real Estate Income Group
30 November 2022
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" )
ACCRETIVE RESOLUTION TO THE GUARANTEE AGREEMENT WITH THE
GOVERNMENT EMPLOYEES PENSION FUND OF SOUTH AFRICA, ALLOWING FOR
GRIT'S OBLIGATIONS TO BE FULLY DISCHARGED IN RELATION TO THE DRIVE
IN TRADING STRUCTURE
The board of Directors (the "Board") of Grit Real Estate Income
Group Limited announces the signing of a variation to the Guarantee
Agreement between the Company and the Government Employees Pension
Fund of South Africa ("GEPF"), represented by Public Investment
Corporation SOC Limited ("PIC"), allowing for the Drive in Trading
(Pty) Ltd ("DiT") structure to be wound up and the Company's
obligations under the Guarantee Agreement (described below) to be
fully discharged.
The existing Guarantee Agreement only provides inter alia for
the sale of 23.25 million Grit Ordinary Shares owned by the DiT
("DiT Security Shares") on the open market. The addendum to the
Guarantee Agreement (the "Addendum") enables the Company to take
direct ownership of their proportionate number of DiT Security
Shares in exchange for making the US$17.5 million Guarantee
Agreement payment to GEPF/PIC, and for PIC to similarly add its DiT
Security Shares to its existing shareholding in the Company.
Following these steps, the Company's obligations under the
Guarantee Agreement will be fully discharged and the potential
market overhang in the Ordinary Shares of Grit on either the London
Stock Exchange or the Stock Exchange of Mauritius will be
removed.
Bronwyn Knight, CEO of Grit Real Estate Income Group Limited,
commented:
"We are pleased to have agreed an accretive resolution to the
winding up of the Drive in Trading structure, whilst fully
discharging Grit of its obligations under the Guarantee Agreement
and removing a market overhang. On a 30 June 2022 pro forma basis,
the combined impact of this transaction would have delivered an
increase in the Company's EPRA NRV from the last reported US$79.4
cps to US$80.5 cps.
Final implementation of the transaction is expected upon South
African regulatory approvals in early 2023 and the LTV impact of
the transaction is expected to be offset by proceeds received by
Grit from deferred rental collections and asset sales already
concluded in 2022."
Further Background:
South African legislation on Black Economic Empowerment ("BEE")
was applicable to the Company whilst still listed on the
Johannesburg Stock Exchange. DiT, the Group's BEE consortium,
obtained cost-effective third-party debt financing for Grit
Ordinary Shares in 2017 by pledging its 23.25 million Grit Ordinary
Shares subscribed for at that date, and on the strength of an
additional US$35.0 million credit guarantee directly from PIC.
Separately, PIC and Grit agreed that Grit would make PIC/GEPF whole
for 50 per cent. Of any potential losses suffered by the PIC/GEPF
under their credit guarantee, up to a maximum of US$17.5 million
(the "Guarantee Agreement"). The transaction was approved by Grit
shareholders at that time.
In August 2020, the GEPF became the lender to DiT as a result of
their credit guarantee being called. In anticipation of the DiT
structure being unwound, the parties concluded that the Guarantee
Agreement only provided inter alia for the sale of DiT Security
Shares through the open market, in a process that would be under
the control of PIC, and which would be expected to introduce
volatility to the Grit share price. Accordingly, the Company and
PIC have signed an Addendum that enables the Company to take
ownership of DiT's proportionate number of DiT Security Shares in
exchange for Grit paying US$17.5 million to GEPF/PIC under the
Guarantee Agreement. The formula to determine proportionate
entitlements to DiT Security Shares is defined as 23,250,000
Ordinary Shares x US$17.5 million/DiT outstanding loan balance at
implementation date, capped at 11,625,000 Ordinary Shares. This
payment by Grit and the subsequent transfer to Grit of its share of
the DiT Security Shares will occur once PIC enforces its rights
under the amended Guarantee Agreement.
Following delivery of the DiT Security Shares to Grit, Grit
intends to repurchase the DiT Security Shares for a nominal value
of US$0.01 per share, utilising the Company's existing share
buyback programme. The repurchased DiT Security Shares will be held
in treasury, not cancelled.
Following these steps, the Company's obligations under the
Guarantee Agreement will be fully discharged.
Further, PIC has indicated its preference to add its entitlement
to DiT Security Shares to its existing holdings in the Company
(currently representing approximately 17.09% of Grit's issued share
capital), resulting in the removal of a market overhang in the
Ordinary Shares of Grit on either the London Stock Exchange or the
Stock Exchange of Mauritius.
As reported in the Company's annual report for the year to 30
June 2022, Grit has already provided US$14.51 million in respect of
the Guarantee Agreement, being the Group's Guarantee exposure net
of the expected value of its DiT Security Shares. On a 30 June 2022
pro forma basis, the transaction would have had an immaterial
effect on Grit's income statement, while the combined impact of the
provision reversal and share buyback would have resulted in an
increase in the Company's EPRA NRV from the last reported US$79.4
cps to US$80.5 cps.
The cash funding of the US$17.5 million Guarantee payment would
have resulted in 30 June 2022 pro forma Group LTV increasing,
however the collection of prior year rent deferrals and asset sale
proceeds already received post 30 June 2022 are expected to result
in Grit's LTV remaining substantially unchanged on implementation
date.
The variation to the Guarantee Agreement is subject to South
African regulatory approval, which is expected to be obtained, and
final closing achieved during the first quarter of 2023. A further
update will be provided once all conditions precedent relating to
this transaction are cleared.
By Order of the Board
30 November 2022
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Knight, Chief Executive Officer +230 269 7090
Darren Veenhuis, Investor Relations +44 779 512 3402
H/Advisors Maitland - Communications Advisor
+44 7747 113 930 / +44
James Benjamin 20 7379 5151
Alistair de Kare-silver Grit-maitland@h-advisors.global
finnCap Ltd - UK Financial Adviser
William Marle/Teddy Whiley (Corporate Finance) +44 20 7220 5000
Mark Whitfeld/Pauline Tribe (Sales) +44 20 3772 4697
Monica Tepes (Research) +44 20 3772 4698
Perigeum Capital Ltd - SEM Authorised Representative
and Sponsor
Shamin A. Sookia +230 402 0894
Kesaven Moothoosamy +230 402 0898
Capital Markets Brokers Ltd - Mauritian
Sponsoring Broker
Elodie Lan Hun Kuen +230 402 0280
NOTES:
Grit Real Estate Income Group Limited is the leading and
award-winning pan-African impact real estate company focused on
investing in, developing and actively managing a diversified
portfolio of assets in carefully selected African countries
(excluding South Africa). These high-quality assets are underpinned
by predominantly US$ 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 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/
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.
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