Johannesburg, South Africa – Redefine Properties continues to advance its strategic priority of strengthening its balance sheet to offset the ongoing uncertainty and negative effects of the COVID-19 pandemic.
In a move to drive the business forward in the face of challenging property fundamentals locally and internationally, today it concluded a deal that will see global private investment firm Starwood Capital Group acquire its 111.9 million shares in UK-based RDI REIT for 95 pence per share. The deal represents a 20.9% premium to the ruling share price.
The disposal generates Redefine GBP106.3 million, which translates, at the current exchange rate, to R2.3 billion.
Given that a portion (49.8 million RDI shares) of Redefine’s investment in RDI is encumbered by an exchangeable bond is issued in September 2016, Redefine today made a tender offer to the holders of the outstanding EUR150 000 000 1.50% Secured Exchangeable Bonds due September 2021 exchangeable into the ordinary shares of RDI, of which EUR117.2 million are presently outstanding.
Undertakings from bondholders in support of the tender offer totalling 77.1% of the amount outstanding have been received.
Redefine financial director Leon Kok says that the disposal of the RDI shares and the settlement of the bonds (assuming all bonds are redeemed) will reduce Redefine’s loan-to-value ratio by approximately 1.1%.
Following the disposal, which is denominated in pound sterling, and the redemption of bonds pursuant according to the tender offer, which is denominated in euro, Redefine will restructure its pound sterling debt portfolio.
Redefine chief executive officer Andrew Konig says the exit out of RDI substantially advances Redefine’s stated intention of simplifying and solidifying its asset platform, as well as eliminating multiple entry points for South African equity investors into the same investment opportunities. Furthermore, it also improves the company’s risk profile by eliminating a risk universe over which it has no direct management influence.
Konig says that Redefine’s strategic intent to strengthen its balance sheet, recycle non-core assets and boost liquidity continues to place the company in a strong position to withstand the risks and challenges of the current uncertain operating environment.
The disposal will also allow Redefine to re-strategise and re-allocate its financial and capital resources to position the company for sustained value creation in a post-COVID-19 environment.
“In the prevailing environment, the knowns are outweighed by evolving unknowns. We intend to ensure we can manage the variables under our control while being extremely well placed to benefit once conditions improve,” concludes Konig.