Hosken Consolidated Investments’ (HCI) wholly owned subsidiary Squirewood Investments 64 is to buy 1.1-million shares in HCI owned by the Southern African Clothing and Textile Workers’ Union (Sactwu) for R131 per share, or R144.1m in total.
In addition, HCI has concluded a sale of shares and claims agreement against three wholly owned subsidiaries in the HCI group — Gallagher Estate Holdings, HCI Rand Daily Mail and HCI Solly Sachs House — which Sactwu will acquire for R549.7m.
HCI said in a statement that Sactwu had held its interest in HCI since 1997, primarily as an income-generating asset and investment vehicle to benefit union members through investments in media, hotels, casinos, coal mines and transport.
Sactwu holds significant property interests outside its investment in HCI with most of its properties occupied by the union itself.
Sactwu has sought to increase its interests in investment property to generate more regular cash flow to fund its operational and member benefit programmes and employment projects.
Since HCI distributes cash dividends to its shareholders every six months, Sactwu has been disposing of HCI shares on market through the JSE order book to enable it to fund its obligations. As these disposals are not sustainable over a longer period of time, Sactwu engaged HCI to find solutions for its cash flow requirements.
The parties agreed that, given Sactwu’s desire to increase its interests in property, investments in immovable property generating sustainable monthly cashflows was probably the most appropriate asset class for Sactwu to acquire.
HCI granted Sactwu the opportunity to conduct a due diligence of the group’s property assets. Sactwu selected the three properties.
In addition, Squirewood agreed to acquire 1.1-million HCI shares from Sactwu for cash, thereby avoiding the need for further disposals of HCI shares on market through the JSE.
HCI considered the purchase price payable by Squirewood of R131 per share in terms of the transactions, which represented a discount of about 2% to the 30-day volume weighted average price of HCI shares on July 2, to be value accretive to HCI shareholders, it said.
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