Grayprop will propose two indivisible schemes of arrangement in terms of which Grayprop will become the holder of all the Grayvest shares and Grayvest debentures for a consideration of 463 Grayprop units for every 100 Grayvest linked units held.
The Grayvest shares and Grayvest debentures currently trade as indivisible linked units on the JSE Securities Exchange South Africa. Grayprop currently does not own any linked units in Grayvest.
Upon implementation of the schemes, the listing of Grayvest linked units on the JSE will be terminated.
The directors of Grayvest have appointed Ernst & Young to advise them on whether the terms and conditions of the schemes are fair and reasonable to scheme members.
The directors of Allan Gray Property Trust Management (AGPTM) and Grayvest said in a atatement that they are of the view that the schemes proposed by Grayprop will be beneficial to both Grayprop unitholders and scheme members.
The tradability of the Grayprop units is expected to improve due to the larger market capitalisation of Grayprop, the increased number of Grayprop units in issue and the enlarged pool of Grayprop unitholders.
This will especially benefit Grayvest linked unitholders as trade in their linked units on the JSE is currently sporadic, they said.
In terms of the proposed Capital Gains Tax (CGT) legislation, any capital gain or loss by a Property Unit Trust will be disregarded for CGT purposes. CGT will be applicable to unitholders on disposal of their units.
The parties said that an entity with greater critical mass will be created, resulting in a greater capability to raise capital for the acquisition of attractive investment property, which will, in turn, broaden the base of potential new investors. In addition economies of scale will be exploited to the benefit of unitholders.
After the implementation of the schemes, Grayprop's market capitalisation is expected to exceed R2-billion, which will make Grayprop the largest property investment entity listed on either the PUT or PLS
sectors of the JSE lists as measured by market capitalisation.
'This will enhance investors' and sector analysts' awareness of Grayprop,' the parties said.
The directors of Grayvest also announced they are to change the year-end of Grayvest from December 31 to September 30 to bring it in line with that of Grayprop.
Grayvest will therefore make an income distribution in respect of the three-month period ending September 30, 2001.
The previous income distribution, declared but not yet paid, was for the six-month period ended June 30, 2001.
The transaction is subject to the fulfilment of a number of suspensive conditions, including approval by the Registrar of Unit Trust Companies, the Grayprop trustee, the relevant competition authority, the requisite majorities of share scheme members and debenture scheme members and the majority of Grayprop unitholders.
Grayprop unitholders and Grayvest linked unitholders are advised to continue to exercise caution when dealing in their units or linked units, as the case may be, until a further announcement is made.