JSE-listed diversified real estate investment trust Dipula Income Fund on Thursday secured shareholder approval to simplify its capital structure from a dual-share model to that of a single share structure.
The group notes in a Sens statement that “all resolutions required to be passed by Dipula shareholders in order to approve the scheme were passed by the requisite majority of shareholders”.
In a separate media statement, Dipula says it “received overwhelming support from its shareholders to collapse its dual share capital structure into a single class of ordinary shares”.
It adds that the restructuring of its capital structure “aligns interests of all stakeholders” and is expected to “improve tradability and liquidity of [its] shares”. This, it says, will “better position Dipula for growth”.
Since listing on the JSE in 2011, Dipula has had a dual share capital structure comprising listed DIA shares and DIB shares.
“DIA shares have preferential entitlements to dividends [if declared], which grows annually by the lower of CPI and 5%. DIB shares are the ‘ordinary’ equity of Dipula, receiving any residual dividend after settlement of the DIA shares’ preferential dividend entitlement,” it explains.
“In terms of the scheme of arrangement, Dipula will buy back and cancel all its issued DIA shares at a swop ratio of 2.4 DIB shares for every DIA share in issue,” the group adds.
“There has been a disconnect between Dipula’s underlying historic performance and its share price performance,” says Izak Petersen, CEO of Dipula.
“This transaction offers Dipula shareholders a path to eliminate misalignment of interests between A and B shareholders. This may lead to a rerating of our share and has the potential to place Dipula back on a growth path based on a reasonable cost of equity.”
Petersen says a single class of ordinary shares is likely to result in improved tradeability and liquidity as well as possible index inclusion over time.
Dipula indicates that it is now well positioned to take advantage of many opportunities it couldn’t previously consider due to the wrong pricing of its share.
“We are deeply honoured by the level of support received from our shareholders which is testament of their belief in the future of Dipula, and now the stage is set to create value,” says Petersen.
It is expected that the listing of DIA shares on the JSE will be terminated on or about Tuesday, May 24, 2022.