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Nova turns to the JSE

Directors set to bag nearly R1bn if listing proceeds.

The Nova Property Group intends to list the remaining Sharemax properties on the JSE before the end of the year which may provide an opportunity for around 33 000 Sharemax investors to liquidate their investments.

Nova, the rescue vehicle of the failed Sharemax property syndication scheme into which investors poured more than R5 billion, released a circular to debenture holders, the largest group of investors, which sets out the basis of the listing. 

Unfortunately, the circular is not a comprehensive prospectus and does not contain an independent fair and reasonable statement which endorses the proposal as being fair to debenture holders.

Nova CEO Dominique Haese did not respond to several requests for an interview to provide clarity on certain aspects of the proposed listing. This is not surprising as Nova suspended all communication with Moneyweb late last year claiming that Moneyweb was waging a vendetta against Nova and the directors.

This was after Moneyweb revealed that the four directors of the company collectively received 87% of the issued share capital for free after Nova fought for more than three years in various courts to keep it a secret. (Read the statement at the end of the article).

Listing information

The 61-page circular proposes a complex transaction that will see the Nova debentures being converted into shares in a new listed company. Investors will supposedly then be able to sell these shares on the open market and thereby realise at least a portion of their original investment.

The number of shares each debenture holder will receive is guided by a special formula that is linked to the underlying properties. This conversion ratio varies significantly between the different properties. Some debenture holders may receive shares to the value of more than 85% of the value of their debentures, while others will receive much less.

According to the schedule (see the bottom of the article) the holders of debentures linked to the Villa and Zambezi will take the biggest hits. Villa investors may receive shares to the value of only 15% of their original investment, while Zambezi investors should expect 20%.

Thus it is possible that these investors will not be overly excited about the proposal.

The circular also states that once the debentures are converted into shares, investors will surrender all rights and claims they had against Nova in terms of the original scheme of arrangement.

Directors are the winners

The circular also reveals a very interesting post listing shareholder structure. The 31 000 debenture holders, whose shares are valued at nearly R1.7 billion, will receive shares representing 34.45% of the new company.

In contrast, the seven founding shareholders of Nova, and specifically the four directors, will receive 43.25% of the shares.

Moneyweb has previously revealed that Connie Myburgh (chairman), Rudi Badenhorst, Dirk Koekemoer and Haese received 87% of the Nova shares for free in terms of the scheme of arrangement, which Myburgh penned.

The circular also states that the company may have a net asset value of around R2.3 billion after the listing. This means that the equity stake of the 31 000 investors amounts to around R790 million, significantly less than the R990 million the founding shareholders’ stake will amount to – assuming the listing goes ahead. 

The 2 000 former Sharemax investors who elected to convert their Nova debentures to Nova shares (which resulted in their debentures valued at around R94 million being cancelled), are set to receive a collective stake of 1.9%. This equates to around R43 million.

An unnamed corporate sponsor is destined to receive 5% of the shareholding that could be worth around R114 million for a contribution valued at only R2.59 million.

The circular also reveals that an unnamed investor is in the wings to invest R400 million of cash into the business on top of an additional R104.4 million to buy out certain classes of debentures that are due for redemption.

Proposed shareholding structure of the listed entity:

Shareholders

Proposed shareholding

Value of total asset base

Current debenture holders

34.45%

 

Seven founding shareholders, including directors

43.21%

 

New investor

15.43%

R400 million

Minority shareholders

1.9%

R55 million

Corporate sponsor

5%

R145 million

Total

   

Unfortunately, the circular is not a prospectus and does not provide clear information about critical assumptions.

Some of these questions relate to the ratio in which the founding shareholders would receive shares in the new company, as they receive nearly four shares for R1, while debenture holders receive only one R1 share for every R1 debenture they own.

Liquidation

The circular also states that liquidation would not be in the best interest for investors. It states that it could take up to four years for a liquidation to be finalised. It includes a possible liquidation scenario which shows that such an action may only realise around R542 million.

In an interview with Business Day, Haese said: “We have been wanting to go into the listed environment for the longest time; it’s the only way you can really unlock value. If we had to exit [debenture holders] today, they would probably get 50c in the rand. That is the reality of where we are.”

Voting on the proposal

A special debenture meeting is planned for November 10 in Pretoria where debenture holders will have to vote on the proposal.

Name of Debenture

Debenture value at 28/2/2017

Quantum of Debentures

Conversion ratio

148 Leeuwpoort Street

R7 000 000

9 700 000

72%

De Marionette

R68 641 452

84 687 603

81%

Shopmakers Village

R42 268 140

49 149 000

86%

Benoni Hyper

R34 476 716

100 475 000

34%

Magalieskruin

R29 830 456

29 830 453

100%

Silverwater Crossing

R74 549 000

74 549 000

100%

Athlone Park Shopping Centre

R59 623 237

90 722 594

66%

Waterglen Shopping Centre

R73 871 709

80 003 023

92%

Carletonville Centre

R38 809 234

38 809 250

100%

Flora Centre

R117 070 000

117 070 000

100%

Liberty Mall

R140 355 333

195 811 354

72%

Oxford Gate

R26 930 591

27 233 000

99%

Parkside Plaza

R44 000 331

73 800 234

60%

Range View

R19 216 398

26 770 000

72%

Rivonia Square Shopping Mall

R108 384 742

250 088 494

43%

Witbank Highveld

R102 566 370

102 566 375

100%

The Fern

R10 002 902

15 530 000

64%

Nelspruit Hyper

R51 652 037

63 648 000

81%

The Villa Retail Park (@ 30%)

R212 515 619

1462769847

15%

Sharemax Zambezi Retail Park (@ 50%)

R143 593 612

706060299

20%

Mont Rouge Residential Estate

R19 947 038

24387886

82%

Stonewood Country Estate

R13 684 236

37599000

36%

Berg & Dal

R35 309 362

47309358

75%

Sharemax Waterfall Estate

R51 802 395

107062000

48%

Sharemax Bay Estate

R58 718 407

69557491

84%

Country View

R60 109 761

77369000

78%

Theresa Park

R25 560 835

41814000

61%

Steenbok Crossing

R10 588 088

19176000

55%

Response from Dominique Haese, CEO of Nova:

Dear Mr van Niekerk,

It is regrettable that our efforts in engaging Moneyweb openly, constructively and in a bona vide fashion has not been reciprocated. In response Moneyweb has chosen to publish articles without prior reference to us, and in breach of your undertaking to allow us to see and comment on the articles first, which articles twist the facts, articulate a number of inaccuracies and untruths and seek to slander and defame the Nova Group and its directorate. We are considering our position and our rights in this regard are reserved.

It has become clear to us that any information that is provided by us to Moneyweb, will be twisted and used out of context for the purpose of further negative reporting of and concerning the Nova Group and its directorate and given that no further productive purpose would be served in engaging with Moneyweb, the Nova Group has decided to break off all forms of communication with Moneyweb.

 We will accordingly no longer respond to questions Moneyweb pose to us, requests for commentary on proposed articles or for that matter to any articles that Moneyweb might publish, subject of course to a reservation of the right to deal with any matter Moneyweb might publish, in a court of law.

Please ensure, should you elect to publish anything further regarding the Nova Group and any of its functionaries, that you include in such publication our above position, verbatim.

Yours faithfully,

Dominique Haese

CEO Nova Property Group

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The history of this company is tainted at best, with serious question marks regarding whether the directors are fit and proper. Why would the JSE permit this listing? Is the decision driven by the fact that it now has competition from the new exchanges and is being forced to accept scraps? Im not sure the new exchanges would contemplate this listing given the potential repetitional damage.

agree
JSE should refuse /reject this
in any event, I do not see many investors taking up shares – but I may be wrong (as I frequently am)
R1bn for those who stole the company—–crime pays.

Nova might be able to list the ex-Sharemax property portfolio on a S.A. Stock Exchange, but, to give just one example, one only have to look at the performance history of Bonatla (a listed real estate group) to see how the market will treat a below average property listing that includes dead horse stock such as unfinished developments, the half-finished Villa Mall, the poorly located and untenable Zambezi Retail Park and an overall book with no or very low profit margins. The Villa Mall and the Zambezi Retail Park do not deliver any positive return whilst also being the two biggest properties in the portfolio of Nova.

The listed market is relentless and the value of such a listed share will reduce to no-value junk for the Sharemax Investors.

This new scheme should be opposed with a vengeance.

I really feel for the poor Sharemax investors (many of them pensioners) for whom this saga is dragging on ad infinitum. For them to make sense of this proposal won’t be easy.

Sharemax Beleggers – Hierdie plan van Nova is ‘n verdere vergrypings-plan en uiterste poging om die dag van afrekening te probeer vermy. Hierdie plan is slegs om die aflosdatum van die skuldbriewe te vermy, wanneer die laaste Sharemax geboue verkoop moet word om die Sharemax beleggers finaal af te los.

Sharemax beleggers het voorheen ‘n onaanvaarbare, baie swak reelingskema van Nova goedgekeur en baie duur betaal vir die fout (verlies van geboue eienaarskap, afstand van 87% van jou vorige aandele regte, vrye teuels aan Nova om die beleggers te besteel, ens).

Moet nie dieselfde fout nou weer begaan nie. Moenie enige goedkeuring aan die direkteure van Nova verleen nie! Die plan gaan jou situasie net verder vererger en kan dit nie verbeter nie. As enige belegger na Nova se stories en leuens luister is jy dom astrant en gaan jy die pyn beslis nog verder vererger.

As Nova die plan wil uitvoer met hul 87% van die aandele regte, moet hulle dit doen sonder enige goedkeuring van die Sharemax beleggers / skuldbrief houers.

WEES GEWAARSKU.

How the directors managed to wrest a huge portion of the residual wealth for themselves for no outlay is absolutely criminal. The ANC are amateurs compared this bunch.

Agreed !

Cant shareholders still stop this extortion of value by the directors via a mass shareholder injunction ?

Unbelievable !

So basically, these dodgy directors are in effect robbing shareholders by seizing the majority of the value holding

????????

Dit is maklik vir ‘n “dodgey” plek soos Nova om Moneyweb te probeer stilmaak met dreigemente oor die waarheid wat publiseer word. Maar “the proof is in the pudding”

Kyk net met watter minagting hanteer Nova / Picvest / Orthotouch die beleggers wie se geld in die beleggings is

Orthotouch betaal tans 2% rente op die HSAG Picvest Sharemax beleggings (wat nie eers ‘n sesde is van wat wat dit aanvanklik was nie), maar ook net as dit hulle pas

September se 2% rentegeld is veronderstel om die 6de van Oktober inbetaal te word maar hulle het so min respek vir hulle “shareholders” dat hulle dit al later en later per maand betaal. Die afgelope paar maande was die datum waarop betalings gedoen was, die 8ste. Vandeesmaak lyk dit of hulle ‘n paar mense betaal het maar nie ander nie. Ekself het nog nie my geld gekry nie en ek wonder of die geld die 12de Oktober inbetaal gaan word of wanneer dit kom.

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