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Property group Attacq said on Thursday it has inked a R2.7 billion deal with the Government Employees Pension Fund (GEPF) that will see state pensioners take a 30% stake in a subsidiary which owns Waterfall City.
The deal, still subject to various approvals, is set to accelerate developments at the massive mixed-use development precinct in Midrand, while also allowing Attacq to cut its debt.
Attacq announced in February it had signed a non-binding agreement with the GEPF, which prompted its share price to surge by a fifth, while on Thursday, it announced it had now reached a binding legal agreement. This is, however, slightly less than the investment amount originally mooted in February.
READ | PIC eyes R2.8bn investment in Attacq's Waterfall City
Under the agreement, the GEPF, via the Public Investment Corporation (PIC), will own 30% of the ordinary shares and shareholder loans in Attacq Waterfall City Investment Company (AWIC) in exchange for a maximum consideration of R2.388 billion in cash, with an additional R300 million being injected as a shareholder loan.
The group intends on utilising the proceeds to settle R2.2 billion of debt in AWIC and about R500 million of debt in the rest of the group.
AWIC had debt of about R5 billion at the end of December, while Attacq, which is currently valued at about R6.5 billion on the JSE, had net debt of about R7.9 billion.
Upon implementation, the group expects the debt reduction to result in a decrease in its gearing from 38% to about 26.3%. Gearing refers to indebtedness, comparing debt to equity.
Waterfall City comprises 2 200ha of leasehold land, with Attacq valuing its subsidiary's property interests at about R12.25 billion at the end of December, the end of its first half. It includes the Mall of Africa, Africa's largest mall constructed in a single phase, and the firm has said the area's location and development has turned it into a growth node, having attracted blue-chip firms including PwC, Deloitte, Cisco, Pfizer, Ericsson as well as Amazon Web Services
Shares in Attacq were up about 2% on Thursday morning, having risen about 20.7% since it first announced the potential transaction in mid-February. Click here for details on the group's shares as well as other info.
