Press Office

SA RETAIL UNITHOLDERS NOT IN FAVOUR OF DEAL WITH MARTPROP

20 April 2005

Hyprop Investments, which on 31 March 2005 announced its intention to acquire the entire unitholding of SA Retail, said today that the majority of SA Retail unitholders has expressed opposition to SA Retail’s proposed transaction with Martprop announced on 30 March 2005.

Hyprop says that 50.8% of SA Retail unitholders have confirmed in writing that they require the proposed Martprop transaction to be cancelled or at the least to be subject to their approval. The percentage of SA Retail unitholders against the proposed Martprop transaction is even higher at over 85% if Marriot Asset Management and Whirlprops 33 – related parties in the proposed Martprop transaction – are excluded.

Hyprop MD Pieter Prinsloo says that the objections of SA Retail unitholders show clearly that they do not believe the proposed Martprop transaction to be in their best interests, and are fully supportive of Hyprop’s attempt to have the transaction classified to necessitate their approval. Hyprop contends that the transaction is ‘frustrating action’ in terms of the SRP Code as well as a category 1 and related party transaction in terms of the JSE Rules. In both instances SA Retail would be compelled to seek majority unitholder approval before going ahead with the transaction, which “in light of the strong negative sentiment that has been openly expressed by SA Retail unitholders, is not likely to be achieved,” says Prinsloo.

Hyprop is currently awaiting a response on this issue from the JSE and SRP. However irrespective of the regulatory decisions, the company asserts that sound corporate governance would demand that SA Retail adhere to the requirements of its unitholders and put the proposed Martprop transaction to the vote.

Prinsloo is confident of SA Retail unitholders’ support for the Hyprop offer. “Hyprop’s offer is an attractive proposition with the swap ratio of 2,7 SA Retail units to one Hyprop unit implying a price per SA Retail unit of R8,70, around 7% up on the current trading price of R8,11.” General market support for Hyprop’s offer underpins Prinsloo’s confidence.

As Hyprop’s offer remains subject to approval of the competition authorities, the fund’s attorneys have approached SA Retail for information which is critical to the documentation required by the Competition Commission. “We have made it clear that all costs of the merger notification will be borne by Hyprop and that any sensitive information can be passed directly from SA Retail to the competition authorities. Unfortunately SA Retail has not complied with our request, to the detriment of its unitholders who would like to accept to an unconditional Hyprop offer but cannot until we have Competition Commission approval,” says Prinsloo.

The company is no longer trading under cautionary.