Accelerate Property Fund Limited (APF) has announced the conclusion of a significant related party settlement agreement. This agreement aims to address various financial claims and property management restructuring. It involves Accelerate, Azrapart Proprietary Limited, and Michael Nicolas Georgiou, among other related parties.
Key Parties Involved
The settlement involves multiple entities controlled by Mr. Michael Georgiou:
- Azrapart Proprietary Limited
- Fourways Precinct Proprietary Limited
- Accelerate Property Management Company Proprietary Limited (AP ManCo)
- Fourways Mall Managing Agent Proprietary Limited (FMMA)
- The Michael Family Trust (MFT)
Mr. Georgiou holds a 15.89% stake in Accelerate and serves as a non-executive director.
Debt Restructuring
A major aspect of the agreement is the restructuring of related party debt:
- Fourways Precinct debt: R631.78 million
- MFT debt: R134.52 million
- Mall profit share debt: R30.4 million
These debts, totaling R796.71 million, will be ceded to Azrapart and settled with no cash outflow from Accelerate.
Rebuilt Claim Settlement
The Rebuilt Claim, previously valued at R300 million, will now include an additional R71.06 million for the time value of money. This total amount of R371.06 million will be set off against the Azrapart Debt.
| Debt Type | Amount (R) |
|---|---|
| Fourways Precinct Debt | 631,783,317 |
| MFT Debt | 134,523,932 |
| Mall Profit Share Debt | 30,400,421 |
| Total Debt | 796,707,670 |
Property Management Restructure
The agreement also addresses the restructuring of property management functions:
- Accelerate will acquire a 50% stake in FMMA for a nominal R60.
- FMMA will become the property, asset, and development manager for the Mall.
The termination of the Fourways Precinct Property Management Agreement will involve a consideration of R50.23 million. Additionally, the AP Manco Management Agreement will be terminated for R59.25 million.
Purchase of Remaining Bulk
Accelerate will purchase 50% of the remaining development bulk (9,325.5 square meters) for R74.65 million. This will be set off against the Azrapart Debt.
Equalization Transactions
The equalization of holdings in the Mall’s letting enterprises will include:
- The acquisition of 50% economic interest in 2,929 parking bays for R241.51 million.
- This ensures a 50/50 ownership structure for the Mall’s economic interests.
Sale Adjustment Account
The Sale Adjustment Account will be settled with no amounts due from either party. This finalizes the financial adjustments from Accelerate’s purchase of a 12.1% share in the Mall.
Headlease Termination
The head lease agreement with Fourways Precinct will terminate, with arrear rental and other amounts totaling R395.48 million being delegated to Azrapart. This amount will be set off against amounts payable by Accelerate.
| Transaction | Amount (R) |
|---|---|
| Rebuilt Claim | 371,063,320 |
| Remaining Bulk Purchase | 74,650,830 |
| Economic Interest in Parking Bays | 241,513,208 |
| Headlease Consideration | 395,482,613 |
| Total | 1,082,710,971 |
Rationale for the Settlement
The settlement aims to align the interests of Mall co-owners and resolve outstanding financial claims. It supports Accelerate’s goal of cleaning up its balance sheet and settling historic related party matters.
Effective Date and Conditions
The effective date is the first business day after all suspensive conditions are met. These conditions include:
- Execution of all transaction agreements.
- Shareholder approval.
- Approvals from Investec Bank, FirstRand Bank, and Sawindu 12.
Conclusion
Accelerate’s settlement agreement with related parties marks a significant step in financial and operational restructuring. The alignment of interests and resolution of claims are expected to enhance the company’s financial stability and future growth prospects.
