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Capital finalisation announcement
Capital unitholders are referred to the previous announcements, the last of which was published on SENS on 9 June 2014, relating to the restructuring of Capital as a corporate REIT with the internalisation of the management of Capital in a manner that would better align the interests of Capital's management with those of investors ("the transaction").
Capital unitholders are hereby advised that all conditions precedent to the transaction have been fulfilled and accordingly the transaction is now unconditional.
The transaction will be implemented under the provisions of Financial Services Board Notice 42 of 2014 issued in terms of the Collective Investment Schemes Control Act, 2002 and section 44 of the Income Tax Act, 58 of 1962, as amended ("amalgamation transaction").
The consideration payable by New Capital for the acquisition of the assets in the Fund will be effectively discharged by means of the issue of shares by New Capital to Capital unitholders directly on behalf of the Fund. On this basis, rollover relief is obtained and no immediate taxes will be payable by either the Capital unitholders, New Capital or the Fund pursuant to the amalgamation transaction. Effectively, New Capital will acquire the assets of the Fund at their effective base cost or tax cost for tax purposes. To the extent that the Fund held the assets on capital account, New Capital will continue to hold those assets on capital account.
This summary is only intended to be a brief and general guide dealing with the main fiscal consequences of the implementation of the transaction for Capital unitholders. It is not intended to provide specific advice and no action should be taken or omitted to be taken in reliance upon it. Capital unitholders are advised to seek professional tax advice in respect of the transaction, including the substitution of their units for New Capital shares.
In order for the transaction to qualify as an amalgamation transaction it is a requirement that the Fund must have taken such steps as necessary within a period of 36 months after the date of the amalgamation to liquidate, wind up or deregister. PFM intends taking all such necessary steps for the winding up of Capital within that time frame.
The salient dates and times for the implementation of the transaction remain as previously announced on 9 June 2014.
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