CDH began advising over a year ago in a process commencing with the establishment, as a Tower subsidiary, of a Mauritian GB1 company TPF International to hold Tower's R1 billion Croatian property portfolio and obtaining undertakings from Oryx to make an aggregate R300 million investment into the portfolio, funded primarily by ABSA.
For various reasons including tax and exchange control, on 17 July 2018 a number of key steps were all implemented including the following –
- Tower disposed of its equity in its Croatian property owning companies to TPF International for a Euro price adjusted for exchange rate movement, settled by issue of further shares in TPF International to Tower;
- Tower disposed of some shares in TPF International to Oryx for the Euro equivalent of R200 million;
- Tower used a portion of the purchase consideration received to repay a portion of its Euro bank debt;
- Tower disposed of its remaining shares in TPF International to its subsidiary Tower Treasury, a newly formed domestic treasury management company (to minimise taxable exchange gains and losses) for a purchase consideration settled by the issue of further shares in TPF International and the assumption of the balance of Tower's Euro bank debt;
On 31 July 2018, Oryx subscribed for further shares in TPF International for the Euro equivalent of R100 million.
This deal was significant for Tower in separating its Croatian portfolio into an efficient Mauritian structure and raising R300 million of capital despite the current challenging economic situation for smaller REIT's. The deal was interesting in involving four jurisdictions with different requirements on matters of law (tax, exchange control, pledge) and process (bank consents, share transfers, notarial and apostille requirements) and with different timetables requiring detailed project management.
Tower, TPF International and Tower Treasury were advised by CDH, assisted by G&P Legal in Mauritius and Glinska & Miskovic in Croatia. Koep & Partners of Namibia acted for Oryx and ABSA.