Fortress’s board planned earlier this year to collapse the company’s dual-share structure into a single share, and so allow the declaration of a dividend, but this plan was not approved by shareholders. Picture: Supplied
The JSE has given Fortress Reit until November 30 to submit a compliant Reit dividend declaration, or its Reit status would be removed, the company said in an update yesterday.
To retain its Reit status, a Reit (real estate investment trust) must distribute at least 75% of its distributable profits to shareholders within four months of its financial year-end, subject to the solvency and liquidity test.
Fortress’s board planned earlier this year to collapse the company’s dual-share structure into a single share, and so allow the declaration of a dividend, but this plan was not approved by shareholders.
Fortress was required to submit a dividend declaration for its year ended June 30, 2022 to the JSE by October 31.
Fortress, however, said its memorandum of incorporation (MOI) prevented the payment of a distribution, where distributable earnings were less than the Fortress A (FFA) share Distribution Benchmark, which had been the case for both the interim and final six-month periods of the 2022 financial year.
“In these circumstances, Fortress cannot comply with the minimum distribution requirement,” the company said.
Last month Fortress received a demand, from shareholder representatives holding 59% of the Fortress A shares and 16% of Fortress B shares, to call a shareholder meeting for Fortress’s MOI to be amended, to allow for the declaration of distributions on a split basis of 80:20, as well as for the financial years ending June 30, 2023 and June 30, 2024.
Fortress, however, warned yesterday that even if shareholder approval was received at this meeting, Fortress would only be able to meet the minimum distribution requirement during January 2023.
Fortress had requested the JSE to allow it to pay a dividend on or before January 31, 2023, but the JSE rejected this, saying it did not have the discretion to grant the dispensation request.
“Fortress still intends to meet its obligations in terms of the Companies Act and convene the general meetings in order for Fortress shareholders to vote on the proposal, which general meetings are expected to be held on or about January 12, 2023,” the company said.
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