WHLE - WOOLWORTHS HOLDINGS LIMITED - Sale of the Elizabeth Street property in Sydney, Australia [JSE Securities Exchange - SENS]
Sale of the Elizabeth Street property in Sydney, Australia

Woolworths Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 1929/001986/06
LEI: 37890095421E07184E97
Share code: WHL
ISIN: ZAE000063863
Bond code: WHLI
("WHL" or "the Group")


Background and strategic rationale

On 27 May 2020, WHL announced certain strategic initiatives which are intended to protect and
strengthen the Group's balance sheet and to establish a platform for sustainable, long-term growth.
These initiatives include reducing and restructuring the debt facilities of the Group's Australian
subsidiaries to create a more sustainable funding structure.

Steady progress is being made on these initiatives. In respect of the ongoing review of the capital
structure of the Australian entities, the Group previously announced the sale of its Bourke Street
Menswear building, with the proceeds of A$121 million used to reduce debt.

Further to these initiatives WHL is pleased to announce the sale of the David Jones Elizabeth Street
property. The board of directors of WHL believes that the Proposed Transaction (as outlined below),
will further strengthen the David Jones' balance sheet and support the repositioning of the business
to deliver shareholder value.

The Proposed Transaction is also intended to facilitate:

    -   the separation of the existing combined and secured Australian debt and financing facilities
        of the David Jones group and Country Road Group Proprietary Limited (CRG) group
        (the Existing Funding Arrangements), through the conclusion of new secured debt and
        financing facilities by the David Jones and CRG groups independently of each other
        (the New Funding Arrangements); and

    -   the consequential termination of the existing cross guarantees between the David Jones
        group and the CRG group forming part of the Existing Funding Arrangements
        (the Cross Guarantee).

In order to achieve the termination of the Cross Guarantee and conclusion of the New Funding
Arrangements, in conjunction with the Proposed Transaction, binding commitments have been
received from financial institutions resulting in the CRG and the DJ groups being financed separately
from each other and each respective group will not cross guarantee or cross collateralise the other,
save for certain immaterial support from David Jones group to CRG group resulting from the total
proceeds of the property sale being received in the David Jones group. This support is expected to
be unwound in the near term.

None of the South African entities within the Group will guarantee the CRG group or David Jones
group in respect of the New Funding Arrangements or the Lease Agreement. The funding made
available by WHL to the Australian businesses as announced on 27 May 2020 remains in place and

The Proposed Transaction

In terms of section 9 of the JSE Limited Listings Requirements, WHL hereby announces that on
Monday, 21 December 2020 David Jones Properties Pty Limited (David Jones Vendor Entity), a
wholly-owned subsidiary of WHL, entered into an agreement to sell the David Jones Elizabeth Street
retail department store property including the building and the land located at 86-106 Castlereagh
Street, Sydney, Australia (folio identifiers 1/34666 and 1/74609) (the Property) to Charter Hall,
through the following associated entities: - The Trust Company (Australia) Limited, as custodian for
Bieson Pty Limited as trustee for LWR DJ Trust; and The Trust Company Limited, as custodian for
Bieson Pty Limited as trustee for CH DJ Subtrust (the Purchaser) for a total cash consideration of
A$510 million (Proposed Transaction). The contract of sale requires the Purchaser to pay a deposit
to the David Jones Vendor Entity equal to 5% of the purchase price on the date of signature of the
contract of sale, with the remaining 95% of the purchase price payable on the completion date
(as set out below).

The implementation of the Proposed Transaction is subject to the fulfilment or waiver (to the extent
permissible), of the condition precedent to the Proposed Transaction as set out below.

In conjunction with the Proposed Transaction, no more than 5 (five) days (but not less than 2 (two)
days) prior to the completion date of the Proposed Transaction, David Jones Pty Limited
(David Jones as Tenant)), another wholly owned subsidiary of WHL, will enter into a lease
agreement with David Jones Vendor Entity, granting David Jones as Tenant a leasehold interest in
the Property.

The key terms of the Lease Agreement are as follows:

    -   an initial term of 20 (twenty) years, together with 5 (five) options to renew the lease, each for
        a further term of 10 (ten) years;

    -   the purchase price reflects a 5% capitalisation rate with the base annual rental of
        A$25.5 million (and a 2.5% annual escalation); and

    -   in line with the objective of improving the flexibility of the David Jones lease portfolio, the
        rental will comprise both a fixed (escalating) and variable component, resulting in a rental
        which is the higher of the fixed rental, or 7.97% of sales (turnover rent), with the latter being
        below the weighted average rental/sales ratio of the existing David Jones lease portfolio and
        which is, in the view of the WHL board a market related rate for a lease of this nature

    (the Lease Agreement).

On completion of the Proposed Transaction, ownership of the Property will transfer to the Purchaser,
but subject to the terms of the Lease Agreement, and all of David Jones Vendor Entity's right, title
and interest (as landlord under the Lease Agreement) will vest in the Purchaser.

Other salient terms of the Proposed Transaction

The effective date will be the completion date of the Proposed Transaction, being a date within
4 (four) months of the date of signature of the contract of sale, subject to the satisfaction of the
condition precedent to the Proposed Transaction.

The implementation of the Proposed Transaction is subject to the fulfilment of the condition
precedent that, by a date which is no later than 4 (four) months after the date of signature of the
contract of sale (subject to any extension agreed to in writing by the parties), approval has been
given by the Australian Foreign Investment Review Board (FIRB) to the grant of the 70 (seventy)
year leasehold interest to David Jones as Tenant as envisaged in the Lease Agreement.

The Proposed Transaction contains representations and warranties by David Jones Vendor Entity in
favour of the Purchaser which are customary for a transaction of this nature.

Value of the net assets of the Proposed Transaction

The total book value of the net assets that are the subject of the Proposed Transaction was
A$376.8 million as at 28 June 2020, as recorded in the audited Annual Financial Statements of
David Jones as Tenant which were prepared in accordance with International Financial Reporting

Profits attributable to the net assets subject of the Proposed Transaction

The Property is currently owned by the David Jones group which conducts business from the
Property. Post implementation of the Proposed Transaction the David Jones group will continue to
conduct business from the Property in terms of the Lease Agreement.
Application of the sale proceeds

The net proceeds of the sale of the Property pursuant to the Proposed Transaction will be applied to
repay and restructure the Australian group's debt and financing facilities.


The Proposed Transaction constitutes a Category 2 transaction for WHL in terms of section 9 of the
JSE Limited Listings Requirements.


Group Finance Director

Investor Relations

Cape Town
21 December 2020

RAND MERCHANT BANK (A division of FirstRand Bank Limited)

The information contained in this announcement has not been reviewed or audited by the Group's
external auditors.

Date: 21-12-2020 05:38:00
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