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Afrox Strengthens Ties With Real Africa

Release Date: 21/01/2002 08:49:25      Code(s): AFX
18 January 2002
African Oxygen Limited (Afrox) has further cemented its association with Don
Ncube's empowerment group Real Africa Holdings Limited, with Real Africa
taking up options today for a further 9,4 percent in Afrox's listed
healthcare subsidiary, Afrox Healthcare Limited (AHealth).
This raises Real Africa's stake in AHealth to 14,8 percent.  Real Africa
hold a further option for 2,2 percent which may be exercised before 2
December 2002.  This will give Real Africa a meaningful 17 percent holding
in AHealth.
Rick Hogben, Afrox's managing director, says, "We welcome the increased
involvement of Real Africa and view it as an important strategic alliance
which will help further develop our healthcare business, especially in our
planning to provide affordable healthcare to a broader sector of the
These options were granted as part of the negotiations between Afrox,
PresMed and Real Africa in 1999, which led to the formation of AHealth.
Notice of these options was given in both the Afrox and PresMed prelisting
statements.  Today's options were for 11,5 million shares at R4,91 per share
and 9,6 million shares at R4,00.   The final option for 4,8 million shares
may be exercised at a fixed price of R4,00 a share.
Rick Hogben says, "The Real Africa options formed a part of the negotiations
to acquire the PresMed group of hospitals in 1999 and to reverse list
Afrox's healthcare business.  The transaction paved the way to the formation
of a leading healthcare provider group and enabled us to achieve economies
of scale for delivering a quality service off a very competitive cost base."
"At the same time," says Hogben, "the important partnership between Afrox
and Real Africa means a broader sector of the community will benefit from
the growth of AHealth which has, since the reverse listing on 4 October
1999, increased its market capitalisation from some R700 million to over R2
For Afrox, the exercising of the options will result in a cash inflow of R95
million and a further R19 million if the final option is exercised.
Hogben says that if the options were exercised in the 2001 financial year,
the net reduction in Afrox's headline earnings would have been less than
four percent.
"Despite this dilution of the earnings stream, I am confident there will be
minimal effect on this years' earnings as Afrox has had a very satisfactory
first quarter.  This has been achieved through a considerable improvement in
liquefied petroleum gas trading conditions, strong export sales of welding
products, new products and marketing programmes introduced last financial
year and, AHealth's continuing strong performance.
"Further, acquisitions nearing finalisation, such as the 700 bed, 4 hospital
Amahosp group, will contribute and supplement continuing strong organic
growth in both our Industrial and Healthcare businesses.  We expect that
Afrox will continue to show satisfactory growth for the full year with its
many revenue enhancing initiatives," concludes Rick Hogben.

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