HOSKEN PASSENGER LOGISTICS AND RAIL LIMITED - Disposal of Promissory Note and Related Rights

Disposal of Promissory Note and Related Rights

HOSKEN PASSENGER LOGISTICS AND RAIL LIMITED
(Previously Niveus Invest 17 Proprietary Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2015/250356/06)
Share code: HPR
ISIN: ZAE000255907
(“HPLR” or the “Company”)


DISPOSAL OF PROMISSORY NOTE AND RELATED RIGHTS


1.   INTRODUCTION

     Shareholders are advised that on 20 December 2018 the Company entered into a sale
     and assignment agreement (“Sale and Assignment Agreement”) with Sanlam Life
     Insurance Limited, acting through its Sanlam Capital Markets division and through its
     Sanlam Investment Management division (“Purchasers”), in terms of which the Company
     will cede and transfer its rights to receive payment of an amount owing to it by Warshay
     Investments Proprietary Limited (“Warshay”) and an accompanying unconditional
     guarantee issued by Investec Bank Limited (formerly referred to as the “Promissory
     Note”) (collectively, “Sold Rights”), and delegate certain related obligations, to the
     Purchasers for a disposal consideration of R 240 248 107 (“Disposal Consideration”)
     (“Disposal”).

2.   SOLD RIGHTS

     The Sold Rights were acquired by the Company from La Concorde South Africa
     Proprietary Limited (“La Concorde”) (a fellow subsidiary of HPLR’s holding company,
     Hosken Consolidated Investments Limited) prior to the Company’s listing in April 2018 on
     the JSE Main Board.

     The rights arose from the disposal during 2016 by La Concorde of its “KWV” business to
     Warshay, with the purchase consideration to be settled in various instalments on each
     anniversary of the effective date of such sale (“KWV Disposal”).

     The third and final purchase consideration instalment under the KWV Disposal remains
     owing to the Company, and is due for payment on 1 October 2019. The payment carries
     interest at 8.5% nominal annual compounded annually and is secured by Investec Bank
     Limited (“Investec”) under a guarantee concluded on or about 7 October 2016 between
     Investec, La Concorde and Warshay (“Tripartite Agreement”). The maturity value of the
     third and final payment on 1 October 2019 is R257 690 776.

3.   RATIONALE AND APPLICATION OF THE DISPOSAL CONSIDERATION

     The Company intends to utilise the Disposal Consideration mainly to declare a special
     dividend to HPLR shareholders and anticipates that such dividend will be declared during
     the first quarter of 2019. This is in line with the Company’s approach of distributing such
     proceeds to shareholders, as was done recently following the maturity of the second
     Promissory Note relating to the KWV Disposal, when HPLR declared a special dividend
     of 75 cents (gross) per share to shareholders, such dividend having since been paid to
     shareholders on Tuesday, 18 December 2018.
4.   DISPOSAL CONSIDERATION

     After deducting an arrangement fee of R480 496 (exclusive of VAT), the balance of the
     Disposal Consideration, amounting to R239 695 537, will be paid to the Company by no
     later than 21 December 2018 free of deduction or set-off in immediately available funds.
     The arrangement fee, comprising 0.2% of the Disposal Consideration, will be due to
     Sanlam Capital Markets Proprietary Limited, subject to receipt by the Company of the
     balance of the Disposal Consideration.

5.   EFFECTIVE DATE OF THE DISPOSAL

     All conditions precedent to the Disposal have been fulfilled and the Disposal will occur on
     and with effect from 21 December 2018.

6.   WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT

     The Sale and Assignment Agreement contains representations and warranties which are
     standard for a transaction of this nature.

7.   CLASSIFICATION OF THE DISPOSAL

     The Disposal constitutes a category 2 transaction in terms of the JSE Limited Listings
     Requirements.


Cape Town
21 December 2018

Sponsor and corporate adviser                             
PSG Capital   

Legal adviser  
ENSafrica

Transaction adviser
Mettle    

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