METTLE INVESTMENTS LIMITED - Acquisition of a 49% interest in Christopher Finance Proprietary Limited

Acquisition of a 49% interest in Christopher Finance Proprietary Limited

METTLE INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2008/002061/06)
JSE share code: MLE
ISIN: ZAE000257622
("Mettle” or "the Company")

ACQUISITION OF A 49% INTEREST IN CHRISTOPHER FINANCE PROPRIETARY LIMITED

 1. INTRODUCTION

 The board of directors of Mettle ("the Board") is pleased to announce that it has concluded agreements
 with, amongst others, the trustees for the time being of the Andia Trust and the Viola Trust (“the CF
 Sellers”), being the shareholders of Imali Medical Claims Proprietary Limited (“Imali”). Once fully
 implemented, Mettle will indirectly own a 49% shareholding in Christopher Finance Proprietary Limited
 (“CF”) and loan claims against CF. This is conditional upon the management of CF, which is currently
 being outsourced to Christopher Consulting Proprietary Limited (“CC”), being internalised (“collectively
 the Transactions”).

 2. OVERVIEW OF CF

 CF is a niche financial services company providing working capital finance to selected firms of attorneys.
 The finance provided by CF is secured by claims for costs the attorneys have against reputable third
 parties.

 Mettle has been instrumental in raising senior funding for CF over the last 2 years. As such Mettle has
 an intimate knowledge of the business model to which it believes it can add significant value. CF’s
 lending book is currently R120 million and there is strong demand for CF’s services.

 The operations of CF are currently managed by CC in terms of a written service agreement.

 CF’s existing management team will continue to be employed in the business post the Transactions.

 3. RATIONALE FOR THE ACQUISITION

 The Board believes that the acquisition of a shareholding in CF complements Mettle’s strategy to
 expand its niche lending businesses. The Transactions will allow Mettle to assist CF with additional
 access to funding to enable sustainable growth of CF.

 4. TRANSACTIONS AND PURCHASE CONSIDERATIONS

 The first transaction entails Mettle acquiring an effective 49% shareholding in CF for R17.7 million
 through the acquisition by it of all the shares in Imali (“the First Transaction”). Imali owns 50% of the
 issued share capital of CF. In addition, Mettle will as part of the First Transaction, also purchase the
 loan claims against Imali from the CF Sellers for their face value, being R9.9 million. The purchase price
 of these shares and loans will be settled in cash. Mettle will obtain warranties and representations from
 the CF Sellers as well as Christopher Holdings Proprietary Limited (“CH”), the other shareholder in CF,
 that are usual for transactions of this nature. As part of the First Transaction, Imali will sell 1% of the
 issued share capital of CF to CH for R404,538 payable in cash, thereby decreasing its interest from
 50% to 49%.

 The second transaction entails CF acquiring the business of CC from CC as a going concern for a
 maximum amount of R15 million. This purchase price will remain owing on an interest-bearing loan
 account. CF will obtain warranties that are normal for a transaction of this nature as well as certain profit
 warranties from CC in respect of the business of CC (“the Second Transaction”).

 Other terms and conditions applicable to the First and Second Transactions are normal for a transaction
 of this nature.

 5. FINANCIAL INFORMATION

 Imali is an investment holding company which owns a 50% shareholding in CF and a loan claim of
 R7.4 million against CF. In terms of the unaudited management accounts of Imali for the 6 months
 ended 31 August 2018, Imali had a net liability value of R17 052 and incurred a loss after tax of R6 201.
 These management accounts exclude Imali’s share of profits from CF.

 In terms of the unaudited management accounts of CF for the 6 months ended 31 August 2018, CF
 had a net asset value of R19.6 million and generated a profit after tax of R4.9 million.

 The above unaudited historical financial information of Imali and CF is calculated in accordance with
 International Financial Reporting Standards for SMEs.

 6. SUSPENSIVE CONDITIONS AND EFFECTIVE DATE

 The First Transaction will be effective from the first business day following the fulfilment of certain
 suspensive conditions, which are expected to be fulfilled by 15 November 2018. The remaining
 outstanding suspensive conditions are:

    •   applicable corporate approvals being obtained by the various parties to the First Transaction;
    •   adoption of a new memorandum of incorporation in respect of CF containing terms agreed to
        by Mettle; and
    •   approval of the First Transaction by a specified debt funding provider to CF.

 The Second Transaction will be effective from the first business day of the calendar month commencing
 immediately after the First Transaction becomes unconditional. The remaining outstanding suspensive
 conditions are:

    •   applicable corporate approvals being obtained by the various parties to the Second
        Transaction, including financial assistance and shareholder approvals by CC;
    •   the entering into of a management agreement between CF and Christopher Commercial
        Properties Proprietary Limited for the provision of certain executive services to CF; and
    •   the First Transaction becoming unconditional in accordance with its terms.

 7. CATEGORISATION

 The Transactions are classified as a Category 2 transaction in terms of the Listings Requirements of
 the JSE.


Company Secretary

Mettle Corporate Finance (Pty) Ltd

Cape Town

5 November 2018

Designated Advisor: Questco Corporate Advisory (Pty) Ltd

Legal Advisor: Cliffe Dekker Hofmeyr Inc.

Date: 05/11/2018 05:12:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.