AFRICAN DAWN CAPITAL LIMITED - Category 2 Transaction Announcement

Category 2 Transaction Announcement

AFRICAN DAWN CAPITAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1998/020520/06)
Share code:ADW
ISIN: ZAE000223194
(“Afdawn” or “the Company”)

CATEGORY 2 TRANSACTION ANNOUNCEMENT

1.   INTRODUCTION

     Shareholders are advised that on 26 January 2021, the Company and its wholly-owned
     subsidiary African Dawn Property Transfer 2 Proprietary Limited (“PTF 2”), entered into a
     subscription agreement (“Agreement”) with Charles Frank Meyerowitz and Manuel
     Jonathan Franck (“Subscribers”). The Agreement provides for the following –

     • the Subscribers will each subscribe for two hundred shares in PTF 2, which, in
       aggregate, constitute 80% of the issued share capital of PTF2 for an aggregate
       subscription amount of R400 (“Subscription Consideration”), resulting in the
       Company’s shareholding in PTF 2 being diluted to 20% of the issued share capital of
       PTF 2 (“Subscription”);

     • the Company has an existing loan claim of R18 181 940 against PTF 2 (“Loan Claim”),
       of which R15 281 940 will be disposed of to the Subscribers for a consideration of
       R25 000 (“Disposal Consideration”) with the remaining R2 900 000 of the Loan
       Claim being retained by Afdawn (“Outstanding Loan Claim”); and

     • the Subscriber has been granted an option to acquire the Company’s remaining 20%
       shareholding in PTF 2 (“Call Option”) for the par value of R100 (“Option
       Consideration”) once the Outstanding Loan Claim has been repaid in full, which Call
       Option will expire after 5 years from the date of signature of this Agreement, or as
       agreed to by the parties.

     (together, the “Transaction”)

2.   DESCRIPTION OF PTF 2

     PTF 2 was incorporated in South Africa with interests in the financial services industry.

3.   RATIONALE FOR THE TRANSACTION

     Given that PTF 2 is not operating to full potential, there is no reasonable prospect of PTF 2
     being able to settle the Loan Claim or to generate a return for the Company. The directors
     of the Company are of the opinion that there is an opportunity in the existing market to re-
     build the business and are aligning themselves with existing industry players who can
     offer funding and skills to implement the strategy.

4.   CONSIDERATION

     The Subscription Consideration, the Disposal Consideration and the Option
     Consideration (“Consideration”) will be paid in cash to the relevant party.

5.   APPLICATION OF THE CONSIDERATION

     The utilisation of the Consideration shall be determined in due course.

6.   CONDITIONS PRECEDENT

     All conditions precedent have been fulfilled.

7.   EFFECTIVE DATE OF THE SUBSCRIPTION

     The effective date of the Subscription shall be the closing date of the Agreement, which
     was on 26 January 2021.

8.   FINANCIAL INFORMATION

     The value of the net liabilities of PTF 2 as at 29 February 2020, being the date of the last
     audited annual financial statements, was R18 442 611

     The audited profits after tax attributable to PTF 2 for the year ended 29 February 2020,
     was R203 633, based on the audited annual financial statements of PTF 2 for the year
     ended 29 February 2020, which were prepared in terms of IFRS.

9.   WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT

     The Agreement contains warranties and indemnities by each party to the other parties
     and by the Company and PTF 2 in favour of the Subscribers which are standard for a
     transaction of this nature.

10. CLASSIFICATION OF THE DISPOSAL

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

Johannesburg
27 January 2021

Designated Adviser

PSG Capital

Date: 27-01-2021 01:00:00
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