AFRICAN DAWN CAPITAL LIMITED - Small Related Party Transaction

Small Related Party Transaction

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”)


SMALL RELATED PARTY TRANSACTION


1.   INTRODUCTION

     Shareholders are advised that on 31 May 2019, the Company and its wholly-owned
     subsidiary African Dawn Property Transfer 2 Proprietary Limited (“PTF 2”), entered into
     an agreement (“Agreement”) with Willem Jakobus Groenewald (“WJ Groenewald”), a
     director of and related party to the Company, Makalu Capital Proprietary Limited (“Makulu
     Capital”), an associate of WJ Groenewald and Graham Brian Hope (“G Hope”), a director
     of and related party to the Company (together the “Grantors”), in terms of which the
     Grantors grant PTF 2 an irrevocable put option (“Put Option”) to sell certain claims and/or
     rights of action of whatsoever nature, owned by PTF 2 against certain creditors, including
     PTF 2’s entitlement to any securities furnished in connection with such claims (“Option
     Claims”) for an option claims consideration equal to the aggregate carry value of the
     Option Claims as at 28 February 2019, being R2 106 119 (“Option Claims
     Consideration”).

     The Put Option may be exercised at the discretion of PTF 2 within a period of 120 calendar
     days from the date of signature of the Agreement. As at the date of this announcement,
     PTF 2 has not exercised the Put Option.

2.   RATIONALE FOR THE EXERCISE OF THE PUT OPTION

     The exercise of the Put Option will further reduce uncertainties arising from collecting the
     Option Claims for the Afdawn group of companies (“Group”), reduce the exposure of the
     Company to the loans owed by the Company to the Grantors and further clean up the
     Statement of Financial Position of the Group. This should enhance the Group’s ability to
     attract further future funding for new revenue opportunities.

3.   OPTION CLAIMS CONSIDERATION

     Should PTF 2 receive any payments in respect of the Option Claims before PTF 2
     exercised the Put Option (“Interim Payments”), the Option Claims Consideration shall
     reduce by an amount equal to such Interim Payments.

     The Option Claims Consideration will be set off against the outstanding balances of each
     of the loans owed by the Company to each of the Grantors.

4.   CONDITIONS PRECEDENT

     The Put Option is not subject to any conditions precedent.
5.   OPTION EXERCISE DATE

     The Put Option may be exercised within 120 calendar days from the date of signature of
     the Agreement, failing which the Put Option will automatically lapse.

6.   FINANCIAL INFORMATION

     The value of the Option Claims as at 28 February 2019 , being the date of the last
     consolidated audited annual financial statements, was R2 106 119.

     No income was generated from the Option Claims for the period ended 28 February 2019,
     based on the consolidated audited annual financial statements of Afdawn for the year
     ending 28 February 2019, which were prepared in terms of IFRS.

7.   WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT

     The Agreement contains warranties by the Company and PTF 2 in favour of the Grantors
     which are standard for a transaction of this nature.

8.   CLASSIFICATION OF THE DISPOSAL

     In terms of the JSE Limited Listings Requirements, Makulu Capital is an associate of WJ
     Groenewald by virtue of the fact that WJ Groenewald is the sole shareholder and director
     of Makulu Capital and WJ Groenewald and G Hope are “related parties” of the Company
     by virtue of the fact that they are directors of the Company.

     The Put Option will be classified on the date on which the Put Option is exercised by PTF
     2.


3 June 2019

Designated Adviser

PSG Capital

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