MASTER DRILLING GROUP LIMITED - Exercise of call option to acquire remaining 60% of the shares in Bergteamet Raiseboring Europe AB

Exercise of call option to acquire remaining 60% of the shares in Bergteamet Raiseboring Europe AB

Master Drilling Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 2011/008265/06)
JSE share code: MDI
ISIN: ZAE000171948
(“Master Drilling” or the “Company”)



EXERCISE OF CALL OPTION TO ACQUIRE REMAINING 60% OF THE SHARES IN
BERGTEAMET RAISEBORING EUROPE AB (“BERGTEAMET RAISEBORING”)


1.     INTRODUCTION


       Shareholders are referred to the announcement of 24 November 2015 which advised
       shareholders that Master Drilling International Limited (“MDI”), a subsidiary of Master
       Drilling, had acquired from Bergteamet AB (“Bergteamet”) a 40% stake in Bergteamet
       Raiseboring, a major raisebore drilling operator in Scandinavia, for a consideration of
       Euro 5.0million. In terms of that acquisition MDI had a call option to acquire the
       remaining 60% shareholders interests in Bergteamet Raiseboring (“the call option”).


2.     EXERCISE OF CALL OPTION AND PURCHASE CONSIDERATION

       MDI has now exercised the call option and thus acquired the remaining 60% of the
       shares in and shareholder claims against Bergteamet Raiseboring by any/all of its
       affiliates or associates for a consideration of approximately 69.8million Swedish
       Krone, approximately Euro 6.9million (“the Acquisition”).


3.     RATIONALE

       The Acquisition is part of Master Drilling’s long-term growth strategy and an effective
       entry into the Scandinavian region. With Bergteamet Raiseboring’s dominant market
       share in Sweden, Norway and Finland, Master Drilling will continue to diversify into
       the European market. Bergteamet Raisboring owns a fleet of 18 raisebore drilling rigs
       and is ranked in the top five globally.
                                                                                            
       The purchase consideration will be financed from internal resources.

4.    CONDITIONS PRECEDENT

4.1   The exercise of the call option is subject to the following conditions precedent being
      fulfilled by no later than 15 March 2018 or such later date as agreed between
      Bergteamet and MDI:


      4.1.1   to the extent required, approval by the Competition Authorities having
              jurisdiction over the acquisition on terms and conditions acceptable to MDI;


      4.1.2   information to the labour unions and employee representative of Bergteamet
              Raiseboring;


      4.1.3   the waiver of any right to cancel or terminate any major contract of
              Bergteamet Raiseboring in consequence of the change in control of or
              change in shareholding in Bergteamet Raiseboring;


      4.1.4   the approval by ABSA Bank Limited of the acquisition;


      4.1.5   the approval of the acquisition by the bankers and financiers of Bergteamet,
              and the waiver by them of any rights to accelerate the repayment and/or
              amend the terms and/or amend the terms and conditions of banking or
              financial facilities.


4.2   The parties shall be entitled, provided same is in writing and signed by all parties:


      4.2.1   to extend the time for fulfilment of any of the conditions precedent;


      4.2.2   to waive the fulfilment of any of the conditions precedent.


5.    EFFECTIVE DATE

      The effective date of the Acquisition is 1 April 2018.

                                                                                               
6.    VALUE OF THE NET ASSETS ACQUIRED AND PROFITS AFTER TAX

      Bergteamet Raiseboring’s net asset value as at 31 August 2017 (being the audited
      financial results prepared in terms of Generally Accepted Accounting Principles in
      Sweden) was USD10.3million, with profit after tax of USD 2.2million.

7.    CATEGORISATION

      The Acquisition is a Category 2 transaction as contemplated in the Listings
      Requirements of the JSE Limited.


8.    FURTHER ANNOUNCEMENT

      Shareholders will be notified once the last of the conditions precedent has been
      fulfilled or waived.




Fochville
12 March 2018

Sponsor
Investec Bank Limited




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