ALLIED ELECTRONICS CORPORATION LIMITED - Disposal by Powertech of its Powertech System Integrators business to Capitalworks

Disposal by Powertech of its Powertech System Integrators business to Capitalworks

Allied Electronics Corporation Limited
(Registration number 1947/024583/06)
(Incorporated in the Republic of South Africa)
Share code: AEL ISIN: ZAE000191342
Share code: AEN ISIN: ZAE000191359
(“Altron” or “the Company”)


DISPOSAL BY POWER TECHNOLOGIES PROPRIETARY LIMITED (“POWERTECH”) OF
ITS POWERTECH SYSTEM INTEGRATORS (“PTSI”) BUSINESS TO CAPITALWORKS
PRIVATE EQUITY ADVISOR PROPRIETARY LIMITED, ON BEHALF OF FUNDS THAT IT
ADVISES OR NOMINEES THEREOF (“CAPITALWORKS”)


POWERTECH SYSTEM INTEGRATORS TRANSACTION


INTRODUCTION

Shareholders are advised that Powertech, a subsidiary of Allied Electronics Corporation Limited
(“Altron”) has entered into a binding written offer (“the Offer”) with Capitalworks, in terms
whereby Powertech will dispose of its PTSI business to Capitalworks on terms and conditions
more fully set out in the Offer and as summarised below (“the Disposal”).

The salient terms and conditions of the Disposal as set out in the Offer are as follows:

-    Capitalworks has agreed to acquire the PTSI business from Powertech for a purchase
     price of R140 million calculated on an enterprise value basis (cash and debt free basis);
-    the Disposal will, except as set out below, include all of the operating assets and liabilities
     of the PTSI business including all client and supplier contracts, as well as tangible and
     intangible assets;
-    the Disposal will exclude the businesses of Powertech QuadPro SA Proprietary Limited
     and Technology Integrated Solutions;
-    standard warranties and indemnities associated with transactions of this nature will be
     provided by Powertech; and
-    the Disposal will be subject to certain conditions precedent more fully set out in this
     announcement.


NATURE OF BUSINESS OF POWERTECH SYSTEM INTEGRATORS

PTSI is a systems engineering business which operates predominantly in the power and energy
sectors with customers that include power utilities and large power users in South Africa and
Sub-Saharan Africa. Its engineering solutions include secondary plant for substation
automation, network planning and control software, mobile workforce and asset management
systems, and systems for advanced and smart metering infrastructure. In addition, PTSI
markets a diverse range of products including, earth fault and surge protection devices and
related protection and metering equipment.


RATIONALE FOR THE DISPOSAL

Following strategic review sessions held at both Altron and Powertech during the past 12
months, the Powertech board, in conjunction with the Altron board, has determined that PTSI is
no longer a core asset for the Altron group and accordingly should be disposed of to a third party
who will be better suited to further develop this business going forward and to extract value for
shareholders.
EFFECTIVE DATE OF THE DISPOSAL

The Disposal by Powertech of PTSI to Capitalworks will become effective following the fulfilment
of the last of the conditions precedent set out below and as detailed in the Offer.


CONSIDERATION

The cash consideration to be received by Powertech as a result of the Disposal of PTSI to
Capitalworks is R140 million exclusive of VAT (“the Disposal Consideration”).


NET ASSET VALUE OF AND PROFITS ATTRIBUTABLE TO POWERTECH SYSTEM
INTEGRATORS

The value of the net assets to be disposed of as at 31 August 2015 (being the date of the most
recent published financial results of the Altron group) amounted to R99 million on a debt free,
cash free basis.

For the six months ended 31 August 2015, PTSI generated revenue of R205 million, an EBITDA
loss of R7 million and a loss after tax of R13.6 million.


CONDITIONS PRECEDENT TO THE DISPOSAL

The Disposal is subject to the fulfilment or waiver, as the case may be, of, inter alia, the following
conditions precedent, namely:

-     the conclusion of a confirmatory due diligence exercise by Capitalworks the findings of
      which are to their satisfaction;
-     the approval of the Disposal by the Capitalworks investment committee;
-     the conclusion of the relevant legal agreements; and
-     the approval, if necessary, of the Disposal by any regulatory body in South Africa
      including, without limitation, the Competition Commission and / or Takeover Regulation
      Panel.


APPLICATION OF THE DISPOSAL CONSIDERATION

The Disposal Consideration proceeds and cash realised will be used to reduce the overall Altron
group debt.


CATEGORISATION OF THE DISPOSAL AND SHAREHOLDER APPROVAL

The Disposal is classified as a Category 2 transaction in terms of Section 9.15 of the JSE
Listings Requirements and accordingly will not require Altron shareholder approval.


By order of the board of the Company


Johannesburg
30 November 2015


Investment Bank and Sponsor
Investec Bank Limited

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