Proposed PSG acquisition of Appleton

Proposed PSG acquisition of Appleton                                            
APPLETON LIMITED               PSG GROUP LIMITED                                
(Incorporated in the Republic  (Incorporated in the Republic                    
of South Africa)               of South Africa)                                 
(Registration number           (Registration number                             
1999/004031/06)                1970/008484/06)                                  
Share Code: ALE                Share Code: PSG                                  
ISIN Code: ZAE000027488        ISIN Code: ZAE000013017                          
("Appleton")                   ("PSG")                                          
PROPOSED ACQUISITION BY PSG INVESTMENT SERVICES (PTY) LIMITED OF THE ENTIRE     
ISSUED SHARE CAPITAL OF APPLETON AND FURTHER CAUTIONARY ANNOUNCEMENT            
1. Shareholders of both Appleton and PSG are referred to Appleton`s cautionary  
announcement of 27 November 2002 (published in the print media on 28 November   
2002) as read together with Appleton`s further cautionary announcement of       
29 November 2002.                                                               
2. Appleton and PSG shareholders are advised that the Appleton board has today  
concluded an agreement with PSG Investment Services (Pty) Limited ("PSGIS"), a  
95 percent subsidiary of PSG, ("the agreement") in terms of which PSGIS will    
propose a scheme of arrangement in terms of section 311 of the Companies Act    
(Act 61 of 1973, as amended) between Appleton and its shareholders (other than  
PSG and/or its subsidiaries (the "PSG group")) ("the scheme").                  
3. The scheme consideration to be offered by PSGIS will be an amount of 9 cents 
per Appleton share (excluding Appleton`s treasury shares and the PSG Group`s    
shareholding in Appleton) amounting to an aggregate scheme consideration of     
R67 779 431,73. Such scheme consideration is to be payable within 7 days of the 
operative date of the scheme (i.e. the date that the suspensive conditions to   
the scheme are fulfilled).                                                      
4.The scheme is to be subject to the following suspensive conditions, namely:   
4.1 receipt of the requisite regulatory approvals, including, to the extent     
necessary, approval of the JSE Securities Exchange South Africa, Securities     
Regulation Panel, Financial Services Board, the Competition Authorities and the 
South African Reserve Bank, by no later than 15 April 2003;                     
4.2 the sanctioning of the scheme by the High Court of South Africa by no later 
than 30 April 2003;                                                             
4.3 that PSG concludes satisfactory arrangements with Wayne Rosenberg and Bruce 
Sneddon for their ongoing employment in relation to the Appleton businesses for 
a period of up to 12 months from the effective date of the scheme (1 January    
2003) on normal terms and conditions given their positions, by no later than    
6 December 2002;                                                                
4.4 that PSG concludes satisfactory non-client solicitation restraint           
arrangements with Wayne Rosenberg, Bruce Sneddon and Stanley Shane which will   
endure for a period of 12 months commencing on the date of termination of their 
service/consultancy agreements in relation to the Appleton businesses, by no    
later than 6 December 2002;                                                     
4.5 that PSG receives, by no later than 6 December 2002, irrevocable letters of 
undertaking from Appleton shareholders holding at least 75% of the issued share 
capital of Appleton (excluding the shares held by the PSG group) to support and 
vote in favour of the scheme on the basis that such undertakings shall be       
irrevocable unless there is a competitive offer at a higher price and PSG,      
within seven days of becoming aware of the competitive offer, elects not to     
match or better the higher offer;                                               
4.6 that PSG obtains the necessary guarantee for the total scheme consideration 
in the sum of R67 779 431,73, by no later than 9 December 2002;                 
4.7 that all the parties to the existing Appleton voting pool agreement waive   
their pre-emptive rights (in respect of the transfer of any Appleton shares held
by any member of the PSG group) to PSG, by no later than 6 December 2002;       
4.8 that Appleton concludes a binding agreement for the sale of the Dublin      
operations for a minimum consideration of US$4  million by no later than        
13 December 2002, of which US$1.2 million is to be payable upfront, upon terms  
and conditions approved in writing by PSG, which approval PSG shall not be      
entitled to withhold or delay unreasonably;                                     
4.9 PSG receiving by 13 December 2002 irrevocable letters of undertaking from   
Appleton shareholders holding at least 75% of the issued share capital of       
Appleton (excluding the shares held by the PSG group) to support and vote in    
favour of the Dublin transaction described in paragraph 4.8 above.              
The aforesaid dates may be extended by agreement between PSG and Appleton.      
5. The agreement contemplates that if the free net cash or cash equivalents of  
Appleton (inclusive of various stated assets of the Appleton group at an agreed 
value) is, as at 6 January 2003, less than R55 million, the aggregate scheme    
consideration will be reduced by the full amount of such shortfall. The Appleton
board does not anticipate any such shortfall.                                   
6. The Appleton board has not received confirmation from either PSG or its      
financial advisor or from another appropriate third party that resources are    
available to PSG sufficient to satisfy the scheme consideration. The furnishing 
of a guarantee by PSG to satisfy the consideration payable on the implementation
of this scheme has been made a condition precedent to the agreement.            
7. The PSG group:                                                               
7.1 owns or has control over 335 797 839 Appleton shares;                       
7.2 is not acting in concert with any other third party/ies in respect of the   
PSG offer;                                                                      
7.3 does not hold an option to purchase any other Appleton shares.              
8. The agreement contemplates the payment by Appleton to PSGIS of a break fee in
the sum of R650 000,00 (exclusive of VAT) in the event of the Appleton board    
receiving a competitive bid and recommending the acceptance of the competitive  
bid which results in the scheme failing.                                        
9. The Appleton board has appointed Corpcapital Corporate Finance and Ernst &   
Young Corporate Finance (Proprietary) Limited as external advisors to the board.
The board is taking advice on the terms of the proposed scheme as to how it     
affects all holders of Appleton shares, including specifically, minority holders
of Appleton shares. The substance of such advice shall be made known to holders 
of Appleton shares in due course.                                               
10. Appleton shareholders should continue to exercise caution in dealing in     
Appleton shares pending the publication of a further announcement including the 
proposed timetable for the implementation of the scheme.                        
3 December 2002                                                                 
Lead Corporate        Independent Advisor   Attorneys to                        
Advisor and           to Appleton           Appleton                            
Transaction Sponsor   minorities                                                
to Appleton                                                                     
Corpcapital           Ernst & Young         Sonnenberg Hoffman                  
Corporate Finance     Corporate Finance     Galombik                            
                      (Pty) Ltd                                                 
Corporate Advisor     Attorneys to PSG                                          
and Transaction                                                                 
Sponsor to PSG                                                                  
PSG Capital           Hofmeyr Herbstein                                         
                      Ghiwala                                                   
Date: 03/12/2002 04:50:02 PM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department