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VUN - Vunani - Subscription for 40% of the issued share capital of civils 2000 Holdings (Proprietary) Limited ("Holdco") VUNANI LIMITED (Incorporated in the Republic of South Africa) (Registration number 1997/020641/06) JSE code: VUN ISIN: ZAE000110359 ("Vunani") SUBSCRIPTION FOR 40% OF THE ISSUED SHARE CAPITAL OF CIVILS 2000 HOLDINGS (PROPRIETARY) LIMITED ("HOLDCO") 1. INTRODUCTION Shareholders are advised that a Subscription and Shareholders` Agreement ("the agreement") has been entered into between CS Shapiro ("Shapiro"), RL Starke ("Starke"), DJ van der Merwe ("van der Merwe")("the existing shareholders of the Civils group of companies", which group of companies is detailed in paragraph 2 below), Pahana Investments 93 (Proprietary) Limited ("Pahana" or the "SPV") and Holdco, in terms of which the SPV will subscribe for 40% of the issued share capital of Holdco, the newly formed holding company of the Civils group of companies ("Civils") on the terms and conditions set out below ("the transaction"). Pahana is a special purpose vehicle jointly owned by Vunani Capital (Proprietary) Limited ("Vunani Capital"), which is a wholly-owned subsidiary of Vunani, and Absa Capital Infrastructure Equity Investments, a division of Absa Bank Limited ("Absa"). Vunani Capital and Absa hold a 51%/49% interest in Pahana. Vunani will then effectively hold 20.4% in Holdco. The SPV is a newly formed company incorporated for the sole purpose of subscribing for the shares in Holdco. 2. BACKGROUND INFORMATION Vunani is a majority black-owned and managed diversified financial services group. Civils was founded by Shapiro and Starke and began operations in 1992. Since then it has secured a strong position in the civil engineering and construction industries in the western, eastern and southern Cape. Its clients include the public sector (provincial and local Government) as well as the private sector. Civils comprises the following four operating companies: Company and Operations Holdco shareholding - Civils 2000 Concrete and civils contractor, (Proprietary) focused mainly on the western Limited (70%) Cape market; - Civils (Southern Concrete and civils contractor, Cape) 2000 focused mainly on the southern (Proprietary) Cape market; Limited (100%)
- Civils 2000 Plant Owns the plant and equipment Hire utilised by the Civils group of (Proprietary) companies and hires out same; and Limited (100%) - Road Smart Specialist road works and asphalt Asphalting surfacing contractor. (Proprietary) Limited (60.6%) 3. RATIONALE FOR THE TRANSACTION The transaction complements Vunani`s other investments in the construction industry. Vunani expects to work with the management of Civils to identify new project opportunities outside of its current geographical focus. Civils currently holds a category 8CE Construction Industry Development Board certificate. By utilising the funds received from the transaction, it is expected that Civils will be able to upgrade to a category 9CE certificate which will enable it to tender for larger public sector work and thereby increase revenue and margins. 4. SUBSCRIPTION The SPV will subscribe for a total of 400 000 A shares with a par value of one cent each in the share capital of Holdco ("the subscription"), being 40% of the issued share capital of Holdco ("the consideration shares"). Simultaneously with the subscription, Absa shall loan an amount of R25 million to Holdco through the SPV, which R25 million will be fully funded by Absa and discharged against the issue and allotment of the consideration shares.
5. EFFECTIVE DATE The transaction will become effective on the successful fulfilment of the conditions precedent set out in paragraph 6 below. 6. CONDITIONS PRECEDENT The transaction is conditional upon, inter alia, the fulfilment of the following conditions precedent by no later than 17:00 on 31 May 2009 or such later date as agreed in writing by the SPV: * the delivery to the SPV of a written waiver signed by RZT Zelphy 4396 (Proprietary) Limited ("RZT") waiving the pre- emptive rights which it has to purchase the consideration shares in Civils 2000 (Proprietary) Limited in terms of an existing shareholders` agreement between the existing shareholders of the Civils group of companies and RZT; * various agreements being signed and becoming unconditional relating to the restructure of indivisibly-related transactions in terms of which the individual Civils companies referred to in paragraph 2 above are acquired by Holdco in accordance with a share-for-share transaction in terms of section 42 of the Income Tax Act thereby becoming underlying subsidiaries of Holdco; * compliance with any regulatory obligations to the extent required by law to effect the transaction, including approval of the Competition Commission and registration with CIPRO of any special resolutions required relative to the restructure of Holdco`s share capital; * Civils delivering to the SPV a Construction Industry Development Board certificate of contractor registration certifying that Civils 2000 (Proprietary) Limited has been registered in category 8CE for civil engineering works, such certificate having an expiry date not earlier than 31 March 2009; and * the respective board approvals of all the relevant companies involved in the transaction, including approval from the investment committee of Absa. Warranties as are normal in transactions of this nature have been provided. Service level and existing restraint agreements have been concluded between the existing shareholders of the Civils group of companies and Holdco.
7. CLASSIFICATION OF THE TRANSACTION The transaction is classified as a Category 2 transaction in terms of the Listings Requirements of the JSE Limited.
8. FINANCIAL EFFECTS OF THE TRANSACTION The transaction will have no immediate financial effect on Vunani`s financial position and may, in the future, contribute dividend income and/or profits in respect of future corporate actions. Johannesburg 4 March 2009 Lead Designated Adviser: Merchantec (Proprietary) Limited Corporate Adviser and Joint Designated Adviser: Vunani Corporate Finance Date: 04/03/2009 12:38:02 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
