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AFX - African Oxygen Limited - Announcement relating to the acquisition and installation of a 200 ton per day GOX 6000 air separation plant by Afrox African Oxygen Limited (Incorporated in the Republic of South Africa) (Registration number: 1927/000089/06) ISIN: ZAE000067120 Share Code: AFX NSX Code: AOX ("Afrox" or "the Company") ANNOUNCEMENT RELATING TO THE ACQUISITION AND INSTALLATION OF A 200 TON PER DAY GOX 6000 AIR SEPARATION PLANT BY AFROX 1. INTRODUCTION Shareholders are advised that Afrox has entered into an agreement dated 22 December 2010 with Linde AG ("Linde"), its controlling shareholder, to acquire proprietary technology and equipment for a new GOX 6000 Air Separation plant ("the GOX 6000 Plant") for a cash purchase consideration of approximately Euro 10.9 million (or c.R97 million) ("the GOX 6000 Acquisition"). The GOX 6000 Acquisition represents the first phase of the project. Following the GOX 6000 Acquisition, Afrox will commence with the second phase of the project which will entail the installation and integration of the GOX 6000 Plant at its Pretoria West Air Separation Plant ("the GOX 6000 Installation"). Afrox is currently in the process of considering contractual obligations relating to the GOX 6000 Installation and once contractual obligations have been entered into, a further announcement will be made. The cash cost of the GOX 6000 Installation is expected to be approximately Euro 10.4 million (or c.R93 million). The total capital expenditure relating to the GOX 6000 Acquisition and the GOX 6000 Installation (collectively "the Transaction") is expected to be approximately Euro 21.3 million (or c.R190 million). 2. TERMS OF THE TRANSACTION The GOX 6000 Acquisition Linde Engineering (a division of Linde) will provide the full lump sum turnkey ("LSTK") plant consisting of a 200 ton per day GOX 6000 Air Separation Unit incorporating an Argon rectification column and associated equipment. It is anticipated that risk and ownership of the GOX 6000 Plant will pass to Afrox within 24 months of placing the order with Linde. The payment structure for the GOX 6000 Acquisition is based on various milestones throughout the ensuing 24 months. The GOX 6000 Installation The GOX 6000 Installation will take place between 2011 and 2013. The integration into product and service lines as well as the civil infrastructure will be undertaken internally by Afrox Technical and Engineering. It is estimated that the GOX 6000 Plant will be fully integrated within the existing Afrox operations in January 2013. 3. RATIONALE Afrox`s Merchant Gases business supports a well developed industrial packaged gases and extended product offering. This business contributes substantially to the overall profitability of the Company. The Transaction will enable Afrox to substantially enhance its production facilities. This will ensure that the Company is well positioned to defend and grow Afrox`s market share and brand reputation in the merchant gases market. 4. SMALL RELATED PARTY TRANSACTION Linde currently owns 173,046,413 Afrox shares, comprising 50.47% of the share capital of Afrox including treasury shares (or 56.08% excluding treasury shares), and is thus the controlling shareholder of Afrox. Linde is therefore regarded as a related party to Afrox in terms of the Listings Requirements of the JSE Limited and accordingly written confirmation is required from an independent professional expert, confirming that the GOX 6000 Acquisition is fair to Afrox`s shareholders. Rand Merchant Bank (a division of FirstRand Bank Limited) and Bateman Engineering N.V. have been appointed as the joint independent experts ("Experts"). The Experts have confirmed that the terms of the GOX 6000 Acquisition are fair to the Afrox shareholders. The report of the Experts will be available for inspection at the registered office of Afrox up until 1 February 2011. 5. PRO FORMA FINANCIAL EFFECTS OF THE GOX 6000 ACQUISITION The pro forma financial effects of the GOX 6000 Acquisition on Afrox`s earnings per share, headline earnings per share, net asset value per share and net tangible asset value per share for the six month period ended 30 June 2010 are not significant (i.e. are less than 3%), and have therefore not been disclosed. Johannesburg 4 January 2011 Joint independent expert and Transaction sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited) Joint independent expert Bateman Engineering N.V. Sponsor Barnard Jacobs Mellet Corporate Finance (Proprietary) Limited Date: 04/01/2011 15:47:01 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.
