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VUN - Vunani Limited - Acquisition of twenty million shares in BSI Steel Limited VUNANI LIMITED (Incorporated in the Republic of South Africa) (Registration number 1997/020641/06) JSE code: VUN ISIN: ZAE000110359 ("Vunani" or "the Company" or "the Group") ACQUISITION OF TWENTY MILLION SHARES IN BSI STEEL LIMITED 1. INTRODUCTION Shareholders are advised that the Company and Vunani Capital Proprietary Limited ("Vunani Capital"), a wholly owned subsidiary of the Company, have entered into an agreement, dated 28 June 2011, with the Longfellow Family Trust and the Denbigh Family Trust ("the agreement"), in terms of which Vunani Capital shall acquire 20 000 000 ordinary shares in the share capital of BSI Steel Limited ("BSI") in exchange for ordinary shares of an equivalent value in the share capital of the Company ("the transaction"). 2. BACKGROUND INFORMATION In October 2007 Vunani acquired a strategic equity interest in BSI, at the time it listed on the JSE. This investment was debt funded with financial guarantees provided by Vunani. Following the global financial crisis and subsequent restructuring of the Company, the board of Vunani took a strategic decision to reduce its on-balance sheet gearing and for this reason the investment in BSI was sold earlier this year. Despite the decision to sell the investment in BSI the relationship between the executives of the two companies has remained strong. This has culminated in the agreement which results in Vunani acquiring an unencumbered shareholding in BSI. 3. RATIONALE FOR THE TRANSACTION William Battershill ("WB") is the executive chairman of BSI and its major shareholder through his family trusts, the Longfellow Family Trust and the Denbigh Family Trust ("the Battershill Family Trusts"), holding just over 320 000 000 ordinary shares or approximately 45% of the ordinary shares in issue. WB and BSI would like to maintain a strong relationship with Vunani and in order to underpin this, WB has agreed to facilitate the sale of 20 000 000 BSI shares held by the Battershill Family Trusts to Vunani, via its wholly owned subsidiary Vunani Capital. After the transaction Vunani Capital will own approximately 3% of the issued ordinary share capital of BSI and the Battershill Family Trusts will own approximately 5% of the issued ordinary share capital of Vunani. Vunani is well acquainted with BSI and wishes to hold an investment in BSI and contribute to the growth of that company. BSI will improve its BEE credentials and Vunani will be well-placed to participate in any future corporate action at BSI, including any future broad based black economic empowerment transaction. The terms and conditions of the agreement are set out in paragraph 4 below. 4. PURCHASE CONSIDERATION The Battershill Family Trusts shall sell 20 000 000 ordinary shares in the share capital of BSI at a price of 71.994 cents per share, which is based on BSI`s 30 day volume weighted average price on 8 June 2011, in terms of the agreement. The purchase consideration of R14 398 972 shall be settled through the issue of 239 852 770 ordinary issued shares in the Company ("the Vunani shares") at a price of 6.0033 cents per share, which is based on the 30 day volume weighted average price on 8 June 2011, in terms of the agreement. In terms of the agreement neither party shall be entitled to dispose of the shares acquired for a period of three years from the date of transfer. 5. EFFECTIVE DATE The transaction will become effective three days after the fulfilment of the condition precedent set out in paragraph 6 below. 6. CONDITIONS PRECEDENT The transaction is conditional upon approval by the JSE of the listing of the Vunani shares. 7. FINANCIAL EFFECTS The unaudited pro forma financial effects, for which the directors are responsible, are provided for illustrative purposes only to show the effect of the transaction on earnings, headline earnings, diluted earnings and diluted headline earnings per share as if the transaction had taken effect on 1 January 2010 and on net asset value and net tangible asset value per share as if the transaction had taken effect on 31 December 2010. Because of their nature, the unaudited pro forma financial effects may not give a fair presentation of the Group`s financial position and performance. The unaudited pro forma financial effects have been compiled from the audited consolidated financial statements for the year ended 31 December 2010 and are presented in a manner consistent with the format and accounting policies adopted by Vunani and have been adjusted as described in the notes below: Movement Notes Audited Unaudited (cents) (%) Before the After the
transaction transaction Loss per share 2 (2.23) (2.11) 0.12 5.4% (cents) Headline loss per 2 (2.93) (2.78) 0.15 5.1% share (cents) Diluted loss per 2 (2.23) (2.11) 0.12 5.4% share (cents) Diluted headline (2.93) (2.78) 0.15 5.1% loss per share 2 (cents) Net asset value 2 & 3 5.25 5.29 0.04 0.8% per share (cents) Net tangible asset 2 & 3 4.22 4.30 0.08 1.9% value per share (cents) Weighted average 4 282 465 4 522 318 number of shares in issue (000`s) Fully diluted weighted average number of shares in issue (000`) Shares in issue at 4 764 502 5 003 355 year end (000`s) Notes: 1 The "Audited Before the transaction" column reflects the audited results of Vunani for the year ended 31 December 2010. 2 The "Unaudited after the transaction" column reflects what the results would have been had the transaction been effective for the full financial year. In this regard it is assumed that Vunani acquired 20 million BSI ordinary shares on 1 January 2010 at a price of 71.9949 cents per share. A fair value adjustment was made by valuing the 20 million BSI ordinary shares at the closing share price on 31 December 2010 of 62 cents per share. A dividend paid by BSI in November 2010 of 2 cents per share was also brought to account. 3 Net asset and tangible net asset value calculations were completed assuming the transaction was concluded at the balance sheet date of 31 December 2010. 8. CLASSIFICATION OF THE TRANSACTION The transaction is classified as a Category 2 transaction in terms of the Listing Requirements of the JSE Limited. Sandton 30 June 2011 Independent Designated Adviser Grindrod Bank Limited Joint Designated Adviser Vunani Corporate Finance Date: 30/06/2011 11:30:06 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.
