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CSP - Chemspec - Proposed raising of new permanent equity capital Chemical Specialities Limited Incorporated in the Republic of South Africa) Registration number (2005/039947/06) Share code: CSP ISIN: ZAE000109427 ("Chemspec" or "the Company") PROPOSED RAISING OF NEW PERMANENT EQUITY CAPITAL 1 SPECIFIC ISSUES FOR CASH AND EMPLOYEE SHARE INCENTIVE SCHEME Chemspec is pleased to announce that it has reached agreement in principle with the Industrial Development Corporation of South Africa Limited ("IDC") to raise approximately R60 million. The transaction is subject to the signing of legal agreements and the fulfilment of certain conditions as pertaining to these agreements. The IDC intends to enter into a convertible loan agreement and share subscription agreement in an amount of R30 million during August 2011. This loan will be converted to ordinary shares as set out below and the IDC intends to follow its rights for an additional R30 million in the proposed rights offer set out in 2 below. Furthermore, Corvest 6(Pty ) Limited ("Corvest") and Basfour 2052 CC, trading as Clark Investments("Clark Investments") have agreed to convert a significant proportion of their loan accounts of approximately R133 million for shares. Chemspec will convene a general meeting of shareholders to consider and, if deemed appropriate, pass the following proposals: 1.1 approval of a specific issue of 75,000,000 ordinary shares for cash to the IDC at a price equivalent to the lower of 40 cents per share or the 30 day volume weighted average trading price, to be determined at the date of issue, which is expected to be on or about 28 October 2011; 1.2 approval of a specific issue of 42,107,280 ordinary shares for cash to Clark Investments in order to capitalise a portion of their loan account of R16,842,912 at 40 cents per share; 1.3 conversion of the share capital of the company from ordinary shares of par value to ordinary shares of no par value and an increase in the authorised share capital from 1 billion shares to 1,5 billion shares of no par value; and 1.4 the adoption of an Employee Share Option Scheme. A circular and notice of meeting is in the course of being prepared and will be posted to shareholders as soon as possible. A further announcement, including the financial effects of the specific issues, will be made in due course. 2 RIGHTS OFFER In order to afford other shareholders the opportunity to participate in the capital raising and to convert to shares a substantial portion of the remaining loan account of Clark Investments and a substantial portion of the loan account of Corvest, as soon as is practicable after the specific issues of shares for cash, Chemspec intends to proceed with a rights offer to shareholders to raise approximately R214 million in the ratio of 1 new Chemspec ordinary share for every 1 Chemspec ordinary share held, at a rights offer price of 40 cents per share. The IDC, Clark Investments and Corvest intend following their rights in the rights offer and shareholders will be entitled to apply for excess shares to their entitlements. The IDC intends to follow its rights for an additional R30 million cash and Clark Investments and Corvest will capitalise a remaining portion of their loan accounts of approximately R32 million and R84 million, respectively. A circular is being prepared and will be posted to shareholders in due course. A further announcement, including the financial effects of the rights offer, will be made in this regard. 3 CONCLUSION The specific issues and rights offer referred to in 1 and 2 above, will strengthen the permanent equity of the Company by between R193 million and R261 million, depending on the success of the rights offer and will see an injection of new cash of between R60 million and R128 million, net of the capitalisation of the shareholder loan accounts. The Board believes that the Company will then be adequately capitalised and have sufficient cash to rebuild the business, both to recover lost ground and to take advantage of the growth opportunities expected to ensue from the strategic and operational initiatives currently being developed and implemented by the board of directors and the new management team. Durban 15 August 2011 Designated advisor Grindrod Bank Limited (Registration number 1994/007994/06) Date: 15/08/2011 16:56:30 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.
