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SKY - Sea Kay Holdings Limited - Acquisition by a wholly-owned subsidiary of Sea Kay of a property development in Kwazulu-Natal, shareholders` warning and further cautionary announcement SEA KAY HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration number 2006/004967/06) JSE code: SKY ISIN: ZAE0000 ("Sea Kay" or "the Company") ACQUISITION BY A WHOLLY-OWNED SUBSIDIARY OF SEA KAY OF A PROPERTY DEVELOPMENT IN KWAZULU-NATAL, SHAREHOLDERS` WARNING AND FURTHER CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION Shareholders are advised that on 13 April 2012, Sea Kay Engineering Services Gauteng Province (Pty) Limited ("Sea Kay Gauteng"), a wholly-owned subsidiary of the Company, entered into an agreement with Amber Mountain Investments 64 (Pty) Limited ("the Seller"), in terms of which a 360 ha commercial and residential property development ("the Property") will be purchased ("the Transaction"). 2. BACKGROUND INFORMATION Sea Kay Sea Kay operates in the construction and development of mass housing and community facilities through its operational subsidiaries in Gauteng, Western Cape and KZN. The board announced the adoption of a restructuring plan in its results for the year ended 30 June 2011 in order to return the Company to its core business of construction ("the Restructuring"). The Transaction The Property has been rezoned from farmland to residential and commercial use and has been awarded all the relevant development rights through a Development Facilitation Act Tribunal. Subsequently the Seller installed certain infrastructure which is now to be further developed. The Property is well-situated close to the coast, 15 minutes north of the King Shaka airport, and in close proximity to Ballito. The Property has been approved to offer 975 residential opportunities as well as a number of commercial developments. The Property comprises 19 separate title deeds, together forming a unit of land on both sides of the N2 Highway. The Property is well-placed to take advantage of the fast growing commercial and residential developments in the Ballito region and is envisaged as a mid to longer term development. 3. RATIONALE FOR THE TRANSACTION The acquisition of the Property is on very favourable terms relative to its commercial value. It will be necessary for Sea Kay to raise funds to settle the purchase consideration. It is envisaged that the Transaction will create a medium to long term pipeline of commercial work in the private sector as well as increasing Sea Kay`s net asset value and forms part of the Restructuring. The Transaction will result in the diversification to commercial and private property business segments and decrease the Company`s concentration on Public sector and Government related work. 4. PURCHASE CONSIDERATION The purchase price payable is R201 million and is subject to Sea Kay obtaining the necessary financing. Sea Kay will embark on a formal fund- raising exercise, which will comprise both debt and equity. The purchase price must be settled through the delivery of a bank guarantee within 60 working days of the signature date of the agreement and be settled as follows: - R180 million on registration of the Property into Sea Kay Gauteng`s name; and - R21 million plus interest at prime within 12 months after registration. Under certain circumstances, the 60 working day period may be extended by 10 working days, however, if the purchase price is not secured within the allowed timeframe, the agreement will lapse and be of no further force and effect. 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, inter alia, upon: - the delivery of a bank guarantee for R201 million as detailed in paragraph 4; - the approval of the Transaction by the Company`s shareholders; and - compliance with all regulatory obligations and the JSE Limited Listings Requirements ("JSE Listings Requirements") to the extent necessary to effect the Transaction. 7. FINANCIAL EFFECTS The financial effects of the Transaction will be published in due course. 8. CLASSIFICATION OF THE TRANSACTION AND WARNING TO SHAREHOLDERS The Transaction is classified as a reverse takeover in terms of the JSE Listings Requirements. Shareholders are accordingly warned as to the uncertainty of whether or not the JSE will allow the Company`s listing to continue following the completion of the Transaction, which includes the securing of the financing as mentioned in paragraph 4. The Company will issue a circular to shareholders, including listing particulars as if it was applying for a new listing on the JSE, which circular will contain, inter alia: - a notice of a general meeting; and - advice as to whether or not the JSE will continue to grant a listing to the Company if shareholders approve the Transaction and it is subsequently concluded. 9. FURTHER CAUTIONARY ANNOUNCEMENT Shareholders are advised that the Company is in negotiations with two other property development owners regarding the acquisition of a retirement village in Cape Town and a lifestyle estate in Port Shepstone. Shareholders are therefore advised to continue to exercise caution when dealing in the Company`s securities until such time as these negotiations are concluded and the financial effects of the Transaction are released. Sandton 18 April 2012 Sponsor Vunani Corporate Finance Date: 18/04/2012 17:05:44 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. 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