BIEDC1 - Edcon Proprietary Limited - Edcon and Absa Bank Limited agree terms

BIEDC1 - Edcon Proprietary Limited - Edcon and Absa Bank Limited  agree terms   
for sale of Edcon`s private label store card portfolio and enter a long term    
strategic relationship                                                          
Edcon Proprietary Limited                                                       
(Incorporated in the Republic of South Africa)                                  
(Registration No. 2007/003525/07)                                               
Company code: BIEDC1                                                            
("Issuer" or "Edcon")                                                           
EDCON AND ABSA BANK LIMITED ("ABSA BANK" OR "ABSA") AGREE TERMS FOR SALE OF     
EDCON`S PRIVATE LABEL STORE CARD PORTFOLIO AND ENTER A LONG TERM STRATEGIC      
RELATIONSHIP                                                                    
Edcon is pleased to announce that it has entered into agreement with Absa Bank, 
a member of Barclays, for it to acquire the accounts and receivables relating to
the private label store cards of Edcon (the "Card Portfolio") (the              
"Acquisition").                                                                 
Edcon and Absa Bank have further agreed to enter into a long-term, strategic    
relationship under which Absa Bank will provide retail credit to Edcon customers
and Edcon will be responsible for all customer facing activities (the           
"Program").                                                                     
Absa Bank will acquire the Card Portfolio for a cash consideration equal to the 
net book value of the Card Portfolio receivables at the effective date of the   
Acquisition. Absa Bank and Edcon expect the purchase price of the Card Portfolio
to be approximately R10 billion. The transaction is expected to close in the    
second half of 2012.                                                            
In terms of the Program, Absa Bank will have responsibility for credit,         
management of fraud, risk, finance, legal and compliance operations of the store
card business, while Edcon will retain all customer-facing activities, including
sales and marketing, customer services and collections. This should ensure a    
seamless customer experience. Edcon and Absa will balance continued growth of   
the credit book with appropriate credit quality.                                
The transaction is a natural evolution for the business and a key milestone in  
its strategic plan. Moreover, it is attractive to Edcon as it will (i) leverage 
the core competencies of both Edcon and Absa (ii) facilitate growth in retail,  
including growth in credit sales (iii) immediately improve Edcon`s balance      
sheet; and (iv) allow Edcon to focus on and fund growth in its core business    
activities.                                                                     
The Edcon store card business operates primarily in South Africa (approximately 
94% of net receivables at 31 March 2012), with smaller operations in Botswana,  
Namibia, Lesotho and Swaziland. While it is the intention of Absa Bank (or one  
of its affiliates) to acquire these portfolios in the neighbouring countries, it
is not a condition precedent to the South African transaction.                  
The Acquisition and the Program are subject to a number of conditions precedent 
customary for a transaction of this nature, which include, but are not limited  
to, the obtaining of regulatory approval for the Acquisition and/or the Program,
as required, and the release of security interests over the Card Portfolio      
assets under Edcon`s various existing notes and funding structures.             
On behalf of: Edcon                                                             
Further info:  Mark Bower, Deputy CEO, Edcon                                    
+27 11 495-6411                                                                 
Email: mbower@edcon.co.za                                                       
or                                                                              
Debbie Millar, Executive Investor Relations and Media, Edcon                    
+27 11 495 4086                                                                 
Email: dmillar@edcon.co.za                                                      
6 June 2012                                                                     
Debt Sponsor                                                                    
Rand Merchant Bank (A division of FirstRand Bank Limited)                       
Legal advisors to Edcon:                                                        
Sidley Austin LLP (USA)                                                         
Kirkland and Ellis (UK)                                                         
Werksmans Attorneys                                                             
Financial advisors to Edcon:                                                    
J.P .Morgan                                                                     
First Annapolis (USA)                                                           
Date: 06/06/2012 09:03:01 Supplied by www.sharenet.co.za                     
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