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SFH - SA French Limited - Scheme of Arrangement, details of the transaction and

Release Date: 28/06/2012 17:39
Code(s): SFH
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SFH - SA French Limited - Scheme of Arrangement, details of the transaction and withdrawal of cautionary SA FRENCH LIMITED Incorporated in the Republic of South Africa (Registration number: 1982/009174/06) Share code: SFH ISIN: ZAE000108890 ("SA French") MIRROR LISTING OF SA FRENCH BY WAY OF A SCHEME OF ARRANGEMENT, INCORPORATING DETAILS OF TRANSACTIONS TO BE CONCLUDED BY A NEW LISTCO IN ANTICIPATION OF THE MIRROR LISTING, INCLUDING A CASH ISSUE, THE ASSIGNMENT AND CONVERSION OF A SHAREHOLDER LOAN ACCOUNT AND THE ACQUISITION OF FORKTECH (PROPRIETARY) LIMITED ("Forktech") AND WITHDRAWAL OF CAUTIONARY 1 INTRODUCTION 1.1 SA French has developed a strategy to diversify its operations and refashion itself as an industrial holding company through the anticipated mirror listing of SA French in terms of which: 1.1.1 a new listed entity, which is currently in the process of being registered with the Companies and Intellectual Property Commission ("New Listco"), will be incorporated as the new
holding company of SA French, resulting in SA French becoming a wholly-owned subsidiary of New Listco; and 1.1.2 the current shareholders of SA French ("Shareholders") will be entitled to receive shares in New Listco in exchange for the
current shares held in SA French, as contemplated in paragraph 2 below (collectively hereinafter referred to as the "Mirror Listing" or "Restructure"). 1.2 In anticipation of the Restructure, certain opportunities have been identified to grow New Listco via the acquisition of businesses in the capital equipment, engineering services and mining and agricultural supplies sectors. To this end, New Listco will, prior to the implementation of the Mirror Listing, raise a minimum amount of R20 million in equity capital to fund future acquisitions and to provide working capital headroom for New Listco to initiate operations through the revised group structure envisaged herein. MIRROR LISTING OF SA FRENCH BY WAY OF A SCHEME OF ARRANGEMENT 2.1 Shareholders are hereby advised that SA French will seek approval from the JSE Limited (the "JSE") for the Mirror Listing of SA French into New Listco. 2.2 The Mirror Listing will be effected by way of a scheme of arrangement in terms of section 114 of the Companies Act 71 of 2008, as amended from time to time (the "Companies Act") (the "Scheme"). 2.3 Rationale for the Scheme 2.3.1 Following its rights issue and recapitalisation in 2011, SA French embarked on a diversification strategy in its core crane rental and sales business in order to alleviate the risks of overexposure to the South African construction sector. This included, amongst other initiatives, positioning the business to have a greater focus on the high growth African infrastructure and resource sectors. In addition, as a result of cost cutting and the implementation of new systems and controls, SA French remains well positioned for a recovery in its core South African market. 2.3.2 As announced on SENS on 19 March 2012, these efforts resulted in SA French reporting a profit of R218 387 for the six months ended 31 December 2011. In order to build on this operational recovery, the directors of SA French have developed a strategy to diversify its operations and refashion it as an industrial holding company by way of the Mirror Listing, as contemplated in paragraph 1.1 above. SA French will therefore become one subsidiary of a diversified portfolio of industrial businesses owned by New ListCo. 2.3.3 The Scheme will provide New ListCo with the ability to ring-fence its holdings in SA French as well as other businesses that will be acquired, allowing for more efficient capital structures and a reduction of risk for the group as a whole. 2.4 Mechanics of the Scheme 2.4.1 The Scheme will constitute an "affected transaction" as defined in section 117(c) of the Companies Act and will be regulated by the Companies Act, the Companies Regulations, 2011 (the "Companies Regulations") and the Takeover Regulation Panel (the "TRP"). 2.4.2 The Scheme will be implemented in terms of section 114 of the Companies Act, proposed by the board of directors of SA French, between SA French and Shareholders. 2.4.3 The Scheme will be subject to the conditions precedent set out in paragraph 2.6 below (the "Scheme Conditions"). 2.5 Material terms of the Scheme The Scheme will be implemented on the basis that: 2.5.1 AfrAsia Corporate Finance (Proprietary) Limited ("AfrAsia") has approved the Cash Issue (as defined in paragraph 3.1.1 below), the Assignment (as defined in paragraph 3.2.3 below), the Shareholder Loan Conversion (as defined in paragraph 3.2.3 below) and the Acquisition (as defined in paragraph 3.3.1 below) (the "Approved Transactions"), as contemplated in paragraphs 3.1, 3.2 and 3.3 below, respectively, as sole shareholder of New Listco at the time; 2.5.2 New Listco will acquire all ordinary shares in SA French, being 611 791 380 shares (the "Scheme Shares"); 2.5.3 following the implementation of the Scheme, SA French will be a wholly owned subsidiary of New Listco; 2.5.4 once the Scheme Conditions have been fulfilled and the Scheme becomes operative, Shareholders will receive the scheme consideration of 1 (one) New Listco share for every 10 (ten) Scheme Shares disposed of in terms of the Scheme (the "Scheme Consideration"), credited as fully paid. Any fraction of less than 0.5 will be rounded downwards and any fraction of 0.5 and greater will be rounded upwards to the nearest whole number; 2.5.5 the Scheme Consideration will not have a cash alternative; 2.5.6 SA French will be delisted from the JSE after the implementation of the Scheme; 2.5.7 New Listco will be listed on the JSE on the implementation date of the Scheme; and 2.5.8 the Scheme Consideration will be issued on the market as listed shares. 2.6 Scheme Conditions 2.6.1 The Scheme will be subject to the fulfilment, or waiver (in whole or in part) by New Listco, of the following conditions: 2.6.1.1 the approval of the Scheme by the requisite majority of Shareholders as contemplated in section 115(2)(a) of the Companies Act (being not less than 75% of the votes exercised by Shareholders present and entitled to vote) at the general meeting of Shareholders convened for purposes of approving the Scheme (the "General Meeting"), and: (a) to the extent required, the approval of the implementation of such resolution by a Court in terms of section 115(2)(c) and/or section 115(3) of the Companies Act; and (b) if applicable, SA French not treating the aforesaid resolution as a nullity, as contemplated in section 115(5)(b) of the Companies Act; 2.6.1.2 the receipt of unconditional approvals, consents or waivers from all regulatory bodies necessary to implement the Scheme, including, but not limited to, the JSE, the TRP (in terms of a compliance certificate or exemption to be issued in terms of the Companies Act in relation to the Scheme) and the Exchange Control Department of the South African Reserve Bank, to the extent that any such approvals, consents or waivers are subject to conditions, such conditions being satisfactory to New Listco; and 2.6.1.3 in relation to any objections to the Scheme by Shareholders: 2.6.1.3.1 if Shareholders give notice objecting to the Scheme, as contemplated in section 164(3) of the Companies Act, and vote against the resolutions proposed at the General Meeting, shareholders holding no more than 10% of all SA French shares eligible to be voted at the General Meeting give such notice and vote against the resolutions proposed at the General Meeting; or 2.6.1.3.2 if Shareholders holding more than 10% of all SA French shares eligible to vote at the General Meeting give notice objecting to the Scheme, as contemplated in section 164(3) of the Companies Act, and vote against the resolutions proposed at the General Meeting, the relevant shareholders do not exercise their appraisal rights afforded to them in terms of section 164 of the Companies Act, by giving valid demands in terms of sections 164(5) to 164(8) of the Companies Act within 30 (thirty) business days following the General Meeting, in respect of more than 10% of the SA French shares eligible to be voted at the General Meeting; 2.6.2 SA French and New Listco will use their reasonable endeavours to procure the fulfilment of each of the Scheme Conditions as soon as reasonably practicable. 2.6.3 The Scheme Conditions in: 2.6.3.1 paragraphs 2.6.1.1 and 2.6.1.2 are not capable of being waived; and 2.6.3.2 paragraph 2.6.1.3 have been inserted for the benefit of New Listco, which will be entitled, in its sole discretion, to waive fulfilment of such Scheme Condition, in whole or in part, on written notice to SA French. 2.6.4 An announcement will be published on SENS as soon as practicable after all the Scheme Conditions have been fulfilled or waived, as the case may be. 2.7 Irrevocable undertakings SA French has received irrevocable undertakings from the following Shareholders to vote in favour of the Scheme and the resolutions to be proposed at the General Meeting, to the extent they are permitted to do so in terms of the Companies Regulations and the Listings Requirements of the JSE (the "Listings Requirements"): Shareholder Number of SA French % of issued share shares held capital of SA French
Trinity Asset Management 152 282 204 24.89% (Proprietary) Limited SA French Group Trust 93 517 500 15.29% Mowana Investments 94 030 162 15.37% (Proprietary) Limited Typhoon Investment Holdings 70 620 475 11.54% (Proprietary) Limited SJP Capital Limited 50 000 000 8.17% Wilduso 112 (Pty) Ltd 50 000 000 8.17% SAF Economic Empowerment 34 840 000 5.69% Trust Total 545 290 341 89.12% 2.8 Shareholding in SA French and acting as principal 2.8.1 New Listco will not, prior to the implementation of the Scheme, hold or control any SA French shares or options to acquire any SA French shares. 2.8.2 New Listco will be incorporated with a sole shareholder, namely AfrAsia, who will hold 1 (one) New Listco share in the issued share capital of New Listco. 2.8.3 New Listco is the ultimate prospective purchaser of the Scheme Shares and is acting alone and not in concert with any party. 2.9 Sufficient securities New Listco will have sufficient shares available to settle the Scheme Consideration payable to Shareholders in terms of the Scheme. 3. TRANSACTIONS TO BE CONCLUDED BY NEW LISTCO IN ANTICIPATION OF THE MIRROR LISTING 3.1 Cash Issue 3.1.1 In anticipation of the Mirror Listing, New Listco will, subject to the requisite regulatory and shareholder approvals, raise a minimum amount of R20 million of equity capital by way of a specific issue of new ordinary New Listco shares for cash to investors at an issue price of R1.00 (one rand) per share (the "Cash Issue"). 3.1.2 The proceeds from the Cash Issue will be applied to finance the cash portion of the Acquisition, as contemplated in paragraphs 3.3.2.2 and 3.3.3 below, and to provide working capital headroom for New Listco to initiate operations through the Restructure. 3.1.3 Prior to the implementation of the Scheme, AfrAsia shall approve the Cash Issue as sole shareholder of New Listco at the time. The Scheme shall accordingly be proposed to Shareholders on the basis that approval for the Cash Issue was obtained by New Listco before the operative date of the Scheme, for implementation immediately after the Scheme becomes operative. 3.1.4 The following investors have irrevocably committed to participate in the Cash Issue: 3.1.4.1 STANLIB Asset Management Limited has provided an irrevocable commitment to subscribe, as part of the Cash Issue, for no less than 6 000 000 (six million) shares in the share capital of New Listco at a subscription price of R1.00 (one Rand) per share, amounting to a total consideration of R6 million (six million Rand). 3.1.4.2 AfrAsia Corporate Finance (a non-public shareholder as defined in the Listings Requirements) has provided an irrevocable commitment to subscribe, as part of the Cash Issue, for no less than 3 000 000 (three million) shares in the share capital of New Listco at a subscription price of R1.00 (one Rand) per share, amounting to a total consideration of R3 million (three million Rand); and 3.1.4.3 Mowana Investments (Proprietary) Limited ("Mowana") (a non-public shareholder as defined in the Listings Requirements) has provided an irrevocable commitment to subscribe, as part of the Cash Issue, for no less than 2 000 000 (two million) shares in the share capital of New Listco at a subscription price of R1.00 (one Rand) per share, amounting to a total consideration of R2 million (two million Rand). 3.1.5 A collection of private individuals and employees of SA French have provided commitments to subscribe, as part of the Cash Issue, for no less than 9 000 000 (nine million) shares in the share capital of New Listco at a subscription price of R1.00 (one Rand) per share, amounting to a total consideration of R9 million (nine million Rand). Updated pro forma financial effects of the Transactions, as defined in paragraph 4.1 below, will be released on SENS in the event that additional irrevocable commitments are received from investors to participate in the Cash Issue. 3.1.6 The Cash Issue will be regarded as a specific issue of shares for cash in terms of the Listings Requirements and therefore requires approval by way of ordinary resolutions with 75% of the votes of Shareholders to be cast in favour thereof in terms of section 5.51(g) of the Listings Requirements. Mowana will be precluded from voting on the aforementioned ordinary resolutions to the extent that they are participants in the Cash Issue. 3.2 Assignment and conversion of shareholder loan account Mowana, SA French and New Listco (the "parties") are about to enter into an assignment and conversion agreement, in terms whereof the parties have agreed that: 3.2.1. subject to the requisite regulatory and shareholder approvals and the Scheme becoming unconditional, SA French will delegate all of its obligations towards Mowana in respect of Mowana`s shareholder loan (being an amount of R462 251) to New Listco (the "New Listco Loan"); 3.2.2 in consideration for assuming SA French`s obligations under the New Listco Loan, SA French shall create a loan account for an amount of R462 251 in favour of New Listco; and 3.2.3 immediately after the assignment of the New Listco Loan as contemplated above (the "Assignment"), the New Listco Loan shall be converted into new ordinary New Listco shares, at an issue price of R1.00 (one Rand) per New Listco share, by issuing 462 251 New Listco shares to Mowana and setting off the subscription price payable by Mowana against the amount owed by New Listco in terms of the New Listco Loan (the "Shareholder Loan Conversion"). 3.2.4 The Shareholder Loan Conversion will be regarded as a specific issue of shares for cash in terms of the Listings Requirements and therefore requires approval by way of an ordinary resolution with 75% of the votes of Shareholders to be cast in favour thereof in terms of section 5.51(g) of the Listings Requirements. Mowana will be precluded from voting on the aforementioned ordinary resolution. 3.3 Acquisition of Forktech 3.3.1 In order to immediately increase the size and diversity of the New Listco portfolio, SA French has, as agent on behalf of New Listco, entered into an agreement dated 28 June 2012 in terms of which New Listco will, subject to the approval of the Scheme, as one indivisible transaction, acquire 100% of the ordinary shares and claims in Forktech from Mr Johann van Tonder (the "Seller") for a total purchase consideration of R15 million, subject to adjustment as contemplated in paragraphs 3.3.2.1(ii) and (iii) and 3.3.5 below (the "Purchase Consideration") (the "Acquisition"). 3.3.2 The Purchase Consideration is to be settled as follows: 3.3.2.1 R11.5 million through the issue of new ordinary New ListCo shares to the Seller as follows: 5 500 000 shares at a subscription price of R1.00 (one Rand) per New Listco share, amounting to R5 500 000 (the "First Consideration Shares") shall be issued on fulfilment of all the conditions precedent to the Acquisition as contemplated in paragraph 3.3.8 below and the Scheme Conditions; a R3 000 000 portion of the Purchase Consideration (the "first R3 000 000 portion") is subject to downwards adjustment based on the achievement of at least R4 000 000 in net profit after tax ("NPAT") for the 12 months ended 30 June 2013 (First Warranty Target"), and is to be settled through the issue of so many new ordinary New Listco shares to the Seller as are required to settle the first R3 000 000 portion, at a subscription price which will be the greater of R1.00 (one Rand) per New Listco share or a price based on the weighted average traded price for New Listco shares over the 30 business days preceding 1 July 2013, and a R3 000 000 portion of the Purchase Consideration (the "second R3 000 000 portion") is subject to downwards adjustment based on the achievement of the R5 000 000 in NPAT for the 12 months ended 30 June 2014 ("Second Warranty Target") (plus any excess NPAT carried over for the 12 months ended 30 June 2013), and is to be settled through the issue of so many new ordinary New Listco shares to the Seller as are required to settle the second R3 000 000 portion, at a subscription price which will be the greater of R1.00 (one Rand) per New Listco share or a price based on the weighted average traded price for New Listco shares over the 30 business days preceding 1 July 2014 (the "Third Consideration Price"), and 3.3.2.2 R3.5 million to be settled in cash. 3.3.3 In addition to the settlement of the Purchase Consideration, New Listco shall subscribe for 10 (ten) new ordinary shares in Forktech for a subscription price of R2 million, amounting to a subscription price per share of R200 000, to be settled in cash. 3.3.4 In the event that the NPAT achieved by Forktech over the 12 months ended 30 June 2014 (including any excess NPAT tax carried over for the 12 months ended 30 June 2013) exceeds the Second Warranty Target, then for every additional Rand of NPAT above the Second Warranty Target, excluding any NPAT applied towards backdated credit (in the event that the Second Warranty Target is exceeded but the First Warranty Target was not achieved in full), the Purchase Consideration shall be increased by R0.20, up to a maximum additional increase of R2 000 000 (the "Additional Amount"). The Additional Amount shall be settled through the issue to the Seller of New Listco Shares at the Third Consideration Price. The number of New Listco Shares issued shall consequently be equivalent to that number of New Listco Shares which, when calculated at the Third Consideration Price, will be needed to settle the Additional Amount. 3.3.5 Forktech is currently engaged in settlement discussions to settle a claim against it in respect of a certain instalment sale agreement (the "Claim"). If the Claim is settled fully and finally by mutual agreement between the parties on or before the first annual anniversary of the implementation date of the Mirror Listing for a sum less than R5 100 000, then the Seller shall be entitled to a further payment from New Listco on the following terms: 3.3.5.1 the additional amount due shall be equal to the difference between the settlement amount and the sum of R5 000 000 up to a maximum additional amount of R3 500 000 (the "Warranty Consideration"); and 3.3.5.2 the Warranty Consideration shall be deemed to be an upward adjustment to the Purchase Consideration. The Warranty Consideration shall be settled through the issue to the Seller of New Listco shares at a price based on the weighted average traded price for New Listco shares over the 30 business days preceding the date on which the settlement of the Claim is agreed between the parties, subject to a minimum price of R1.00 (one Rand) per share (the "Warranty Price"). The number of New Listco shares issued shall consequently be equivalent to that number of New Listco shares which, when calculated at the Warranty Price, will be needed to settle the Warranty Consideration. 3.3.6 The issue of the shares to the Seller as contemplated in paragraphs 3.3.2.1(i) to (iii), 3.3.4 and 3.3.5 shall be subject to a two year lockup which shall apply from the date on which such shares are listed on the JSE to the second annual anniversary of that date. 3.3.7 The effective date of the Acquisition will be the date of fulfilment of all of the conditions precedent detailed in paragraph 3.3.8 below. 3.3.8 Conditions precedent of the Acquisition 3.3.8.1 The Acquisition is suspensively conditional upon the following being fulfilled on or before 30 July 2012, or such other date as agreed to in writing between the Seller and New Listco: (i) the JSE granting its approval of the listing of the First Consideration Shares; (ii) the shareholders of New Listco approving the Acquisition; (iii) New Listco completing a private placement to raise a minimum gross amount of R20 000 000; (iv) New Listco completing the due diligence investigation of the business, nature, status and general affairs of Forktech and electing to continue with the Acquisition based on the results of such due diligence investigation; (v) the board of New Listco approving the Acquisition; (vi) the South African Competition authorities granting their approval of the Acquisition, to the extent required; and (vii) the implementation of the Scheme. 3.3.8.2 The conditions contained in paragraph 3.3.8.1 are expressed for the benefit of New Listco. New Listco may waive the fulfilment of any one or more of these conditions by written notice to the Seller, save that such notice may not be delivered after the deadline date for fulfilment of all conditions. New Listco and the Seller may only extend the deadline date for fulfilment of any one or more of these conditions by mutual agreement. 3.3.8.3 New Listco and the Seller shall use their reasonable endeavours to procure the fulfilment of the conditions detailed in this paragraph 3.3.8. 3.3.9 Nature of business carried on by Forktech Forktech is a Cape Town based company engaged in forklift rentals, sales and repairs with warranted future average NPAT over the next two years of R4.5 million, as contemplated in the earn out provisions in paragraphs 3.3.2.1(ii) and (iii) above. The company principally operates in the coastal regions of South Africa providing forklift solutions to the farming, infrastructure, construction and logistics sectors. Forktech is managed by its founder and owner, who has established strong relationships with a broad client base in the coastal and key agricultural regions in South Africa. Forktech holds a distributor license for Nissan forklifts in these regions and now wishes to expand its presence to the greater Gauteng region. 3.3.10 Rationale for the Acquisition The rationale for the Acquisition is as follows: a well-developed and achievable expansion plan has been developed for Forktech which should materially enhance its earnings going forward; cost synergies can be achieved between SA French and Forktech through shared distribution centres and service technicians. Accounting functions will also be shared and run by New ListCo, thereby eliminating certain overlapping back office costs; revenue synergies are expected for both SA French and Forktech as the geographic foot print will be enhanced via SA French`s established presence and customer base in Gauteng and Forktech`s established presence and customer base in the coastal regions of South Africa; the transaction structure will result in the owner of Forktech becoming an important shareholder in the enlarged group, thereby ensuring the lock in and commitment of a highly capable and successful industry expert and entrepreneur; and warranted earnings and deferred payments provide an underpin to the valuation of the business. 4. INTER-CONDITIONALITY OF TRANSACTIONS 4.1 The Scheme, the Cash Issue, the Shareholder Loan Conversion and the Acquisition are collectively hereinafter referred to as the "Transactions". 4.2 The Transactions are inter-conditional and therefore should any one resolution relating to the respective Transactions not be approved by Shareholders, then none will be implemented. 5. PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS ON NEW LISTCO The unaudited pro forma financial effects of the Transactions on Shareholders are the responsibility of the SA French directors and have been prepared for illustrative purposes only to provide information about how the Transactions may affect the financial position and results of SA French and, because of its nature, may not give a fair reflection of SA French`s financial position and results after the Transactions. Before the After After After Cash After % change Trans- Scheme(2) Share- Issue Acqui- actions(1) holder sition Loan Con-
version Profit for 219 219 219 219 1 586 624.20% the period Headline -916 -916 -916 -916 415 149.24% earnings per share Net asset 2.43% value per 9.06 90.57 90.65 90.73 92.77 share (cents) Net -4.23% tangible 9.06 90.57 90.65 90.73 86.74 assets value per share (cents) Basic 0.04 396.48% earnings 0.39 0.38 0.28 1.92 per share (cent) Headline 133.75% earnings -0.16 -1.62 -1.60 -1.19 0.55 per share (cent) Weighted 566 375 689 56 637 569 57 115 569 77 115 569 82 615 569 and actual number of shares in issue at the end of the period Notes and assumptions: 1. The amounts set out in the "Before the Transactions" column above have been extracted from the published unaudited consolidated financial results of the SA French for the six months ended 31 December 2011. 2. Shareholders will receive the scheme consideration of 1 (one) New Listco share for every 10 (ten) Scheme Shares disposed of in terms of the Scheme. 3. It has been assumed that: (a) the Transactions had been implemented on 31 December 2011 for purposes of compiling the statement of financial position and on 1 July 2011 for purposes of compiling the statement of comprehensive income; (b) the Cash Issue will be for an amount of R20 million; (c) the earn out targets in respect of the Acquisition as contemplated in paragraphs 3.3.2.1(ii) and (iii) above are fully met (i.e. full contingent consideration paid in respect of the Acquisition, calculated in accordance with IFRS3); (d) all the Transactions are implemented; and (e) transaction fees amount to R2 000 000. 4. Extracted from Forktech`s unaudited balance sheet as at 31 December 2011 and unaudited income statement for the period 1 October 2011 to 31 December 2011. 5. Present value calculations are based on a discount rate of 9% (prime interest rate), where required. 6. All adjustments have a continuing effect. 6. OPINIONS AND RECOMMENDATIONS In accordance with regulation 90(1) of the Companies Regulations, the independent board of SA French, being those directors of SA French who act independently as contemplated in the Companies Regulations issued pursuant to the Companies Act, namely J de Bruyn, J Fizelle, JM Poluta and S Swana (the "Independent Board") has retained BDO Corporate Finance (Proprietary) Limited, an independent expert acceptable to the TRP, for the purposes of providing external advice in regard to the Scheme, the Cash Issue and the Shareholder Loan Conversion and to make appropriate recommendations to the board of SA French for the benefit of Shareholders. The substance of the external advice and the views of the Independent Board will be detailed in a circular that will be posted to Shareholders. 7. FURTHER DOCUMENTATION AND SALIENT DATES Further details of the Scheme, the Cash Issue, the Shareholder Loan Conversion and the Acquisition will be included in a circular to be sent to Shareholders in due course, and which will contain, inter alia, a notice of the General Meeting, a form of proxy, a form of surrender and transfer and a prospectus in relation to New Listco (which requires registration with the Companies and Intellectual Property Commission prior to the circular being posted) (the "Circular"). The salient dates in relation to the Scheme will be published prior to the posting of the Circular, along with further information on New ListCo, including its name and the composition of its board of directors. In accordance with regulation 102(2) of the Companies Regulations, the Circular will be posted within 20 (twenty) business days after the date of this announcement, or such longer period allowed by the TRP if good cause is shown. 8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT Following the release of this announcement, the cautionary announcement released by SA French on 10 May 2012 is hereby withdrawn and caution is no longer required to be exercised by Shareholders when dealing in SA French shares. 9. RESPONSIBILITY STATEMENT The Independent Board accept responsibility for the information contained in this announcement. To the best of their knowledge and belief, the information contained in this announcement is true and nothing has been omitted which is likely to affect the importance of the information included. Johannesburg 28 June 2012 Corporate advisor: AfrAsia Corporate Finance Proprietary Limited Designated advisor: PSG Capital Proprietary Limited Date: 28/06/2012 17:39:00 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.

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