WESCOAL HOLDINGS LIMITED - Offer to acquire a coal trading business and cautionary announcement

Offer to acquire a coal trading business and cautionary announcement

WESCOAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/006913/06)
JSE Share code: WSL & ISIN: ZAE000069639
("Wescoal" or "the Company")


  OFFER TO ACQUIRE A COAL TRADING BUSINESS AND CAUTIONARY
  ANNOUNCEMENT


1. INTRODUCTION

  Shareholders are advised that Chandler Coal Proprietary Limited (“Chandler”), a wholly
  owned subsidiary of Wescoal, has made an offer to acquire a coal trading business from a
  third party (the "Third Party") (the "Third Party's coal business"), subject to certain suspensive
  conditions (“the acquisition”).

2. RATIONALE FOR THE ACQUISITION
  Wescoal is a junior miner with a trading arm, Chandler that is a coal supplier to the Southern
  African domestic market with offices and depots situated in Gauteng, Eastern and Western
  Cape. Since 2008 the various coal supply companies operating in the South African domestic
  market have had to compete with the primary producers resulting in reduced volumes and
  pressure on margins.
  The acquisition of the Third Party's coal business will give the trading division the critical mass
  required to negotiate and overcome these challenges. In addition, significant synergy savings
  and the profits generated by the Third Party's coal business will enhance Wescoal earnings and
  shareholder value.


3. DESCRIPTION OF THE THIRD PARTY'S COAL BUSINESS
  The Third Party is a coal supply business operating within the Southern African region with
  offices and various depots situated in Gauteng, Eastern and Western Cape.


4. TERMS AND CONDITIONS OF THE ACQUISITION
  4.1 On 7 June 2013 Chandler made an offer to acquire the Third Party's coal business with
      effective from 1 October 2013 (“effective date”). The offer was accepted by the Third Party
      on 10 June 2013, subject to various suspensive conditions.
  4.2 The total purchase price is R 79 million consisting of property, movable assets and
      goodwill, subject to inventory adjustment on the effective date.
  4.3 The acquisition is conditional upon inter alia:
  4.3.1   The completion of all legal agreements necessary to complete the acquisition;
  4.3.2   The conclusion of a legal and financial due diligence investigation into the Third Party's
          coal business to the satisfaction of Chandler;
4.3.3   Chandler being able to secure funding for the acquisition;
4.3.4   Conclusion of a four year restraint of trade agreement;
4.3.5   Approval of the acquisition by Wescoal shareholders to the extend required;
4.3.6 All the necessary regulatory approvals including JSE Limited (“JSE”) and Competition
      Commission approvals for the acquisition.


5   UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
    The unaudited pro forma financial effects will be published in due course.


6   CATEGORISATION OF THE ACQUISITION
    The acquisition is categorized, in terms of the JSE’s Listings Requirements, as a
    Category 1 transaction and requires shareholders’ approval. A circular to shareholders
    in respect of the acquisition will be mailed in due course.


7   CAUTIONARY ANNOUNCEMENT
    Shareholders are advised to exercise caution in dealing in the company’s securities on
    the JSE until such time as the financial effects of the acquisition are published.


8   FURTHER ANNOUNCEMENT
    Shareholders will be notified once the final agreements have been signed and will be kept up
    to date on progress on the acquisition.



Corporate adviser & Sponsor
Exchange Sponsors

Johannesburg
13 June 2013

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