Compulsory Convertible Preference Share Rights Offer To Raise Approximately R193 Million Of New Equity And Proposed Chemical Specialities Limited Incorporated in the Republic of South Africa Registration number 2005/039947/06 Share code: CSP ISIN: ZAE000109427 ("Chemspec" or "the Company") COMPULSORY CONVERTIBLE PREFERENCE SHARE RIGHTS OFFER TO RAISE APPROXIMATELY R193 MILLION OF NEW EQUITY AND PROPOSED CIRCULAR TO SHAREHOLDERS 1. INTRODUCTION, RATIONALE AND PURPOSE OF THE RIGHTS OFFER Chemspec has reached the point in its growth path where it needs to be financially independent while it generates sustainable profits. The milestones achieved so far can be summarised as follows: • A strong board o Excellent non- executive directors o Revised executive team comprising industry leaders • very good corporate governance • industry specific workforce with good knowledge and experience • good products that only need to be fine tuned • good production and infrastructure with a focus on improved service delivery • good international and local partners • good sales growth There is a strategic focus on Chemspec’s sales growth which is founded on building strong customer relationships and by a focus on new markets, products and territory opportunities. Clearly defined and specific sales channels and products as well as margin and cost management with a de-complication plan and supply chain improvements should result in double digit sales growth and improved financial performance. The levels of growth opportunities that Chemspec will achieve both locally and internationally will require capital to “stay ahead of the curve” as well as further accelerate its organic growth strategies as well as to strengthen and improve the structure and efficiency of its balance sheet. The Company intends to use the proceeds to: • fund organic growth initiatives; • increase the balance sheet flexibility and proactively manage the capital structure, better aligning the funding of the Group’s long term investments with long term capital and diversifying and improving funding sources and additional borrowing capacity; and • further improving working capital management, leveraging increased liquidity to obtain better terms from suppliers and strategically building inventory in an inflationary environment. Shareholders are reminded that the funds are not expected to fund further losses. In light of the above, the board of directors of Chemspec (“the board”) has decided to raise approximately R193 million from its shareholders in the form of a renounceable compulsory convertible preference share rights offer (“the proposed rights offer”) as more fully set out in paragraph 3 below. 2. PROPOSED CIRCULAR TO SHAREHOLDERS In order to effect the proposed rights offer in terms of the Companies Act, no 71 of 2008 (“the Act”) and the JSE Listings Requirements, shareholders will be asked in general meeting to approve the following corporate actions: • an increase in authorised share capital by the creation of compulsory convertible preference shares (“CCP’s”); and • the placing of all unissued compulsory convertible preference shares under the control of the directors for the purposes of the proposed rights offer. Chemspec is in the process drafting a circular to shareholders incorporating a notice of general meeting and further details will be announced as soon as possible. 3. PARTICULARS OF THE PROPOSED RIGHTS OFFER Ratio 40 CCP’s for every 100 ordinary shares held Coupon rate 8% cumulative preference dividend per annum, payable six-monthly Issue price 45 cents per CCP* Conversion terms 1 ordinary share for every 1 CCP after 3 years from issue Listing Application will be made for the listing of the CCP’s on the JSE * A discount of 10% to the 30 day volume weighted average share price of Chemspec ordinary shares on the JSE 4. IRREVOCABLE UNDERTAKINGS Chemspec shareholders representing 66,7% of the shares in issue have irrevocably undertaken to vote in favour of the shareholders’ resolutions (required in terms of the Act and the JSE Listings Requirements) necessary to give effect to the proposed rights offer. 5. CONDITIONS PRECEDENT The proposed rights offer is conditional upon, inter alia: • the approval by the JSE of the required documentation so as to implement the proposed rights offer; • the passing of any necessary shareholder resolutions required to implement the proposed rights offer; • the registration by the Companies and Intellectual Property Commission of all documents and resolutions (if any) required in respect of the proposed rights offer; and • obtaining all regulatory approvals required (if any) in terms of the Act including a white wash resolution (if necessary) to ensure that no mandatory offers are required pursuant to the proposed rights offer. 6. CAUTIONARY ANNOUNCEMENT AND FURTHER DETAILED ANNOUNCEMENT Shareholders are advised that the proposed rights offer may have a material effect on the price of the Company’s securities. Accordingly, shareholders are advised to exercise caution when dealing in the Company’s securities until a full announcement is made setting out the salient dates and times as well as the pro forma financial effects of the proposed rights offer. A further detailed announcement will be made in due course. Durban 27 June 2013 Designated Advisor Grindrod Bank Limited Date: 27/06/2013 05:02:00 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.