ALEXANDER FORBES PREF SHARE INV LTD - Cautionary announcement regarding the proposed capital restructuring of Alexander Forbes Equity Holdings Proprietary

Cautionary announcement regarding the proposed capital restructuring of Alexander Forbes Equity Holdings Proprietary

Alexander Forbes Preference Share Investments Limited
(Incorporated in the Republic of South Africa)
Registration number: 2006/031561/06
Share code: AFP
ISIN: ZAE000098067
(“AF Pref”)

Cautionary announcement regarding the proposed capital restructuring of Alexander Forbes
Equity Holdings Proprietary Limited (“AF”) and the implications for AF Pref linked unitholders

In the unaudited interim financial results to 30 September 2013, AF reported on the introduction of the
revised capital adequacy requirements for long-term insurers by the Financial Services Board in
advance of the implementation of the Solvency Assessment and Management framework.
Consequently and as previously highlighted, it is contemplated that the current capital structure of AF
will be restructured in order to optimise and simplify the existing funding and legal structure, align
shareholder interests and ensure continued compliance with the regulatory requirements (“Proposed
Restructure”).

The Proposed Restructure contemplates the following:
 1. A full settlement, in cash, of the Payment-In-Kind (“PIK”) debenture issued by Alexander Forbes
     PIK Funding Proprietary Limited, a wholly-owned subsidiary of AF, and held by AF Pref;
 2. A disposal of the high-yield term loan instruments (“HY Loan”) and preference shares (“HYCo
     Preference Shares”) issued by Alexander Forbes Funding Proprietary Limited (“HYCo”) to AF
     for accrued value. Ordinary shareholders of AF will subsequently be required to subscribe for
     new AF ordinary shares in an amount equal to the HY Loan balance and HYCo Preference
     Shares; and
 3. A redemption of the entire issued A preference share capital of AF through the issue of new
     ordinary shares in AF

The settlement of the PIK debentures will result in the debentures issued by AF Pref which form part
of the AF Pref linked units listed on the JSE (“Linked Units”) being partially redeemed for cash and
partially settled through newly issued S preference shares in the issued share capital of AF Pref,
which will require amendments to the AF Pref memorandum of incorporation and AF Pref debenture
trust deed. Pursuant to the Proposed Restructure, it is envisaged that the Linked Units will be
restructured and that AF Pref will only hold ordinary shares in AF and no other instruments. The cash
redemption portion, in an amount to be quantified in the detailed terms announcement referred to
below, will be distributed to AF Pref linked unitholders (“Linked Unitholders”) as a consequence of the
implementation of the Proposed Restructure.


The Proposed Restructure will require approval from Linked Unitholders and as such a circular to all
Linked Unitholders and ordinary shareholders containing the full details of the Proposed Restructure
will be posted in due course. Included in the circular will be notices of the class meeting of preference
shareholders, general meeting of ordinary shareholders and preference shareholders and general
meeting of debenture holders, wherein holders of the respective classes of security will vote on the
Proposed Restructure. The Proposed Restructure will also be subject to a number of conditions
precedent including the completion of the Guardrisk disposal.


Further to this cautionary announcement, a detailed terms announcement, including disclosure of the
unaudited pro forma financial effects of the Proposed Restructure, will be released in due course.
Accordingly, Linked Unitholders are advised to exercise caution when dealing in their Linked Units
until a further announcement is made.

Sandton

21 January 2014

Joint Financial Advisers to AF and AF Pref
Deutsche Bank
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Legal and Tax Adviser to AF and AF Pref
Bowman Gilfillan

Sponsor to AF Pref
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

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