TONGAAT HULETT LIMITED - TONGAAT HULETT LIMITED - Conversion of "A Preferred Ordinary" Shares to Ordinary Shares

TONGAAT HULETT LIMITED - Conversion of "A Preferred Ordinary" Shares to Ordinary Shares

Tongaat Hulett Limited
(Registration number 1892/000610/06)
Share code: TON
ISIN ZAE000096541
("Tongaat Hulett" or "the company")

TONGAAT HULETT LIMITED - Conversion of "A Preferred Ordinary"
Shares to Ordinary Shares

Shareholders are advised in this voluntary announcement of the
details relating to the compulsory conversion of the company's
"A Preferred Ordinary" shares in issue into Ordinary shares,
listed on the JSE, in terms of its 2007 broad based black
economic empowerment (BEE) transaction.

In 2007, Tongaat Hulett entered into a broad based BEE equity
participation transaction, which inter-alia included an 18%
participation structure for two strategic groupings - a cane
growing communities trust (Masithuthukisane Trust) together
with   Sangena  and   a  land   conversion  communities   trust
(Mphakathi Trust), together with Ayavuna, through two BEE SPVs
(special purpose vehicles). This was detailed in a circular to
shareholders dated 18 May 2007 and approved by shareholders in
June 2007. The original terms and conditions of the
transaction agreements have remained in place and have not
been altered since their conclusion and approval in 2007.

This BEE participation structure involved the issuance of 25,1
million "A Preferred Ordinary" shares in Tongaat Hulett, which
were funded by the BEE SPVs through external funding, BEE
participants' funding and notional vendor finance in 2007. In
accordance with the original agreements and approvals, these
shares had a 7 year term, within the overall 10 year
transaction period contemplated in the agreements. On the 7
year anniversary of the transaction (i.e. beginning of July
2014), the process commenced that results in the automatic
conversion of the "A Preferred Ordinary" shares to Ordinary
shares. The "A Preferred Ordinary" shares thus cease to exist
and the A preferred ordinary dividends of some R100 million
per annum are no longer payable. The converted Ordinary shares
will be held by the BEE SPVs for the time being and rank
equally (pari passu) with other Ordinary shares and will be
listed on the JSE in the first week of July 2014.

Simultaneously, in accordance with the 2007 agreements and
approvals, a calculation has been performed which determines
the number of these converted shares that Tongaat Hulett is
entitled to buy-back for the consideration of 1 cent per share
(the buy-back right), in order to extinguish the notional
vendor finance in the transaction. This buy-back right is
subordinated in favour of the repayment of the external
funding and the BEE shareholder loans, which have no recourse
to Tongaat Hulett and are well covered by the assets in the
BEE SPVs. This means that the buy-back by Tongaat Hulett can
only occur after the repayment, in due course, of the external
funding in the BEE SPVs – i.e. sometime after the initial 7
year period and prior to the ultimate 10 year duration. At the
prevailing share price, approximately 4,5 million shares held
by the BEE SPVs are required to settle the external funding,
which currently amounts to some R650 million in the two BEE
SPVs.    Simultaneously, in accordance with the original
agreements and formulae, at the current share price, Tongaat
Hulett is entitled to buy-back the remaining approximately
20,6 million shares for a consideration of 1 cent per share,
in due course in this process.

While the issued share capital of Tongaat Hulett listed on the
JSE will now include these approximately 20,6 million shares,
that are the subject of the buy-back right, these shares will
not be included in the calculations determining earnings per
share and headline earnings per share.

Tongaat Hulett will use the next period to assess how best to
take the 2007 BEE participation structure forward, both within
the context of the original intent of a transaction structure
that spans 10 years and the context of the strategic
importance to Tongaat Hulett of meaningful black economic
empowerment. Shareholders will continue to be kept updated on
the progression of these 2007 transaction structures and
should any material changes be required then these would be
brought to shareholders for consideration and approval in due
course.

Tongaat
2 July 2014

Transaction Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)

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