BK ONE LIMITED - Announcement regarding the granting of a call option Notice of preference shareholders meeting Cautionary announcem

Announcement regarding the granting of a call option
Notice of preference shareholders’ meeting
Cautionary announcem

BK One Limited
Incorporated in the Republic of South Africa
Registration Number: 2011/008103/06
Preference Share Code: BK1P
ISIN: ZAE000161352
“BK One” or “the Company”

Announcement regarding the granting of a call option
Notice of preference shareholders’ meeting
Cautionary announcement

1. Introduction

    BK One preference shareholders (“Shareholders”) are referred to the cautionary
    announcements published 28 August 2014 and 18 December 2014 and are advised that BK One
    has entered into a call option agreement in terms of which the Company has granted a call
    option to Advanced Vacuum Alloys Limited (“the Acquirer”) (“the Call Option”) to acquire the
    Company’s entire right, interest and title in the shares held in Advanced Vacuum Alloys
    Proprietary Limited (“AVA”) a (“the Subject Matter”).

2. Rationale for the Call Option

    As disclosed in the Annual Financials for year ended 28 February 2014, the ability for the
    company to continue as a going-concern is dependent on the procurement of adequate funding
    for working capital. Possible sources of working capital were to:
    · sell part or whole of its respective investments; and / or
    · recover short-term receivables from its underlying assets; and / or
    · issue additional shares; and / or
    · or a combination of the above.

    The directors are of the view that the out-and-out sale of the whole or part of the Company’s
    respective investments did not present, at the present time, a realistic alternative.

    In order to recover short-term receivables from the underlying assets, the underlying assets
    would need to be fully funded. Various methods to procure funding for the underlying assets
    were considered and the most favourable option was the Call Option as it was linked to
    providing working capital and trade finance funding for AVA, the effect of which will stabilise
    AVA into the future while simultaneously securing the possibility of a liquidity event for the
    Company through the Call Option. Shareholders are also referred to the preference
    shareholders’ meeting held on 30 September 2014 in terms of which the authorisation of the
    subscription for and allotment of 800 authorised but unissued ordinary shares in the ordinary
    share capital of the Company was granted. The subscription for the aforementioned ordinary
    shares is subject to certain conditions precedent still to be fulfilled, however it is anticipated
    that these conditions will be fulfilled shortly. The combination of the Call Option and
    subscription for ordinary shares will in the opinion of the directors adequately provide for the
    working capital requirements of the Company for the following year.
3. Terms of the Call Option

The terms of the Call Option are as follows:

    3.1. BK One has granted the Acquirer the Call Option for a period of two years to purchase the
         Subject Matter;
    3.2. in the event that the Acquirer exercises the Call Option, it shall issue convertible loan notes
         (“CLs”) to BK One in payment for the Subject Matter (“the Purchase Consideration”);
    3.3. the Acquirer shall procure a listing of itself as soon as possible after the exercise of the Call
         Option;
    3.4. the outstanding CLs shall bear interest at a rate of 2% per annum, compounded annually
         until such time as either:
        3.4.1.the market capital of the Acquirer reaches US$68.5 million (“the Conversion Event”);
               or
        3.4.2.the second anniversary of the date on which the CLs were issued by the Company (“the
               Long Stop Date”);

              whichever is the earlier (“the Conversion Date”); and

    3.5. the Company shall be entitled, at its discretion, at the Conversion Event to serve a
         conversion notice to the Acquirer to convert all CLs held by the Company into fully paid
         ordinary shares in the Acquirer at the conversion price on the Conversion Date.

4. Purchase consideration of the Call Option

On exercise of the Call Option, the Acquirer will issue CLs for the share equity of 5 960 611 shares in
AVA for US$ 4 296 232.00.


5. Notice of preference shareholders’ meeting

A general meeting of Shareholders of BK One will be held Friday, 16 January 2015 at 11h00 at
Boundary Terraces, 3rd Floor, Mill House, 1 Mariendahl Road, Newlands, Cape Town to transact the
business as stated in the notice posted to Shareholders on 19 December 2014.

The date on which Shareholders must be recorded as such in the register maintained by the transfer
secretaries of the Company for purposes of being entitled to attend and vote at the preference
shareholders’ meeting as determined in terms of the Companies Act, No 71 of 2008, is Friday, 9
January 2015.



6. Cautionary announcement

Further to the renewal of cautionary announcement released on SENS on 18 December 2014 BK One
continues to be in negotiations in relation to its underlying assets.
Cape Town

19 December 2014

Investment bank and Sponsor

Nedbank Capital

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