MPACT LIMITED - Mpact Board of Directors ("Board") resolves to pursue a Board Based Black Economic Empowerment Transaction

Mpact Board of Directors ("Board") resolves to pursue a Board Based Black Economic Empowerment Transaction

MPACT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2004/025229/06)
JSE code: MPT ISIN: ZAE000156501
("Mpact" or "the Company" or "the Group")

MPACT BOARD OF DIRECTORS ("BOARD") RESOLVES TO PURSUE A BROAD
BASED BLACK ECONOMIC EMPOWERMENT TRANSACTION

Introduction and rationale

The Mpact Board of Directors is pleased to announce that it has
resolved to pursue a Broad-Based Black Economic Empowerment ("B-
BBEE") ownership transaction through its wholly-owned subsidiary
Mpact Operations Proprietary Limited ("Mpact Operations") in terms
of which it is anticipated that a B-BBEE partner will subscribe
for 10% of the ordinary issued shares ("B-BBEE Shares") in Mpact
Operations ("Proposed B-BBEE Transaction").

The Proposed B-BBEE Transaction will be the second empowerment
transaction implemented by Mpact, following the successful exit of
its previous B-BBEE partner, Shanduka Packaging Proprietary
Limited, in 2012.

On 1 January 2015 Mpact consolidated its South African operating
assets   under   Mpact   Operations  which   unlocked  operating
efficiencies within the Group and positioned Mpact Operations to
facilitate the implementation of the Proposed B-BBEE Transaction
("Group Restructure").

The Proposed B-BBEE Transaction has been structured to meet the
following objectives:
-  pursue    true  empowerment   aimed   at   empowering  previously
   disadvantaged   stakeholders  with   a   focus   on  broad-based
   groupings;
-  create a sustainable funding structure which is not reliant on
   external bank funding, share price appreciation or dividend
   payments;
-  materially improve Mpact Operations and its subsidiaries’
   ("Mpact Operations Group") B-BBEE ownership credentials;
-  complement existing B-BBEE initiatives; and
-  preserve existing value for current shareholders.

Identity of the B-BBEE partner and its beneficiaries
It is anticipated that a broad-based trust ("the Mpact Foundation
Trust"), through a wholly-owned subsidiary ("the Mpact Foundation
(RF) Proprietary Limited"), will act as the B-BBEE partner to the
Proposed B-BBEE Transaction.

Mpact   Limited  will   act   as  founder   ("Founder")  for   the
establishment of the Mpact Foundation Trust. The Founder will be
responsible for the appointment of the relevant trustees of which
at least 50% shall be independent from the Mpact Foundation Trust,
at least 50% shall be black people and at least 25% shall be black
women.

The beneficiaries of the Mpact Foundation Trust will include
amongst other:

-  Mpact Operations Group employees and their families;
-  emerging entrepreneurs, suppliers and customers directly or
   indirectly involved in the packaging and/or recycling sectors;
-  primary, secondary and tertiary education initiatives;
-  other individual(s), group(s) of people or entity/ies that
   operate within the communities in which the Mpact Operations
   Group operates or are identified by the trustees from time to
   time.

In addition to the above and as required by the applicable B-BBEE
legislation, at least 85% of distributions to further the Mpact
Foundation Trust’s objectives shall be used to benefit black
people of which at least 40% shall be black women.

Salient features of the Proposed B-BBEE Transaction

In order to facilitate the Proposed B-BBEE Transaction and as part
of the Group Restructure, Mpact Limited sold a number of its South
African operating assets to Mpact Operations on 1 January 2015.
The sale proceeds were settled through the issuance of an intra-
group loan by Mpact Limited to Mpact Operations.

In order to retain existing value for Mpact Limited shareholders
and to enable Mpact Foundation (RF) Proprietary Limited (on behalf
of the Mpact Foundation Trust) to subscribe for the B-BBEE shares
at a nominal value ("B-BBEE Subscription"), it is anticipated that
prior to the B-BBEE Subscription:

   - Mpact Limited will subscribe for cumulative redeemable non-
     participating preference shares ("Preference Shares") in
     Mpact Operations equal to the equity market value of the
     Mpact Operations Group ("Market Value") ("Preference Share
     Subscription"); and
   - Mpact Operations will make a special distribution to Mpact
     Limited up to the amount received from the Preference Share
     Subscription ("Special Distribution").

The Preference Share Subscription coupled with the Special
Distribution will enable Mpact Foundation (RF) Proprietary Limited
to subscribe for ordinary shares in Mpact Operations without the
need to raise its own acquisition funding and provides it with the
added benefit of immediate, unencumbered ownership in the Mpact
Operations Group.

Conditions to the Proposed B-BBEE Transaction

The appropriate subscription agreements are expected to be
concluded as soon as:
   - the Mpact Foundation Trust has been duly established;
   - Mpact Foundation (RF) Proprietary Limited has been duly
     incorporated; and
   - Mpact   Operations   has   adopted   a   new   memorandum  of
     incorporation (which is required to facilitate the Preference
     Share Subscription and the B-BBEE Subscription).

Shareholders will be informed once the B-BBEE Subscription
agreement has been concluded. Mpact expects to conclude the
Proposed B-BBEE Transaction by the end of June 2015.

Financial effects of the Proposed B-BBEE Transaction

Any   distributions  by   the  Mpact   Foundation   Trust to  its
beneficiaries shall be included in the consolidated earnings of
Mpact for the purposes of calculating basic earnings per share
("EPS") in terms of IAS 33 Earnings Per Share. There will be no
further impact on EPS in the consolidated financial statements of
Mpact arising from the Proposed B-BBEE Transaction.

Conclusion

Following the Board’s decision to pursue the Proposed B-BBEE
Transaction, Mr Bruce Strong, Chief Executive Officer of Mpact
Limited, said:

"Since the exit by the Group’s previous B-BBEE partner (Shanduka
Packaging Proprietary Limited) in October 2012, the Board has been
considering various options to re-introduce B-BBEE ownership into
the Group. The resolution by the Board confirms Mpact’s commitment
to broad-based empowerment in South Africa, especially within the
communities within which Mpact operates and insofar the previously
disadvantaged individuals with whom the Group interacts. We view
the Proposed B-BBEE Transaction as a flagship empowerment
initiative and look forward to not only continue with our existing
B-BBEE projects, but also pursue new empowerment initiatives that
have been identified to make a real difference amongst people in
need."

Melrose Arch
4 March 2015

B-BBEE Transaction Sponsor and Corporate Advisor: Bravura Capital
Proprietary Limited

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

Tax Advisors: KPMG Services Proprietary Limited

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