The proposed partial disposal of shareholdings in Sunwest and Worcester SUN INTERNATIONAL LIMITED (Incorporated in the Republic of South Africa) (Registration number: 1967/007528/06) Share code: SUI ISIN: ZAE000097580 ("SIL") THE PROPOSED PARTIAL DISPOSAL OF SHAREHOLDINGS IN SUNWEST INTERNATIONALPROPRIETARY LIMITED AND WORCESTER CASINO PROPRIETARY LIMITED 1. Introduction Terms have been agreed between SIL, Grand Parade Investments Limited ("GPI") and Tsogo Sun Gaming Proprietary Limited ("Tsogo") regarding a proposed disposal by GPI and SIL of a 10% interest each in SunWest International Proprietary Limited ("SunWest") and a 10% interest each in Worcester Casino Proprietary Limited ("Worcester") (collectively the "Western Cape Assets") to Tsogo ("Proposed Transaction"). 2. Background to the Western Cape Assets SunWest and Worcester have casino and hotel operations in the Western Cape. SunWest’s primary assets are the GrandWest Casino and the Table Bay Hotel in Cape Town situated on the historic Victoria & Alfred Waterfront. Worcester operates the casino, hotel and ancillary leisure and entertainment business in respect of the Golden Valley Casino at Worcester in the Breede River Valley. 3. Structure of the Proposed Transaction During May 2014, SIL, GPI and Tsogo ("the Parties") announced a transaction whereby Tsogo would have acquired a 40% interest in SunWest and Worcester ("Previous Transaction"). In January 2015 the Competition Commission ("the Commission") recommended to the Competition Tribunal ("the Tribunal") that the Previous Transaction be prohibited. The Parties did not agree with the recommendation made by the Commission and opposed such recommendation before the Tribunal. A key condition of the Previous Transaction was that it be implemented by 31 August 2015. It became apparent that the Tribunal process was such that the Previous Transaction could not be concluded prior to 31 August 2015 (being the long stop date) and the Parties concluded that it was not possible to simply extend the date again as the commercial metrics agreed to had changed due to the effluxion of time. The Parties, by mutual agreement, therefore decided to terminate the Previous Transaction in July 2015. When structuring the Proposed Transaction, in addition to reducing the shareholding to 20% and revising the commercial metrics from the Previous Transaction, Tsogo’s investment in the Western Cape Assets will be limited to that of a passive investor and Tsogo will therefore have no: - Representation on the board of directors of either SunWest or Worcester; - Operational involvement in the Western Cape Assets nor any material influence in respect of the conduct of the businesses of the Western Cape Assets; or - Access to any information regarding the Western Cape Assets, except for information to which it has statutory rights as a shareholder, which will include the audited financial statements of the Western Cape Assets. 4. Salient Terms of the Proposed Transaction The Proposed Transaction entails SIL disposing of a 10% economic interest in the Western Cape Assets for a purchase consideration of R675 million ("Purchase Consideration") ("Sun Disposal"). The Purchase Consideration is calculated based on the aggregate of the forecast EBITDA to 30 June 2016 and the aggregate of the forecast net debt position at 30 June 2016 of the Western Cape Assets. In the event that the 30 June 2016 actual EBITDA is less than the forecast 30 June 2016 EBITDA by more than R25 million then an adjustment will be made to the Purchase Consideration. The Purchase Consideration will also be adjusted by any variation from the forecast net debt. Tsogo will settle the Purchase Consideration through the payment of 18 monthly cash installments of R37.5 million (unless adjusted per the aforegoing) commencing in the month following the fulfillment of the condition precedent to the Proposed Transaction, which condition is anticipated to be fulfilled by 30 April 2016. The Proposed Transaction also entails GPI disposing of a 10% economic interest in the Western Cape Assets on the same terms as the Sun Disposal ("GPI Disposal"). The GPI Disposal is conditional on GPI obtaining the approval of its shareholders by 30 June 2016, which date may be extended by 30 days at the instance of GPI. In the event that GPI shareholder approval is not obtained by this date then SIL will increase the shares disposed of under the Sun Disposal such that Tsogo acquires a further 10% stake in the Western Cape Assets from SIL, bringing Tsogo’s aggregate interest in the Western Cape Assets to 20%. The Proposed Transaction will not result in a change of control in respect of the Western Cape Assets. Following the implementation of the Proposed Transaction, the effective voting and economic shareholding of the Western Cape Assets will be as follows: SunWest Worcester SIL and GPI Sell 10% Each SIL Sell 20% SIL an GPI Sell 10% Each SIL Sell 20% Voting Economic Voting Economic Voting Economic Voting Economic SIL 50.05% 61.60% 50.01% 51.60% 61.40% 61.40% 51.40% 51.40% GPI 29.93% 15.10% 49.89% 25.10% 15.10% 15.10% 25.10% 25.10% Sun International Employee Share Trust ("SIEST") 0.01% 3.30% 0.01% 3.30% 3.50% 3.50% 3.50% 3.50% Tsogo 20.00% 20.00% 0.09% 20.00% 20.00% 20.00% 20.00% 20.00% Sun International Management Limited will continue to manage the Western Cape Assets under its existing management contract on the same terms and conditions 5. Put Option In the event that any party ("Offeror") acquires 35% or more of the issued ordinary shares of SIL, excluding treasury shares ("Trigger Shareholding") or makes an offer or causes a scheme of arrangement or any other transaction or arrangement to be proposed which, if implemented, will result in the Offeror (and/or parties acting in concert with it) holding a Trigger Shareholding or acquiring all or the greater part of the assets or undertaking of SIL ("Offeror Transaction"), then Tsogo may elect by written notice given to SIL, within 30 days of the announcement of the Offeror Transaction ("Offer Announcement"), to put its equity in the Western Cape Assets to SIL for shares in SIL and/or for a cash consideration. SIL will determine the proportion of the purchase consideration which will be settled by the issue of SIL shares (subject to shareholder approval at that time) or in cash. The aggregated value of the equity held by Tsogo in the Western Cape Assets will be determined based on an EBITDA multiple of 7.5, where the EBITDA is determined based on the last available published financial information of the Western Cape Assets as published by SIL. The valuation of the Tsogo investment in the Western Cape Assets will be limited to 29.99% of SIL’s market capitalisation at that time ("Capped Amount") and Tsogo will only be entitled to put so much of its investment to SIL as is equal to the Capped Amount, retaining the balance, subject to any required regulatory approval. In the event that SIL shares are to be issued in settlement of the Put Option (subject to shareholder approval at that time) then the 5 day volume weighted average price at which SIL ordinary shares trade on the exchange operated by the JSE Limited following the Offer Announcement will apply. 6. Rationale and Use of Proceeds The Proposed Transaction allows SIL to realise a portion of its investment in the Western Cape Assets at market value without compromising its control or management of the assets. The cash proceeds from the Proposed Transaction will be utilised to repay debt. SIL and GPI are of the considered view that Tsogo can provide similar BEE ownership credentials to that of GPI, thereby ensuring that the BEE ownership requirements of the operations are maintained. Furthermore Tsogo has the financial capability to implement a transaction of this magnitude. 7. Conditions Precedent The Sun Disposal is conditional upon receipt from the SIEST, by not later than 30 April 2016, that it has waived its pre-emptive rights in terms of the current shareholders agreement. SIEST has a right to increase its current shareholding in SunWest from 3.3% to 3.5%. 8. Net Assets Disposed and Profits Attributable to those Assets The net book value of the Western Cape Assets as at 31 December 2015 is R327.8 million. The EBITDA associated with these assets for the 6 months ended 31 December 2015 was R506.5 million and the profit after tax was R256.3 million. 9. Categorisation The Sun Disposal constitutes a Category 2 transaction in terms of Section 9 of the JSE Limited Listings Requirements. Sandton 4 April 2016 Legal Advisor Cliffe Dekker Hofmeyr Competition Law Advisor Baker & McKenzie Sponsor RAND MERCHANT BANK (a division of FirstRand Bank Limited) Date: 04/04/2016 05:09:00 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. 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