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Acquisition of additional equity position in M6 Mecsek Concession, in partnership with Aberdeen Asset Management
Group Five Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1969/000032/06)
Share code: GRF ISIN: ZAE 000027405
("Group Five” or "the Company")
ACQUISITION OF ADDITIONAL EQUITY POSITION IN M6 MECSEK CONCESSION, IN PARTNERSHIP
WITH ABERDEEN ASSET MANAGEMENT
1. INTRODUCTION
Shareholders are referred to the announcement released on the Stock Exchange News Service
(“SENS”) on 5 December 2016 wherein they were advised that the Company had entered into
a strategic equity partnership (“the JV”) with Aberdeen Infrastructure Funds ("AIF"), a wholly-
owned subsidiary of Aberdeen Asset Management PLC ("Aberdeen").
Pursuant thereto, the Company has elected to exercise its pre-emptive right with regards to
the sale of a 10% stake in Mecsek autopalya koncesszios zrt (“M6 Mecsek”) by a co-
shareholder of M6 Mecsek (“Acquisition”). In line with the strategic intent of the JV formed
with AIF, Group Five has elected to on-sell to AIF 49.99% of the Acquisition stake in M6 Mecsek
to be acquired by the Company from the M6 Mecsek co-shareholder (“Disposal”) (together
“the Transaction”).
Accordingly, following implementation of the Transaction, Group Five and AIF will jointly hold
the additional 10% stake in M6 Mecsek (50.01% and 49.99% respectively), alongside the assets
described in the announcement released on SENS on 5 December 2016.
2. THE TRANSACTION
Rationale for the Transaction
The Transaction serves to strengthen the strategic alliance between Group Five and AIF by
adding additional scale to the JV, whilst being complimentary to the role of Group Five under
its long-term operations and maintenance contract over the asset.
Terms of the Transaction
Group Five has exercised its pre-emptive right to acquire a further 10% stake in the M6
Mecsek concession for a cash consideration of EUR8.70 million or ZAR125.16 million, when
converted at the prevailing exchange rate of EUR:ZAR = 14.39. Following this Acquisition,
Group Five will on-sell a 49.99% interest in this stake to AIF for a Disposal consideration of
EUR4.35 million or ZAR62.57 million, resulting in a net Acquisition consideration payable by
the Company of EUR4.35 million or ZAR62.59 million (“Transaction Consideration”). Combined
with its existing stake in M6 Mecsek, Group Five will then hold a 10% interest in M6 Mecsek on
implementation of both this Transaction and that announced on SENS on 5 December 2016,
with the JV holding a combined 20% interest in M6 Mecsek.
The Transaction Consideration will be settled utilising cash proceeds realised from the
transaction announced on SENS on 5 December 2016 and which were retained offshore.
Cash proceeds of EUR4.35 million or ZAR62.57 million from the follow-on Disposal by the
Company of a 49.99% interest in the 10% M6 Mecsek stake to AIF will be primarily retained
offshore and applied to co-invest in new projects, alongside AIF, as and when such projects are
secured and subject to appropriate rates of return.
The effective date of the Transaction is expected to be 28 April 2017.
Nature of the business of M6 Mecsek
M6 Mecsek is a road concession company incorporated in the Republic of Hungary. It was
formed in 2007 in order to design, build, finance and operate the M6 phase 3, an 80km
motorway which covers the south-western part of the M6 in Hungary.
Value of the net assets of M6 Mecsek and profits attributable to the net assets
The value of the net assets of M6 Mecsek and the profits attributable to the net assets, and
therefore the financial effects of the Transaction, can be summarized as follows:
EUR’m ZAR’m
Value of Acquisition 8.70 125.16
Value of Disposal 4.35 62.57
Net value retained by the Company 4.35 62.59
F2016 F2015
Operating profit acquired R44.7m R15.9m
Operating profit disposed of R22.3m R7.9m
Net operating profit retained by the R22.4m R8.0m
Company
Conditions precedent
The implementation of the Transaction is subject to the fulfillment by 30 June 2017, or waiver
(where capable of waiver), as the case may be, of the following outstanding conditions
precedent:
- Hungarian State Ministerial consent;
- the approval of the Financial Surveillance Department of the South African Reserve
Bank, to the extent required; and
- the receipt of relevant lenders' consents.
3. CATEGORISATION OF THE TRANSACTION
The transaction is classified as a Category 2 transaction in terms of the JSE Limited Listings
Requirements and, accordingly, no shareholder approval is required.
Johannesburg
9 February 2017
Financial Advisor and Transaction Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Legal Advisor
HOGAN LOVELLS
Sponsor
NEDBANK CORPORATE AND INVESTMENT BANKING
Date: 09/02/2017 01:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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