PPC LIMITED - Detailed Cautionary Announcement in Relation to the Proposed Merger of PPC and AfriSam Group Proprietary Limited

Detailed Cautionary Announcement in Relation to the Proposed Merger of PPC and AfriSam Group Proprietary Limited

PPC Ltd
(Incorporated in the Republic of South Africa)
(Company registration number: 1892/000667/06)
JSE Code: PPC
ISIN: ZAE000170049
("PPC" or the "Company")

DETAILED CAUTIONARY ANNOUNCEMENT IN RELATION TO THE PROPOSED MERGER
OF PPC AND AFRISAM GROUP PROPRIETARY LIMITED

INTRODUCTION
Shareholders of PPC are hereby advised that the Board of Directors
of PPC and the Board of Directors of AfriSam Group Proprietary
Limited (“AfriSam”) (collectively the “Parties”) have entered into a
Heads of Terms to assess the merits of a potential merger between
the two groups (“Proposed Merger”) and to enter into formal
discussions in this regard.

The Parties have independently concluded that current market
circumstances, warrant entering into formal discussions to consider
the Proposed Merger.

As part of such discussions, the Parties will jointly assess the
value that they believe can be realised for the shareholders of PPC
and AfriSam if the Proposed Merger is implemented, which the
respective Boards of Directors believe may arise from the following:
   i)   The creation of a South African-owned cement producer that
        is financially stronger, operationally more efficient and
        has deeper technical capability;
   ii) The merged entity being able, by virtue of such enhanced
        capabilities, to invest in future growth opportunities;
   iii) The merged entity being significantly empowered, given that
        Phembani Group Proprietary Limited (a major shareholder in
        AfriSam) and other empowered investors (including PPC’s
        existing broad-based black economic empowerment (“B-BBEE”)
        shareholders) will own a significant share of the merged
        entity. This will be in addition to PPC’s announced
        intention   to   implement   a   further   B-BBEE  ownership
        transaction (“PPC’s Proposed B-BBEE Transaction”);
   iv) Globally the cement market is dominated by multinational and
        regional players. The merged entity will be well placed and
        have the balance sheet capabilities to develop as a major
        African cement producer, given its complementary production
        assets in six African countries outside of South Africa;
  v)    Synergies which might arise from a combination of the
        parties’ operations.

As part of the assessment of the Proposed Merger, and as a condition
to agreeing to pursue the Proposed Merger, the following will be
required:
   i)   The Parties being satisfied that, after closing of the
        Proposed Merger, the merged entity will have similar levels
        of gearing to PPC with sufficient financial liquidity;
   ii) Agreement by the Parties on the merger ratio;
   iii) The Parties confirming their preliminary view described
        above that the merged entity will be significantly
        empowered, including being satisfied with the potential
        impact of the Proposed Merger on PPC’s Proposed B-BBEE
        Transaction;
   iv) Agreement between the Parties in respect of any potential
        competition law considerations associated with the Proposed
        Merger; and
   v)   Each Party separately conducting, and being satisfied with
        the results of, a due diligence concerning the business,
        assets and liabilities of the other; and
   vi) Ultimately, agreement that the Proposed Merger is likely to
        deliver compelling benefits for all stakeholders.

The Parties will communicate the outcome of the assessment of the
above considerations.

CAUTIONARY
The discussions between PPC and AfriSam regarding the Proposed
Merger, if implemented, may have a material impact on the price of
the Company’s shares. Accordingly, shareholders are advised to
exercise caution when dealing in securities of the Company until
such time a further announcement is made.

A live investor and analyst conference call will be held at 08:30
(SAST) this morning. PPC CEO Darryll Castle will briefly address
investors and analysts and then open the floor to questions.

Live dial-in details:
South Africa: 011 535 3600 or 010 201 6800
International: +27 11 535 3600 or +27 10 201 6800
Ask to be joined to the PPC investor and analyst conference call.

Up until three days after the conference call, a recording will be
available to investors and analysts that are unable to participate
on the live conference call.

Playback dial-in details:
South Africa: 011 305 2030
International: +27 11 305 2030
Playback code: 13217

Sandton
13 February 2017

Investor contacts:
PPC
Azola Lowan
Tel: +27 (0) 11 386 9000
Azola.Lowan@ppc.co.za

Financial Advisor and Sponsor to PPC
Merrill Lynch South Africa (Pty) Ltd

Legal Advisors to PPC
Bowman Gilfillan

Financial Advisor to AfriSam
Rand Merchant Bank (a division of FirstRand Bank Limited)

Legal Advisors to AfriSam
Webber Wentzel
Nortons Inc

Financial Communications Advisor:
Instinctif Partners
Louise Fortuin
Mobile: +27 (0) 71 605 4294
Louise.Fortuin@instinctif.com

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