A E C I LIMITED - Sale of Much Asphalt Proprietary Limited

Sale of Much Asphalt Proprietary Limited

AECI LIMITED
(Incorporated in the Republic of South Africa)
(Registration No. 1924/002590/06)
Share code: AFE ISIN: ZAE000000220
Hybrid code: AFEP ISIN: ZAE000000238
Bond company code: AECI
LEI: 3789008641F1D3D90E85
("AECI" or the "Company")

SALE OF MUCH ASPHALT PROPRIETARY LIMITED

1. INTRODUCTION

   Shareholders and noteholders are advised that AECI, has entered into a Share Purchase
   Agreement (the "Agreement") with Old Mutual Private Equity, acting through OMPE VI GP
   Proprietary Limited ("OMPE"), and Sphere Investments Proprietary Limited ("Sphere") (together
   the "Consortium") ("the Purchasers"), to dispose of 100% of its shareholding in its wholly-owned
   subsidiary Much Asphalt Proprietary Limited ("Much Asphalt") for an estimated consideration of
   R1 100 million, subject to adjustments as detailed in paragraph 4.3 below (the "Consideration"
   or "Proceeds") (the "Transaction").

   The Consortium's beneficial owners are OMPE and Sphere. The Consortium members are not
   'related parties' in relation to AECI, as defined in the JSE Listings Requirements.

2. OVERVIEW OF MUCH ASPHALT

   Much Asphalt is South Africa's leading independent manufacturer and supplier of bituminous
   products. The company manufactures and delivers premium-grade products to customers for use
   in infrastructure such as roads, airport runways, and private use, including hot and cold asphalt
   products, bituminous road binders, emulsions, primers, pre-coats and modified binders.

3. RATIONALE FOR THE TRANSACTION

   In alignment with AECI's strategy and optimising its portfolio to create a platform for growth, AECI
   is focusing on its AECI Mining and AECI Chemicals businesses and divesting from businesses
   with limited synergies with the chosen core businesses.

   This strategic shift aims to streamline operations, enhance efficiency, and leverage in-house
   expertise, by concentrating efforts on areas where AECI has a competitive advantage and strong
   market potential. AECI will be positioned for sustainable growth and improved performance.

4. KEY TERMS OF THE TRANSACTION

   4.1  Suspensive conditions
        The Transaction is subject to the fulfilment of certain suspensive conditions by no later than
        30 June 2025 (or such other date as may be agreed by the parties in writing), including:
        - the parties obtaining (where applicable) the necessary approval by the competition
          authorities;
        - AECI procuring and delivering to the Purchaser the consents from the noteholders of
          the notes issued under AECI's Domestic Medium Term Note Programme (the "AECI
          DMTN Programme") for the release of Much Asphalt as original guarantor from its
          obligations under the AECI DMTN Programme;
        - Much Asphalt delivering to the Consortium:
          o a letter regarding the release from the relevant guarantees;
          o written consents regarding the Transaction in respect of the relevant facilities;
        - AECI delivering to the Consortium written consent from the relevant facility agent
          regarding the Transaction; and
        - The conclusion of a restructuring agreement between AECI Mozambique and Much
          Asphalt Mozambique with respect to Much Asphalt's operations in Mozambique.

   4.2  Closing Date
        The Transaction will be effective on the later of (i) the 11th business day following the date
        on which the last of the suspensive conditions are fulfilled or waived, as applicable (the
        "Fulfilment Date") or (ii) the 11th business day following the date on which the "locked-box"
        date accounts are finalised, with either of these dates being the "Closing Date".
        Shareholders and noteholders will be informed once all of the remaining suspensive
        conditions have been fulfilled and the anticipated implementation date of the Transaction.

   4.3  Consideration
        The Consideration has been structured as a "locked-box" structure with an effective date of
        31 December 2024 (the "Locked-Box Date"). The "locked-box" component is subject to
        ordinary course leakage provisions and the net Consideration payable will not exceed
        R1 500 million.

   4.4  Use of Proceeds
        The Proceeds will be deployed in line with AECI's capital allocation framework.

   4.5  Warranties and other significant terms of the Agreement
        The Agreement provides for customary warranties, indemnities, events of default, interim
        period and other undertakings that are normal for a transaction of this nature including a
        right of either (i) the Purchasers to terminate the Agreement in the event that a material
        adverse change has occurred at any time prior to the Closing Date, or (ii) AECI to terminate
        in the event that a material adverse change has occurred at any time prior to the Locked
        Box Date.

5. FINANCIAL INFORMATION

   5.1  Net value of assets disposed
        The value of the net assets of Much Asphalt (deemed to be the value of the business assets
        less business liabilities to be disposed of) as at 31 December 2023 was R1 592 million.

   5.2  Earnings after tax
        Earnings after tax for the year ended 31 December 2023 attributable to Much Asphalt was
        R74 million.

        The financial information has been extracted from the most recent published audited annual
        financial statements for the year ended 31 December 2023, which were prepared in terms
        of International Financial Reporting Standards.

6. CLASSIFICATION OF THE TRANSACTION

   The Transaction constitutes a category 2 transaction in terms of the JSE Listings Requirements
   and does not require AECI shareholder approval.

Woodmead, Sandton
4 November 2024

Financial Adviser to AECI
Investec Bank Limited

Legal Adviser to AECI
Edward Nathan Sonnenbergs Incorporated

Legal Adviser to the Consortium
Cliffe Dekker Hofmeyr Incorporated

Equity Sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited)

Debt Sponsor
Questco Proprietary Limited



Date: 04-11-2024 09:40:00
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