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AFRICAN PHOENIX INVESTMENTS LIMITED - Proposed Transactions Update, Distribution of Circular, Notice of General Meeting and Withdrawal of Cautionary

Release Date: 18/02/2019 10:16
Code(s): AXLP AXL     PDF:  
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Proposed Transactions Update, Distribution of Circular, Notice of General Meeting and Withdrawal of Cautionary

AFRICAN PHOENIX INVESTMENTS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1946/021193/06)
Ordinary share code: AXL        ISIN: ZAE000221370
Hybrid instrument code: AXLP       ISIN: ZAE000221388
(“African Phoenix” or “the Company”)


PROPOSED TRANSACTIONS UPDATE, DISTRIBUTION OF CIRCULAR, NOTICE OF
GENERAL MEETING AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENTS


1. INTRODUCTION

    Shareholders are referred to the ‘Voluntary Transaction and Cautionary Announcement’
    released on SENS on 7 September 2018, and the subsequent renewal of cautionary
    announcements, the last of which was dated 18 January 2019, wherein Shareholders were
    informed that African Phoenix proposes to implement certain strategic transactions.

    The board of directors of African Phoenix (“Board”) is pleased to announce that the
    structure of the Proposed Transactions referred to in the aforementioned announcements
    has now been finalised and accordingly, the details thereof are set out below.

    Furthermore, Shareholders are hereby advised that the combined circular to Ordinary and
    Preference Shareholders dated 18 February 2019 (“Circular”) (and using the terms defined
    therein unless otherwise stated) containing, inter alia, full details of the Proposed
    Transactions, and incorporating:
    -   Revised Listing Particulars;
    -   a report prepared by the Independent Expert in terms of section 48(8) read with
        sections 114(2) and 114(3) of the Companies Act, and section 1.15(d) and schedule 5 of
        the Listings Requirements in relation to the Scheme Repurchase and Voluntary
        Repurchase;
    -   a report prepared by the Independent Expert in terms of section 10 and schedule 5 of
        the Listings Requirements in relation to the management arrangements necessary to
        implement the BFM Structure as a composite agreement between African Phoenix and a
        Related Party; and
    -   a notice convening a general meeting of Shareholders (“General Meeting”) in order to
        consider and, if deemed fit to pass, with or without modification, the special and ordinary
        resolutions necessary to approve, inter alia, the Proposed Transactions,
    will be distributed today, 18 February 2019.

    The Circular is also available on the Company’s website at www.phoenixinvestments.co.za.

2. PROPOSED TRANSACTIONS

2.1. The Company intends to implement the strategic transactions which include the following
     key components:

    2.1.1.   a scheme of arrangement in terms of sections 48, 114 and 115 of the Companies
             Act, proposed by the Board between African Phoenix and its Preference
             Shareholders, in terms of which African Phoenix will, subject to the terms and
             conditions set out in the Circular, repurchase all of the Preference Shares for a
             cash consideration of R37.50 (thirty seven Rand and fifty cents) per Preference
             Share (“Scheme Repurchase Consideration”) (“Scheme Repurchase”);

    2.1.2.   a voluntary repurchase, made separately but concurrently with the Scheme
             Repurchase, of up to all of the issued Preference Shares from Preference
             Shareholders in terms of sections 48, 114 and 115 of the Companies Act, and the
             Listings Requirements, subject to the terms and conditions set out in the Circular,
             for a cash consideration of R37.50 (thirty seven Rand and fifty cents) per
             Preference Share (“Voluntary Repurchase Consideration”) (“Voluntary
             Repurchase”), which Voluntary Repurchase will only be implemented if the
             Scheme Repurchase is not implemented for any reason whatsoever. Under the
             Voluntary Repurchase, the Preference Shareholders may also elect to retain their
             Preference Shares;

    2.1.3.   in furtherance of the BFM Structure, the acquisition by African Phoenix of a limited
             partnership interest in a private equity fund to be established as a South African en
             commandite partnership, to be known as the "API Capital Fund", through the
             contribution of cash only thereto. The API Capital Fund, which will be managed by a
             black-owned fund manager, namely API Capital Proprietary Limited (“API
             Capital”), in accordance with the B-BBEE Codes, will be established through
             African Phoenix (as a limited partner of the API Capital Fund) entering into a limited
             partnership agreement, namely the “Partnership Agreement”, with API Capital (as
             the general partner of the API Capital Fund (“General Partner”)) and the related
             adoption of a new investment policy for African Phoenix and reclassification of
             African Phoenix as an "investment entity" in terms of section 15 of the Listings
             Requirements;

    2.1.4.   amendments to the memorandum of incorporation of African Phoenix (“MOI”) to,
             inter alia, (i) create a new class of unlisted, non-voting, non-participating convertible
             ordinary shares, namely the B Shares, which B Shares are to be issued to the
             management team of API Capital (“Management Team”) for purposes of settling
             the Management Team’s performance participation entitlements, and other
             amendments to the MOI necessary to give effect to the Proposed Transactions; and

    2.1.5.   the proposed issue of 300 000 000 B Shares by African Phoenix to the participation
             partnership (being a partnership operated for the benefit of the Management Team
             and/or their related entities, as nominated by the General Partner) and
             implementation of the Share Purchase, in terms of which the General Partner will,
             in accordance with paragraph 15.4(f) of the Listings Requirements, purchase 1% of
             the issued Ordinary Shares in the Company in the open market within three months
             of the requisite approvals being obtained from Shareholders.

    collectively referred to as the "Proposed Transactions".

2.2. The implementation of the Proposed Transactions (including the entering into of the relevant
     agreements relating to the Proposed Transactions) is subject to the approval of the
     resolutions required to implement each component of the relevant Proposed Transactions by
     the Shareholders in terms of the MOI, the Companies Act and the Listings Requirements, as
     applicable, and the terms and conditions set out in the Circular. The JSE has approved the
     Circular and the Financial Surveillance Department of the South African Reserve Bank has
     approved the Scheme Repurchase, the Voluntary Repurchase, and the delisting of the
     Preference Shares (to the extent applicable).

3. RATIONALE FOR THE PROPOSED TRANSACTIONS

3.1. Scheme Repurchase or Voluntary Repurchase

    3.1.1.   The Preference Shares are legacy from the previous holding company capital
             structure, where African Phoenix was the ultimate bank controlling company of
             African Bank Limited, and where the Preference Shares were akin to traditional
             funding preference shares in the bank controlling company structure. African
             Phoenix has departed from all banking-related activities and African Phoenix's
             current main business is that of an investment holding company. As such, the
             purpose for which the Preference Shares were created is no longer relevant and
             the Scheme Repurchase would afford the Preference Shareholders with an
             opportunity to exit the current African Phoenix structure. Moreover, the dual capital
             structure in African Phoenix creates conflict between the differing share classes and
             is unsuitable in the context of an investment holding company creating unnecessary
             complexity in the African Phoenix capital structure. It is proposed that African
             Phoenix’s capital structure be simplified through a single class of shares (i.e. the
             Ordinary Shares) which will also ensure alignment of interests between the
             Shareholders.

    3.1.2.   As set out in the "Voluntary Transaction and Cautionary Announcement", the
             Company initially proposed implementing the Voluntary Repurchase (together with
             the implementation of, inter alia, the BFM Structure as set out therein). However,
             following further confidential Shareholder interaction, it became apparent that
             proposing the Scheme Repurchase separately to, but concurrently with, the
             Voluntary Repurchase could, if implemented, result in an even greater alignment of
             interests between Shareholders. In this context, the Scheme Repurchase, or
             alternatively, in the event that the Scheme Repurchase is not adopted by the
             requisite majority of Shareholders at the General Meeting and/or the Scheme
             Repurchase is not implemented for whatever reason, the Voluntary Repurchase
             has been proposed, which allows Preference Shareholders to elect to retain their
             Preference Shares.

3.2. Implementation of the BFM Structure and the reclassification of the Company to an
     "Investment Entity"

    3.2.1.   African Phoenix is an investment holding company managed primarily by Black
             South Africans who have a proven track record of deploying capital in a manner
             that generates long-term economic value for investors. The Proposed Transactions
             are a significant step towards realising the Company’s mission primarily due to:

             3.2.1.1.   preservation of capital for investments which are in line with the
                        investment holding company classification;

             3.2.1.2.   reinvigorating the current listed, permanent capital structure to provide
                        access to additional sources of capital;

             3.2.1.3.   establishing a B-BBEE investment platform which gives African Phoenix
                        access to unique investment opportunities that are not typically
                        available to public market investors;

             3.2.1.4.   funding investments while enhancing the B-BBEE status of investee
                        companies with no dilution in value for African Phoenix Shareholders;

             3.2.1.5.   establishing the long-term alignment of interests between African
                        Phoenix, the General Partner and African Phoenix Shareholders; and
              3.2.1.6.   efficiently positioning African Phoenix's capital structure in anticipation
                         of the updated insurance regulations which will be applicable to the
                         Company as a result of African Phoenix's holding of Stangen.

4. SCHEME REPURCHASE CONSIDERATION AND VOLUNTARY REPURCHASE CONSIDERATION

4.1. The Scheme Repurchase Consideration or the Voluntary Repurchase Consideration (as the
     case may be) will comprise a return of capital to Preference Shareholders of R37.50 per
     Preference Share. Accordingly, the Directors have resolved to declare the Scheme
     Repurchase Consideration or the Voluntary Repurchase Consideration (as the case may be)
     as a return of CTC as defined in section 1 of the Income Tax Act. No portion of the Scheme
     Repurchase Consideration or the Voluntary Repurchase Consideration (as the case may be)
     will comprise a dividend as defined in section 1 of the Income Tax Act.

4.2. The tax implications of the Scheme Repurchase or Voluntary Repurchase (as the case may
     be) are dependent upon the individual circumstances of the Scheme Repurchase
     participants or Voluntary Repurchase participants concerned (as the case may be) and the
     tax jurisdiction applicable to such Scheme Repurchase participants or Voluntary Repurchase
     participants (as the case may be). Scheme Repurchase participants or Voluntary
     Repurchase participants (as the case may be) should consequently seek appropriate
     professional advice in this regard.

5. BFM STRUCTURE

5.1. The BFM Structure aims to create a permanently empowered investment holding structure
     as contemplated in the B-BBEE Codes, the implementation of which will result in certain
     changes to the governance structures of the Company as envisaged and set out more fully
     in the Circular. The table below sets out the proposed composition of the Board of African
     Phoenix should the implementation of the BFM Structure be approved by the requisite
     majority of Shareholders at the General Meeting:

    African Phoenix Board of Directors1
    Name of Director                                 Classification
    Alethea Conrad                                   Independent non-executive Director
    Nonzukiso Siyotula                               Independent non-executive Director
    Oyama Mabandla2                                  Executive Director
    Reshma Mathura                                   Independent non-executive Director
    Samuel Sithole                                   Non-executive Director
    
    1.   The Board will remain substantially the same, with the required Board committees in
         line with the requirements set out in the Companies Act (read with the Companies
         Regulations, 2011), the Listings Requirements and the principles and recommended
         practices of King Report on Corporate Governance for South Africa, 2016.
    2.   Mr Oyama Mabandla is proposed to serve as an executive Director on the Board post
         implementation of the Proposed Transactions.


5.2. The API Capital Fund is proposed to be an en commandite partnership established in South
     Africa and comprising the General Partner (holding a 0.01% interest in the API Capital Fund)
     and a Limited Partner, being African Phoenix (holding a 99.99% interest in the API Capital
     Fund). The table below provides an overview of the proposed governance structures in
     relation to the management of the API Capital Fund should the BFM Structure be approved
     by the requisite majority of Shareholders at the General Meeting.

      General Partner's board of      BFM Management Team           Investment Committee
      directors
      Morris Mthombeni1               Alu Sithebe                   Siya Nhlumayo (executive)
      Shafiek Rawoot4                 Shafiek Rawoot                Shafiek Rawoot (executive)
      Siya Nhlumayo*                  Siya Nhlumayo3                Mahlatse Kabi2(independent
                                                                    non-executive)
                                      Kamo Mudimbu                  Aadil Carim (independent
                                                                    non-executive)
                                                                    Sean Dougherty
                                                                    (independent non-executive)

      1. Mr Morris Mthombeni will resign as an independent non-executive Director of the
         Company and will no longer serve as the chairperson of the Board, as he is proposed to
         serve on the board of directors of the General Partner.
      2. Ms Mahlatse Kabi will resign as an independent non-executive Director of the Company
         as she is proposed to serve on the General Partner's Investment Committee.
      3. Mr Siya Nhlumayo will resign as an executive Director of the Company as he is
         proposed to serve as a member of the board of directors of the General Partner and a
         member of the General Partner's Investment Committee.
      4. Mr Shafiek Rawoot will resign as an executive Director of the Company as he is
         proposed to serve as a member of the board of directors of the General Partner and as
         a member of the General Partner's Investment Committee.

5.3. All the investment decisions of the API Capital Fund will be taken by the Investment
     Committee of the General Partner, which will sit as a sub-committee of the board of directors
     of the General Partner and, as indicated above, will comprise a majority of independent non-
     executive members.

5.4. The salient features of the key potential fees due to the General Partner in relation to the
     services provided are summarised in the table below and are more fully set out in the
     Circular:

           Proposed Fee          Calculation
      1.   Management fee        The General Partner will be entitled to receive a Fund
                                 Management Fee of 1.00% per annum of the API Fund's
                                 Average Invested NAV, provided that the minimum annual fee
                                 will amount to R19 million for the first accounting period (and
                                 increasing by 7% for each subsequent financial year).
      
      2.   Performance           The Performance Participation shall entitle holders of the B
           Participation*        Shares to receive 16% of the profit share over and above the
                                 hurdle return rate of 10%, assessed and paid at the end of
                                 each Measurement Period, calculated by taking into account
                                 the average of 75% of the Invested NAV during a
                                 Measurement Period and 25% of the increase in African
                                 Phoenix's market capitalisation during the same Measurement
                                 Period, as exceeds the performance hurdle of 10%.
    
    i.   On the relevant Measurement Date, the B Shares will automatically convert to A
         Shares on a one for one basis, in accordance with, and as envisaged by, the terms
         attaching to the B Shares including the formulae set out therein. The terms attaching
         to the B Shares also preclude the conversion into issued A Shares at a discount.
         Furthermore, as 300 000 000 B Shares will be issued to the Participation Partnership,
         no more than 300 000 000 A Shares can be issued to the Participation Partnership on
         conversion of the B Shares into A Shares in accordance with the terms attaching to
         the B Shares.
     
     ii. The fairness of the overall fee structure in relation to the management of the API
         Capital Fund has been assessed by the Independent Expert who is of the opinion that
         the key terms thereof in unity are fair to the Shareholders. A signed copy of the
         Independent Expert's report regarding the management arrangements necessary to
         implement the BFM Structure is available for inspection as set out in the Circular, a
         copy of which is attached to the Circular as Annexure 2.

6. SHAREHOLDER SUPPORT

   African Phoenix has received support from the Shareholders representing in aggregate
   c. 48.04% of the issued Ordinary Shares and c. 41.77% of the issued Preference Shares
   (together representing approximately 48.02% of the aggregate voting rights in the Company).

7. INDEPENDENT EXPERT REPORTS

7.1. Ernst & Young Advisory Services Proprietary Limited (“EY”) has been appointed by the
     independent sub-committee of the Board (“Independent Sub-committee”) as the
     Independent Expert in accordance with:

    7.1.1.   section 5.69 of the Listings Requirements, read with section 1.15 thereof, to advise
             the Board on whether the Scheme Repurchase, or in the alternative, the Voluntary
             Repurchase is fair to Preference Shareholders. The report of the Independent
             Expert is incorporated as Annexure 1 to the Circular. The Board, and separately the
             Independent Sub-committee, is of the opinion that the Scheme Repurchase, or in
             the alternative, the Voluntary Repurchase is fair insofar as the Preference
             Shareholders are concerned and the Independent Sub-committee has been so
             advised by the Independent Expert; and

    7.1.2.   section 10.4(f) of the Listings Requirements, to advise the Board on whether the
             key elements of the management arrangements necessary to implement the BFM
             Structure, are fair to Shareholders. The report of the Independent Expert is
             incorporated as Annexure 2 to the Circular. The Board, and separately the
             Independent Sub-committee, is of the opinion that key elements of the
             management arrangements required to implement the BFM Structure are fair
             insofar as the Shareholders are concerned and the Independent Sub-committee
             has been so advised by the Independent Expert.

8. DIRECTORS OPINION AND RECOMMENDATIONS

   The Directors, and separately the Independent Sub-committee, having carefully considered
   the terms, conditions and rationale of the Proposed Transactions are of the opinion, that the
   Proposed Transactions are fair and could create value for Shareholders. Accordingly, the
   Directors, and separately the Independent Sub-committee, recommend that Shareholders
   vote in favour of all of the resolutions to be proposed at the General Meeting required in order
   to implement the Proposed Transactions.

9. NOTICE OF GENERAL MEETING

9.1.   Notice is hereby given that the General Meeting of the Company’s Shareholders will be
       held (subject to any adjournment, postponement or cancellation) at 13:00 on Wednesday,
       20 March 2019, at Webber Wentzel, 90 Rivonia Road, Sandton, to consider, and, if
       deemed fit, to pass, with or without modification, the special and ordinary resolutions set
       out in the notice of General Meeting, which is contained in the Circular.

9.2.   The Board has determined that, in terms of section 62(3)(a), as read with section 59 of the
       Companies Act, the record date for the purpose of determining which Shareholders of the
       Company are entitled to participate in and vote at the General Meeting is Friday, 15 March
       2019. Accordingly, the last day to trade African Phoenix Shares in order to be recorded in
       the Company’s securities register to be entitled to vote will be Tuesday, 12 March 2019.

9.3.   Voting on all resolutions will be in accordance with the rights attaching to the Shares as
       envisaged in the MOI and Shareholders should see the Circular in this regard.

10. SALIENT DATES OF THE PROPOSED TRANSACTIONS

10.1. The salient dates pertaining to the Proposed Transactions, also contained in the Circular,
      are set out in the table below.

                                                                                            2019

       Record date to determine Shareholders that are eligible to              Friday, 8 February
       receive the Circular and notice of General Meeting
       Circular distributed to the Shareholders and notice convening          Monday, 18 February
       the General Meeting published on SENS on
       Last day to trade in order to be recorded on the Register in order       Tuesday, 12 March
       to be eligible to vote at the General Meeting
       Record date to be recorded on the Register and hence eligible             Friday, 15 March
       to vote at the General Meeting
       Last day to lodge Forms of Proxy in respect of the General                Monday, 18 March
       Meeting by 13:00 on
       Last date for African Phoenix Shareholders to give notice in           Wednesday, 20 March
       terms of section 164(3) of the Companies Act to African Phoenix
       objecting to the resolution approving the Scheme Repurchase
       General Meeting to be held at 13:00 at Webber Wentzel, 90              Wednesday, 20 March
       Rivonia Road, Sandton
       Results of the General Meeting published on SENS on                    Wednesday, 20 March
       
       If the Scheme Repurchase is adopted by the requisite majority of 
       African Phoenix Shareholders at the General Meeting:
       
       Last day on which Shareholders who voted against the Scheme             Thursday, 28 March
       Repurchase can make application to the court in terms of
       section 115(3)(a) of the Companies Act (if applicable) on
       Last day for African Phoenix Shareholders who voted against              Thursday, 4 April
       the Scheme Repurchase to apply to court for leave to apply for a
       review the Scheme Repurchase in terms of section 115(3)(b) of
       the Companies Act (if applicable) on
       Last date for African Phoenix to give notice of adoption of the          Thursday, 4 April
       special resolution approving the Scheme Repurchase in terms of
       section 164(4) of the Companies Act to Dissenting Shareholders on
       Scheme Repurchase Conditions are fulfilled or waived 
       (to the extent applicable):
       Finalisation Date in respect of the Scheme Repurchase                      Monday, 8 April
       expected to be on
       Finalisation Date announcement in respect of the Scheme                    Monday, 8 April
       Repurchase expected to be released on SENS by no later than
       11:00 on
       Expected last day to trade in order to be recorded on the                 Monday, 15 April
       Register in order to be eligible to participate in the Scheme
       Repurchase
       Suspension of listing of Preference Shares on the JSE expected           Tuesday, 16 April
       to take place at the commencement of trade on
       Forms of Surrender and Transfer to be received by the Transfer          Thursday, 18 April
       Secretaries on or before 12:00 on
       Scheme Repurchase Record Date                                           Thursday, 18 April
       Scheme Repurchase Participants who are Dematerialised                    Tuesday, 23 April
       Shareholders expected to have their accounts held at their
       CSDP or Broker credited with the Scheme Repurchase
       Consideration on or about
       Scheme Repurchase Consideration expected to be paid/posted               Tuesday, 23 April
       to Scheme Repurchase Participants who are Certificated
       Preference Shareholders (provided their Forms of Surrender
       and Transfer and Documents of Title are received on or prior to
       12:00 on the Scheme Repurchase Consideration Record Date)
       on or about
       Termination of listing of the Preference Shares on the JSE             Wednesday, 24 April
       expected to take place at the commencement of trade on or
       about
       
       If the Scheme Repurchase is not adopted by the requisite majority of African
       Phoenix Shareholders at the General Meeting and/or the Scheme Repurchase is not
       implemented and the Voluntary Repurchase is adopted by African Phoenix
       Shareholders at the General Meeting:
       
       Last day on which Shareholders who voted against the                    Thursday, 28 March
       Voluntary Repurchase can make application to the court in
       terms of section 115(3)(b) of the Companies Act on
       Last day for African Phoenix Shareholders who voted against              Thursday, 4 April
       the Voluntary Repurchase to apply to court for leave to apply for
       a review the Voluntary Repurchase in terms of section 115(3)(b)
       of the Companies Act (if applicable) on
       
       Voluntary Repurchase Conditions are fulfilled or waived (to the extent applicable):
       
       Finalisation Date in respect of the Voluntary Repurchase                   Monday, 8 April
       expected to be on
       Finalisation Date announcement in respect of the Voluntary                 Monday, 8 April
       Repurchase expected to be released on SENS by no later than
       11:00 on
       Expected last day to trade in order to be recorded on the                 Monday, 15 April
       Register in order to be eligible to participate in the Voluntary
       Repurchase
       Suspension of listing of Preference Shares (in the event that all        Tuesday, 16 April
       of the Preference Shares are repurchased by African Phoenix)
       on the JSE expected to take place at the commencement of
       trade on
       Forms of Election, Surrender and Transfer to be received by the         Thursday, 18 April
       Transfer Secretaries on or before 12:00 on
       Voluntary Repurchase Closing Date                                       Thursday, 18 April
       Voluntary Repurchase Record Date                                        Thursday, 18 April
       Results of the Voluntary Repurchase published on SENS on                Thursday, 18 April
       Expected date on which the Voluntary Repurchase is                       Tuesday, 23 April
       implemented
       Dematerialised Shareholders participating in the Voluntary               Tuesday, 23 April
       Repurchase expected to have their accounts held at their CSDP
       or Broker credited with the Voluntary Repurchase Consideration
       on
       Voluntary Repurchase Consideration expected to be paid/posted            Tuesday, 23 April
       to Certificated Shareholders participating in the Voluntary
       Repurchase (provided their Forms of Election, Surrender and
       Transfer and Documents of Title are received on or prior to
       12:00 on the Voluntary Repurchase Closing Date)
       Termination of listing of the Preference Shares (in the event that     Wednesday, 24 April
       all of the Preference Shares are repurchased by African
       Phoenix) on the JSE expected to take place on the
       commencement of trade on or about
Notes:
1.    All of the above dates and times are subject to change. The dates have been
      determined based on certain assumptions including that no court approval or review
      of the special resolution approving the implementation of the Scheme Repurchase
      or the Voluntary Repurchase will be required. Shareholders will be notified of any
      amendments to these salient dates and times on SENS.
2.    Shareholders should note that as transactions in Shares are settled in the electronic
      settlement system used by Strate, settlement of trades takes place three Business
      Days after such trade. Therefore, persons who acquire Shares after the last day to
      trade in order to be recorded in the Register to be eligible to vote at the General
      Meeting, namely, Tuesday, 12 March 2019 will not be able to vote thereat, but may,
      nevertheless, provided the Scheme Repurchase or the Voluntary Repurchase is
      adopted and they acquire the Preference Shares on or prior to the Scheme
      Repurchase or Voluntary Repurchase last day to trade in order to participate in the
      Scheme Repurchase or Voluntary Repurchase, expected to be Monday,
      15 April 2019 in respect of the Scheme Repurchase or Monday, 15 April 2019 in
      respect of the Voluntary Repurchase.
3.    Ordinary Shareholders may not dematerialise or rematerialise their Ordinary Shares
      from Tuesday, 16 April 2019 to Thursday, 19 April 2019, both days inclusive.
      Preference Shareholders may not dematerialise or rematerialise their Preference
      Shares after the last day to trade.
4.    A Shareholder may submit a Form of Proxy at any time before the commencement
      of the General Meeting (or any adjournment of the General Meeting) or hand it to
      the chairman of the General Meeting before the appointed proxy exercises any of
      the relevant Shareholder’s rights at the General Meeting (or any adjournment of the
      General Meeting), provided that should a Shareholder lodge a Form of Proxy with
      the Transfer Secretaries less than 48 hours before the General Meeting, a
      Shareholder will also be required to furnish a copy of such Form of Proxy to the
      chairman of the General Meeting before the appointed proxy exercises any of such
      Shareholder’s rights at the General Meeting (or any adjournment of the General
      Meeting).
5.    If the General Meeting is adjourned or postponed, Forms of Proxy submitted for the
      initial General Meeting will remain valid in respect of any such adjournment or
      postponement.
6.    The FTSE reclassification of the Company is based on, inter alia, the Company's
      revenue streams and is expected to occur, in accordance with the FTSE review
      cycle. Shareholders will be apprised of developments in this regard through SENS.
7.    To the extent that the Preference Shares are not all repurchased, either in terms of
      the Scheme Repurchase or the Voluntary Repurchase, such Preference Shares will
      remain listed on the JSE under the hybrid instrument code "AXLP" and ISIN
      ZAE000221388.
8.    All times indicated above are South African standard times.

11. WITHDRAWAL OF CAUTIONARY

  Shareholders are referred to the ‘Voluntary Transaction and Cautionary Announcement’
  released on SENS on 7 September 2018, and the subsequent renewal of cautionary
  announcements, the last of which was dated 18 January 2019, and are hereby advised that
  further to the details contained in this announcement, caution is no longer required to be
  exercised by Shareholders when dealing in the Company’s securities.

12. SHAREHOLDER CONFERENCE CALL

  Shareholders are advised that the Company has today made available an investor
  presentation in relation to the Proposed Transactions ("Presentation"), which can be
  accessed at www.phoenixinvestments.co.za. Shareholders are also invited to register for a
  conference call during which Siya Nhlumayo, African Phoenix CEO and Shafiek Rawoot,
  African Phoenix CFO, will take participants through the Presentation. Details of the
  conference call are:

    Date                   Monday, 18 February 2019
    Time                   15:00 SAST/CAT
    Web pre-registration   Interested parties are requested to pre-register for this conference
                           call at http://www.diamondpass.net/2110410 and follow the
                           instructions provided.

  The website also contains Frequently Asked Questions (FAQs) for further information.

13. DISCLAIMER

13.1. The information contained in this announcement:

      13.1.1. is not for publication, distribution or release, in whole or in part, directly or indirectly,
              in or into any jurisdiction where to do so would constitute a violation of the relevant
              laws of such jurisdiction;

      13.1.2. does not constitute or form a part of any offer or an invitation or solicitation or
              advertisement to purchase and/or subscribe for securities in South Africa, including
              an offer to the public for the sale of, or subscription for, or an invitation or the
              solicitation of an offer to buy and/or subscribe for, securities as defined in the
              Companies Act or otherwise and will not be distributed to any person in South
              Africa in any manner that could be construed as an offer to the public as
              contemplated in the Companies Act. Accordingly, the information contained in this
              voluntary transaction and cautionary announcement does not, nor does it intend to,
              constitute a "registered prospectus", as contemplated by the Companies Act and no
              prospectus has been, or will be, filed with the South African Companies and
              Intellectual Property Commission in relation to the Proposed Transactions; and

      13.1.3. may include forward-looking statements about African Phoenix, its prospects and/or
              the Proposed Transactions, which are based on current expectations and
              projections about future events. These statements may include, without limitation,
              any statements preceded by, followed by or including words such as "target",
              "believe", "expect", "aim", "intend", "may", "anticipate", "estimate", "plan", "project",
              "will", "can have", "likely", "should", "would", "could" and other words and terms of
              similar meaning or the negative thereof. These forward-looking statements are
              subject to risks, uncertainties and assumptions about the Company, its subsidiaries
              or affiliates and the Proposed Transactions, including, among other things, the
              development of African Phoenix's strategy. In light of these risks, uncertainties and
              assumptions, the events in the forward-looking statements may not occur. No
              representation or warranty is made that any forward-looking statement will come to
              pass and, in particular, no representation or warranty is made that the Proposed
              Transactions will be implemented (either wholly or in part). No one undertakes to
              publicly update or revise any such forward-looking statement. The information
              contained in this voluntary transaction and cautionary announcement is provided as
              at the date of this voluntary transaction and cautionary announcement and is
              subject to change without notice. The Company expressly disclaims any obligation
              or undertaking to disseminate any updates or revisions to any forward-looking
              statements contained herein to reflect any change in its expectations with regard
              thereto or any change in events, conditions or circumstances on which any of such
              statements are based.

Johannesburg
18 February 2019

Financial advisor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Legal advisor
Webber Wentzel

Independent Expert
Ernst & Young Advisory Services Proprietary Limited

Sponsor
Merchantec Capital

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