LOAN AGREEMENT WITH A RELATED PARTY AND RENEWAL OF CAUTIONARY ANNOUNCEMENT

Transcription

1 TRUSTCO GROUP HOLDINGS LIMITED Incrprated in the Republic f Namibia (Registratin number 2003/058) Registered as an external cmpany in Suth Africa (External registratin number 2009/002634/10) NSX share cde: TUC JSE share cde: TTO ISIN Number: NA000A0RF067 ( Trustc r the Cmpany ) LOAN AGREEMENT WITH A RELATED PARTY AND RENEWAL OF CAUTIONARY ANNOUNCEMENT Trustc sharehlders ( Sharehlders ) are referred t the cautinary annuncement which was published n SENS n 28 September 2018, advising Sharehlders that discussins with several parties have prgressed t such a level that the bard is f the pinin that if it s successfully cncluded, may have a material effect n the price f the Cmpany s securities, and that sharehlders dealing in the equities f the Cmpany shuld therefre exercise cautin. Sharehlders are advised that ne f the transactins referred t is a capital raise transactin thrugh a prpsed lan agreement with the majrity sharehlder f the Cmpany. 1. Lan with a Related Party Sharehlders are advised that Dr Quintn van Ryen, tgether with his investment vehicle (being Next Investments (Pty) Ltd) - cllectively hereinafter referred t as the Family, has entered int a lan agreement with Trustc, the material terms being: The Family will prvide a lan f up t a maximum amunt f NAD 1 billin (the Capital Amunt ) t the Cmpany. The lan is repayable n 31 March 2024 (the Due Date ). The lan shall be an interest nly lan with the Capital Amunt repayable as a bullet payment, in cash n the Due Date, unless the Family exercise their ptin t have the sum f the Capital Amunt settled in TTO shares (the Cnversin Optin ).

2 The Family will dispse f a prtin f its Trustc Grup Hldings Limited securities ( TTO shares ) t investrs that will include, but nt be limited t institutins, individuals, crprates and existing sharehlders t fund the Capital Amunt; The current issued share capital f Trustc is and the Family currently wns (Five Hundred and Thirty Five Millin Eight Hundred and Fifty Fur Thusand One Hundred and Twenty) TTO shares representing 55% f the issued TTO shares. Sharehlders are referred t the SENS annuncements published n 4 and 21 September 2018 in terms wheref it was reprted that the Hus transactin had clsed. The Cmpany and the Family are cnfident that the earn ut in terms f the Hus transactin will be achieved, and subsequently the Family will wn (One Billin One Hundred and Sixty Fur Millin Six Hundred and Frty Three Thusand One Hundred and Twenty) TTO shares representing 72.65% f the issued TTO shares. After the prpsed sale f a relatively small prtin f the Family s equity, the Family will maintain its significant cntrlling interest in the Grup, while the Grup s share flat will be increased, thereby increasing the number f shares that may be freely traded, which generally benefits all sharehlders. The prpsed sale will nt lead t a change f cntrl in Trustc. The Family will still have the vast majrity f its net wrth in TTO shares. Each and any sale f any tranche f the Family s securities will be annunced n SENS. The lan will be prvided t Trustc as an unsecured subrdinated sharehlders lan. Interest n the Capital Amunt will be calculated mnthly in arrears at the prime interest rate f Namibia as published frm time t time by the Bank f Namibia; Currently the prime interest rate f Namibia is published at 10.50%. The average cst f capital fr the grup is currently apprximately 14%; A prtin f the current funding lines f Trustc is USD denminated whilst this lan wuld be advanced and repayable in NAD and is therefre nt be subject t currency vlatility. Interest will be paid mnthly. The actual lan amunt may be fr a lesser amunt depending n the grwth capital requirements f the Cmpany as determined by the independent nn-executive bard members f the Cmpany, at any time befre 30 June During the term f the Lan, the Family, in its sle discretin, have the right and may elect t pstpne r write-ff any prtin f the Capital Amunt. The Family wuld give 30 (thirty)

3 days ntice t the Trustc bard f the Family s decisin t pstpne r write-ff the Capital Amunt r any prtin theref which was n lend t the s subsidiaries r perating segments. The Cmpany wuld be bligated t align the Capital Amunt accrdingly t reflect the Family s decisin in the Brrwer s subsidiaries r perating segments. Alternatively, the Family, in its discretin may elect t exercise the Cnversin Optin and receive the Capital Amunt nt as a single payment in cash n the Due Date, but rather by way f cnversin f the Capital Amunt int TTO shares, in part r in full, at a cnversin price per TTO share which shall be determined based n the perids during which the Cnversin Optin is exercised as set ut belw; Between 1 January March 2020 at a rate f NAD per share t a maximum number f TTO shares; Between 1 January March 2021 at a rate f NAD per share t a maximum number f TTO shares; Between 1 January March 2022 at a rate f NAD per share t a maximum number f TTO shares; Between 1 January March 2023 at a rate f NAD per share t a maximum number f TTO shares ; Between 1 January March 2024 at a rate f NAD per share t a maximum number f TTO shares. The highest clsing price f TTO shares since listing was NAD per share. The independent nn-executive directrs f the Brrwer may during the abvementined perids elect t make an early repayment f the Capital Amunt, in full r in part, by giving 30 (thirty) days ntice t the Lender f its intentin; The Brrwer shall nt be penalised fr any early payments made t the Lender in terms f the Capital Amunt, prir t the Due Date. The Lender may, upn receipt f the ntice, t make an early repayment exercise its discretin and elect t receive capital repayments, in part r in full, by way f a cnversin r cash fr the utstanding Capital Amunt r a prtin theref int TTO shares n the rate per share as set ut abve. This lan is prvided t the Cmpany in additin t: the interest bearing sharehlders lan at prime rate as a result f the clsing f the Hus transactin in the amunt f NAD 296 millin in the Resurces Segment (Hus Amendment Circular, issued t Sharehlders n 11 May 2017, page 42);

4 the management and surety fees fr the financial year ending 31 March 2018 had been written ff, ttalling NAD 61.5 millin (AFS 2017/2018 page 43 as published n indemnificatin in the amunt f USD 25 millin fr the Meya prject fr a perid f 4 years as frm 31 January 2017 (SENS annuncement dated 23 August 2016); surety pledged fr the benefit f the Cmpany t the value f NAD billin (AFS 2017/2018 page 53 as published n ); and assets pledged fr the benefit f the Cmpany in the amunt f NAD1.4 billin (AFS 2017/2018 page 53 as published n 2. Use f funds The Capital Amunt is earmarked t be deplyed fr grwth thrughut the Trustc grup f cmpanies, but primarily in the Resurces Segment: Sharehlders are referred t the SENS annuncement dated 9 August 2018 where it was reprted by SRK Cnsulting (Canada) Inc. in their interim technical reprt fr the Meya Prject, that the explratin results t date indicates that bth the hurdle cmpnents have been achieved, being a resurce f at least 3 millin carats r at least USD 1 billin valued at internatinal diamnd market prices. With the ge-ecnmic ptential having been verified, Meya is in the prcess f evaluating varius ptins t increase the verall mine cnfiguratin and achieve an ptimal mine plan. This includes plant ptimisatin and acquiring additinal mining fleet as well as securing a 25 year mining license in due curse. The intentin is t increase prductin first t 165,000 carats per annum and subsequently t 300,000 carats per annum. The Banking and Finance Segment will als benefit frm the lan by: financing grwth f the Trustc Finance student lan bk t the stated target f NAD 1 billin in the next 18 mnths (Integrated Annual Reprt 2017/2018 page 112, available at and further capitalising Trustc Bank t prvide mrtgage bnds in the Namibian prperty market, SME lans, persnal lans and cmmercial lans. Trustc Bank s ability t fund mrtgage lans t buyers f the Grup s prperties is a material cmpetitive advantage. (Sharehlders are referred t the SENS annuncement regarding the update in the Insurance Segment in re: Namibian Land Cnference dated 8 Octber 2018) The Insurance Segment (and its investments) will be capitalised t take advantage f attractive pprtunities in the current market cnditins.

5 A prtin f the lan will be applied twards the current debt restructuring f the Grup. The Cmpany is in the prcess f negtiating a frmal capital standstill up t 15 June 2019 with the Internatinal Lenders Grup. During the agreed capital standstill a frmal debt restructuring agreement will be cmpleted and finalised. 3. Ratinale fr the Lan Namibia, where the bulk f Trustc s peratins are lcated, experienced nine cnsecutive quarters f negative ecnmic grwth. This transactin will blster grwth capital fr Trustc, Namibia and the ther cuntries in which it perates. The investment in the Resurces Segment acts as a natural currency hedge, as this generates USD revenue. The sale f a prtin f the Family s equity and entering int a subsequent lan agreement with the Family will nt have the immediate effect f further dilutin fr existing sharehlders in Trustc. The sale f a prtin f the Family s equity will imprve liquidity and the free flat f TTO shares in the market. 4. Circular t Sharehlders Dr Quintn van Ryen is a related party as cntemplated in paragraph 10.1 f the JSE Listings Requirements ( Listings Requirements ) as a directr f Trustc and is als entitled tgether with Next Investments (Pty) Ltd t exercise 10% r mre f the vtes able t be cast at a Trustc general meeting. The Family is the majrity sharehlder in Trustc. The settlement mechanism f the lan by way f the ptential issuance f TTO shares t the Family shuld the Cnversin Optin be exercised, is cnsidered t be a specific issue f shares fr cash as per 5.51 f the Listings Requirements ( Specific Issue ). Cnsequently, in terms f the Listings Requirements, the Specific Issue requires the apprval f Sharehlders at a general meeting. The Family and its assciates will be excluded frm vting at the abve general meeting. A circular cntaining full details f the Specific Issue as well as a ntice t cnvene a general meeting f Sharehlders in rder t cnsider and, if deemed fit, t pass with r withut mdificatin, the reslutins necessary t apprve and implement the Specific Issue, will be made available t Sharehlders in due curse.

6 5. Renewal f cautinary annuncement The lan by the Family is ne f a number f transactins currently being negtiated by Trustc and as such Sharehlders are advised t exercise cautin when dealing in the Cmpany s securities until a further annuncement is made. It is envisaged that the prcess f btaining all Regulatry and Sharehlders apprval, as well as prviding the required Capital Amunt will be cncluded by 30 June The Cmpany s bard apprved the terms f this transactin n 5 Octber Sharehlders wuld be kept abreast f the prgress made in this regard via SENS. 6. Cnclusin The lan prvides Trustc the mechanism t access grwth capital fr key pprtunities that the Grup is pursuing, withut affecting debt cvenant ratis r diluting Sharehlders n unfavurable terms. The grwth pprtunities in Trustc are significant and the Cmpany is f the view that these pprtunities have the capacity t materially increase the earnings and cash flw f Trustc. Windhek, Namibia 8 Octber 2018 Amanda Bruyns Cmpany Secretary: Trustc Grup Hldings Limited JSE Spnsr Vunani Crprate Finance NSX Spnsr Simnis Strm Securities Prprietary Limited