Aveng Limited. Circular to shareholders

Transcription

1 Aveng Limited (Incorporated in the Republic of South Africa) (Registration number 1944/018119/06) Share code: AEG ISIN: ZAE ( Aveng or the Company ) Circular to shareholders regarding: a voluntary offer by Rand Merchant Bank, a division of FirstRand Bank Limited, to all Aveng shareholders to purchase up to Aveng shares on a first come, first served basis, for a cash consideration of R53.16 per share up to a maximum aggregate value of R3.5 billion; and a specific repurchase by Aveng from RMB of all Aveng shares sold to RMB in terms of the voluntary offer for a cash consideration of R53.16 per share including: a notice of general meeting; a form of proxy for certificated shareholders and dematerialised shareholders with own name registration (blue); and a form of acceptance and surrender for certificated shareholders only (yellow) 18 September 2007 Merchant bank and transaction sponsor Independent sponsor Independent reporting accountants Attorneys to RMB Corporate law adviser to Aveng ATTORNEYS

2 CORPORATE INFORMATION Company secretary and registered office G J Baxter Block B 204 Rivonia Road Morningside Sandton 2057 (PO Box 6062, Rivonia, 2128) Transfer secretaries Computershare Investor Services 2004 (Proprietary) Limited (Registration number 2004/003647/07) Ground Floor 70 Marshall Street Johannesburg 2001 (PO Box 61051, Marshalltown, 2107) Attorneys to RMB Werksmans Inc. (Registration number 1990/007215/21) 155 Fifth Street Sandton 2196 (Private Bag 10015, Sandton, 2146) Corporate law adviser to Aveng Taback & Associates (Proprietary) Limited (Registration number 2000/010434/07) 13 Eton Road Parktown 2193 (PO Box 3334, Houghton, 2041) Reporting accountants Ernst & Young Inc. (Registration number 2005/002308/21) Wanderers Office Park 52 Corlett Drive Illovo Johannesburg 2196 (Private Bag X14, Northlands, 2116) Independent sponsor JP Morgan Equities Limited (Registration number 1995/011815/06) 1 Fricker Road (corner Hurlingham Road) Illovo Johannesburg 2196 (Private Bag X9936, Sandton, 2146) Merchant bank and transaction sponsor Rand Merchant Bank, a division of FirstRand Bank Limited (Registration number 1929/001225/06) 1 Merchant Place Corner Rivonia Road and Fredman Drive Sandton 2196 (PO Box , Sandton, 2146) This circular is available in English only. Copies may be obtained from the registered offices of the Company and the transfer secretaries at the addresses set out above.

3 If you have any questions regarding the contents of this circular, please call the Client Shareholder Information Line on (or if you are calling from outside South Africa) This line is available from 08:00 to 16:30 South African time for the period from Monday 8 October 2007 to the expected closing date of the RMB offer, being Friday 2 November Please note that your call will be recorded for customer safety. 1

4 APPLICABLE LAWS The definitions and interpretations commencing on page 7 of this circular apply to this section. The RMB offer, its acceptance and any agreements concluded pursuant thereto will be governed by the laws of South Africa. This circular does not constitute an offer in any jurisdiction in which it is illegal to make such offer. In such circumstances, this circular is sent for information purposes only. The making of the RMB offer to non-resident shareholders may be affected by the laws of jurisdictions other than South Africa. Such non-resident shareholders should inform themselves about and observe fully all applicable legal requirements. It is the responsibility of any non-resident shareholder wishing to accept the RMB offer, to satisfy himself as to the full observance of the laws of all jurisdictions in connection therewith, including the obtaining of any consents which may be required, the compliance with formalities and the payment of any taxes or other requisite amounts due in such jurisdictions. Any such non-resident shareholder will be solely responsible for such payments by whomsoever payable and RMB and Aveng and any person acting on their behalf shall be fully indemnified and held harmless by such non-resident shareholder for any such payment. Aveng shares have not been registered under the USA Securities Act of 1933 ( USA Securities Act ) and therefore may not be offered, placed or sold within the USA or to, or for the account or benefit of, USA persons (as defined in Regulation S of the USA Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the USA Securities Act and applicable USA state securities laws. The shares are not being sold and purchased in the USA and are being sold and purchased outside the USA in compliance with Regulation S, subject to compliance with any other applicable law. Aveng shares have not been approved or disapproved by the USA Securities and Exchange Commission, any State Securities Commission in the USA or any other USA regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the Aveng shares nor the accuracy or adequacy of this circular. Any representation to the contrary is a criminal offence in the USA. Aveng shares have not been registered under any securities laws of Australia, Canada or Japan. The RMB offer may not, and is not, made in Australia, Canada or Japan or for the account or benefit of any national, resident or citizen of Australia, Canada or Japan, and this circular does not constitute an offer or the solicitation of participation in the RMB offer to any person in any jurisdiction to whom or in which such offer, solicitation is unlawful, and in particular, is not for distribution in Australia, Canada or Japan. 2

5 TABLE OF CONTENTS Page CORPORATE INFORMATION Inside front cover APPLICABLE LAWS 2 ACTION REQUIRED BY SHAREHOLDERS 4 SALIENT DATES AND TIMES 6 DEFINITIONS AND INTERPRETATION 7 CIRCULAR TO SHAREHOLDERS 1. INTRODUCTION AND RATIONALE 9 2. THE RMB OFFER THE REPURCHASE EXCHANGE CONTROL REGULATIONS OTHER INFORMATION CONSENTS DIRECTORS RESPONSIBILITY STATEMENT UNDERTAKING BY RMB DOCUMENTS AVAILABLE FOR INSPECTION 19 Annexure 1 Unaudited pro forma financial information 20 Annexure 2 Independent reporting accountants report on the pro forma financial information 24 Annexure 3 Trading history of Aveng shares on the JSE 26 Notice of general meeting Form of proxy for the general meeting (blue) Form of acceptance and surrender (yellow) Attached Attached Attached 3

6 ACTION REQUIRED BY SHAREHOLDERS The definitions and interpretations commencing on page 7 of this circular apply to this section on action required by shareholders. If you are in any doubt as to what action to take, consult your CSDP, broker, attorney, banker or other professional adviser immediately. 1. Action required by shareholders regarding the general meeting A general meeting of shareholders will be held at 10:00 on Thursday 11 October 2007 at the registered office of Aveng, Block B, 204 Rivonia Road, Morningside, Sandton to consider and, if deemed fit, to pass the resolutions to enable Aveng to proceed with the repurchase. A notice convening the general meeting is attached to and forms part of this circular. Please take careful note of the following provisions relating to the actions required by shareholders regarding the general meeting: 1.1 If you have dematerialised your shares other than with own name registration: Voting at the general meeting Your CSDP/broker should contact you in the manner stipulated in the custody agreement concluded between you and your CSDP/broker to ascertain how you wish to cast your vote at the general meeting and thereafter to cast your vote in accordance with your instructions If you have not been contacted, it would be advisable for you to contact your CSDP/broker and furnish it with your voting instructions If your CSDP/broker does not obtain voting instructions from you, it will be obliged to vote in accordance with the instructions contained in the custody agreement concluded between you and your CSDP/broker You must NOT complete the attached form of proxy (blue) Attendance and representation at the general meeting In accordance with the custody agreement between you and your CSDP/broker, you must advise your CSDP/broker if you wish to attend the general meeting in person or if you wish to send a proxy to represent you at the general meeting and your CSDP/broker will issue the necessary letter of representation for you or your proxy to attend the general meeting. 1.2 If you have not dematerialised your shares or have dematerialised your shares with own name registration: Voting and attendance at the general meeting: You may attend and vote at the general meeting in person Alternatively, you may appoint a proxy or proxies to represent you at the general meeting by completing the attached form of proxy (blue) in accordance with the instructions it contains and returning it to the transfer secretaries to be received by no later than 10:00 on Tuesday 9 October

7 2. Acceptance of the RMB offer: PLEASE TAKE CAREFUL NOTE THAT THE RMB OFFER IS BEING CONDUCTED ON A FIRST COME, FIRST SERVED BASIS AND, ACCORDINGLY, ONCE THE RMB OFFER CLOSES OR THE MAXIMUM NUMBER OF SHARES HAS BEEN TENDERED IN TERMS OF THE RMB OFFER, NO FURTHER SHARES TENDERED IN TERMS OF THE RMB OFFER WILL BE ACCEPTED. 2.1 If you have dematerialised your shares with or without own name registration: If you wish to accept the RMB offer in respect of any/all of your shares, you are required to notify your CSDP/broker of your acceptance of the RMB offer as soon as possible You must NOT complete the attached form of acceptance and surrender (yellow) The RMB offer consideration will be credited to the account that you hold with your CSDP/broker and your RMB offer shares debited from your account. 2.2 If you have not dematerialised your shares: If you wish to accept the RMB offer in respect of any/all of your shares, you must complete the attached form of acceptance and surrender (yellow) and lodge it together with your documents of title in compliance with the provisions set out in the attached form of acceptance and surrender (yellow) with the transfer secretaries, to be received as soon as possible (as a result of the first come, first served basis of the RMB offer) in order to constitute a valid acceptance The RMB offer consideration will be posted, by ordinary post and at your risk, to the address as disclosed on the form of acceptance and surrender (yellow) if different from the address on the register, or, if applicable, deposited directly into your bank account, depending on your instructions contained in the properly completed form of acceptance and surrender (yellow). If you wish to dematerialise your shares, please contact your CSDP or broker. Shareholders are advised to consult their professional advisers about their personal tax positions regarding the receipt of the RMB offer consideration. If you have disposed of all of your shares, this circular should be handed to the CSDP or broker, banker or other agent who disposed of your shares for you. 5

8 SALIENT DATES AND TIMES 2007 Last day to lodge forms of proxy for the general meeting by 10:00 on General meeting to be held at 10:00 on Results of the general meeting released on SENS on Results of the general meeting published in the South African press on Last date to trade in order to receive Aveng dividend for 2007 year on RMB offer becomes unconditional at 17:00 on Aveng shares trade ex dividend on RMB offer opens at 10:00 on Record date to receive the Aveng dividend on Last date to trade in order to participate in the RMB offer is Aveng shares trade ex the RMB offer on RMB offer closes at 12:00 on Record date for the RMB offer on Result of RMB offer released on SENS on Result of RMB offer published in the South African press on Tuesday 9 October Thursday 11 October Thursday 11 October Friday 12 October Friday 12 October Friday 12 October Monday 15 October Monday 15 October Friday 19 October Friday 26 October Monday 29 October Friday 2 November* Friday 2 November* Monday 5 November* Tuesday 6 November* * The RMB offer may close prior to this date in the event that the maximum number of shares to be acquired in terms of the RMB offer has been tendered in terms of the RMB offer. In that case, the RMB offer will be deemed to close on such earlier date. Notes: 1. All times shown in this circular are South African local times. 2. The above dates and times are subject to change. Any material change will be released on SENS and published in the South African press. 3. Aveng shares may not be dematerialised or rematerialised between the period commencing on the day after the last day to trade in order to participate in the RMB offer and terminating on the closing date of the RMB offer, both days inclusive. 4. Dematerialised shareholders are required to notify their duly appointed CSDP/broker of their acceptance of the RMB offer, in the manner and time stipulated in the custody agreement governing the relationship between the shareholder and his/her CSDP/broker. 5. Certificated shareholders are required to complete and return the form of acceptance and surrender in accordance with the instructions contained therein to be received by the transfer secretaries as soon as possible as the RMB offer is being made on a first come, first served basis. 6. Dematerialised shareholders will have the account that they hold with their CSDP/broker credited with the RMB offer consideration due to them and have the RMB offer shares debited from their account within 5 business days of tendering their shares in the RMB offer. 7. The RMB offer consideration will be posted, by ordinary post, to the certificated shareholders who accept the RMB offer, at the risk of the shareholders concerned, to the address as disclosed on the form of acceptance and surrender (yellow) if different from the address on the register, or, if applicable, deposited directly into the certificated shareholder s bank account depending on the certificated shareholder s instructions contained in the properly completed form of acceptance and surrender (yellow). 6

9 DEFINITIONS AND INTERPRETATION Throughout this circular, unless otherwise stated or the context otherwise requires, the words in the first column have the meanings stated opposite them in the second column, words in the singular shall include the plural and vice versa, words signifying one gender include the other and words denoting natural persons include juristic persons and associations of persons: the Act articles Aveng or the Company board business day certificated shareholders circular or document closing date CSDP dematerialised shareholders directors documents of title the Companies Act, 1973 (Act 61 of 1973), as amended; the articles of association of Aveng; Aveng Limited (Registration number 1944/018119/06), a public company incorporated in South Africa and listed on the JSE; the board of directors of Aveng; any day which is not a Saturday, Sunday or a public holiday in South Africa; shareholders who have not dematerialised their shares through Strate; this circular to shareholders dated 18 September 2007, together with the annexures hereto and incorporating a notice of general meeting, a form of proxy (blue) and a form of acceptance and surrender (yellow); the date on which the RMB offer closes; a central securities depository participant, accepted as a participant in terms of the Securities Services Act; shareholders who have dematerialised their shares through Strate; the directors of Aveng; share certificates, certified transfer deeds, balance receipts or any other physical documents of title to shares which have not been dematerialised through Strate, which are acceptable to Aveng; general meeting the general meeting to be held at 10:00 on Thursday 11 October 2007 at Block B, 204 Rivonia Road, Morningside, Sandton; Group Income Tax Act JSE Listings Requirements last practicable date memorandum Rand or R or cents register Registrar repurchase collectively, Aveng and all its subsidiaries; the Income Tax Act, 1962 (Act 58 of 1962), as amended; JSE Limited (Registration number 2005/022939/06), a public company incorporated in South Africa and licensed as an exchange under the Securities Services Act; the Listings Requirements of the JSE; Friday 7 September 2007, being the last practicable date prior to the finalisation of this circular; the memorandum of association of Aveng; the lawful currency of South Africa, being South African Rand and cents; the register of certificated shareholders maintained by Aveng and the sub-register of dematerialised shareholders maintained by the relevant CSDPs in terms of Sections 91A and 101, respectively, of the Act; the Registrar of Companies; a specific repurchase by Aveng from RMB, in terms of the repurchase agreement, of all the shares acquired by RMB pursuant to the RMB offer, at the RMB offer consideration up to a maximum aggregate amount of R3.5 billion in terms of the provisions of sections 85 to 89 (both inclusive) of the Act; 7

10 repurchase agreement repurchase consideration RMB RMB offer RMB offer consideration RMB offer shares Securities Services Act SENS shares or Aveng shares shareholders South Africa South African Exchange Control Regulations STC Strate subsidiary the agreement between RMB and Aveng dated Wednesday 5 September 2007, in respect of the RMB offer and the repurchase; the consideration payable by Aveng to RMB in respect of the repurchase, being a cash consideration per share equal to the RMB offer consideration; Rand Merchant Bank, a division of FirstRand Bank Limited (Registration number 1929/001225/06), a public company incorporated in South Africa; the voluntary offer made by RMB to shareholders and described in this circular, in terms of which RMB offers to acquire from shareholders, on a first come, first served basis, up to shares at the RMB offer consideration; a cash consideration of R53.16 per share to be paid by RMB in respect of the RMB offer shares up to a maximum aggregate consideration of R3.5 billion; the shares sold to and acquired by RMB pursuant to the RMB offer; the Securities Services Act, 2004 (Act 36 of 2004), as amended; the Securities Exchange News Service of the JSE; ordinary shares with a par value of R0.05 (5 cents) each in the issued share capital of Aveng; the registered holders of shares; the Republic of South Africa; the South African Exchange Control Regulations, as amended, promulgated in terms of section 9 of the Currency and Exchanges Act, 1933 (Act 9 of 1933), as amended; secondary tax on companies levied in terms of the provisions of the Income Tax Act; Strate Limited (registration number 1998/022242/06), a public company incorporated in South Africa, being a registered central securities depository in terms of the Security Services Act; has the meaning ascribed thereto in section 1(3) of the Act; transfer secretaries Computershare Investor Services 2004 (Proprietary) Limited (Registration number 2004/003647/07), a private company incorporated in South Africa and situated at Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107); and VAT value added tax, levied in terms of the provisions of the Value Added Tax Act, 1991 (Act 89 of 1991), as amended. 8

11 Aveng Limited (Incorporated in the Republic of South Africa) (Registration number 1944/018119/06) Share code: AEG ISIN: ZAE ( Aveng or the Company ) DIRECTORS Executive C Grim (Chief Executive Officer) D R Gammie D G Robinson Non-Executive A W B Band* (Chairperson) J R Hersov* R L Hogben* L Gcabashe (Ms.)* V Z Mntambo* M J D Ruck* R B Savage* N L Sowazi B P Steele* P K Ward* *Independent CIRCULAR TO SHAREHOLDERS 1. INTRODUCTION AND RATIONALE In May 2007, Aveng disposed of its 45.65% shareholding in Altur Investments (Proprietary) Limited ( Altur Investments ), which represented its 45.65% indirect interest in Holcim South Africa (Proprietary) Limited ( Holcim South Africa ), for a cash consideration of R6.8 billion. In the circular to shareholders, dated 11 May 2007, the board indicated that it anticipated that at least 50% of the cash proceeds of the disposal would be returned to shareholders. The aggregate amount of capital to be returned to shareholders is a function of the current organic and acquisitive growth prospects as well as the balance sheet capacity of Aveng. Given the current buoyancy of the markets in which Aveng operates, a number of such growth prospects are currently under evaluation and, to the extent that these prospects progress beyond the current assessment stage, the board will inform shareholders. The board is however confident that, irrespective of the outcome of the aforementioned prospects, R3.5 billion of capital can be returned to shareholders in the short term and, should the assessment of current prospects not result in significant incremental capital requirements, it is anticipated that as much as R5.0 billion of capital would, in aggregate, be returned to shareholders. After careful consideration of the various alternatives available to Aveng to return capital to shareholders and being cognisant of the prospects as set out above, the board proposes to return capital of R3.5 billion to shareholders via the following mechanism: a voluntary offer (the RMB offer) will be made by RMB to shareholders for RMB to acquire up to shares for a cash consideration of R53.16 per share, representing approximately R3.5 billion in total (i.e. approximately 17% of the entire issued share capital of Aveng). Shareholders will have the ability to tender anything up to 100% of their Aveng shareholding to RMB. The RMB offer will be conducted on a first come, first served basis; and Aveng will, under the repurchase, purchase from RMB all the shares that RMB has acquired in terms of the RMB offer, in terms of the repurchase agreement, at the repurchase consideration. 9

12 This mechanism achieves the following two key objectives: shareholders who are looking at rebalancing their portfolio, subsequent to the disposal of Aveng s indirect interest in Holcim South Africa by disposing of their shares in Aveng, would be able to do so by tendering their shares to RMB in terms of the RMB offer. On the other hand, shareholders that consider themselves to be long-term shareholders in Aveng who do not wish to sell their Aveng shares would not be required to do so in terms of this voluntary offer; and the RMB offer provides an efficient mechanism through which shareholders can dispose of all or part of their shareholding in Aveng. The RMB offer consideration payable in terms of the RMB offer, which will (subject to the overall limit of shares) be settled on a daily basis (refer to paragraph 2.8 of this circular), will provide shareholders more certainty on the extent of the acceptance of their tender of shares in terms of the RMB offer than would be possible under a pro-rata voluntary tender offer by Aveng. A pro-rata voluntary tender offer by Aveng would apportion the repurchase between shareholders at the end of the offer period, thereby resulting in uncertainty regarding the eventual outcome of the shareholders tenders. The RMB offer, which operates on a first come, first served basis, will provide shareholders certainty on the extent of the acceptance of their tender on a day-today basis. It should be noted that, being a voluntary offer which does not compel shareholders to sell any portion of their shares, the RMB offer may not result in the maximum number of shares being repurchased by Aveng from RMB pursuant to the repurchase. Should less than the maximum number of shares be acquired by RMB in terms of the RMB offer, and after the evaluation of the aforementioned growth opportunities has been finalised, the board will propose a further capital return programme to ensure that the optimal level of capital (but no less than R3.5 billion) will have been returned to shareholders. It is anticipated that, if necessary, such a proposal will be made prior to the end of the 2007 calendar year. The purpose of this circular is to provide shareholders with details of the RMB offer and the repurchase and to seek approval from shareholders for the return of approximately R3.5 billion of capital to shareholders and for the implementation of this return of capital through the RMB offer and the repurchase. 2. THE RMB OFFER RMB hereby makes an offer to all shareholders to purchase up to shares on a first come, first served basis on the terms and subject to the conditions set out below: 2.1 Terms of the RMB offer Subject to the fulfilment of the conditions precedent set out in paragraph 2.2 below, RMB will purchase from shareholders, on a first come, first served basis, at the RMB offer consideration, the shares tendered in terms of the RMB offer up to a maximum of shares The RMB offer will be conducted on a first come, first served basis and on the basis that all shareholders who accept the RMB offer on a given day will be treated equally. RMB will after the close of trading on each day after the RMB offer opens, purchase all shares tendered to it by shareholders on that day, unless the number of shares tendered during the day, when aggregated with all the shares already so purchased by RMB pursuant to the RMB offer, exceeds the maximum number of shares. In such event: RMB will accept tenders of and purchase a pro rata amount of the shares tendered by each shareholder on that day, such that the number of shares purchased by RMB in terms of the RMB offer equals shares in the aggregate; and the RMB offer will be deemed to have closed on that day Payment of the RMB offer consideration for all shares sold pursuant to the RMB offer will be settled within 5 business days of RMB purchasing such shares, in accordance with the provisions of paragraph 2.8 of this circular and as per normal Strate settlement rules Shareholders will be advised daily via SENS announcements of the level of acceptances of the RMB offer and the cumulative number of shares sold to RMB pursuant thereto It should be noted that shareholders who hold Aveng shares prior to the opening of the RMB offer will become entitled to the 2007 final dividend and as such, the RMB offer price should be viewed as an ex dividend purchase consideration. 10

13 2.2 Conditions precedent The opening of the RMB offer and, accordingly, the purchase and sale of any shares to RMB pursuant thereto, is subject to the following conditions precedent: the special resolution approving the repurchase as a specific approval in terms of section 85 of the Act being passed by the requisite majority at the general meeting and such special resolution being registered by the Registrar on or before 12 October 2007 (or such later date as RMB and Aveng may agree in writing); the volume weighted average price of Aveng shares on the JSE on Wednesday 10 October 2007, being the trading day immediately prior to the date of the general meeting, not being lower than 85% of the RMB offer consideration; and Aveng depositing funds with RMB amounting to R3.5 billion by no later than Thursday 17 September 2007, which amount will be ceded by Aveng to RMB as surety for Aveng s obligations in terms of the repurchase agreement Should any of the conditions precedent referred to in paragraph above not have been timeously satisfied or waived in writing by Aveng or RMB as relevant, the RMB offer shall ipso facto lapse and be of no force or effect. 2.3 The RMB offer consideration The RMB offer consideration comprises a cash consideration equal to R53.16 per Aveng share, representing the 5 day volume weighted average price per share at the close of business on Friday 14 September 2007 of R54.01 less the dividend of R0.85 per share declared by Aveng for the year ended 30 June RMB will, through the transfer secretaries, administer and effect settlement of the RMB offer consideration to shareholders accepting the RMB offer. 2.4 The RMB offer period Subject to the conditions precedent referred to in paragraph 2.2 above being timeously fulfilled or waived, the RMB offer will open for acceptances from 10:00 on Monday 15 October 2007 and is expected to close at 12:00 on Friday 2 November Any amendments to the opening and closing dates or times of the RMB offer will be released on SENS and published in the South African press. 2.5 Amendments to or variation of the RMB offer No amendments to, or variation of the RMB offer will be valid unless made in writing and signed by a duly authorised representative of RMB and a duly authorised representative of Aveng. Any amendment and/or variation will be released on SENS and published in the South African press RMB reserves the right in its sole and absolute discretion, to condone the non-compliance by any shareholder with any of the terms of the RMB offer subject to the prior written consent of Aveng If the RMB offer is amended, varied or revised in a manner which makes it more favourable to the shareholders, the benefit of such improved offer will automatically accrue to any shareholder who has accepted the RMB offer prior to the amendment, variation or revision being made The acceptance by or on behalf of such shareholder of the RMB offer in its original or previous form shall be deemed to be an acceptance of any improved offer pursuant to any amendment, variation or revision and shall constitute an irrevocable authority and power in rem suam to any duly authorised representative of RMB to: accept such amended, varied or revised offer on behalf of such person; execute on behalf of and in the name of such person all such further documents (if any) as may be required to give effect to such acceptance. 2.6 Funding of the RMB offer The RMB offer consideration will be funded out of cash and liquid assets of RMB. 11

14 2.7 Tax implications for shareholders Shareholders should seek advice from appropriate professional advisers if they are in any doubt whatsoever about their tax position. The tax treatment of shareholders is dependent on their individual circumstances and on the tax jurisdiction applicable to them. 2.8 Procedure for the acceptance of the RMB offer and settlement of the RMB offer consideration All acceptances of the RMB offer received by the transfer secretaries or the relevant CSDP/broker on or prior to the closing date shall be irrevocable. The RMB offer may be accepted by shareholders in respect of all or some of their Aveng shares. Shareholders who do not wish to accept the RMB offer need take no further action and will be deemed to have declined the RMB offer Dematerialised shareholders Dematerialised shareholders must not complete the form of acceptance and surrender (yellow). Dematerialised shareholders are required to notify their duly appointed CSDP/broker of their acceptance of the RMB offer, in terms of the custody agreement governing the relationship between such shareholder and his/her CSDP/broker. Shareholders should confirm with their CSDP/broker as to the cut-off date and time for such notification. Dematerialised shareholders who accept the RMB offer will have the account that they hold with their CSDP/broker credited with the RMB offer consideration due to them and their shares sold and purchased in terms of the RMB offer, debited from their account Certificated shareholders Certificated shareholders who wish to accept the RMB offer, in whole or in part, must properly complete the form of acceptance and surrender (yellow) attached to this circular as soon as possible (based on the fact that the RMB offer is on a first come, first served basis) and deliver it together with the relevant document(s) of title to the transfer secretaries Certificated shareholders are advised to deliver the form of acceptance and surrender (yellow), together with their documents of title promptly so as to prevent late arrivals due to postal delays if sent through the post Any acceptance of the RMB offer made through the post should be sent by registered post and will be at the risk of such shareholder concerned. Postal acceptances which are received by the transfer secretaries on or before the closing date, subject to the maximum number of shares which are to be acquired, will be treated as valid acceptances of the RMB offer concerned. Postal acceptances which are received by the transfer secretaries after the closing date will not be valid and will not be accepted in terms of the RMB offer No receipts will be issued for the form of acceptance and surrender (yellow) and document(s) of title lodged with the transfer secretaries unless specifically requested. Lodging agents who require special transaction receipts are requested to prepare such receipts and submit them for stamping together with the documents of title lodged In the event of a certificated shareholder accepting the RMB offer in respect of only part of his/her Aveng shareholding, RMB shall use its reasonable endeavours to procure that a replacement share certificate for the balance of such shareholder s remaining shares will be posted, by ordinary post to that shareholder, at such shareholders risk, within five business days after the closing date or the date on which the documents of title are received by the transfer secretaries, whichever is the later; provided that the RMB offer has been validly accepted by such certificated shareholder in respect of a part of his/her Aveng shareholding If the documents of title relating to the surrender of the shares have been lost or destroyed, shareholders who wish to accept the RMB offer, should nevertheless return the form of acceptance and surrender (yellow), duly signed and completed, to the transfer secretaries. Provided the properly completed form of acceptance and surrender is received by the transfer secretaries on or before the closing date, RMB, 12

15 in consultation with and with the written consent of Aveng, may dispense with the surrender of documents of title upon producing to RMB, by no later than the closing date of evidence to RMB s and Aveng s satisfaction that the documents of title have been lost or destroyed and upon delivery to RMB of a suitable indemnity. Only indemnity forms obtained from the transfer secretaries will be regarded as suitable and are available on request The RMB offer consideration will be posted, by ordinary post, to the certificated shareholders entitled thereto at the risk of the shareholders concerned, to the address as disclosed on the form of acceptance and surrender (yellow) if different from the address on the register, or, if applicable, deposited directly into such shareholder s bank account, depending on the shareholder s instructions contained in the properly completed form of acceptance and surrender RMB reserves the right, in its discretion, to: treat as invalid, forms of acceptance and surrender (yellow) not accompanied by valid documents of title, subject to paragraph above dealing with lost or destroyed documents of title; and require proof of the authority of the person signing the form of acceptance and surrender where such proof has not yet been lodged with or recorded by the transfer secretaries, failing the production of which proof, RMB, may treat such form of acceptance and surrender as invalid. 3. THE REPURCHASE Following the RMB offer, Aveng will, in terms of the repurchase agreement, on the next business day following the closing date, undertake a specific repurchase of the shares that RMB has acquired in terms of the RMB offer. 3.1 Authority to repurchase shares In terms of the notice of general meeting which forms part of this circular, a general meeting of Aveng is convened to be held at 10:00 on Thursday 11 October 2007 at Block B, 204 Rivonia Road, Morningside, Sandton at which meeting the resolutions authorising a specific repurchase from RMB of up to shares will be proposed for consideration. 3.2 Terms of the repurchase and the repurchase consideration Aveng will, subject to obtaining the requisite shareholder approval, repurchase from RMB all the shares acquired by RMB in terms of the RMB offer at a price per share equal to the RMB offer consideration. The excess of the repurchase consideration over the par value of the shares repurchased will be provided from distributable reserves of Aveng and, assuming the full shares are tendered to RMB in terms of the RMB offer and repurchased from RMB by Aveng, STC credits to the value of R350 million will be utilised through the repurchase. 3.3 Amendments to or variation of the repurchase and corporate actions No amendments to, or variation of the repurchase will be valid unless made in writing and signed by a duly authorised representative of Aveng and a duly authorised representative of RMB. Any amendment and/or variation will be released on SENS and published in the South African press Aveng reserves the right, without prejudice to its own rights, in its sole and absolute discretion, to condone the non-compliance by RMB with any of the terms of the repurchase. 3.4 Implications for bondholders The repurchase of shares from RMB on the basis as set out in this circular, will not result in any adjustment to the terms of the guaranteed convertible bond issued in Cancellation of shares The JSE listing of all those shares that will be repurchased by Aveng from RMB will be subsequently terminated and the shares so acquired, cancelled by Aveng. 13

16 3.6 Pro forma financial effects of the repurchase The table below, which also includes the financial effects of Aveng s disposal of its indirect interest in Holcim South Africa, sets out the unaudited pro forma financial effects of the repurchase on basic earnings per share ( EPS ), diluted basic EPS, headline EPS, diluted headline EPS, net asset value per share and net tangible asset value per share, based on the audited results of Aveng for the year ended 30 June The unaudited pro forma income statement and balance sheet is contained in Annexure 1 of this circular. The unaudited pro forma financial effects are the responsibility of the Aveng directors and have been prepared for illustrative purposes only to provide information about how the repurchase may impact shareholders on the relevant reporting date. Due to their nature, the unaudited pro forma financial effects may not be a fair reflection of Aveng s financial position, changes in equity, results of operations or cashflows after implementation of the repurchase or of Aveng s future earnings: Before Change After Change the due to the % due to After the % disposal (1) disposal disposal (2) Change repurchase repurchase (3) Change Earnings per share (cents) % % Headline earnings per share (cents) (4.6) (1%) (0.3) % Fully diluted earnings per share (cents) % % Fully diluted headline earnings per share (cents) (3.7) (1%) (8.6) (3%) Net asset value per share (cents) % (507.3) (18%) Net tangible asset value per share (cents) % (546.5) (21%) Number of shares in issue (millions) % (65.8) (17%) Weighted average number of shares in issue (millions) % (65.8) (17%) Diluted weighted average number of shares in issue (millions) % (65.8) (14%) Notes: 1. Audited consolidated financial results of Aveng as reported for the year ended 30 June The After the disposal column illustrates the impact of the Holcim disposal on the 2007 full year results and was calculated on the following basis: the 45.65% shareholding in Altur Investments was sold with effect from 1 July 2006; the cash proceeds from the disposal were received on 1 July 2006; interest was earned on the net cash proceeds received at an after tax rate of 6.4% per annum for the period 1 July 2006 to 30 June 2007; the profit on disposal of the sale shares of R6.451 billion (calculated based on the carrying value of Altur Investments at 30 June 2007 and after deducting transaction costs) has been excluded in the calculation of headline earnings per share and fully diluted headline earnings per share. For the purposes of this calculation: the carrying value of the investment as at the date of sale of Altur Investments was R322m; the equity accounted earnings that would have been accounted for the period until the disposal in May 2007 would have been R415m; and the total cash disposal proceeds amount to R6.773 billion. 3. The After the repurchase column is calculated on the following basis: the financial impact on the earnings of Aveng are illustrated as if the repurchase had been implemented at the beginning of the year which ended on 30 June 2007, while the impact on the net assets of Aveng are shown as if the repurchase had been implemented on 30 June 2007; the repurchase consideration is R3.5 billion in aggregate; the repurchase consideration was paid on 1 July 2006; the repurchase consideration is R53.16 per share, representing the 5 day volume weighted average price per share at the close of business on Friday 14 September 2007 of R54.01 less the dividend of R0.85 per share declared by Aveng for the year ended 30 June 2007; the number of shares in issue reduces by as a result of the repurchase; the interest assumed to be earned on the net cash proceeds received (at an after tax rate of 6.4% per annum) for the period 1 July 2006 to 30 June 2007 was reduced to account for the R3.5 billion that is assumed to be paid on 1 July 2006; and no STC was incurred due to STC credit on Altur Investments disposal. The independent reporting accountants report on the pro forma financial effects of the repurchase is included as Annexure 2 to this circular. 3.7 Funding of the repurchase The repurchase consideration will be funded out of cash and liquid assets of Aveng. 14

17 3.8 Adequacy of working capital The board is of the opinion that, after considering the effect of the repurchase: the Group will be able to pay its debts as they become due in the ordinary course of business for a period of 12 months after the date of approval of this circular by the JSE; the assets of the Group will be in excess of the liabilities of the Group for a period of 12 months after the date of approval of this circular by the JSE; the share capital and the reserves of the Group will be adequate for ordinary business purposes for a period of 12 months after the date of approval of this circular by the JSE; and the working capital of the Group will be adequate for ordinary business purposes for a period of 12 months after the date of approval of this circular by the JSE. 3.9 Share capital Aveng s authorised and issued share capital before and after the repurchase, is as set out below: Authorised share capital at the last practicable date Authorised shares of 5 cents each 44.1 Issued share capital at the last practicable date Issued shares of 5 cents each 19.5 Share premium R m Notes 1. A R1 billion convertible bond is currently accounted for as combined borrowings and equity. This treatment will continue until the conversion of the bond into equity. 2. Approval for this conversion into shares was granted at the annual general meeting of Aveng, which was held on 28 October The number of shares placed under the control of the directors for the purposes of this conversion was There have been no changes to Aveng s authorised or issued share capital between 30 June 2007 and the last practicable date Authorised share capital after the repurchase Authorised shares of 5 cents each 44.1 Issued share capital after the repurchase (assuming that shares have been repurchased) Issued shares of 5 cents each 16.5 Share premium R m Notes 1. A R1 billion convertible bond is currently accounted for as combined borrowings and equity. This treatment will continue until the conversion of the bond into equity. 2. Approval for this conversion into shares was granted at the annual general meeting of Aveng, which was held on 28 October The number of shares placed under the control of the directors for the purposes of this conversion was There have been no changes to Aveng s authorised or issued share capital between 30 June 2007 and the last practicable date. 15

18 3.8.3 Major shareholders Based on the register at 31 July 2007, the shareholders in the table below (other than directors) are, directly or indirectly, beneficially interested in 5% or more of the issued share capital of Aveng: Number % of issued Beneficial owner of shares share capital Public Investment Corporation Old Mutual Liberty Group Expenses of the repurchase The estimated cash expenses of the repurchase and detailed below, relate, inter alia, to the repurchase process, printing, publication and distribution costs of this circular and other related announcements, fees payable to the professional advisers and JSE documentation fees. All the fees payable to the parties below are exclusive of VAT: Estimated amount Rand Printing and related costs INCE (Proprietary) Limited JSE documentation fees Transfer secretaries Computershare Independent sponsor fees JP Morgan Equities Merchant bank and transaction sponsor fees RMB Reporting accountant fees Ernst & Young Inc Corporate law adviser fees Taback and Associates Estimated total EXCHANGE CONTROL REGULATIONS The following is a summary of the South African Exchange Control Regulations insofar as they have application to shareholders who wish to accept the RMB offer. In the event of any doubts, shareholders are advised to consult their professional advisers as soon as possible. 4.1 Residents of the common monetary area In the case of: certificated shareholders whose registered addresses in the register are within the common monetary area and whose documents of title are not restrictively endorsed in terms of the South African Exchange Control Regulations, the RMB offer consideration will be posted to such shareholders; or dematerialised shareholders whose registered addresses in the register are within the common monetary area and have not been restrictively designated in terms of the South African Exchange Control Regulations, the RMB offer consideration will be credited directly to the accounts nominated for the relevant shareholder by their duly appointed CSDP/broker in terms of the provisions of the custody agreement with their CSDP/broker. 4.2 Emigrants from the common monetary area In the case of shareholders who are emigrants from the common monetary area, the RMB offer consideration will: in the case of certificated shareholders whose documents of title have been restrictively endorsed under the South African Exchange Control Regulations, be forwarded to the authorised dealer in foreign exchange in South Africa controlling such certificated shareholder s blocked assets in terms of the South African Exchange Control Regulations. The attached form of acceptance and surrender (yellow) makes provision for details of the authorised dealer concerned to be given; or 16

19 4.2.2 in the case of dematerialised shareholders, be credited to the bank account of the shareholders CSDP/broker which shall arrange for the same to be credited directly to the shareholders blocked Rand bank accounts held by the shareholders authorised dealers and held to the order of the shareholders authorised dealers in foreign exchange in South Africa. 4.3 All other non-residents of the common monetary area The RMB offer consideration accruing to non-resident shareholders whose registered addresses are outside the common monetary area and who are not emigrants from the common monetary area will: in the case of certificated shareholders, whose documents of title have been restrictively endorsed under the South African Exchange Control Regulations, be posted to the registered addresses of the non-resident shareholders concerned, unless written instructions to the contrary are received and an address provided. The attached form of acceptance and surrender (yellow) makes provision for a substitute address or bank details; or in the case of dematerialised shareholders, be credited by their duly appointed CSDP/broker directly to the accounts nominated by the shareholders in terms of the provisions of the custody agreement with their CSDP/broker. 4.4 Information not provided If the information regarding the authorised dealer is not given or instructions are not given as required, the RMB offer consideration will be held by the transfer secretaries on behalf of RMB, as the case may be, for the benefit of the certificated shareholders concerned pending receipt of the necessary information or instructions. Any interest accrued on the RMB offer consideration so held will be for the account of RMB. 5. OTHER INFORMATION 5.1 Litigation statement The following outstanding matters relate to material pending or threatened legal proceedings where alleged claims have been brought against the Group: Aquarius Platinum (South Africa) (Proprietary) Limited has issued a summons for R963 million against Moolmans, a division of Aveng (Africa) Limited (formerly Grinaker-LTA Limited), for alleged misrepresentation of weightings used in an escalation formula that was tabled for discussion at the time the tender for the Marikana opencast mining contract was tabled in late Attorneys are currently of the opinion that there is no financial exposure to Moolmans. The entire R963 million has however been disclosed as a contingent liability. Aveng (Africa) Limited (formerly Grinaker-LTA) Building division entered into a contract in 2001 to build 100 houses in Gabon. The houses were duly built by means of finance provided by a local financial institution which is now seeking restitution in the amount of a15.5 million (R142 million), due to an alleged default by the government of Gabon. Proceedings are in progress. Other than as set out above, the Group is not a party to any material legal or arbitration proceedings (including any such proceedings which are pending or threatened and of which the Group is aware), which may have had, in the previous 12 months, a material effect on the Group s financial position. 5.2 Material changes There have been no material changes in the financial or trading position of the Group between 30 June 2007 and the last practicable date, other than in the ordinary course of business. 17