CIRCULAR TO ALERT STEEL SHAREHOLDERS regarding:

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION The definitions commencing on page 3 of this Circular have been used on this front cover. ACTION REQUIRED Detailed action required by shareholders is set out on page 2 of this Circular. DISCLAIMER Alert Steel does not accept responsibility and will not be held liable for any failure on the part of the CSDP or broker of a dematerialised shareholder to notify such Shareholder of the details of this Circular. The summary of the Exchange Control Regulations detailed in paragraph 11 of this circular is intended only as a guide and is therefore not a comprehensive statement of the Exchange Control Regulations. Alert Steel shareholders who are in any doubt as to the appropriate course of action to take should consult their professional advisors. JURISDICTION All transactions arising from the provisions of this circular and the form of instruction shall be governed by and be subject to the laws of South Africa. The Claw-back Offer may be affected by the laws of the relevant jurisdictions of foreign shareholders. Such foreign shareholders should inform themselves about and observe any applicable legal requirements of such jurisdictions in relation to all aspects of this circular that may affect them, including the Claw-back Offer. It is the responsibility of any foreign shareholder to satisfy himself/herself as to the full observation of the laws and regulatory requirements of the relevant jurisdiction in connection with the Claw-back offer, including the obtaining of any governmental, exchange control or other consent or the making of any filings which may be required, the compliance with other necessary formalities, the payment of any issue, transfer or other taxes or requisite payments due in such jurisdiction. The Claw-back Offer is further subject to any other applicable laws and regulations, including the Exchange Control Regulations. Any foreign shareholder who is in doubt as to his/her position, including without limitation his/her tax status, should consult an appropriate independent professional adviser in the relevant jurisdiction without delay. The rights that are represented by the form of instruction in respect of the Letters of allocation are valuable and may be sold on the JSE. Letters of allocation can, however, only be traded in dematerialised form and accordingly, all Letters of allocation have been issued in dematerialised form. Alert Steel Holdings Limited Incorporated in the Republic of South Africa (Registration number 1999/009701/06) Share code: AET ISIN: ZAE ( Alert Steel or the company ) CIRCULAR TO ALERT STEEL SHAREHOLDERS regarding: a renounceable Claw-back offer to Alert Steel shareholders of Claw-back shares of no par value in the share capital of Alert Steel at a Subscription Price of 200 cents per Claw-back share, in the ratio of Claw-back shares for every 100 Alert Steel shares held at the close of trade on Friday, 14 February 2014; and enclosing: a form of instruction in respect of a Letter of allocation providing for the acceptance and/or renunciation and/or sale of all or part of the Claw-back Entitlement(s) embodied in the Letter of allocation in terms thereof for the use of certificated shareholders only; and revised listings particulars. Claw-back offer opens at 09:00 on Monday, 17 February 2014 Claw-back offer closes at 12:00 on Friday, 7 March 2014 An English copy of this circular, together with the Letter of allocation and the documents referred to in paragraph 23 of this circular, have been approved by the JSE as required by section 95(1)(k) of the Companies Act. Designated Adviser Auditors Attorneys Date of issue: 17 February 2014 This circular is available in English only. Copies of this circular may be obtained from the office of the company from the date of issue until Friday, 28 February 2014, or it can be downloaded from the company s website at from Monday, 17 February 2014.

2 CORPORATE INFORMATION Registered office of Alert Steel Corner of Engelbrecht and Lanham Streets East Lynne Pretoria, 0186 (PO Box 29607, Sunnyside, 0132) Telephone: (012) Facsimile: (012) Transfer secretaries Computershare Investor Services Proprietary Limited (Registration number 2004/003647/07) Ground Floor 70 Marshall Street Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) Telephone: (011) Facsimile: (011) Reporting accountants KPMG Incorporated (Registration number 1999/021543/21) KPMG Crescent 85 Empire Road Parktown, 2193 (Private bag X9, Parkview, 2122) Telephone: (011) Facsimile: (011) Company secretary M Pretorius (BCom (Law) LLB) Corner of Engelbrecht and Lanham Streets East Lynne Pretoria, 0186 (PO Box 29607, Sunnyside, 0132) Telephone: (012) Facsimile: Designated Adviser Exchange Sponsors (2008) Proprietary Limited (Registration number 2008/019553/07) 44a Boundary Road Inanda, 2196 (PO Box , Craighall, 2024) Telephone: (011) Facsimile: (011) Attorneys Fluxmans Inc. (Registration number 2000/024775/21) 11 Bierman Avenue Rosebank, 2196 Telephone: (011) Facsimile: (011) Date of incorporation: 3 July 2003 Place: Pretoria

3 TABLE OF CONTENTS Page Corporate information Inside front cover Action required by shareholders 2 Definitions 3 Salient dates and times 6 Circular to shareholders 1. Introduction 7 2. Purpose and rationale of the Claw-back offer 8 3. Terms of the Claw-back offer 8 4. Directors and executive management 9 5. Major and controlling shareholders 9 6. JSE listings Financial information Share capital Claw-back Entitlement Procedure for acceptance, renunciation and sale of Claw-back Entitlement Exchange Control Regulations Tax consequences of Claw-back offer Jurisdiction Opinion and recommendations Directors authority to issue shares Directors responsibility statement Litigation statement Corporate governance Material contracts Expenses of the Claw-back offer Consents Material changes Documents and consents available for inspection 18 Annexure 1 Pro forma consolidated financial information of Alert Steel 19 Annexure 2 Independent reporting accountants report on the compilation of pro forma consolidated financial information 22 Annexure 3 Table of Entitlement 24 Annexure 4 Price history of Alert Steel shares on the JSE 25 Annexure 5 Corporate Governance 26 Annexure 6 Information relating to the directors 36 Annexure 7 Information on the Subscriber 40 Revised listing particulars 41 Letter of allocation Enclosed 1

4 ACTION REQUIRED BY SHAREHOLDERS The definitions commencing on page 3 of this circular apply to this section. 1. DEMATERIALISED SHAREHOLDERS If you hold Alert Steel shares in dematerialised form (including where you have elected own-name registration) you will not receive a printed form of instruction. Your CSDP or broker will contact you to ascertain: whether you wish to follow all or some of your Entitlements in terms of the Claw-back offer and in respect of how many Claw-back offer shares; whether you wish your CSDP or broker to endeavour to procure the sale of your Entitlements on the JSE on your behalf and if so, in respect of how many rights; whether you wish to renounce your Entitlements and if so, how many Entitlements you wish to renounce and the details of the renouncee; or whether you wish for your Entitlements in respect of the Claw-back offer to lapse. Your CSDP or broker will credit your account with the number of Entitlements to which you are entitled in terms of the Claw-back offer. If you do not hear from your CSDP or broker, you should contact them and furnish them with your instructions. If your CSDP or broker does not obtain instructions from you, they are obliged to act in terms of the custody agreement entered into between you and them. 2. CERTIFICATED SHAREHOLDERS A form of instruction is enclosed for use by certificated shareholders only. The rights in respect of such forms are renounceable and can be sold on the JSE. If you hold your Alert Steel shares in certificated form and you wish to subscribe for some or all of the Claw-back offer shares allocated to you, you must complete the form of instruction enclosed herewith in accordance with the instructions contained therein and lodge it, together with payment for the amount due in respect thereof, with the transfer secretaries, whose details are set out on the inside front cover of this circular, by not later than 12:00 on Friday, 7 March If you do not wish to subscribe for all or some of the Claw-back offer shares allocated to you, you may sell or renounce your Entitlements or allow them to lapse. In such event, you must complete the relevant section of the form of instruction and return it to the transfer secretaries to be received not later than 12:00 on Friday, 28 February 2014, if you wish to sell, and by no later than 12:00 on Friday, 7 March 2014, if you renounce your Entitlements. If you intend to allow your Entitlements to lapse, you need not take any action. 3. IF YOU HAVE DISPOSED OF YOUR SHARES If you have disposed of your Alert Steel shares, please forward this circular to the purchaser of such shares or to the broker or agent through whom the disposal was effected. Note: If you are in any doubt as to the action you should take, please consult your CSDP, broker, banker, legal advisor, accountant or other professional advisor immediately. Alert Steel does not accept responsibility and will not be held liable for any failure on the part of the CSDP or broker of a dematerialised shareholder to notify such shareholder of the Claw-back offer. 2

5 DEFINITIONS In this circular, unless otherwise stated or the context so 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 denoting one gender include the other and expressions denoting natural persons include juristic persons and associations of persons: Alert Steel or the company Alert Steel Holdings Limited (Registration number 2003/005144/06), a public company incorporated in accordance with the laws of South Africa and the shares of which are listed on the Alt x of the JSE; Alert Steel shareholders or shareholders Alt x business day Cannistraro Capital Africa Steel or CAS certificated shareholders circular Claw-back offer Claw-back shares common monetary area CSDP Companies Act dematerialisation dematerialised shareholders the registered holders of Alert Steel shares as appearing on the Alert Steel register; the Alternative Exchange of the JSE; any day other than a Saturday, Sunday or public holiday in the Republic; Cannistraro Investments 282 Proprietary Limited (Registration number 2011/008136/07), a private company incorporated in accordance with the laws of South Africa, the sole shareholder of which is Mr Rayhaan Hassim; Capital Africa Steel Proprietary Limited (Registration number 2003/008668/07), a private company incorporated in accordance with the laws of South Africa, the shares in which are owned by WBHO Limited and Brait Private Equity; Alert Steel shareholders who have not dematerialised their Alert Steel share certificates in terms of the Strate system; all the documents and annexures contained in this bound circular, dated 17 February 2014, including the form of instruction; a renounceable Claw-back offer to Alert Steel shareholders of Claw-back shares at a Subscription Price of 200 cents per Claw-back share in the ratio of Claw-back shares for every 100 ordinary shares held at the close of trade on the Record Date; new ordinary shares which are the subject of the Clawback offer; South Africa, the Republic of Namibia and the Kingdoms of Lesotho and Swaziland; Central Securities Depository Participant accepted as a participant in terms of the Financial Markets Act, 2012 (Act 19 of 2012), as amended, appointed by an individual shareholder for purposes of the dematerialisation of documents of title for purposes of incorporation into the Strate system; the Companies Act, 2008 (Act 71 of 2008), as amended; the process by which certificated shares are converted to an electronic form as uncertificated shares and recorded in the sub-register of shareholders maintained by a CSDP; Alert Steel shareholders who hold shares which have been incorporated into the Strate system and which are no longer evidenced by physical documents of title in terms of the Custody and Administration of Securities Act, 1992 (Act 85 of 1992), as amended; 3

6 directors or board of directors Designated Adviser emigrants Entitlement or Claw-back Entitlement(s) form of instruction Group the board of directors of Alert Steel, further details of whom appear in Annexure 6 of this circular; Exchange Sponsors (2008) Proprietary Limited (Registration number 2008/019553/07), a private company registered and incorporated under the laws of South Africa, the Designated Advisor of Alert Steel; former residents of the common monetary area; a Shareholder s Entitlement to subscribe for Claw-back shares in the ratio of Claw-back shares for every 100 ordinary shares held on the Record Date, which Entitlement arises as a result of the Clawback offer; form of instruction (attached to this circular in the case of certificated shareholders) in respect of the Letters of allocation reflecting the Entitlement of certificated shareholders and on which certificated shareholders are required to indicate whether they wish to take up, sell or renounce their Claw-back Entitlement; Alert Steel and its subsidiaries, all incorporated in accordance with the laws of South Africa; incorporation the date of incorporation of Alert Steel, being 3 July 2003; independent reporting accountants and/or auditors JSE the last practicable date Listings Requirements Letter/s of allocation or LAs Record Date Revised Build Kwik Sale Agreement SARS SENS shares South Africa Strate KPMG Incorporated. (Registration number 1999/021543/21), a company incorporated in accordance with the laws of South Africa; the JSE Limited (Registration number 2005/022939/06), a limited liability public company incorporated in accordance with the laws of South Africa which operates a securities exchange licensed in terms of the Financial Markets Act, 2012 (Act 19 of 2012); the last practicable date prior to the finalisation of this circular, which date was 15 February 2014; the Listings Requirements of the JSE, as amended from time to time; renounceable (nil paid) letters of allocation to be issued to Alert Steel shareholders pursuant to the Claw-back offer, conferring a Claw-back Entitlement on the holder to subscribe for Claw-back shares in terms of the Claw-back offer; last date for Alert Steel shareholders to be recorded in the register in order to participate in the Claw-back offer, being the close of trade on Friday, 14 February 2014; the Sale Agreement between Build Kwik Wholesalers Proprietary Limited and Alert Steel Proprietary Limited, dated 27 November 2013, for the purchase of furniture, fixtures, fittings and other moveable assets for R ; the South African Revenue Services; The Stock Exchange News Service; the issued ordinary no par value shares in the share capital of the company; the Republic of South Africa; the settlement and clearing system used by the JSE, managed by Strate Limited (Registration number 1998/022242/06), a company incorporated in accordance with the laws of South Africa; 4

7 the Subscriber Subscription Agreement Subscription Amount Subscription Price Southern Palace transfer secretaries Cannistraro Investments 282 Proprietary Limited (Registration number 2011/008136/07), a private company incorporated in accordance with the laws of South Africa and which is 100% owned by Mr Rayhaan Hassim; the Subscription Agreement dated 27 November 2013, entered into between Alert Steel and the Subscriber in terms of which the Subscriber has, subject to the rights of Alert Steel shareholders in terms of the Claw-back offer, agreed to subscribe for new ordinary shares of no par value in the share capital of Alert Steel at a Subscription Price of 200 cents per Claw-back share for the total amount of R (ninety six million Rand); the amount of R (ninety six million Rand) payable by the Subscriber for the Claw-back shares in terms of the Subscription Agreement; a subscription price of 200 cents per Claw-back share; Southern Palace Investments 265 Proprietary Limited (Registration number 2005/005086/07), a company duly registered and incorporated with limited liability in accordance with the laws of South Africa and which is 100% owned by Mr Rayhaan Hassim; Computershare Investor Services Proprietary Limited (Registration number 2004/003647/07), a private company duly incorporated in accordance with the laws of South Africa; VAT value-added tax levied in terms of the Value-Added Tax Act, 1991 (Act 89 of 1991), as amended from time to time; and ZAR or Rand or R South African Rand. 5

8 SALIENT DATES AND TIMES 2014 Last day to trade in Alert Steel shares in order to qualify to participate in the Clawback offer (cum Entitlement) on Listing of Letters of allocation on the JSE under the JSE code AETN and ISIN ZAE at commencement of trading on Allotment of Claw-back shares to Subscriber Record Date for participation in the Claw-back offer at the close of trade on Claw-back offer Circular and form of instruction posted to shareholders, where applicable Claw-back offer opens at commencement of trading on Dematerialised shareholders accounts at their CSDP or broker automatically credited with their Entitlement Certificated shareholders Entitlements will be credited to an account held with the transfer secretaries Last day to trade in Letters of allocation on the JSE on Trade in Claw-back shares commences Claw-back offer closes payments to be made and form of instruction in respect of Letters of allocation lodged by certificated shareholders by 12:00 (see note 5) on Record Date for Letters of allocation Claw-back shares not accepted in terms of the Claw-back offer issued to the Subscriber Dematerialised shareholders accounts updated with Claw-back shares to the extent accepted and debited with the relevant costs by their CSDP or broker and new Alert Steel share certificates posted to certificated shareholders (see note 5) on Friday, 7 February Monday,10 February Monday, 10 February Friday, 14 February Monday, 17 February Monday, 17 February Monday, 17 February Monday, 17 February Friday, 28 February Monday, 3 March Friday, 7 March Friday, 7 March Monday, 10 March Monday, 10 March Results of Claw-back offer announcement released on SENS on or about Monday, 10 March Notes: 1. Dematerialised shareholders are required to notify their duly appointed CSDP or broker of their acceptance or otherwise of the Claw-back offer in the manner and time stipulated in the agreement governing the relationship between such shareholder and their CSDP or broker. 2. All times indicated are South African times unless otherwise stated. 3. Share certificates may not be dematerialised or rematerialised between Monday, 10 February 2014, and Friday, 14 February 2014, both days inclusive. 4. The CSDP/broker accounts of dematerialised shareholders will be automatically credited with new Alert Steel shares to the extent to which they have accepted the Claw-back offer. Alert Steel share certificates will be posted, by registered post at the shareholders risk, to certificated shareholders in respect of the Claw-back shares which have been accepted. 5. CSDPs or brokers effect payment in respect of dematerialised shareholders on a delivery versus payment method. 6

9 Alert Steel Holdings Limited Incorporated in the Republic of South Africa (Registration number 1999/009701/06) Share code: AET ISIN: ZAE ( Alert Steel or the company ) Directors Non-executive MM Patel (Independent non-executive chairman) WP van der Merwe (Independent non-executive director) BS Mahuma (Independent non-executive director) AE Loonat (Independent non-executive director) Executive PN Dodson (Chief Executive Officer) MSI Gani (Chief Financial Officer) MJ Gani (Chief Operating Officer) All directors are South African. CIRCULAR TO ALERT STEEL SHAREHOLDERS 1. INTRODUCTION 1.1 Shareholders of Alert Steel were informed on 4 February 2013 that Nedbank had assigned all of its rights and obligations under a 5-Year Term Loan Agreement, to Southern Palace. 1.2 On 8 February 2013, Cannistraro entered into an agreement with Capital Africa Steel, in terms of which Cannistraro agreed to acquire 47.5% of the shares in issue in Alert Steel from Capital Africa Steel for R6 million and also undertook to procure the release of Capital Africa Steel from a bank guarantee of R7.5 million. Therefore the aggregate purchase consideration in respect of the sale equated to a price of cents per share. 1.3 On 15 February 2013, Cannistraro entered into the Nedbank Sale with Nedbank in terms of which Cannistraro agreed to acquire a further 19.78% of the shares in issue in Alert Steel from Nedbank for R1 million (and therefore at a purchase price of 9.72 cents per share). On 11 April 2013, it was announced, inter alia, that Southern Palace informed Alert Steel that it had assigned the rights and obligations which it had acquired from Nedbank (referred to in paragraph 1.1 above) to Cannistraro, with effect from 27 February On 15 July 2013, Cannistraro made an unconditional mandatory offer to all of the shareholders other than CAS and Nedbank at cents per share ordinary shares at an offer price of cents were acquired by Cannistraro from Alert Steel shareholders in pursuance of such mandatory offer. 1.5 On 11 April 2013, it was announced that Alert Steel had decided to change the previously announced subscription and claw-back offer to a specific issue of shares for cash to Cannistraro. The Specific Issue Agreement was concluded on the 19 August 2013, subject to the fulfilment of certain conditions precedent. 1.6 On 17 September 2013, Alert Steel issued a circular to shareholders for the approval of inter alia, the specific issue of shares to Cannistraro at 200 cents per share for cash to raise R96 million. At the general meeting of shareholders to approve the resolutions pertaining, inter alia, to the specific issue, the resolutions were withdrawn and not voted on by shareholders. 7

10 1.7 In an announcement released on SENS on 28 November 2013, shareholders were advised that the company and the Subscriber entered into the Subscription Agreement which provides for the subscription by the Subscriber of new ordinary shares of no par value in the share capital of Alert Steel at a Subscription Price of 200 cents per share for the total Subscription Amount, which subscription is subject to the rights of Alert Steel shareholders in terms of the Claw-back offer. 1.8 The Subscription Price represents a premium of approximately 30% to the 30-day volume weighted average share price of Alert Steel over the 30 days ended 11 April 2013, which was the date on which the issue price for the specific issue of shares for cash as announced on SENS was agreed upon by the board of Alert Steel. The Subscription Price represents a discount of approximately 28% to the 30-day volume weighted average share price of Alert Steel over the 30 days ended 28 November 2013, which was the date on which the Claw-back offer was announced on SENS. There is no subscription or other fee payable to the Subscriber. 1.9 Alert Steel has received the Subscription Amount from the Subscriber. The amount is held in Alert Steel s bank account The attached form of instruction in respect of the Letters of allocation contains details of the Claw-back Entitlement to which certificated shareholders are entitled, as well as the procedures for acceptance, sale or renunciation of that Claw-back Entitlement Dematerialised shareholders will be advised by their CSDP or broker of the Claw-back Entitlement to which they are entitled as well as the procedure for acceptance, sale or renunciation of those Claw-back Entitlement The JSE has approved the listings of the: Claw-back shares from the commencement of trade on Monday, 3 March 2014; and Letters of allocation from the commencement of trade on Monday, 10 February 2014, until the close of trade on Friday, 28 February 2014, both days inclusive Upon allotment and issue, the Claw-back shares will rank pari passu in all respects including dividends with the ordinary shares currently in issue The Claw-back shares will not have any convertibility or redemption provisions The purpose of this circular is to furnish shareholders with relevant information concerning the Claw-back offer and the implications thereof in accordance with the Listings Requirements and the Companies Act. Included in the circular are revised listing particulars as the Claw-back offer of shares equates to more than 50% of the shares in issue. 2. PURPOSE AND RATIONALE OF THE CLAW-BACK OFFER 2.1 The purpose of the Claw-back offer is to redeem debt owing by Alert Steel to Cannistraro. This will be redeemed from the subscription amount received from the Claw-back offer. Refer to paragraph 1.9 above. 2.2 The Claw-back shares, upon their issue, will be issued under the general authority of directors to issue unissued, but authorised shares for cash which was authorised at the annual general meeting of shareholders held on 15 November In terms of a special resolution passed on 9 January 2014, shareholders approved the issue of new ordinary no par value shares at 200 cents per ordinary share in terms of section 41(3) of the Companies Act (which represent more than 30% of the shares in issue prior to such issue) to enable the company to implement the Claw-back offer. 3. TERMS OF THE CLAW-BACK OFFER 3.1 Particulars of the Claw-back offer Alert Steel shareholders and/or their renouncees are hereby offered for subscription, by way of a renounceable Claw-back offer, a total of Claw-back shares at a Subscription Price of 200 cents per Claw-back share in the ratio of Claw-back shares for every 100 ordinary shares held in Alert Steel at the close of trade on the Record Date, upon the terms and conditions set out in this circular. 8

11 3.1.2 The issue by the company of the Subscription Shares to be issued by the company in terms of the Claw-back offer was approved by the shareholders at the general meeting held on 9 January 2014, in accordance with the provisions of section 41(3) of the Act The Subscription Price is payable in ZAR and in full upon acceptance by certificated shareholders, or on a delivery versus payment basis by the CSDP or broker of dematerialised shareholders who have accepted the Claw-back offer Holders of dematerialised shares who wish to accept the Claw-back offer should ensure that the necessary funds are deposited with the relevant CSDP or broker The Subscription Price represents a premium of approximately 30% to the 30-day volume weighted average share price of Alert Steel shares over the 30-day period ended on 11 April 2013, which was the date on which the issue price for the specific issue of shares for cash as announced on SENS was agreed upon by the board of Alert Steel Alert Steel shareholders (recorded in the register at the close of trade on the Record Date) or their renouncees in terms of the Claw-back offer will be entitled to participate in the Claw-back offer. The Letters of allocation may only be traded in dematerialised form and, accordingly, Alert Steel has issued all Letters of allocation in dematerialised form The Claw-back shares issued to the Subscriber on Monday, 10 February 2014 will be issued in certificated format and held by the transfer secretaries. 3.2 Opening and closing dates of the Claw-back offer The Claw-back offer will open at the commencement of trade on Monday, 17 February 2014 and will close at 12:00 on Friday, 7 March Excess applications The Claw-back offer does not include the right for shareholders to apply for excess Claw-back offer shares. 4. DIRECTORS AND EXECUTIVE MANAGEMENT Details of the directors and executive management, including the appointment, remuneration, borrowing powers of directors, and director s interests and declarations are set out in Annexure 6 to this circular. 5. MAJOR AND CONTROLLING SHAREHOLDERS Set out below are the names of those shareholders that, directly or indirectly, are beneficially interested in 5% or more of the total shares in the company in issue at the last practicable date: Name % Cannistraro WF&JC Familie Trust Should no shareholder, apart from Cannistraro, Claw-back any of the Claw-back shares, resulting in the Subscriber subscribing for all the Claw-back shares, the shareholding of Cannistraro will increase as a result of the implementation of the Claw-back offer as follows: Number of shares Percentage shareholding % Cannistraro before Claw-back offer Claw-back offer Cannistraro after Claw-back offer* Total shares in issue after Claw-back offer * Based on the assumption that none of the shareholders will follow their Entitlements in terms of the Claw-back offer. 9

12 5.2 Should all shareholders, including Cannistraro, follow their Entitlements in terms of the Claw-back, the percentage shareholding of Cannistraro will remain the same as a result of the implementation of the Claw-back offer as follows: Number of shares Percentage shareholding % Cannistraro before Claw-back offer Claw-back offer Cannistraro after Claw-back offer* Total shares in issue after Claw-back offer * Based on the assumption that all of the shareholders including Cannistraro will follow their Entitlements in terms of the Claw-back offer. There will not be a change in the controlling shareholder of Alert Steel resulting from the Claw-back offer, which will be Cannistraro both before and after the implementation of the Claw-back offer. Insofar as the directors of Alert Steel are aware, no other shareholder will hold, directly or indirectly, 5% or more of the issued share capital of Alert Steel following the Claw-back offer save for WF&JC Familie Trust who will own 6.08% of the issued shares should it not follow its Entitlement in terms of the Claw-back offer. 6. JSE LISTINGS The JSE has granted listings for the Letters of allocation and the Claw-back shares as follows: new Alert Steel shares will be issued and listed with effect from the commencement of business on Monday, 3 March 2014; 6.2 Letters of allocation in respect of new Alert Steel shares will be listed from the commencement of business on Monday, 10 February 2014, to close of business on Friday, 28 February 2014, both days inclusive; and 6.3 as the Claw-back offer is fully subscribed, no minimum subscription is required. 7. FINANCIAL INFORMATION The table below sets out the summary of the pro forma financial effects of the Claw-back offer on Alert Steel s, on basic loss, headline loss, net asset value and net tangible asset value per share. The summary of the pro forma financial effects have been prepared to illustrate the impact of the Clawback offer on the audited published financial information of Alert Steel for the year ended 30 June 2013, had the Claw-back offer occurred on 1 July 2012 for the purpose of the statement of comprehensive income and on 30 June 2013 for the purpose of the statement of financial position. The summary of the pro forma financial effects have been prepared using accounting policies that comply with International Financial Reporting Standards and that are consistent with those applied in the audited, published financial statements of Alert Steel for the year ended 30 June The summary of the pro forma financial effects set out below are the responsibility of the directors and have been prepared for illustrative purposes only and because of their nature may not fairly present the financial position, changes in equity, and results of operations or cash flows of Alert Steel after the Clawback offer. The reporting accountants report on the compilation of the pro forma financial information of Alert Steel is set out in Annexure 2 to this circular. 10

13 Before the Claw-back offer audited results for the year ended 30 June 2013 Pro forma After the Claw-back offer unaudited 30 June 2013 % change Basic loss per share (cents) (106.10) (44.77) 58 Headline loss per share (cents) (132.90) (58.20) 56 Net asset value per share (cents) (48.64) Net tangible asset value per share (cents) (60.50) Weighted average number of shares Shares in issue as at 30 June 2013 (including shares held by the share option scheme) Detailed assumptions in respect of the above financial effects are included in Annexure 1 to this circular. 8. SHARE CAPITAL The authorised stated capital and issued stated capital of Alert Steel, before and after the Claw-back offer, will be as follows: Authorised stated capital before the Claw-back offer Rand ordinary shares of no par value Issued share capital before ordinary no par value shares Less: treasury shares (76 000) Total issued share capital Authorised share capital after Claw-back offer Rand ordinary shares of no par value Issued share capital after ordinary no par value shares Less: treasury shares (76 000) Total issued share capital * The JSE has granted the listing of the Claw-back shares, subsequent to the Claw-back offer. 9. CLAW-BACK ENTITLEMENT 9.1 Alert Steel shareholders will receive the right to subscribe for new Alert Steel shares for every 100 shares held on the initial Record Date, being Friday, 14 February Alert Steel shareholders are entitled to participate in the Claw-back offer in accordance with Annexure 3 to this circular. 9.3 The allocation of Claw-back shares will be such that shareholders will not be allocated a fraction of a Claw-back share and as such, any Entitlement to receive a fraction of a Claw-back shares which: is less than one-half of a Claw-back share, will be rounded down to the nearest whole number; and is equal to or greater than one-half of a Claw-back share but less than a whole Claw-back share will be rounded up to the nearest whole number. 9.4 Certificated shareholders will have their Entitlements credited to a nominee account in electronic form, which will be administered by the transfer secretaries on their behalf. The enclosed form of instruction reflects the number of shares for which the certificated shareholder is entitled to subscribe. The procedure to be followed by certificated shareholders for the acceptance, sale or renunciation of their Entitlements is reflected on the form of instruction. 11

14 9.5 Dematerialised shareholders will have their Entitlements to subscribe for Claw-back shares credited in electronic form to their account held by their appointed CSDP or broker. The CSDP or broker will advise dematerialised shareholders of the procedure to be followed and the timing for the acceptance, sale, renunciation or lapsing of such Entitlements. 9.6 The Letters of allocation to which the forms of instruction relate are negotiable and can be sold on the JSE. 10. PROCEDURE FOR ACCEPTANCE, RENUNCIATION AND SALE OF CLAW-BACK ENTITLEMENT 10.1 Certificated shareholders The Claw-back Entitlement of certificated shareholders will be credited to an account in electronic form, which will be administered by the transfer secretaries on their behalf. The enclosed form of instruction reflects the number of Claw-back shares for which the certificated shareholder is entitled to subscribe. Any instruction by certificated shareholders to accept, sell or renounce all or part of the Claw-back shares allocated to them may only be made by means of the form of instruction Acceptance Full details of the procedure for acceptance of the Claw-back offer by certificated shareholders are contained in the form of instruction enclosed with this circular. It should be noted that: acceptances are irrevocable and may not be withdrawn; acceptances may be made only by means of the form of instruction; any instruction to sell or renounce all or part of the Claw-back shares may only be made by means of the form of instruction; the properly completed form of instruction and a banker s draft or cheque in ZAR crossed not transferable and or bearer deleted in payment of the Subscription Price payable for the relevant Claw-back shares must be received by the transfer secretaries at either of the addresses referred to in paragraph by not later than 12:00 on Friday, 7 March No late postal acceptances will be accepted; the form of instruction to take up the Claw-back Entitlement in question will be regarded as complete only when the cheque or banker s draft has been cleared for payment; such payment will constitute an irrevocable acceptance of the Claw-back offer upon the terms and conditions set out in this circular and in the form of instruction once the banker s draft or cheque has been cleared for payment; if any form of instruction is not received as set out above, the Claw-back offer will be deemed to have been declined and the Claw-back Entitlement to subscribe for the Claw-back shares in terms of the form of instruction will lapse regardless of who holds it; and no acknowledgement of receipt will be given for a cheque or banker s draft received in respect of the Claw-back offer Renunciation or sale of Claw-back Entitlement Alert Steel has issued the LAs in dematerialised form and the electronic record for certificated shareholders is being maintained by the transfer secretaries The LAs to which the form of instruction relates are negotiable and can be traded on the JSE Certificated shareholders who do not wish to subscribe for all, or some of the Claw-back shares allocated to them as reflected in the form of instruction, may sell or renounce or lapse their Claw-back Entitlement In addition, certificated shareholders who wish to sell the Claw-back Entitlement allocated to them as reflected in the form of instruction must complete the relevant section of the form of instruction and return it to the transfer secretaries 12

15 in accordance with the instructions contained therein, to be received by not later than 12:00 on Friday, 7 March The transfer secretaries will endeavour to procure the sale of the Claw-back Entitlement on the JSE on behalf of such certificated shareholders and will remit the proceeds in accordance with the payment instructions reflected in the form of instruction, net of brokerage charges and associated expenses. Neither the transfer secretaries nor the company nor any broker appointed by either of them will have any obligation or be responsible for any loss or damage whatsoever in relation to or arising out of the timing of such sales, the price obtained or any failure to sell such Claw-back Entitlement. References in this paragraph to a certificated shareholder include references to the person or persons executing the form of instruction and any person or persons on whose behalf such person or persons executing the form of instruction is/are acting and in the event of more than one person executing the form of instruction, the provisions of this paragraph shall apply to them, jointly and severally Certificated shareholders who do not wish to sell the Claw-back Entitlement allocated to them as reflected in the form of instruction, and who do not wish to subscribe for the Claw-back shares offered in terms of the form of instruction but who wish to renounce their Claw-back Entitlement, should complete the relevant section of the form of instruction and return it to the transfer secretaries in accordance with the instructions contained therein, to be received by no later than 12:00 on Friday, 7 March Certificated shareholders who wish to subscribe for only a portion of the Clawback Entitlement allocated to them must indicate on the form of instruction the number of Claw-back shares for which they wish to subscribe Certificated shareholders wishing to sell their Claw-back Entitlement will be liable to pay the transfer secretaries an amount of R (one hundred and thirty one Rand and 10 cents) (all inclusive) for trades having a value of less than or equal to R and an amount equal to R (one hundred and thirty one Rand and 10 cents) plus 0.25% of the value of the trade for trades with a value of R (forty thousand Rand) or more Payment Currency The amount due on acceptance of the Claw-back offer is payable in ZAR Payment terms A banker s draft drawn on a registered bank or a cheque drawn on a South African bank (either of which should be crossed and marked not transferable and, in the case of a cheque, with the words or bearer deleted) in favour of Alert Steel Holdings Limited Claw-back offer in respect of the amount due, together with a properly completed form of instruction, must be lodged by certificated shareholders and/or their renouncees by no later than 12:00 on Friday, 7 March 2014, in accordance with the instructions contained in the form of instruction and clearly marked Alert Steel Holdings Limited Claw-back offer. By hand to: Computershare Investor Services Proprietary Limited Ground Floor, 70 Marshall Street Johannesburg 2001 or 13

16 sent by post, at the risk of the shareholder or renouncee concerned, to: Computershare Investor Services Proprietary Limited PO Box Marshalltown 2107 All cheques or banker s drafts received by the transfer secretaries will be deposited immediately for payment. In the event that any cheque or banker s draft is dishonoured, Alert Steel, in its sole discretion, may treat the relevant acceptance as void or may tender delivery of the relevant Claw-back shares to which it relates against payment in cash of the Subscription Price for such Claw-back shares Share certificates Where applicable, share certificates in respect of Claw-back shares will be posted, by registered post, by the transfer secretaries, at the risk of the certificated shareholders concerned, on or about Monday, 10 March As Alert Steel uses the certified transfer deeds and other temporary documents of title procedure approved by the JSE, only block certificates will be issued in respect of Clawback shares. Certificated shareholders receiving Claw-back shares in certificated format must note that such shares cannot trade on the JSE until they have been dematerialised. This could take between one and ten days Dematerialised shareholders Acceptance, renunciation or sale of Claw-back Entitlement The CSDPs or brokers appointed by dematerialised shareholders should contact them to ascertain: whether the shareholder concerned wishes to follow his Claw-back Entitlement in terms of the Claw-back offer (in which case CSDPs effect payment on a delivery versus payment basis) and if so, in respect of how many Claw-back shares; whether the shareholder concerned wishes to renounce his Claw-back Entitlement and if so, in respect of how many Claw-back shares; whether the shareholder concerned wishes to sell those Claw-back Entitlement which he/she does not wish to follow or renounce and if so, how many Claw-back Entitlement are to be sold. Shareholders not contacted by their CSDPs or brokers should contact them and furnish them with their instruction; and should a CSDP or broker not obtain instructions from a dematerialised shareholder, they are obliged to act in terms of the mandate entered into between them and the dematerialised shareholder, or if the mandate is silent in this regard, not to accept the Claw-back Entitlement on behalf of such shareholder Payment The CSDP or broker will effect payment directly on behalf of dematerialised shareholders in respect of Claw-back Entitlement followed, in ZAR, on Friday, 7 March 2014, on a delivery versus payment basis. Holders of dematerialised shares who wish to accept the Clawback offer should ensure that the necessary funds are deposited with the relevant CSDP or broker Claw-back shares Dematerialised shareholders accounts will be credited with the Claw-back shares subscribed for in terms of the Claw-back offer, on Monday, 10 March EXCHANGE CONTROL REGULATIONS The following summary is intended only as a guide and is therefore not a comprehensive statement of the Exchange Control Regulations. Alert Steel shareholders who are in any doubt as to the appropriate course of action to take should consult their professional advisors. 14

17 The new Alert Steel shares to be issued pursuant to the Claw-back offer are not freely transferable from South Africa and must be dealt with in terms of the Exchange Control Regulations. Alert Steel shareholders who are not resident in the common monetary area should obtain advice as to whether any governmental and/or other legal consent is required and/or whether any other formality must be observed to follow their rights in terms of the Claw-back offer Non-resident of the common monetary area In terms of the Exchange Control Regulations, non-residents of the common monetary area will be allowed to: take up rights allocated to them in terms of the Claw-back offer; purchase Letters of allocation; and subscribe for the new Alert Steel shares in terms of the Claw-back offer, provided payment is received in foreign currency through normal banking channels or in ZAR from a non-resident account Share certificates issued pursuant to the application must be endorsed non-resident. In respect of Alert Steel shareholders taking up their rights in terms of the Claw-back offer: a non-resident endorsement will be applied to forms of instruction issued to non-resident certificated shareholders; or a non-resident annotation will appear in the CSDP or broker s register for non-resident dematerialised shareholders All applications by non-residents for the above purposes must be made through a South African authorised dealer. Where rights are sold on the JSE on behalf of non-residents, the proceeds of such sale are freely remittable through a South African authorised dealer in foreign exchange Former residents of the common monetary area ( emigrants ) Where an Entitlement in terms of the Claw-back offer falls due to an emigrant, which right is based on shares blocked in terms of Exchange Control Regulations, only then may blocked funds be used to: take up rights allocated to such emigrant in terms of the Claw-back offer; purchase Entitlements on the JSE; and subscribe for new Alert Steel shares in terms of the Claw-back offer Applications by emigrants using blocked ZAR for the above purposes must be made through the South African authorised dealer controlling their blocked assets. Alert Steel share certificates issued pursuant to blocked ZAR transactions must be endorsed nonresident and placed under the control of the authorised dealer through whom the payment was made In respect of Alert Steel shareholders taking up their Entitlement in terms of the Claw-back offer: a non-resident endorsement will be applied to forms of instruction issued to non-resident certificated shareholders; or a non-resident annotation will appear in the CSDP or broker s register for nonresident dematerialised shareholders Where Entitlements are sold on the JSE on behalf of emigrants, which Entitlement are based on an investment which is blocked in terms of the South African Exchange Control Regulations, the proceeds of such sales will be credited to the blocked ZAR accounts of the Alert Steel shareholders concerned Non-resident and emigrant dematerialised shareholders will have all aspects relating to exchange control managed by their CSDP or broker. 15

18 12. TAX CONSEQUENCES OF THE CLAW-BACK OFFER The directors of the issuer are of the opinion that the purchase, holding and disposal of the Letters of allocation or Claw-back shares should, for taxation purposes, be treated according to the usual rules relating to the categorisation of an asset and its return as capital or revenue and accordingly Alert Steel shareholders are advised to consult their professional advisors regarding the tax consequences of the Claw-back offer. 13. JURISDICTION The distribution of this circular and/or accompanying documents and/or the transfer of the new Alert Steel shares and/or the rights to subscribe for new Alert Steel shares in jurisdictions other than South Africa may be restricted by law and failure to comply with any of those restrictions may constitute a violation of the laws of any such jurisdiction in which it is illegal to make such a Claw-back offer. In such circumstances this circular is not addressed to such shareholders and the Claw-back offer is made only to qualifying shareholders. Any shareholder resident outside the common monetary area who receives the circular and form of instruction, should obtain advice as to whether any governmental and/or any other legal consent is required and/or any other formality must be observed to enable such a subscription to be made in terms of such form of instruction. The Claw-back offer does not constitute and offer in any jurisdiction in which it is illegal to make such an offer and the circular and form of instruction should not be forwarded or transmitted by recipients thereof to any person in any territory other than where it is lawful to make such an offer. The Claw-back offer shares have not been and will not be registered under the Securities Act of the United States of America. Accordingly, the Claw-back offer shares may not be offered, sold, resold, delivered or transferred, directly or indirectly, in or into the United States or to, or for the account or benefit of, United States persons, except pursuant to exemptions from the Securities Act. The circular and the accompanying documents are not being, and must not be, mailed or otherwise distributed or sent in, into or from the United States. The circular does not constitute an offer of any securities for sale in the United States or to United States persons. The Claw-back offer contained in the circular does not constitute an offer in the District of Colombia, the United States, the Dominion of Canada, the Commonwealth of Australia, Japan or in any other jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer. Non-qualifying shareholders should consult their professional advisers to determine whether any governmental or other consents are required or other formalities need to be observed to allow them to take up he Claw-back offer, or trade their Entitlement. Shareholders holding Alert Steel shares on behalf of persons who are non-qualifying shareholders are responsible for ensuring that taking up the Claw-back offer, or trading in their Entitlements under that offer, do not breach regulation in the relevant overseas jurisdictions. To the extent that non-qualifying shareholders are not entitled to participate in the Claw-back offer as a result of the aforementioned restrictions, the allocated rights in respect of such non-qualifying shareholders shall revert to Alert Steel who shall be entitled to sell or place same or failing which such rights will lapse. 14. OPINIONS AND RECOMMENDATIONS 14.1 The board of directors have considered the terms and conditions of the Claw-back offer and are of the opinion that such terms and conditions are fair and reasonable to Alert Steel shareholders Shareholders are recommended to consult their professional advisers regarding the action to be taken in relation to the Claw-back offer. 15. DIRECTORS AUTHORITY TO ISSUE SHARES 15.1 Section 41(3) of the Act requires that shareholders approve by way of special resolution, an issue of shares if the voting power of the class of shares that are to be issued will be equal to or exceed 30% of the voting powers of all the shares of that class already issued immediately before the issue The section 41(3) special resolution was passed at the general meeting held on Thursday, 9 January