CIRCULAR TO SHAREHOLDERS Regarding a RENOUNCEABLE CLAW BACK RIGHTS OFFER

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. The definitions commencing on page 8 of this Circular apply mutatis mutandis to this document including the cover page. This Document is neither a prospectus nor an invitation to the public to subscribe for shares in Cavmont Capital Holdings Zambia Plc ( CCHZ or the Company ), but is an offer on a claw back basis to existing CCHZ shareholders, to acquire shares in the Company on the terms and conditions set out in this Circular. Action Required: This entire Circular is important and should be read with particular attention to page 5 entitled Action required by CCHZ shareholders which sets out the action required of them with regard to the Claw back Rights Offer; If you are in any doubt as to the meaning of the contents of this Circular or as to the action you should take, please consult your accountant, bank manager, stockbroker or other professional advisor immediately; If you no longer hold any shares in CCHZ, then you should send this Circular, as soon as possible, to the stockbroker through whom the sale of your shareholding in CCHZ was effected for onward transmission to the purchaser or transferee of those CCHZ shares; Letters of Allocation ( LAs ) may only be traded in dematerialised form and accordingly CCHZ has issued all Letters of Allocation in dematerialised form. CAVMONT CAPITAL HOLDINGS ZAMBIA PLC (Incorporated in the Republic of Zambia, Company Registration Number: 41902) Share Code: CCHZ ISIN: ZM ( Cavmont or the Company ) CIRCULAR TO SHAREHOLDERS Regarding a RENOUNCEABLE CLAW BACK RIGHTS OFFER Of 64,285,714,286 ordinary shares of ZMK 1.00 (one Zambian Kwacha) par value each in the share capital of CCHZ ( Claw back Rights Offer Shares ), at a subscription price of ZMK 1.40 per Claw back Rights Offer Share ( Claw back Offer Price ), on the basis of 90 (ninety) new Claw back Rights Offer Shares for every 7 (seven) ordinary shares already held as at the Record Date, payable in full on acceptance; and incorporating: the information required for a Pre Listing Statement for the purposes of providing information to the public on CCHZ which complies with the Listing Requirements of the LuSE. JOINT LEAD ADVISERS STOCKBROKERS ZAMBIA LIMITED IMARA BOTSWANA LIMITED Legal Adviser LNA Lewis Nathan Lewis Nathan Advocates LEWIS NATHAN ADVOCATES Independent Reporting Accountant DELOITTE & TOUCHE CHARTERED ACCOUNTANTS Sponsoring Broker Transfer Secretary STOCKBROKERS ZAMBIA LIMITED CORPSERVE ZAMBIA Date of Issue: 16 November 2012 Page 1 of 84

2 The Directors of CCHZ, whose names are given in section E of this Circular, collectively and individually accept full responsibility for the accuracy of the information contained in this Circular and confirm that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement false or misleading, that they have made all reasonable enquiries to ascertain such facts and that the Circular contains all information required by law. Each of the Joint Lead Advisers to the Offer and the listing, Sponsoring Broker, Legal Adviser and Independent Reporting Accountant have consented in writing to act in the capacities stated and to their names being stated and, where applicable, their reports being included in this Circular. Copies of this Circular are available in English only and may be obtained during normal business hours between 16 November and 07 December 2012 from the registered office of the Company and the offices of the Sponsoring Brokers, the addresses of which are set out in the Corporate Information section on page 3 of this Circular. Page 2 of 84

3 CORPORATE INFORMATION Company Secretary and Registered Office Issuer Louis Kabula Cavmont Capital Holdings Zambia Plc Cavmont Capital Holdings Zambia Plc PwC Place, Plot 2374 PwC Place, Plot 2374 Thabo Mbeki Road Thabo Mbeki Road P.O. Box P.O. Box Lusaka Lusaka Zambia Zambia Joint Lead Adviser Joint Lead Adviser and Sponsoring Broker Imara Botswana Limited Stockbrokers Zambia Limited (a member of the LuSE) Plot 117, Millennium Office Park 2nd Floor, Stock Exchange Building Ground Floor, Block A Unit 2 Central Park Kgale Hill, P Bag P.O. Box Gaborone Lusaka Botswana Zambia Legal Advisers Transfer Secretary Lewis Nathan Advocates Corpserve Share Transfer Agents The Nathan Park, 758 Independence Avenue Plot 3671 Woodlands House Number 6, Mwaleshi Road P.O. Box P.O Box Lusaka Lusaka Zambia Zambia Banker Independent Reporting Accountant Cavmont Bank Limited Deloitte & Touche Chartered Accountants PwC Place, Plot 2374 Abacus Square, Plot no. 2374/B Thabo Mbeki Road Thabo Mbeki road P.O. Box P.O. Box Lusaka Lusaka Zambia Zambia Auditors PricewaterhouseCoopers PwC Place Stand No. 2374, Thabo Mbeki Road P.O. Box Lusaka Zambia Page 3 of 84

4 CONTENTS Page CORPORATE INFORMATION 3 CONTENTS 4 ACTION REQUIRED BY CAVMONT SHAREHOLDERS 5 IMPORTANT INFORMATION 6 SALIENT DATES AND TIMES 7 DEFINITIONS 8 SALIENT FEATURES OF THE CLAW BACK RIGHTS OFFER THE CLAW BACK RIGHTS OFFER FINANCIAL EFFECTS OF THE CLAW BACK OFFER DIRECTORS OPINION, RECOMMENDATION AND UNDERTAKING PRE LISTING STATEMENT 11 CIRCULAR TO SHAREHOLDERS 12 A. PURPOSE OF THIS CIRCULAR 12 B. THE CLAW BACK OFFER 13 C. INFORMATION RELATING TO CAVMONT CAPITAL HOLDINGS ZAMBIA PLC 17 D. FINANCIAL INFORMATION 23 E. INFORMATION RELATING TO THE DIRECTORS 25 F. GENERAL INFORMATION 27 ANNEXURE I EXTRACTS FROM THE ARTICLES OF ASSOCIATION 28 ANNEXURE II TABLE OF ENTITLEMENTS 29 ANNEXURE III INFORMATION RELATING TO THE UNDERWRITERS 30 ANNEXURE IV REPORT ON THE FORECAST STATEMENT OF COMPREHENSIVE INCOME AND STATEMENT OF FINANCIAL POSITION 31 ANNEXURE V REPORT OF THE INDEPENDENT REPORTING ACCOUNTANT 35 LETTER OF ALLOCATION AND ACCEPTANCE FORM 81 Page 4 of 84

5 ACTION REQUIRED BY CAVMONT SHAREHOLDERS COURSES OF ACTION Action to be taken by CCHZ Shareholders In order to participate in the Claw back Rights Offer, you need a copy of this Circular and your Letter of Allocation, which indicates your name, the number CCHZ shares that you held as at the Record Date, which was Friday, 02 November 2012, and the number of Claw back Rights Offer Shares that you are entitled to purchase on the basis of 90 Claw back Rights Offer Shares for every 7 ordinary shares held on Record Date and then follow the courses of action provided at on page 39 of this Circular and summarized below. If you are a Shareholder and wish to buy more Claw back Rights Offer Shares, over and above your entitlement on the Record Date, you should contact your stockbroker to purchase tradable rights or Letters of Allocation (LAs) listed on the LuSE during the period from 16 November 2012 to 05 December 2012, at the then prevailing market price, and thereafter proceed to purchase the Claw back Rights Offer Shares associated with the purchased LAs, at the Claw back Rights Offer Price of ZMK 1.40 (one Kwacha and four ngwee) per Claw back Rights Offer Share. Pursuant to this Claw back Rights Offer by Cavmont Capital Holdings Zambia Plc, shareholders may elect one of four courses of action to follow. The four options are summarised below. Should you have any questions about the appropriate action to take, please consult your financial advisor or your stockbroker, or the Sponsoring Broker to the transaction, Stockbrokers Zambia Limited. 1. SUBSCRIBE for Claw back Rights Offer Shares offered (acceptance) Complete Section A of the Renounceable Letter of Allocation/ Acceptance Form (at the end of this Circular) and see your broker to effect payment for the Claw Back shares being subscribed for. Alternatively you can deposit or transfer your payment to the following bank account: BANK : CAVMONT BANK LIMITED ACCOUNT NAME : CCHZ CLAW BACK RIGHTS OFFER ACCOUNT NUMBER : BRANCH SORT CODE : And send the completed Acceptance Form, together with your certified Deposit Slip as proof of payment, or a Cheque or Bank Draft, in favour of CCHZ CLAW BACK RIGHTS OFFER, crossed not negotiable and not transferable by no later than 16h00 on Friday, 07 December 2012 to the Sponsoring Broker whose details are given on page SELL your rights through the LuSE (renunciation) Complete Section B of the Renounceable Letter of Allocation (at the end of this Circular) and send it to your stockbroker, or to the Sponsoring Broker with the instructions to sell the rights. Participants will be permitted to sell their rights over the LuSE during the Offer Period. 3. SUBSCRIBE in part for Claw back Rights Offer Shares AND SELL the remaining rights through the LuSE Complete Section B of the Renounceable Letter of Allocation (at the end of this Circular) and deposit or transfer your payment to the following bank account: BANK : CAVMONT BANK LIMITED ACCOUNT NAME : CCHZ CLAW BACK RIGHTS OFFER ACCOUNT NUMBER : BRANCH SORT CODE : Send the completed form to your stockbroker, or to the Sponsoring Broker with the instructions to subscribe for a number of Rights Offer Shares and sell the balance, together with your certified Deposit Slip as proof of payment, or a Cheque or Bank Draft, in favour of CCHZ CLAW BACK RIGHTS OFFER, crossed not negotiable and not transferable by no later than 13h00 on Wednesday, 05 December 2012 to the Sponsoring Broker whose details are given in page 3. Participants will be permitted to sell their rights over the LuSE between Friday, 16 November 2012 and Wednesday, 05 December Non Action Shareholders not selecting any of the foregoing options by Friday, 07 December 2012, the closing of the Offer Period, will be deemed to have selected the option to sell all of their rights at the then prevailing price and, provided there are buyers for the rights, they will be sold by their stockbroker or in the event that shareholders do not have a broker, by the Sponsoring Broker. This period for the sale of rights where the shareholder does nothing will also close on Friday, 07 December Page 5 of 84

6 IMPORTANT INFORMATION The definitions as set out in the Definitions section of this Circular apply to this section regarding important information. No person has been authorised by CCHZ to give any information or to make any representation not contained in or not consistent with this Circular or any other information supplied in connection with the Claw back Rights Offer. If given or made, such information or representation must not be relied upon as having been authorised by CCHZ, the Joint Lead Advisers or the Legal Advisers. Neither the delivery of this Circular nor any subscription made in connection herewith shall, under any circumstances, create any implication that there has been no change in the affairs of CCHZ since the date of the publication of this Circular, or that any other financial statement or other information supplied in connection with the Circular is correct at any time subsequent to the date indicated in the document containing the same. This Circular does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any Claw back Rights Offer Shares, in any jurisdiction, to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. Neither CCHZ nor the Joint Lead Advisers or Legal Adviser represent that this Circular may be lawfully distributed, or that any Claw back Rights Offer Shares may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available there under, or assumes any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by CCHZ, the Joint Lead Advisers or the Legal Adviser that would permit a public offering of any Claw back Rights Offer Shares or distribution of this Circular in any jurisdiction where action for that purpose is required. Accordingly, no Claw back Rights Offer Shares may be offered or subscribed for, directly or indirectly, and neither this Circular nor any advertisement or other offering material may be distributed or published in any jurisdiction, except in compliance with any applicable laws and regulations, and the Joint Lead Advisers have represented that all offers and sales or subscriptions will be made in compliance with this prohibition. To the extent that this Circular may be sent to any jurisdiction in which the dissemination of this Circular is illegal or fails to conform to the laws of such jurisdiction, it is provided for information purposes only. The distribution of this Circular and the offer or sale of or subscriptions for Claw back Rights Offer Shares may be restricted by law in certain jurisdictions. Persons into whose possession this Circular or any Claw back Rights Offer Shares come, must inform themselves about, and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. The Claw back Rights Offer Shares have not been and will not be registered under the US Securities Act or with any securities regulator of any state or jurisdiction of the United States. Claw back Rights Offer Shares may not be offered, sold, subscribed for or delivered within the United States or to US persons except in accordance with Regulations under the US Securities Act. Market and industry data Market and other statistical information used throughout this Circular are based on independent industry publications, government publications or other published independent sources. Although CCHZ believes these sources are reliable, the Company has not verified the information independently and cannot guarantee its accuracy and completeness. Forward looking statements This Circular includes forward looking statements which include all statements other than statements of historical facts, including, without limitation, those regarding CCHZ s financial position, profit and revenue forecasts, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to CCHZ s subsidiary s products and services) and any statement preceded by, followed by or that includes the word projects, prospects, estimates, targets, believes, expects, aims, intends, will, may, anticipates, would, could or seeks or any similar expression or the negative thereof. Such forward looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other important factors beyond the Company s control that could cause the actual results, performance and/or achievements of CCHZ to be materially different from future results, performance and/or achievements expressed or implied by such forward looking statements. Such forward looking statements are based on numerous assumptions regarding the Group s present and future business performance and/or strategies and the environment in which CCHZ will operate in the future. These forward looking statements speak only as of the date of this document. CCHZ and its directors expressly disclaim any obligation or undertaking to disseminate revisions to any forward looking statements contained in this Circular to reflect any change in CCHZ s expectations with regard to such statements or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by applicable law. Page 6 of 84

7 SALIENT DATES AND TIMES Last day to trade in CCHZ shares in order to settle by the Record Date and to qualify to participate in the Claw back Rights Offer (cum entitlement) Tuesday, 30 October 2012 Record Date for participation in the Claw back Rights Offer Friday, 02 November 2012 Listing of Letters of Allocation (Las) on the LuSE Friday, 16 November 2012 Claw back Offer Circular posted to CCHZ shareholders by Friday, 16 November 2012 Claw back Offer opens Friday, 16 November 2012 Last day to trade in Letters of Allocation on the LuSE Wednesday, 05 December 2012 Claw back Rights Offer closes Friday, 07 December 2012 Dematerialised CCHZ shareholders accounts updated with Claw back Rights Offer Shares to the extent accepted Friday, 14 December 2012 Results of Claw back Offer announcement published on or about Friday,14 December 2012 Claw Back Shares commence trading ex claw back rights on the LuSE Monday, 17 December 2012 Page 7 of 84

8 DEFINITIONS Throughout this Private Placing Offer Document and the appendices hereto, unless otherwise indicated, the words in the first column have the meanings stated opposite them in the second column, words in the singular include the plural and vice versa, words importing one gender include the other gender and references to a person include references to a body corporate and vice versa: Acceptance Form(s) Act Allocation Applicable Laws Applicant(s) Articles ATS Bank of Zambia or BOZ Bank of Zambia Policy Rate or BOZ Policy Rate Banking and Financial Services Act Board or Board of Directors Business Day Cavmont Bank or CBL the forms of acceptance attached to the back of this Circular, to be used by Applicants in connection with the Offer; means the Securities Act Chapter 354 of the Laws of Zambia; means the allocation of Claw back Rights Offer Shares to Applicants under the Claw back Rights Offer; the Laws of the Republic of Zambia in force from time to time, to which this Circular is subject; a person, including juristic persons, applying for Claw back Rights Offer Shares in terms of the Claw back Rights Offer set out in this Circular; the Articles of Association of CCHZ as amended from time to time; Automated Trading System of the LuSE; the Central Bank of the Republic of Zambia; the policy rate as set by BoZ from time to time; the Banking and Financial Services Act, Chapter 387 of the laws of Zambia; the Board of Directors of CCHZ; any day other than a Saturday, Sunday or official public holiday in the Republic of Zambia; Cavmont Bank Limited (registration number 26788), a wholly owned subsidiary of CCHZ, a private company duly registered and incorporated in terms of the laws of the Republic of Zambia and whose licensed activity is the provision of banking and financial services in Zambia; CEE Act the Citizenship Economic Empowerment Act, No 9 of 2006; Central Share Depository or CSD Central Statistics Office or CSO CIH Circular Claw back Rights Offer Claw back Rights Offer Price the LuSE Central Shares Depository Limited, a company incorporated in Zambia with registration number 36617, whose functions are to serve as custodian of the LuSE tradable securities and to hold such securities in electronic form in its central depository on behalf of the beneficial owners; and to provide clearing and settlement services to the LuSE; the Central Statistics Office of the Government of the Republic of Zambia; Capricorn Investment Holdings Limited, a company registered in Namibia under registration number 82/031 and whose registered office is 6 th Floor, CIH House, Kasino Street, P. O. Box 15, Windhoek, Namibia this circular to CCHZ shareholders dated DD, 16 November 2012, including any annexure and document incorporated by reference and the Acceptance Form; the renounceable claw back offer by CCHZ of 64,285,714,286ordinary shares at a subscription price of ZMK 1.40 per share in the ratio of 90 new ordinary shares for every 7 ordinary shares held at the close of business on Friday, 02 November 2012; ZMK1.40 per Claw back Rights Offer Share; Page 8 of 84

9 Claw back Rights Offer Shares Closing Date Company or CCHZ Companies Act Directors DPS Employees EPS FSDP Global Share Certificate GDP Imara Joint Lead Advisers Kwacha or K or ZMK or ZK Legal Adviser Letter of Allocation or LA Lewis Nathan Advocates the LuSE the 64,285,714,286 new ordinary shares which are the subject of the Claw back Rights Offer; being the last date and time for submission of Acceptance Forms which falls on Friday, 07 December 2012; Cavmont Capital Holdings Zambia Plc (registration number 41902), a public limited liability company duly registered and incorporated in terms of the laws of the Republic of Zambia and whose registered office is located at PwC Place, Plot 2374, Thabo Mbeki Road, Lusaka, Zambia; the Companies Act, Chapter 388 of the laws of Zambia; the executive and non executive directors of the Company whose details are set out in Section E of this Circular; dividend per share; individuals that are pensionable employees, contractual employees, executives or Directors of the Company; earnings per share; the Financial Sector Development Plan. A comprehensive strategy that has been formulated by the Government of the Republic of Zambia (GRZ) to address the current weaknesses in the Zambian financial system as well as guide efforts aimed at realising the vision of a financial system that is stable, sound and market based and that would support efficient resource mobilisation necessary for economic diversification and sustainable growth; the single certificate, registered in the name of the LuSE CSD or its nominee, and representing dematerialised shares; Gross Domestic Product; Imara Botswana Limited (Registration number 2002/2770), a company registered in Botswana; Stockbrokers Zambia Limited (Registration number 52224), a company registered in Zambia and Imara Botswana Limited (Registration number 2002/2770), a company registered in Botswana; the legal tender of Zambia in which all monetary amounts in this Private Placing Offer Document are expressed unless otherwise indicated; Lewis Nathan Advocates; the renounceable Letter of Allocation, for each shareholder of CCHZ as at Record Date, in respect to the Claw back Rights Offer, which is attached hereto as Appendix 7, that will be posted to each shareholder of CCHZ after the Record Date, and which sets out the entitlement of the person/ shareholder to whom this Circular is addressed with respect to the Claw back Rights Offer; a law firm incorporated in Zambia and regulated by the Law Association of Zambia. the Lusaka Stock Exchange Limited a company incorporated in Zambia with registration number 30495, whose functions are to operate a market for the trading (i.e. buying and/ or selling) of securities. The LuSE is licensed and regulated by the Securities and Exchange Commission of Zambia ( SEC ) under the Securities Act Chapter 354 of the Laws of Zambia; Page 9 of 84

10 Mukumbi Net Asset Value or NAV Ordinary Shares PACRA PAT PBT PBV ratio PE ratio the Receiving Agents the Registrar of Companies Return on Assets or ROA Return on Equity or ROE RTGS SADC the Securities Act the SEC Sponsoring Broker Stockbrokers Zambia Limited Underwriter(s) Underwriting Agreement USD or US$ US Securities Act Mukumbi Investments Limited (registration number ), a wholly owned subsidiary of CIH, a private company duly registered and incorporated in terms of the laws of the Republic of Zambia and created to facilitate the participation of Zambians or Zambian entities in the ownership of Cavmont Bank; the result of subtracting a company s long term and current liabilities from the sum of its fixed and current assets; Ordinary Shares with a par value of K 1.00 each in the share capital of CCHZ; the Patents and Company Registration Agency of Zambia; profit after tax; profit before tax; price to book value ratio; price to earnings ratio; the receiving agents to the Offer; the Zambian Registrar of Companies, established pursuant to section 366 of the Company s Act; the result of dividing a company s PAT by the average total assets; the result of dividing a company s PAT by the average shareholder s equity; Real Time Gross Settlement; Southern African Development Community; the Securities Act, Chapter 354 of the laws of Zambia; the Securities and Exchange Commission Zambia, a statutory body established under the Securities Act Cap 354 of the laws of Zambia; Stockbrokers Zambia Limited; Stockbrokers Zambia Limited (Registration number 52224), a company registered in Zambia and a member of the LuSE and licensed by the SEC as a dealer; CIH and Mukumbi; The underwriting agreement entered into between CCHZ as issuer and the Underwriters whereby on 28 September 2012 CIH, subscribed for 17,009,814,181 shares and Mukumbi for 13,619,471,534 shares, in CCHZ, on a claw back basis at the Claw Back Rights Offer Price; United States Dollars; US Securities Act of 1933, as amended; Page 10 of 84

11 SALIENT FEATURES OF THE CLAW BACK RIGHTS OFFER This summary section highlights certain information contained in this Circular, which should be read in its entirety for a full appreciation of the subject matter contained herein. If you are in any doubt as to its meaning, or what action to take, please consult, a licensed broker, investment adviser, accountant, lawyer or other professional adviser. This section does not purport to be complete and is taken from, and is qualified by, the remainder of this Circular. Terms not otherwise defined in this section have the same meaning as used in the Definitions section of the Circular. 1. THE CLAW BACK RIGHTS OFFER 1.1 Introduction and terms of the Claw back Rights Offer At the 13 th Annual General Meeting of the Company held on 05 July 2012, shareholders authorised the Board of Directors to proceed with the recapitalisation of Cavmont Bank Limited, the wholly owned subsidiary of Cavmont Capital Holdings Zambia PLC, to comply with the new BoZ capital adequacy framework announced on 30 January 2012, by raising up to a maximum of Zambian Kwacha 90,000,000,000 (ZMK 90 billion). On 28 September 2012, CCHZ issued 17,009,814,181 ordinary shares to CIH and 13,619,471,534 ordinary shares to Mukumbi at a price of ZMK 1.40 per share as the first step towards recapitalisation of Cavmont Bank Limited on the basis of Claw back Rights Offer by CCHZ. Shareholders were subsequently notified by way of the First and Second Announcements published in the press on 19 October 2012 and 29 October 2012 respectively, that in order to provide equal opportunity to all shareholders to participate in the recapitalisation of Cavmont Bank Limited, CCHZ was undertaking a Renounceable Claw back Rights Offer. The second step and final stage of the Claw back Rights Offer is now to offer the Claw Back Rights Shares to all shareholders of CCHZ other than CIH and Mukumbi. Accordingly, CCHZ shareholders are now offered the right to claw back their shareholding in CCHZ by participating in this Claw back Rights Offer to acquire the Claw Back Rights Shares as ordinary shares in CCHZ on the basis of 90 Claw back Rights Offer Shares for every 7 CCHZ ordinary shares held on the Record Date at a price of ZMK 1.40 per Claw back Rights Offer Share. All shareholders who are owed dividends which were declared but not paid by the Company, may use those unpaid dividends to take up Claw Back Rights Shares at a price of ZMK 1.40 per Claw back Rights Offer Share as part of this Claw back Rights Offer process. 1.2 Purpose of the Claw back Rights Offer The proceeds of the Claw back Rights Offer will be used to recapitalise Cavmont Bank Limited, the 100 % wholly owned subsidiary of Cavmont Capital Holdings Zambia Plc, in an effort to comply with the new Bank of Zambia capital adequacy framework announced on 30 January Underwriting Agreement In terms of the Underwriting Agreement (incorporated herein by reference), CIH and Mukumbi agreed to subscribe for a combined total of 30,629,285,715 Claw back Rights Offer Shares at an issue price of ZMK 1.40 per Claw back Rights Offer Share as partial underwriting of the ZMK 90 billion capital raise by CCHZ. In addition it is envisaged that some Zambian institutional investors may commit to participate as counderwriters. An underwriting flat fee of 1.5% of the value of the underwriting commitment is payable to each of the Underwriters and any counderwriters who subsequently sign up for this role. 2. FINANCIAL EFFECTS OF THE CLAW BACK OFFER At ANNEXURE IV is provided the Reporting Accountants Report on the forecast statement of comprehensive income and statement of financial position to 31 December DIRECTORS OPINION, RECOMMENDATION AND UNDERTAKING The directors, whose names are given in the Information relating to the directors in section F of this circular, have considered the terms of the Claw back Rights Offer and are of the opinion that the terms thereof are fair and reasonable to CCHZ shareholders and, accordingly, recommend that the shareholders follow their Claw back Rights in terms of the Claw back Rights Offer as set out in this Circular. 4. PRE LISTING STATEMENT In compliance with paragraph 6.18(g) of the LuSE Listing Requirements, this Circular contains information required in a Pre Listing Statement. COPIES OF THIS CIRCULAR Copies of this Circular, in English, may be obtained during normal business hours between Friday, 16 November 2012 and Friday, 07 December 2012 from the registered office of the Company and the offices of the Sponsoring Broker, at the addresses set out in the Corporate information section of this Circular. Page 11 of 84

12 CAVMONT CAPITAL HOLDINGS ZAMBIA PLC (Incorporated in the Republic of Zambia, Company Registration Number: 41902) Share Code: CCHZ ISIN: ZM ( Cavmont or the Company ) Directors Guy D. Z Phiri (Independent Chairman), Joseph Ngosa (Non Executive Director), Johan Swanepoel (Non Executive Director) Johan Minnaar (Managing Director). Address: PwC Place, Plot 2374, Thabo Mbeki Road, Stand no P O Box 38474, Lusaka, Zambia. A. PURPOSE OF THIS CIRCULAR Background CIRCULAR TO SHAREHOLDERS In 2011 the Board of Cavmont Bank Limited approached CIH to obtain long term funds to recapitalise the bank. Subsequently CIH provided K20 billion as Tier II capital which the Bank of Zambia approved in December 2011 and was ratified by the shareholders of CCHZ at the 13 th AGM held on 05 July At the AGM held on 05 July 2012, shareholders of CCHZ also authorised the Board of Directors to proceed with a recapitalisation plan to ensure Cavmont Bank Limited, the wholly owned subsidiary of Cavmont Capital Holdings Zambia PLC, complies with the new Bank of Zambia capital adequacy framework announced on 30 January 2012 for locally owned banks, by raising up to a maximum of Zambian Kwacha 90,000,000,000 (K90 billion). At the AGM held on 05 July 2012, the shareholders approved the following resolution: To AUTHORISE the Board of Directors to proceed with the capital raise to ensure Cavmont Bank Limited, the wholly owned subsidiary of Cavmont Capital Holdings Zambia PLC, complies with the new Bank of Zambia capital adequacy framework announced on 30 January 2012, by raising up to a maximum of Zambian Kwacha 90,000,000,000 (K90 billion) at a share issue price not less than the minimum allowed in terms of the prevailing Lusaka Stock Exchange Listings Rules and Requirements as they pertain to a capital raise, provided that such capital raise shall be in compliance with and in a form acceptable to both the Lusaka Stock Exchange and the Bank of Zambia requirements for such capital raise. The capital raise will be in the form of an underwritten rights offer (the Rights Offer ) or an underwritten public offer (the Public Offer ) where the existing shareholders shall have a pre emptive right to acquire shares. On 28 September 2012, CCHZ issued 17,009,814,181 ordinary shares to CIH and 13,619,471,534 ordinary shares to Mukumbi at a price of ZMK 1.40 per share to raise a total of ZMK 42,881,000,000 as the first step of the Claw back Rights Offer to raise the required sum of ZMK 90 billion for recapitalisation of Cavmont Bank Limited. Part of the proceeds from this claw back capital raise will be used to acquire and convert into ordinary shares the Tier II capital that was provided by CIH to Cavmont Bank in Shareholders were subsequently notified by way of the First and Second Announcements dated 19 October 2012 and 29 October 2012 that in order to provide equal opportunity to all shareholders to participate in the recapitalisation of Cavmont Bank Limited, CCHZ was undertaking a Renounceable Claw back Rights Offer. The second step and final stage of the Claw back Rights Offer is to now offer the Claw Back Rights shares to all shareholders of CCHZ, other than CIH and Mukumbi, as per this Circular document. Page 12 of 84

13 Accordingly, CCHZ shareholders are now offered the right to claw back their shareholding in CCHZ by participating in this Claw back Rights Offer by acquiring shares in CCHZ on the basis of 90 Claw back Rights Offer Shares for every 7 CCHZ ordinary shares held on the Record Date at a price of ZMK 1.40 per Claw back Rights Offer Share. The purpose of this Circular is to provide CCHZ shareholders with all the relevant information relating to the Claw back Rights Offer and the implications thereof in accordance with the LuSE Listing Requirements and the Securities Act. This Circular contains information required for a Pre Listing Statement, which information is required in terms of paragraph 6.18(g) of the LuSE Listing Requirements as a result of the Company issuing shares in terms of the Claw back Rights Offer in excess of 30% of its current shares in issue. B. THE CLAW BACK OFFER 1. INTRODUCTION 1.1 At the 13 th Annual General Meeting of the Company held on 05 July 2012, shareholders authorised the Board of Directors to proceed with the recapitalisation of Cavmont Bank Limited, the wholly owned subsidiary of Cavmont Capital Holdings Zambia Plc, to comply with the new Bank of Zambia capital adequacy framework for local banks announced on 30 January 2012, by raising up to a maximum of Zambian Kwacha 90,000,000,000 (ZMK 90 billion). Holders of CCHZ ordinary shares registered as such at the close of business on Friday 02 November 2012 (the Record Date) will be entitled to receive rights or Letters of Allocation, reflecting the number of Claw back Rights Offer Shares they are entitled to in terms of the Claw back Offer. 1.2 The LuSE has approved the listing of the Letters of Allocation (LAs) in respect of the Claw back Rights Offer Shares and from the commencement of trade on Friday, 16 November 2012 until the close of trade on Wednesday, 05 December In terms of the Claw back Offer, CCHZ shareholders recorded in the register at the close of business on Friday, 02 November 2012, being the Record Date, will receive rights to subscribe for Claw back Rights Offer Shares in term of the Claw back Rights Offer on the basis of 90 Claw back Rights Offer Shares for every 7 CCHZ ordinary shares held on the Record Date, at a Claw back Rights Offer Price of ZMK 1.40 per Claw back Offer Share 1.4 The Claw back Rights Offer Shares, upon their issue, will rank pari passu in all respects, with the ordinary shares currently in issue. 2. PURPOSE OF THE CLAW BACK RIGHTS OFFER On 30 January 2012, the Bank of Zambia issued a circular, (referenced as CB Circular No.: 02/2012), revising the capital requirements of commercial banks in Zambia. Prior to 30 January 2012 the minimum capital requirement for commercial banks operating in Zambia was ZMK 12 billion. In the revised BOZ regulations, the new capitalisation requirements for commercial banks are linked to the shareholding structure of the banks as follows: i) For foreign owned banks, the minimum capital requirement is now ZMK 520 billion; and ii) For locally owned banks a lower capital requirement threshold of ZMK 104 billion has been set. A locally owned bank refers to a bank licenced by the BOZ where at least 51% of its equity is owned by Zambian citizens and or entities incorporated in Zambia that have at least 51 % equity owned by Zambian citizens. A foreign owned bank refers to a bank licensed by the BOZ where more than 49% of its equity is owned by foreign entities. Cavmont Bank Limited is a wholly owned subsidiary of CCHZ. CCHZ is listed on the Lusaka Stock Exchange. Following the announcement by BOZ on 30 January 2012 regarding the revised capital requirements of commercial banks in Zambia, CCHZ initiated a shareholding restructuring and recapitalisation plan for the Company. The proposed plan essentially involves the following two key and critical actions on a simultaneous basis: i) The restructuring of the shareholding in CCHZ such that Cavmont Bank qualifies as a locally owned bank in terms of the revised BOZ regulations; and ii) The recapitalisation of Cavmont Bank via a capital raise by CCHZ. The primary reason for the Claw back Rights Offer is therefore to restructure the shareholding of CCHZ and simultaneously recapitalise CBL, the wholly owned subsidiary of CCHZ. Page 13 of 84

14 3. TERMS OF THE CLAW BACK RIGHTS OFFER 3.1 Particulars of the Claw back Rights Offer CCHZ shareholders and/ or their renounces are hereby offered for subscription, by way of a Renounceable Claw back Rights Offer, a total of 64,285,714,286 CCHZ ordinary shares at a Claw back Rights Offer Price of ZMK 1.40 per Claw back Rights Offer Share on the basis of 90 Clawback Rights Offer Shares for every 7 CCHZ ordinary shares held as at the Record date, being Friday, 02 November The Claw back Offer Price is payable in Zambian Kwacha in full upon acceptance of the Claw back Offer. The Claw back Offer Price represents a discount of 69% to the 90 day volume weighted average price (VWAP) of ZMK 4.50 of CCHZ shares on 28 September 2012, the date of the Underwriting Agreement. CCHZ shareholders recorded in the register on the Record Date, being Friday, 02 November 2012, or renounces in terms of the Claw back Offer will be entitled to participate in the Claw back Offer. The Letters of Allocation may be traded on the LuSE during the period from Friday, 16 November 2012 to Wednesday, 05 December Opening and closing dates of the Claw back Offer The Claw back Offer will open at the commencement of trade on Friday, 16 November 2012 and will close at 14h00 on Friday, 07 December Entitlement CCHZ shareholders are entitled to subscribe for 90 Claw back Rights Offer Shares for every 7 CCHZ ordinary share held as at Record Date and are referred to the Table of Entitlements set out in Annexure 2 to this Circular. The allocation of Claw back Shares will be such that only whole numbers of Claw back Rights Offer Shares will be issued and shareholders will be entitled to rounded numbers of Claw back Rights Offer Shares. Fractional entitlements of 0.5 or greater will be rounded up and those less than 0.5 will be rounded down. 3.4 Excess applications Holders of Letters of Allocation may apply for a greater number of Claw back Rights Offer Shares than those allocated in terms of the Clawback Offer and set out in such Letter of Allocation. Applications for excess Claw back Rights Offer Shares must be made by completing the Acceptance Form in accordance with instructions contained therein. All applications for excess Claw back Rights Offer Shares must be accompanied by sufficient funds to cover such applications in accordance with 5.3 below. Cheques and/ or the refunding of monies in respect of unsuccessful applicants for additional Claw back Rights Offer Shares will be posted to the relevant applicant, at their risk, on or about 17 December No interest will be paid on any monies received in respect of unsuccessful applications. 3.5 Listing of Letters of Allocation and Claw Back Rights Offer Shares on the LuSE The LuSE has granted the listings for the Claw back Rights Offer Shares and Letters of Allocation as follows: i) Letters of Allocation in respect of 64,285,714,286 Claw back Rights Offer Shares will be listed from the commencement of trade on Friday, 16 November 2012 until the close of trade on Wednesday, 05 December 2012, both days inclusive; ii) 64,285,714,286 Claw back Rights Offer Shares will be listed with effect from the commencement of trade on Monday, 17 December Takeover and Mergers Rules At the 13 th Annual General Meeting of the Company held on 05 July 2012, shareholders resolved that a mandatory offer in terms of Clause 56 of the Securities (Takeover and Mergers) Rules, Statutory Instrument No 170 of 1993 of the Securities Act, would be waived in the event that a person or entity or related parties acquired 35% or more voting rights in CCHZ arising from the participation in the Claw back Rights Offer described in this Circular. 3.7 Limits on voting rights under Zambian banking regulations Under the BFSA, no person or entity can hold directly or indirectly more than 25% voting rights in a bank in Zambia unless that person or entity is listed on a recognised stock exchange. Accordingly, it will be necessary to seek and obtain BOZ approval for any shareholding exceeding 25% voting power in CCHZ as a result of the Claw Back Rights Offer described in this document. Page 14 of 84

15 4. APPLICATION OF NEW CAPITAL The new capital shall be applied as follows: Figures (ZMK Millions) Total Support Lending Capacity 37,500 37,500 75,000 Branch Refurbishments 1,000 2,400 3,000 6,400 Branch Relocations 1, ,800 Fixed Assets 1,000 1,500 1,000 3,500 Technology 1,300 2,000 3,300 Total 90,000 Loans and advances The capital shall be used to support the lending capacity; Branch improvements & renovation of Archives Building; Branch Relocations; Fixed Assets for improvements to security (CCTV), office equipment and teller cubicles; and Technology includes Mobile banking and ATMs. 5. PROCEDURE FOR ACCEPTANCE, RENUNCIATION AND SALE OF CLAW BACK RIGHTS The enclosed Letter of Allocation reflects the number of Claw back Rights Offer Shares for which a shareholder is entitled to subscribe. Any instruction to accept, sell or renounce all or part of the Claw back Rights Offer Shares allocated to them may be made by means of the Acceptance Form. 5.1 Acceptance Full details of the procedure for acceptance of the Claw back Rights Offer are contained in the Acceptance Form 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 Acceptance Form; any instruction to sell or renounce all or part of the Claw back Rights Shares may only be made by means of the Acceptance Form; the properly completed Acceptance Form and together with your certified Deposit Slip as proof of payment, or a Cheque or Bank Draft, in favour of CCHZ CLAW BACK RIGHTS OFFER, crossed not negotiable and not transferable, for the relevant Claw back Rights Offer Shares must be received by the Sponsoring Broker at the addresses set out in the Corporate information section of this Circular by no later than 14h00 on Friday, 07 December 2012; the Acceptance Form to take up the Claw back Offer Rights will be regarded as complete only when monies have 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 Acceptance Form once monies have been cleared for payment; if any Acceptance Form is not received as set out above, the Claw back Rights Offer will be deemed to have been declined and the Claw back Rights to purchase the Claw back Rights Offer Shares in terms of the Letter of Allocation will lapse regardless of who holds it; no acknowledgement of receipt will be given for monies received in respect of the Claw back Rights Offer. Page 15 of 84

16 5.2 Renunciation or sale of Claw back Rights CCHZ has issued the Letters of Allocation in dematerialised form The Letters of Allocation to which the Acceptance Form relates are negotiable and can be traded on the LuSE Shareholders who do not wish to purchase all, or some of the Claw back Rights Offer Shares allocated to them as reflected in the Letter of Allocation, may sell or renounce or lapse their Claw back Rights In addition, shareholders who wish to sell the Claw back Rights allocated to them as reflected in the Letter of Allocation must complete the relevant section of the Acceptance Form and return it to the Sponsoring Brokers in accordance with the instructions contained therein, to be received no later than 14h00 on Friday, 07 December The Sponsoring Broker will endeavour to procure the sale of the Claw back Rights on the LuSE on behalf of such shareholders and will remit the proceeds in accordance with the payment instruction reflected in the Acceptance Form, net of brokerage charges and associated expenses. Neither the Sponsoring Broker nor the Company nor any broker appointed by either of them will have any obligation or responsibility 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 Rights. References in this paragraph to shareholders include references to the person or persons executing the Acceptance Form and any person or persons on whose behalf such person or persons executing the Acceptance Form is/ are acting and in the event of more than one person executing the Acceptance Form, the provisions of this paragraph shall apply to them, jointly and severally Shareholders who do not wish to sell the Claw back Rights allocated to them as reflected in the Letter of Allocation, and who do not wish to purchase the Claw back Rights Offer Shares offered in terms of the Acceptance Form but who wish to renounce their Clawback Rights, should complete the relevant section of the Acceptance Form and return it to the Sponsoring Broker in accordance with the instructions contained therein, to be received by no later than 14h00 on Friday, 07 December Shareholders who wish to purchase only a portion of the Claw back Rights Offer Shares allocated to them must indicate on the Acceptance Form, the number of Claw back Rights Offer Shares which they wish to purchase. 5.3 Payment Currency The amount due on acceptance of the Claw back Offer is payable in Zambian Kwacha Payment terms The amount due on acceptance is payable in Zambia Kwacha by deposit or transfer to the following bank account: BANK : CAVMONT BANK LIMITED ACCOUNT NAME : CCHZ CLAW BACK RIGHTS OFFER ACCOUNT NUMBER : BRANCH SORT CODE : Payment may also be in the form of manager s cheques or bankers drafts (crossed not negotiable ) in respect of subscriptions and should be made payable to CCHZ CLAW BACK OFFER. Cheques and bankers drafts and completed Letters of Allocation should be lodged, with payment, with the Sponsoring Brokers Broker at the addresses set out in the Corporate information section of this Circular by no later than 14h00 on Friday, 07 December All cheques or drafts received by the Sponsoring Broker will be deposited immediately. In the event that any cheque or bank s draft is dishonoured, CCHZ, in its sole discretion, may treat the relevant acceptance as void or may tender delivery of the relevant Claw back Rights Offer Shares to which it relates against payment in cash of the Claw back Offer Price for such Claw back Rights Offer Shares. Payments received in respect of an Application which is rejected or otherwise treated as void by CCHZ, or which is otherwise not validly received in accordance with the terms stipulated in this paragraph, will be posted by registered mail (without interest) by way of a cheque drawn in Zambian Kwacha to the Applicant concerned, at the Applicant s risk on or about 17 December If the Applicant concerned is not a CCHZ shareholder and gives no address in the Acceptance Form, then the relevant refund will be held by CCHZ with no interest payable to the Applicant until collected by the Applicant. Page 16 of 84

17 5.3.3 Share certificates Where applicable, share certificates in respect of Claw back Rights Offer Shares will be posted, by registered mail, by the Transfer Secretaries, at the risk of the certificated shareholders concerned, on or about Monday, 17 December Certificated shareholders receiving Claw back Rights Offer Shares in certificated form must note that such shares cannot trade on the LuSE until they have been dematerialised. Dematerialised shareholder s LuSE CSD accounts will be credited with the Claw back Rights Offer Shares subscribed for in terms of the Clawback Offer on Monday, 17 December UNDERWRITING AGREEMENT CCHZ has entered into the Underwriting Agreement with CIH and Mukumbi in terms of which CIH and Mukumbi subscribed for and were issued 17,009,814,181 and 13,619,471,534 Claw back Rights Offer Shares each respectively at an issue price of ZMK 1.40 per Claw back Offer Share, which raised a total of ZMK 42.9 billion or 47.66% of the Claw Back Rights Offer, and subject to claw back in terms of the Renounceable Claw back Offer to CCHZ shareholders. An underwriting fee of 1.50 % of the value of the subscription commitment is payable to each Underwriter. Information relating to the Underwriters is set out in ANNEXURE III to this Circular. Minimum subscription The minimum subscription is ZMK 45 billion or 50 % of the total Claw back Rights Offer Shares on offer. Of this ZMK 45 billion, a total of ZMK 42.9 billion or % has already been raised from the Underwriters 7. TAX CONSEQUENCES CCHZ shareholders are advised to consult their professional advisers regarding the tax consequences of the Claw back Offer. 8. JURISDICTION The distribution of this Circular and the offer of Claw back Rights Offer Shares may be restricted by law in certain jurisdictions. Persons who are in possession of this Circular are cautioned to familiarise themselves, and to observe any such restrictions. The Claw back Rights Offer Shares have not been and will not be registered in any jurisdiction outside of Zambia. Any investor(s) from any jurisdiction outside of Zambia, is (are) required to comply with the laws of that jurisdiction in participating in this Rights Offer. C. INFORMATION RELATING TO CAVMONT CAPITAL HOLDINGS ZAMBIA PLC 1. INCORPORATION AND HISTORY The Company was originally incorporated in Zambia on 6 January 1999 as Cavmont Capital Leasing Company Limited. Its name was subsequently changed to Cavmont Capital Holdings Zambia Limited and to Cavmont Capital Holdings Zambia PLC following its conversion to a public company on 25 September Its ordinary shares were first quoted on the LuSE in October 2005 and it became fully listed on the LuSE in September Cavmont Bank Limited is 100 % owned by CCHZ and was originally incorporated as Cavmont Merchant Bank Limited on 29 October 1992 and is registered as a bank under the Banking and Financial Services Act. It changed its name to Cavmont Capital Bank Limited following its merger with its affiliate New Capital Bank Limited, a Zambian retail bank incorporated in March In 2007, CIH, a banking and financial services group from Namibia acquired a 25% stake in CCHZ. CIH subsequently provided partial underwriting to the renounceable rights offer undertaken by CCHZ in November 2007 and consequently increased its equity stake in CCHZ beyond 25% by holding non voting shares. CIH has supported CBL with technical support services in the past when required. In 2010 CCHZ conducted a rebranding exercise and changed the name of the bank to Cavmont Bank Limited. Page 17 of 84