Aveng Limited. Circular to shareholders regarding:

Transcription

1 Aveng Limited (incorporated in the Republic of South Africa) (Registration number 1944/018119/06) Share code: AEG ISIN: ZAE ( Aveng or the Company ) Circular to shareholders regarding: the acquisition, in terms of section 85 and 89 of the Companies Act 1973, Act 61 of 1973, as amended ( the Companies Act ), by Aveng and Richtrau, a wholly-owned subsidiary of Aveng, of a pro rata portion of each shareholders s Aveng shares up to a total of 14% of the issued share capital of Aveng at a price of R61.58 per share, by way of a scheme of arrangement in terms of section 311 of the Companies Act proposed between Aveng, Richtrau and Aveng s shareholders; including: an explanatory statement in terms of section 312(1)(a)(i) of the Companies Act which explains the provisions and effect of the scheme; a scheme of arrangement in terms of section 311 of the Companies Act (blue); a valuation statement in terms of section 312(1)(a)(ii) of the Companies Act which explains the financial effects of the scheme; a statement of directors interests in terms of section 312(1)(a)(iii) of the Companies Act; a notice of scheme meeting; the Order of Court convening the scheme meeting; a form of proxy for the scheme meeting (white) for use by certificated shareholders and dematerialised shareholders with own name registration only; a form of surrender (pink) for use by certificated shareholders only; a notice of general meeting; a form of proxy for the general meeting (yellow) for use by certificated shareholders with own name registration only; and a general authority to repurchase shares. 20 December 2007 Merchant bank and transaction sponsor Independent reporting accountants Sponsor Corporate law adviser

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

3 TABLE OF CONTENTS Page CORPORATE INFORMATION Inside front cover ACTION REQUIRED BY SHAREHOLDERS 3 SALIENT DATES AND TIMES 6 DEFINITIONS AND INTERPRETATION 7 EXPLANATORY STATEMENT 1. Rationale for the scheme The scheme Procedure Scheme conditions precedent Effects of the scheme No set-off of scheme consideration Special arrangements Exchange Control Regulations Authorship 14 SCHEME OF ARRANGEMENT 1. Definitions and interpretation Share capital of Aveng The object of the scheme The scheme The scheme consideration Settlement of the scheme consideration Surrender of documents of title Conditions precedent Taxation implications of the scheme Exchange Control Regulations Listing on the JSE Undertakings by Aveng and Richtrau Instructions and authorities General 23 VALUATION STATEMENT 1. Definitions and interpretations Pro forma financial effects of the scheme Share capital of Aveng 25 STATEMENT OF DIRECTORS INTERESTS 1. Definitions and interpretations Directors interests in securities 27 INFORMATION REQUIRED IN TERMS OF THE LISTINGS REQUIREMENTS 1. The repurchase Other information 31 ORDER OF COURT 34 NOTICE OF SCHEME MEETING 37 1

4 Page Annexure 1 Unaudited pro forma financial information 39 Annexure 2 Independent reporting accountants report on the pro forma financial information 43 Annexure 3 Trading history of Aveng shares on the JSE 45 NOTICE OF GENERAL MEETING 47 FORM OF PROXY FOR THE GENERAL MEETING (yellow) FORM OF PROXY FOR THE SCHEME MEETING (white) FORM OF SURRENDER (pink) Attached Attached Attached 2

5 ACTION REQUIRED BY SHAREHOLDERS The definitions and interpretations commencing on page 7 of this circular apply to this section on action required by shareholders. Please take careful note of the following provisions regarding the action required by shareholders. If you are in any doubt as to what action to take, consult your CSDP, broker, attorney, banker or other professional adviser immediately. 1. Action required by shareholders regarding the general meeting A general meeting of shareholders will be held at 10:00 on Thursday 24 January 2008, at the registered office of Aveng, 204 Rivonia Road, Morningside, Sandton, 2057 to consider and, if deemed fit, pass, inter alia, the special and ordinary resolutions required to enable Aveng to proceed with the repurchase. A notice convening the general meeting is attached to and forms part of this circular. 1.1 If you have dematerialised your shares other than with own name registration: Voting at the general meeting Your CSDP or broker should contact you to ascertain how you wish to cast your vote at the general meeting and thereafter to cast your vote in accordance with your instructions If you have not been contacted by your CSDP or broker, it would be advisable for you to contact your CSDP or broker and furnish it with your voting instructions If your CSDP or broker does not obtain voting instructions from you, it will be obliged to vote in accordance with the instructions contained in the custody agreement concluded between you and your CSDP or broker You must not complete the attached form of proxy for the general meeting (yellow) Attendance and representation at the general meeting In accordance with the mandate between you and your CSDP or broker, you must advise your CSDP or broker if you wish to attend the general meeting and your CSDP or broker will issue the necessary Letter of Representation to you to attend the general meeting. 1.2 If you have not dematerialised your shares or have dematerialised your shares with own name registration: Voting and attendance at the general meeting You may attend the general meeting in person and may vote at the general meeting Alternatively, you may appoint a proxy to represent you at the general meeting by completing the attached form of proxy for the general meeting (yellow) in accordance with the instructions it contains and return it to the transfer secretaries to be received by no later than 10:00 on Tuesday 22 January Action required by scheme members regarding the scheme meeting A meeting of scheme members will be held at 10:30 on Thursday 24 January 2008 at the registered office of Aveng, 204 Rivonia Road, Morningside, Sandton, 2057 (or so soon thereafter as the general meeting convened for 10:00 on the same day and at the same venue shall have been concluded or adjourned) to consider and, if deemed fit, to agree to the scheme. A notice convening the scheme meeting is attached to and forms part of this circular. 2.1 If you have dematerialised your shares other than with own name registration: Attendance and representation at the scheme meeting and the Court hearing to sanction the scheme In accordance with the mandate between you and your CSDP or broker, you must advise your CSDP or broker if you wish to attend the scheme meeting and/or to appear or to be 3

6 represented by Counsel at the Court hearing to sanction the scheme or send a proxy to represent you at the scheme meeting and your CSDP or broker will issue the necessary Letter of Representation to you to attend the scheme meeting and/or to appear or to be represented by Counsel at the Court hearing Voting at the scheme meeting Your CSDP or broker should contact you to ascertain how you wish to cast your vote at the scheme meeting and thereafter to cast your vote in accordance with your instructions If you have not been contacted by your CSDP or broker, it would be advisable for you to contact your CSDP or broker and furnish it with your voting instructions If your CSDP or broker does not obtain voting instructions from you, it will be obliged to vote in accordance with the instructions contained in the custody agreement concluded between you and your CSDP or broker You must not complete the attached form of proxy for the scheme meeting (white). The Court hearing is expected to take place at 10:00, or as soon thereafter as Counsel may be heard, on Tuesday 5 February 2008 or such other date as the board may determine, provided that at least one week s notice of such date has been given, which date will be released on SENS and published in the press. The proceedings will be held in the High Court of South Africa (Witwatersrand Local Division), which is located at the High Court Building, von Brandis Square, corner Pritchard and von Brandis Streets, Johannesburg. If you wish to attend the High Court hearing, you must advise your CSDP or broker accordingly and your CSDP or broker will issue you with the necessary Letter of Representation for you to appear or be represented by counsel at the Court hearing Surrender of documents of title in terms of scheme You must not complete the attached form of surrender (pink) Scheme consideration Scheme participants will have their accounts held at their CSDP or broker credited with the scheme consideration on the operative date. 2.2 If you have not dematerialised your shares: Voting and attendance at the scheme meeting You may attend the scheme meeting in person and may vote at the scheme meeting. Alternatively, you may appoint a proxy to represent you at the scheme meeting by completing the attached form of proxy for the scheme meeting (white) in accordance with the instructions it contains and return it to the transfer secretaries to be received by no later than 10:30 on Wednesday 23 January Forms of proxy may also be handed to the chairman of the scheme meeting no later than 10 minutes before the scheme meeting is due to commence Attendance at Court hearing to sanction the scheme You are entitled to appear or be represented by Counsel at the Court hearing for the sanctioning of the scheme. The Court hearing is expected to take place at 10:00, or as soon thereafter as Counsel may be heard, on Tuesday 5 February 2008 or such other date as the board may determine, provided that at least one week s notice of such date has been given, which date will be released on SENS and published in the press. The proceedings will be held in the High Court of South Africa (Witwatersrand Local Division), which is located at the High Court Building, von Brandis Square, corner Pritchard and von Brandis Streets, Johannesburg Surrender of documents of title in terms of the scheme You are required to surrender your documents of title in respect of all your scheme shares in order to receive the scheme consideration by completing the attached form of surrender (pink), and returning it, together with the relevant documents of title, to the transfer secretaries. 4

7 2.2.4 Scheme consideration If the scheme becomes operative and you have surrendered your documents of title on or before the operative date, the scheme consideration will be paid and a new share certificate will be posted to you on or about the operative date. If the scheme becomes operative and you surrender your documents of title after the operative date, the scheme consideration will be paid and a new share certificate will be posted to you within five business days after surrender. 2.3 If you have dematerialised your shares with own name registration Paragraphs 2.1.4, and above are applicable to you. If you wish to dematerialise your shares, please contact your CSDP or broker. Shareholders are advised to consult their professional advisers about their personal tax positions regarding the receipt of the scheme consideration. If you have disposed of all of your shares, this circular should be handed to the purchaser of such shares or the CSDP or broker, banker or other agent who disposed of your shares for you. 5

8 SALIENT DATES AND TIMES Last day to trade in order to vote at the scheme meeting on Tuesday 15 January 2008 Record date in order to vote at the scheme meeting on Tuesday 22 January 2008 Last day to lodge forms of proxy for the general meeting by 10:00 on Tuesday 22 January 2008 Last day to lodge forms of proxy for the scheme meeting by 10:30 on* Wednesday 23 January 2008 General meeting to be held at 10:00 on Thursday 24 January 2008 Scheme meeting to be held at 10:30 (or so soon thereafter as the general meeting has been concluded or adjourned) on Thursday 24 January 2008 Results of the general meeting and scheme meeting released on SENS on Thursday 24 January 2008 Results of the general meeting and scheme meeting published in the South African press on Friday 25 January 2008 Report of the chairman of the scheme meeting available for inspection from Friday 25 January 2008 Court hearing to sanction the scheme on Tuesday 5 February 2008 Results of Court hearing to sanction the scheme released on SENS on Tuesday 5 February 2008 Results of Court hearing to sanction the scheme published in the South African press on Wednesday 6 February 2008 If the scheme is sanctioned by the Court, registration of Court Order by the Registrar on or about Wednesday 6 February 2008 Last day to trade in order to be registered on the record date to participate in the scheme on Friday 15 February 2008 Shares will commence trading ex the scheme under the new ISIN: ZAE on Monday 18 February 2008 Record date to participate in the scheme on Friday 22 February 2008 Operative date of the scheme at the commencement of trading on Monday 25 February 2008 Scheme consideration posted or electronically transferred to certificated scheme participants who have surrendered their documents of title from Monday 25 February 2008 Dematerialised shareholders will have their accounts at their CSDP or broker updated and credited with the scheme consideration on Monday 25 February 2008 *Forms of proxy may also be handed to the chairman of the scheme meeting up to 10 minutes before the scheme meeting commences on Thursday 24 January Notes: 1. All times shown in this circular are South African local times. 2. The above dates and times are subject to change. Any material change will be released on SENS and published in the South African press. 3. Aveng shares may not be dematerialised or rematerialised between the period commencing on the day after the last day to trade in order to participate in the scheme and the close of business on the record date of the scheme, both days inclusive. 6

9 DEFINITIONS AND INTERPRETATION Throughout this circular, unless otherwise stated or the context otherwise requires, the words in the first column below have the meanings stated opposite them in the second column below, words in the singular shall include the plural and vice versa, words signifying one gender include the other and words denoting natural persons include juristic persons and associations of persons. articles Aveng or the Company the articles of association of Aveng; Aveng Limited (Registration number 1944/018119/06), a public company incorporated in South Africa and listed on the JSE; Aveng Guaranteed Convertible the R1 billion worth of guaranteed convertible bonds issued by Aveng Bonds at a coupon rate of 6.125% which are due in 2012; board broker business day certificated scheme participants certificated shareholders certificated shares circular or document Companies Act conditions precedent Court CSDP dematerialised scheme participants dematerialised shareholders dematerialised shares directors documents of title general meeting group the board of directors of Aveng; any person registered as a broking member (equities) in terms of the Rules of the JSE made in accordance with the Stock Exchange Control Act, 1985 (Act 1 of 1985), as amended; any day which is not a Saturday, Sunday or a public holiday in South Africa; scheme participants who are certificated shareholders; shareholders who have not dematerialised their shares through Strate; shares which have not been dematerialised, title to which is represented by a document of title; this circular to shareholders, dated 20 December 2007, together with the annexures hereto and incorporating a form of proxy for the general meeting (yellow), a form of proxy for the scheme meeting (white) and a form of surrender (pink); the Companies Act, 1973 (Act 61 of 1973), as amended; the conditions precedent to which the scheme is subject, as set out in paragraph 8 of the scheme; the High Court of South Africa (Witwatersrand Local Division) which is located at the High Court Building, Pritchard Street, Johannesburg; Central Securities Depository Participant, accepted as a participant in terms of the Securities Services Act; scheme participants who are dematerialised shareholders; shareholders who have dematerialised their shares through Strate; shares which have been dematerialised; the directors of Aveng; share certificates, certified transfer deeds, balance receipts or any other physical documents of title to shares which have not been dematerialised through Strate and which are acceptable to Aveng; the general meeting of Aveng to be held at 10:00 on Thursday 24 January 2008 at the registered office of Aveng, 204 Rivonia Road, Morningside, Sandton, 2057; collectively, Aveng and all its subsidiaries; 7

10 Income Tax Act JSE Listings Requirements last practicable date memorandum operative date Rand or R or cents register Registrar repurchase or the transaction Richtrau RMB RMB offer RMB offer consideration RMB offer shares rounding principle scheme the Income Tax Act, 1962 (Act 58 of 1962), as amended; JSE Limited (Registration number 2005/022939/06), a public company incorporated in South Africa and licensed as an exchange under the Securities Services Act; the Listings Requirements of the JSE; Friday 7 December 2007, being the last practicable date prior to the finalisation of this circular; the memorandum of association of Aveng; the first business day immediately following the scheme consideration record date, being the date on which the scheme becomes operative, which is expected to be on or about Monday 25 February 2008; the lawful currency of South Africa, being South African Rand and cents; the register of certificated shareholders maintained by Aveng and the sub-register of dematerialised shareholders maintained by the relevant CSDPs in terms of sections 91A and 101, respectively, of the Companies Act; the Registrar of Companies; the repurchase by Aveng and Richtrau of shares in terms of the provisions of sections 85 to 89 (both inclusive) of the Companies Act, by way of the scheme; Richtrau No. 191 (Proprietary) Limited (Registration number 2007/032784/07), a private company incorporated in South Africa which is a wholly-owned subsidiary of Aveng; Rand Merchant Bank, a division of FirstRand Bank Limited (Registration number 1929/001225/06), a public company registered in South Africa; the voluntary offer made by RMB to shareholders and described in the circular to shareholders, dated 18 September 2007, in terms of which RMB offered to acquire from shareholders, on a first come, first served basis up to shares at the RMB offer consideration; a cash consideration of R53.16 per share paid by RMB in respect of the RMB offer shares; the shares sold to and acquired by RMB pursuant to the RMB offer; the rounding up or down to the nearest whole number of shares to be acquired by Aveng in terms of the scheme, on the basis that such fractions will be: rounded up to the nearest whole number if the fraction is equal to or greater than 0.5 of a share; or rounded down to the nearest whole number if the fraction is less than 0.5 of a share; the scheme of arrangement in terms of section 311 of the Companies Act between Aveng, Richtrau and the shareholders on the terms and conditions set out in the scheme (blue), subject to any modification or amendment agreed to by Aveng and which is approved, if necessary, by the Court, which, if it becomes operative, will result in Aveng acquiring from each shareholder on a pro rata basis in terms of section 85 of the Companies Act, four out of every 100 shares held by such shareholder and Richtrau acquiring from each shareholder on a pro rata basis in terms of section 89 of the Companies Act, ten out of every 100 shares held by such shareholder; 8

11 scheme consideration the consideration payable by Aveng and Richtrau to each scheme participant, being R61.58 per scheme share acquired by them, being the volume weighted average price per share on the JSE on Friday 2 November 2007, which represents a total scheme consideration of R3.412 billion; scheme consideration record date the latest time and date for shareholders to be recorded in the register as such in order to receive the scheme consideration, which date is expected, subject to the fulfilment of the conditions precedent, to be the close of business on Friday 22 February 2008, or such other date as may be released on SENS and published in the South African press; scheme meeting scheme members scheme participants scheme shares Securities Services Act SENS shareholders shares or Aveng shares South Africa South African Exchange Control Regulations STC Strate subsidiary the meeting of scheme members to be held at 10:30 on Thursday 24 January 2008 at the registered office of Aveng, 204 Rivonia Road, Morningside, Sandton, 2057 (or so soon thereafter as the general meeting convened at 10:00 on the same date and at the same venue, shall have been concluded or adjourned), or any adjournment thereof, at which meeting the scheme members will consider and vote on the scheme; shareholders recorded in the register on the voting record date, who are entitled to attend and vote at the scheme meeting; shareholders recorded in the register at 17:00 on the scheme consideration record date, who are entitled to receive the scheme consideration; a maximum of shares to be acquired by Aveng and Richtrau, collectively, in terms of the scheme, being 14 shares for every 100 shares held by each scheme participant on the scheme consideration record date, adjusted by the application of the rounding principle; the Securities Services Act, 2004 (Act 36 of 2004), as amended; the Securities Exchange News Service of the JSE; the registered holders of shares; ordinary shares with a par value of R0.05 (5 cents) each in the issued share capital of Aveng; the Republic of South Africa; the South African Exchange Control Regulations, as amended, promulgated in terms of section 9 of the Currency and Exchanges Act, 1933 (Act 9 of 1933), as amended; Secondary Tax on Companies in terms of the provisions of the Income Tax Act; Strate Limited (Registration number 1998/022242/06), a public company incorporated in South Africa, being a registered central securities depository in terms of the Securities Services Act; has the meaning ascribed thereto in section 1(3) of the Companies Act; transfer secretaries Computershare Investor Services 2004 (Proprietary) Limited (Registration number 2004/003647/07), a private company incorporated in South Africa and situated at Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107); VAT voting record date value-added tax, levied in terms of the provisions of the Value-Added Tax Act, 1991 (Act 89 of 1991), as amended; and the close of business on Tuesday 22 January 2008, or the close of business three business days prior to the date of any adjourned general meeting or scheme meeting, being the latest time and date for shareholders to be recorded in the register as such, in order to vote at the general meeting and the scheme meeting or, as the case may be, at any adjournment thereof. 9

12 Aveng Limited (incorporated in the Republic of South Africa) (Registration number 1944/018119/06) Share code: AEG ISIN: ZAE DIRECTORS Executive C Grim (Chief Executive Officer) D R Gammie J J A Mashaba D G Robinson Non-executive A W B Band* (Chairperson) J R Hersov* R L Hogben* L Gcabashe (Ms)* V Z Mntambo* M J D Ruck* R B Savage* N L Sowazi B P Steele* P K Ward* *Independent EXPLANATORY STATEMENT APPLICABLE TO THE SCHEME OF ARRANGEMENT IN TERMS OF SECTION 312(1)(a)(i) OF THE COMPANIES ACT Note: This explanatory statement sets out the reasons for, and the effects and procedures of, the scheme and does not constitute the scheme itself. The attention of shareholders is drawn to the fact that the scheme (blue) commences on page 15 of the circular. For a full understanding of the detailed terms and conditions of the scheme, this circular should be read in its complete form. The definitions and interpretation contained in the section entitled Definitions and interpretation commencing on page 7 of the circular, where required, have been used in this explanatory statement. 1. Rationale for the scheme The scheme is being proposed to implement the return of capital to shareholders. A number of mechanisms were available to Aveng in order to return capital to shareholders. Two notable alternatives to the proposed pro rata repurchase in terms of a scheme of arrangement, are a special dividend and an on-market general repurchase. Set out below are the reasons why the board has opted for a pro rata repurchase through the scheme in favour of either of the aforementioned two alternatives: 1.1 General repurchase The extent of the capital proposed to be returned to shareholders, being approximately R3.5 billion (approximately 14% of the issued share capital of Aveng), is of such a quantum that an on-market general repurchase would have taken a protracted period to implement. This is due to reasonable assumptions regarding the proportion of Aveng s average trading volume that could be 10

13 repurchased through an on-market general repurchase. Given the likely impact that such a protracted repurchase program in the open market is likely to have on the trading patterns in the shares, the board does not believe a general repurchase is a feasible alternative for Aveng. 1.2 Special dividend 2. The scheme A special dividend provides a simple mechanism for returning surplus capital to shareholders. In the instance of Aveng however, such a dividend would result in an adjustment to the conversion ratio of the Aveng Guaranteed Convertible Bonds. Based on the current market prices, a special dividend of this extent would result in the illustrative number of shares to be issued in settlement of the Aveng Guaranteed Convertible Bonds, increasing from approximately 66 million shares to in excess of 80 million shares. While the adjustment to the conversion ratio is made in order to put bondholders in the same position from a value perspective that they would have been in prior to the payment of the special dividend, the board believes this incremental issue of shares to bondholders would cause undue dilution to shareholders, given management s positive outlook on the prospects of Aveng. The full text of the scheme is set out in the blue section commencing on page 15 of the circular. In terms of the scheme, on the operative date: 2.1 scheme participants will be deemed to have disposed of, subject to the rounding principle, four out of every 100 shares owned by scheme participants to Aveng in terms of section 85 of the Companies Act, free from encumbrances and, in return, scheme participants will be entitled to receive the scheme consideration in respect of the scheme shares so disposed of. The excess of the scheme consideration per scheme share over the par value per scheme share of R0.05, being an amount of R61.53 per scheme share, will be paid out of the distributable reserves of Aveng; 2.2 scheme participants will be deemed to have disposed of, subject to the rounding principle, 10 out of every 100 shares owned by scheme participants to Richtrau and Richtrau will be deemed to have acquired ownership of such scheme shares in terms of section 89 of the Companies Act, free from encumbrances and, in return, scheme participants will be entitled to receive the scheme consideration in respect of the scheme shares so disposed of; and 2.3 the scheme shares so acquired by Aveng will be cancelled in accordance with the provisions of the Companies Act, whilst the shares so acquired by Richtrau will remain in existence as part of Aveng s issued share capital. It is contemplated that the scheme shares acquired by Richtrau will ultimately be acquired by Aveng from Richtrau in terms of section 85 of the Companies Act and thereupon cancelled. 3. Procedure 3.1 The scheme meeting The scheme will be put to a vote at the scheme meeting, convened in terms of the Order of Court (a copy of which is included in this circular), to be held at 10:30 on Thursday 24 January 2008 at the registered office of Aveng (or so soon thereafter as the general meeting convened for 10:00 on the same date and at the same venue shall have been concluded or adjourned). The notice convening the scheme meeting is attached to, and forms part of, this circular Section 311(2)(b) of the Companies Act requires that the scheme be agreed to by a majority representing not less than three-fourths (75%) of the votes exercisable by scheme members who are present and voting, either in person or by proxy, at the scheme meeting Each certificated scheme member and dematerialised scheme member with own name registration who is registered as such on the voting record date may attend and vote at the scheme meeting or give a proxy to someone else (including the chairman of the scheme meeting) to represent such scheme member at the scheme meeting Forms of proxy for the scheme meeting (white) must be received by the transfer secretaries by not later than 10:30 on Wednesday 23 January Forms of proxy may also be handed to the chairman of the scheme meeting not later than 10 minutes before the scheme meeting is due to commence. 11

14 3.1.5 A dematerialised scheme member who does not have own name registration must arrange with his CSDP or broker to give the dematerialised scheme member authority to attend and vote at the scheme meeting Scheme members who do not want to support the scheme will be given an opportunity to state their views at the scheme meeting. 3.2 Court hearing If the scheme is agreed to by the requisite majority at the scheme meeting and the conditions precedent referred to in paragraphs and below are fulfilled, Aveng will make application to the Court to sanction the scheme at 10:00, or so soon thereafter as Counsel may be heard, on Tuesday 5 February Shareholders holding certificated shares or dematerialised shares with own-name registration are entitled to attend at Court in person, or to be represented by Counsel, and to be heard concerning any objections they may have to the scheme. The Court is located at the High Court Building, von Brandis Square, corner Pritchard and von Brandis Streets, Johannesburg. Shareholders holding dematerialised ordinary shares without own-name registration, must advise their CSDP or broker in accordance with their mandate with their CSDP or broker if they wish to appear or to be represented by Counsel at the Court hearing to sanction the scheme and the CSDP or broker will issue the necessary Letter of Representation to them to appear or to be represented by Counsel at the Court hearing If the scheme is sanctioned by the Court, then the Order of Court sanctioning the scheme and the special resolutions referred to in paragraph below will be lodged with the Registrar for registration. When the Order of Court sanctioning the scheme and such special resolutions are registered by the Registrar, which is expected to happen on or about Wednesday 6 February 2008, the scheme will become binding on all scheme participants, even those who voted against the scheme. 3.3 Settlement of the scheme consideration If the scheme becomes operative, scheme participants will be entitled to the scheme consideration on the basis set out below Dematerialised scheme participants will have their accounts with their CSDP or broker credited with the scheme consideration due to them and updated with their new share balances on the operative date, in accordance with the custody agreements that they have signed with their CSDP or broker Subject to the South African Exchange Control Regulations and provided certificated scheme participants have furnished a duly signed form of surrender (pink) in accordance with the instructions contained therein and surrendered their documents of title on or before the scheme consideration record date, the scheme consideration and the new share certificates will be posted to certificated scheme participants within five business days of the operative date The scheme consideration will be paid to certificated scheme participants by cheque. Alternatively, it is possible for those certificated scheme participants who wish to do so, and who surrender their documents of title on or prior to the scheme consideration record date, to submit their bank account details to facilitate the electronic transfer of the scheme consideration into such bank accounts. The form of surrender (pink) provides a space for the insertion of such bank account details If certificated scheme participants do not surrender their documents of title together with the completed form of surrender (pink) on or before the scheme consideration record date, cheques and new share certificates will be posted to such certificated scheme participants within five business days of receipt of the documents of title, together with the completed form of surrender (pink). The facility of having the scheme consideration paid into certificated scheme participants bank accounts will not be available to those certificated scheme participants who surrender their documents of title together with the completed form of surrender (pink) after the scheme consideration record date. 12

15 3.3.6 The cheques and new share certificates which are posted by registered post to the addresses of certificated scheme participants will be posted to their respective addresses recorded in the register, at the risk of such certificated scheme participants If the scheme consideration is not sent to the certificated scheme participants entitled thereto because the relevant documents of title together with the completed form of surrender (pink) have not been surrendered, or, if having been sent, is returned, such scheme consideration will be held by Aveng until claimed. No interest will accrue or be paid on any scheme consideration so held The rights of the scheme participants to receive the scheme consideration in respect of their scheme shares will be a right enforceable by scheme participants against Aveng only. 3.4 Surrender of documents of title This paragraph 3.4 (other than paragraph 3.4.9) only applies to certificated scheme participants and does not apply to dematerialised scheme participants Certificated scheme participants must surrender their documents of title together with the completed form of surrender (pink) in order to receive the scheme consideration Certificated scheme participants must use the form of surrender (pink) to surrender their documents of title and return the form of surrender (pink) as soon as possible to the transfer secretaries together with their documents of title. This can be done before the scheme meeting, in which case paragraph below will apply No receipts will be issued for documents of title surrendered unless specifically requested Documents of title surrendered by certificated scheme participants in anticipation of the scheme becoming operative will be held in trust by the transfer secretaries pending the scheme becoming operative. Should the scheme not become operative for any reason whatsoever, then the transfer secretaries will, within five business days of the date upon which it becomes known that the scheme will not become operative, return the documents of title to the certificated scheme participants concerned, by registered post, at the risk of such shareholders Once the scheme becomes operative, a further form of surrender will be sent to all certificated scheme participants for use by those certificated scheme participants who may not yet have surrendered their documents of title The attention of shareholders is drawn to the fact that if the documents of title in respect of shares which have not been dematerialised are surrendered in advance, it will not be possible to dematerialise or trade those shares between the date of surrender and the operative date. In addition, no dematerialisation or rematerialisation of shares will take place between Monday 18 February 2008 and Friday 22 February 2008, both days inclusive If a certificated scheme participant s documents of title have been lost or destroyed and the scheme participant concerned produces evidence to this effect to Aveng s satisfaction, Aveng may dispense with the surrender of documents of title requirement against provision of an indemnity acceptable to Aveng in its sole discretion by the relevant certificated scheme participant, the cost of which indemnity will be borne by the certificated scheme participant concerned The shares may only be traded on the JSE in dematerialised form. Scheme participants who, at the time of dematerialisation, elected to retain their physical share certificates should note that they do not need to submit their share certificates for dematerialisation in order to receive the scheme consideration Dematerialised scheme participants do not have to surrender any documents of title. 4. Scheme conditions precedent 4.1 The scheme is subject to the fulfilment of the following conditions precedent: the special and ordinary resolutions approving the acquisition of the scheme shares by Aveng and Richtrau being duly passed at the general meeting in accordance with sections 85 and 89 of the Companies Act and the Listings Requirements; 13

16 4.1.2 the special resolutions referred to in paragraph above, if passed at the general meeting, being registered by the Registrar; the scheme being agreed to by a majority representing not less than three-fourths of the votes exercisable by the scheme members present and voting, either in person or by proxy, at the scheme meeting; the scheme being sanctioned by the Court; and a certified copy of the Order of Court sanctioning the scheme being registered by the Registrar. 4.2 Should any of the conditions precedent referred to in paragraph 4.1 above, not be fulfilled, the scheme shall ipso facto lapse and be of no force or effect. 5. Effects of the scheme If the scheme is implemented, each scheme participant (whether such scheme participant shall have voted in favour of the scheme or not), will be deemed to have disposed of such scheme participant s scheme shares, as to four shares to Aveng and 10 shares to Richtrau for every 100 scheme shares held by such scheme participant. No scheme participant may elect to dispose of more than such scheme participant s scheme shares to Aveng and Richtrau in terms of the scheme. 6. No set-off of scheme consideration Settlement of the scheme consideration will be discharged, in full, in accordance with the terms of the scheme without regard to any lien, right of set-off, counterclaim or other analogous right to which Aveng and Richtrau may otherwise be, or claim to be entitled against any scheme participant. 7. Special arrangements 7.1 No arrangements, undertakings or agreements have been made by Aveng, or persons acting in concert with Aveng, in relation to the scheme shares. 7.2 No arrangements or undertakings (including any compensation arrangements), which have any connection with or dependence on the scheme, exist between Aveng (or any person acting in concert with Aveng) and any director of Aveng or any person who was a director of Aveng within the period commencing 12 months prior to the operative date, or any person who is or was a holder of shares within the period commencing 12 months prior to the operative date. 7.3 Other than contemplated in this circular, no arrangements have been made between Aveng and its directors in connection with the transaction. 8. Exchange Control Regulations Paragraph 10 of the scheme (blue) contains a summary of the South African Exchange Control Regulations as they apply to scheme participants. A scheme participant who is not resident in, or who has a registered address outside South Africa, must satisfy himself as to the full observance of the laws of any relevant territory concerning the receipt of the scheme consideration, including obtaining any requisite governmental or other consents, observing any other requisite formalities and paying any taxes due in such territory. 9. Authorship The board has completed this explanatory statement on behalf of Aveng and the directors of Aveng, who have furnished the information and facts contained herein. For and on behalf of the board AVENG LIMITED D R Gammie Director: Finance Sandton 20 December

17 Aveng Limited (incorporated in the Republic of South Africa) (Registration number 1944/018119/06) Share code: AEG ISIN: ZAE ( Aveng or the Company ) SCHEME OF ARRANGEMENT IN TERMS OF SECTION 311 OF THE COMPANIES ACT, PROPOSED BY AVENG BETWEEN AVENG, RICHTRAU AND AVENG S SHAREHOLDERS 1. Definitions and interpretation In this scheme, unless otherwise stated or the context otherwise requires, the words in the first column below have the meanings stated opposite them in the second column below, words in the singular shall include the plural and vice versa, words signifying one gender include the other and words denoting natural persons include juristic persons and associations of persons. Aveng or the Company broker business day certificated scheme members certificated scheme participants certificated shareholders certificated shares common monetary area Companies Act conditions precedent Court CSDP dematerialisation dematerialised scheme members dematerialised scheme participants Aveng Limited (Registration number 1944/018119/06), a public company incorporated in South Africa and listed on the JSE; any person registered as a broking member (equities) in terms of the Rules of the JSE made in accordance with the Stock Exchange Control Act, 1985 (Act 1 of 1985), as amended; any day which is not a Saturday, Sunday or public holiday in South Africa; scheme members who hold certificated shares; scheme participants who are certificated shareholders; shareholders who have not dematerialised their shares through Strate; shares which have not been dematerialised, title to which is represented by a document of title; South Africa, the Republic of Namibia and the Kingdoms of Lesotho and Swaziland; the Companies Act, 1973 (Act 61 of 1973), as amended; the conditions precedent to which the scheme is subject, as set out in paragraph 8 of the scheme; the High Court of South Africa (Witwatersrand Local Division), which is located at the High Court Building, Pritchard Street, Johannesburg; Central Securities Depository Participant accepted as a participant in terms of the Securities Services Act; the process by which certificated shares are converted to or held in an electronic form as uncertificated securities and recorded in the sub-register of security holders maintained by a CSDP or broker; scheme members who hold dematerialised shares; scheme participants who are dematerialised shareholders; 15

18 dematerialised shares documents of title Income Tax Act JSE last practicable date operative date Rand or R registered office Richtrau rounding principle shares which have been dematerialised; share certificates, certified transfer deeds, balance receipts or any other physical documents of title to shares which have not been dematerialised through Strate and which are acceptable to Aveng; the Income Tax Act, 1962 (Act 58 of 1962), as amended; JSE Limited (Registration number 2005/022939/06), a public company incorporated in South Africa and licensed as an exchange under the Securities Services Act; Friday 7 December 2007, being the last practicable date prior to the finalisation of this circular; the first business day immediately following the scheme consideration record date, being the date on which the scheme becomes operative, which is expected to be on or about Monday 25 February 2008; the lawful currency of South Africa, being South African Rand and cents; the registered office of Aveng which is 204 Rivonia Road, Morningside, Sandton, 2057; Richtrau No. 191 (Proprietary) Limited (Registration number 2007/032784/07), a private company incorporated in South Africa which is a wholly-owned subsidiary of Aveng; the rounding up or down to the nearest whole number of shares to be acquired by Aveng in terms of the scheme, on the basis that such fractions will be: rounded up to the nearest whole number if the fraction is equal to or greater than 0.5 of a share; or rounded down to the nearest whole number if the fraction is less than 0.5 of a share; scheme scheme consideration the scheme of arrangement in terms of section 311 of the Companies Act between Aveng, Richtrau and the shareholders on the terms and conditions set out in this scheme, subject to any modification or amendment agreed by Aveng and which is approved, if necessary, by the Court, which, if it becomes operative, will result in Aveng acquiring from each shareholder on a pro rata basis in terms of section 85 of the Companies Act, four out of every 100 shares held by such shareholder and Richtrau acquiring from each shareholder on a pro rata basis in terms of section 89 of the Companies Act, ten out of every 100 shares held by such shareholder; the consideration payable by Aveng and Richtrau to each scheme participant, being R61.58 per scheme share acquired by them, being the volume weighted average price per share on the JSE on Friday 2 November 2007, which represents a total scheme consideration of R3.412 billion; scheme consideration record date the latest time and date for shareholders to be recorded in the register as such in order to receive the scheme consideration, which date is expected, subject to the fulfilment of the conditions precedent, to be the close of business on Friday 22 February 2008, or such other date as may be released on SENS and published in the South African press; scheme meeting the meeting of scheme members to be held at 10:30 on Thursday 24 January 2008 at the registered office of Aveng, 204 Rivonia Road, Morningside, Sandton, 2057 (or so soon thereafter as the general meeting convened at 10:00 on the same date and at the same venue, shall have been concluded or adjourned), or any adjournment thereof, at which meeting the scheme members will consider and vote on the scheme; 16

19 scheme members scheme participants scheme shares Securities Services Act SENS shareholders shares South Africa South African Exchange Control Regulations Strate transfer secretaries voting record date shareholders recorded in the register on the voting record date, who are entitled to receive the scheme consideration; shareholders recorded in the register at 17:00 on the consideration record date, who are entitled to receive the scheme consideration; a maximum of shares to be acquired by Aveng and Richtrau, collectively, in terms of the scheme, being 14 shares for every 100 shares held by each scheme participant on the scheme consideration record date, adjusted by the application of the rounding principle; the Securities Services Act, 2004 (Act 36 of 2004), as amended; the Securities Exchange News Service of the JSE; the registered holders of shares; ordinary shares with a par value of R0.05 (5 cents) each in the issued share capital of Aveng; the Republic of South Africa; the South African Exchange Control Regulations, as amended, promulgated in terms of section 9 of the Currency and Exchanges Act, 1933 (Act 9 of 1933), as amended; Strate Limited (Registration number 1998/022242/06), a public company incorporated in South Africa, being a registered central securities depository in terms of the Securities Services Act; Computershare Investor Services 2004 (Proprietary) Limited (Registration number 2004/003647/07), a private company incorporated in South Africa and situated at Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107); and the close of business on Tuesday 22 January 2008, or the close of business three business days prior to the date of any adjourned general meeting or scheme meeting, being the latest time and date for shareholders to be recorded in the register as such, in order to vote at the general meeting and the scheme meeting or, as the case may be, at any adjournment thereof. 2. Share capital of Aveng 2.1 Aveng s authorised and issued share capital at the last practicable date, is as set out below: Authorised share capital Authorised ordinary shares of 5 cents each Issued share capital Issued ordinary shares of 5 cents each 19.8 Share premium R m Notes: 1. A R1 billion convertible bond is currently accounted for as combined borrowings and equity. This treatment will continue until the conversion of the bond into equity. 2. Approval for this conversion into shares was granted at the annual general meeting of Aveng, which was held on 28 October The number of shares placed under the control of the directors for the purposes of this conversion was There have been no changes to Aveng s authorised share capital between 30 June 2007 and the last practicable date. 4. The only recent change in relation to Aveng s issued share capital relates to the shares that Aveng repurchased from RMB pursuant to the RMB offer. 5. At the last practicable date, Aveng held no shares as treasury shares. 17