ZAMEFA TO SHAREHOLDERS OF METAL FABRICATORS OF ZAMBIA PLC THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Transcription

1 TO SHAREHOLDERS OF METAL FABRICATORS OF ZAMBIA PLC ZAMEFA THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 1

2

3 TO SHAREHOLDERS OF METAL FABRICATORS OF ZAMBIA PLC THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION IF YOU ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULD IMMEDIATELY SEEK ADVICE FROM YOUR STOCKBROKER, BANK MANAGER, LEGAL ADVISER, ACCOUNTANT OR OTHER PROFESSIONAL ADVISER Note: If you were a minority shareholder that has recently disposed of all of your ordinary shares, please forward this Offer Document, together with the Form of Acceptance, to the Sponsoring Broker or the broker through whom the disposal was effected. REQUIRED ACTION: 1. Read this document fully. 2. Read the instructions in Sections 6 and 7 of this document and if you elect to sell part or all of your ordinary shares, complete the Form of Acceptance at the end of the document. 3. Send the completed Form of Acceptance to any of the brokers registered to trade on the Lusaka Securities Exchange by no later than 17h00 on Monday, 14 August Minority Shareholders who do not wish to participate in the mandatory offer need take no further action and will retain their existing ordinary shares Metal Fabricators of Zambia PLC (Incorporated in the Republic of Zambia) (Registration number ) Share code: ZAMEFA ISIN: ZM ( Zamefa ) Reunert International Investments (Mauritius) Ltd Incorporated in the Republic of Mauritius File Number C1/GBL ( Offeror or RIIL ) Reunert Limited Incorporated in the Republic of South Africa (Registration number 1913/004355/06) Being the holding company of RIIL ( Reunert ) Circular to Zamefa minority shareholders Relating to An unconditional mandatory offer from the Offeror to the minority shareholders in Zamefa to purchase some or all of their ordinary shares in Zamefa at an offer price per share of ZMW 4.82 and The response from the independent board of Zamefa containing their views in respect of the mandatory offer and incorporating a Form of Acceptance Date of Issue: Friday, 7 July 2017 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 1

4 CORPORATE INFORMATION RELATING TO REUNERT AND RILL Registered office of Reunert Nashua Building Woodmead North Office Park 54 Maxwell Drive, Woodmead Sandton, 2191 Johannesburg South Africa Financial adviser to Reunert Investec Bank Limited 100 Grayston Drive Sandown, 2196 Johannesburg South Africa Registered office of RIIL 6 th Floor, Dias Pier Building Le Caudan Waterfront Caudan Port Louis Mauritius Legal adviser to Reunert and RIIL in Zambia Corpus Legal Practitioners Ground Floor, Elunda Office Park, Elunda II Addis Ababa Roundabout, Lusaka (PO Box 32115, Lusaka, Zambia) CORPORATE INFORMATION RELATING TO ZAMEFA Registered office Plot 1400 H. Figov Road, Luanshya (PO Box 90295, Luanshya, Zambia) Company Secretary Jonathan Ambali BDO Zambia Counting House Square Thabo Mbeki Road, Lusaka (PO Box 35139, Lusaka, Zambia) Financial adviser and Sponsoring broker Legal adviser in Zambia Stockbrokers Zambia Limited 2nd Floor, Stock Exchange Building Central Park, Lusaka (PO Box 38956, Lusaka, Zambia) Ground Floor, Elunda Office Park, Elunda II Addis Ababa Roundabout, Lusaka (PO Box 32115, Lusaka, Zambia) Independent financial adviser Ernst & Young Advisory Services Limited EY Place Plot No , Lusaka (PO Box 35483, Lusaka 10101, Zambia) Auditors Deloitte and Touche Abacus square Plot No. 2374/B Thabo Mbeki Road, Lusaka (PO Box 30030, Lusaka, Zambia) 2 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

5 TABLE OF CONTENTS 1. Timetable 4 2. Definitions and Interpretations 5 3. Offer document to the minority shareholders 7 4. Reason for the mandatory offer Terms and conditions of the mandatory offer Letter from the committee of independent directors of Zamefa Independent committee of the board Actions to be taken by minority shareholders Settlement Implication of the mandatory offer in relation to Zamefa s listing on the LuSE Sale by Reunert of purchased ordinary shares under the mandatory offer to institutional investors 12. Costs of the mandatory offer Tax implications of the mandatory offer Directors responsibility statement Documents available for inspection Applicable laws List of LuSE Brokers 19 Annexure A: Report by the independent financial advisor on the offer from RIIL to the minority shareholders of Zamefa Annexure B: Form of Acceptance THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 3

6 1. TIMETABLE 1.1 The proposed timetable for concluding the mandatory offer is as follows: Event Record Date of the Offer: Share register record to be used for posting the combined Offer document and Circular Circular posted to Zamefa s minority shareholders via registered mail Date Friday: 21 July 2017 On or about Monday, Monday: 24 July 2017 Offer opens at 08h00 on Monday: 31 July 2017 Offer closes at 17h00 on Monday: 14 August 2017 Last date for receipt of postal acceptances, postmarked on or before Monday, 14 August 2017, to be received by 17:00 hours on Wednesday: 16 August 2017 Trade Date Monday: 21 August 2017 Settlement Date (T+3) Thursday: 24 August 2017 Payment made to shareholders by their respective brokers Friday: 25 August 2017 Results of the mandatory offer published Monday: 28 August 2017 Uncollected cheques posted to shareholders Wednesday: 6 September 2017 Minority shareholders who prefer not to sell any of their ordinary shares do not need to respond to the mandatory offer in any way and will simply retain their existing ordinary shares in the Company. Minority shareholders wishing to sell some or all of their ordinary shares must tender their ordinary shares as prescribed in Section 8 (Actions to be taken by minority shareholders) of this Circular. Note: Unless otherwise indicated, the times in this timetable are Zambian times. The dates and times indicated are subject to amendment. Any such amendment will be published in the Zambian press. 4 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

7 2. DEFINITIONS AND INTERPRETATIONS 2.1 In this Circular, unless the context indicates a contrary intention, an expression which denotes one gender includes the other gender, a natural person includes a juristic person and vice versa and the following definitions bear the meanings assigned to them below: Business Day Change in Control means any day other than a Saturday, Sunday or official public holiday in the Republic of Zambia; means the acquisition by RIIL, of Ordinary Shares, representing 75.39% of the Company s issued share capital from PDACC, through a trade on the LuSE on 26 August 2016; Circular means this bound document dated Friday, 7 July 2017 together with the Form of Acceptance and annexures hereto; Closing Date Committee of Independent Directors Companies Act CSD Directors or Board means the date on which the Offer shall close, namely, Monday, 14 August 2017; means the committee of independent directors of the Board set up to discharge the duties of the Board with regard to the Offer, comprising the following directors of the Company: Mr Joe M. Chisanga and Mr Chance Kabaghe; means the Companies Act, Chapter 388 of the Laws of Zambia; means the LuSE Central Shares Depository Limited, a company incorporated in Zambia with registration number , 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; means the Board of Directors of Zamefa; Form of Acceptance Independent Financial Adviser Last Practicable Date Legal Adviser LuSE LuSE Listing Rules Mandatory Offer or Offer Minority Shareholders means the document enclosed with this document to be completed by the Minority Shareholders in respect to the Offer; means the independent financial advisers to the Committee of Independent Directors with respect to the Offer, being Ernst & Young Advisory Services Limited; means, 6 July 2017, being the last practicable date prior to the finalisation of this Circular; means the legal advisers to the Board with respect to the Mandatory Offer, being Corpus Legal Practitioners; means the Lusaka Securities Exchange Limited, a company incorporated in Zambia with registration number and licensed to operate as a stock exchange under the Securities Act; means the harmonised listings requirements of the LuSE as amended from time to time; means the unconditional cash offer set out in the Circular, as submitted by RIIL to the Board on 7 March 2017 to purchase any Ordinary Shares that the Minority Shareholders may wish to tender; means all Shareholders in Zamefa, other than RIIL, who own Ordinary Shares, as at the Record Date; THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 5

8 Offer Period Offer Price Ordinary Shares PDACC Record Date Register means the period of time the Offer is open to the Minority Shareholders, being from 08:00 hours Monday, 31 July 2017 to 17:00 hours on Monday, 14 August 2017; means the cash offer price of ZMW4.82 per Ordinary Share (ex-dividend) payable to the Minority Shareholders who elect to participate in this Offer; means ordinary shares of Zamefa which are registered with the SEC and listed on the LuSE; means Phelps Dodge Africa Cable Corporation, a company incorporated in Delaware, from whom RIIL acquired its 75.39% interest in Zamefa; means the last date on which a Shareholder (other than Reunert) must be registered as a Shareholder in order to be eligible to participate in the Offer, being up to the close of business on 21 July 2017; means the register of Shareholders maintained by the CSD; Reunert or the Ultimate Offeror RIIL or Offeror means Reunert Limited, a company incorporated in the Republic of South Africa with registration number 1913/004355/06 acting through its wholly owned subsidiary, RIIL; means Reunert International Investments (Mauritius) Limited, a company incorporated in the Republic of Mauritius with File Number C1/GBL; Securities Act means the Zambian Securities Act, No. 41 of 2016; Shareholders Sponsoring Broker or SBZ Register SEC Takeovers and Mergers Rules ZMW or Kwacha means the registered holders of Ordinary Shares, from time to time; means Stockbrokers Zambia Limited, a company incorporated in Zambia with registration number , a member of LuSE and licensed by the SEC as a dealer and engaged by the Company in relation to its obligations pursuant to the LuSE Listing Requirements and the Offer; means the register of Shareholders maintained by the CSD; means the Securities and Exchange Commission of Zambia, a statutory body established under the Securities Act; means the Securities (Takeovers and Mergers) Rules, Statutory Instrument No 170 of 1993, issued pursuant to the Securities Act; and the lawful currency of Zambia, being the Zambian Kwacha as rebased or any successor currency. 6 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

9 3. MANDATORY OFFER DOCUMENT TO MINORITY SHAREHOLDERS 3.1 Introduction to RIIL and Reunert RIIL acquired Ordinary Shares, representing 75.39% of the Company s issued share capital from PDACC, through a trade on the LuSE on 26 August RIIL is a wholly owned subsidiary of Reunert. Reunert manages a portfolio of businesses in the fields of electrical engineering, information, communication and technology and applied electronics. The group was established in 1888 by Theodore Reunert and Otto Lenz. The group has been listed on the Johannesburg Stock Exchange since 1948 and is included in the industrial goods and services (electronic and electrical equipment) sector of this exchange. The group operates mainly in South Africa, but also has operations in Zambia (through Zamefa), Australia, Lesotho, Sweden, the USA and Zimbabwe. The group headquarters are located in Woodmead, Johannesburg, South Africa. 3.2 Directors of RIIL As per shareholder disclosure requirements pertaining to the Offer, the information set forth below provides further details on the Board of Directors of RIIL. NAME David Axten Marie Claire Goolam Hossen Johan Steyn Nick Thomson RILL BOARD OF DIRECTORS DESIGNATION Executive director Executive director Non-executive director Non-executive director 3.3 Identity of Ultimate Offeror The Ultimate Offeror (being the direct shareholder of RIIL) is Reunert. Should the Minority Shareholders decide to sell some or all of their Ordinary Shares, the result will be an increased indirect holding by Reunert in the Company. The level of the holding will only be determined after the Offer has been closed. THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 7

10 3.3.2 Directors of the Ultimate Offeror As per shareholder disclosure requirements pertaining to the Offer, information on the Board of Directors of Reunert is listed below: NAME Trevor Munday Alan Dickson Tasneem Abdool-Samad Sean Jagoe Sarita Martin Phuti Mahanyele Mohini Moodley Thabang Motsohi Thandi Orleyn Brand Pretorius Mark Taylor Nick Thomson Rynhardt van Rooyen REUNERT BOARD OF DIRECTORS DESIGNATION Chairman, non-executive director Chief Executive Officer and executive director Independent non-executive director Independent non-executive director Independent non-executive director Independent non-executive director Group Human Resources and Transformation executive director Independent non-executive director Non-executive director Independent non-executive director Executive director, Segment head ICT Chief Financial Officer and executive director Independent non-executive director Reunert shareholding Reunert is a publicly listed entity on the Johannesburg Stock Exchange. As at 15 June 2017 the major shareholders of Reunert were: - Public Investment Corporation Ltd 11.17% - Allan Gray (Pty) Ltd 8.93% - Old Mutual Investment Group (SA) (Pty) Ltd 6.42% - Investec Asset Managment (Pty) Ltd 4.91% - Pzena Investment Managers, LLC 4.57% - Sanlam Investment Managers (Pty) Ltd 4.14% Reunert operating segments Reunert s operations are divided into three segments, namely electrical engineering (which includes cables), information, communication and technology and applied electronics. 8 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

11 3.3.5 Reunert financial performance Extract from the Reunert 2016 Statement of Profit or Loss ZAR m ZMW m Revenue 8,511 6,228 EBITDA 1,433 1,049 Profit for the year Average ZAR/ZMW exchange rate applied Disclosure statements by Reunert, RIIL and Zamefa on shareholding interests As at the Last Practicable Date, Reunert held, indirectly, 75.39% of the issued share capital of Zamefa through its shareholding in RIIL, which is the direct shareholder of Zamefa and in which Reunert holds all the issued shares As at the Last Practicable Date, Zamefa held no shares in Reunert or RIIL. 3.4 Directors of Zamefa As per shareholder disclosure requirements pertaining to the Offer, the information set forth below provides further details on the Board of Directors of Zamefa. ZAMEFA BOARD OF DIRECTORS NAME Alan Dickson Roseta Chabala Chance Kabaghe Johan Steyn Graeme Eddey Joe M. Chisanga Nick Thomson Pieter De Villiers DESIGNATION Chairman, non-executive director Managing director Independent non- executive director Executive director Non-Executive director Independent non- executive director Non-executive director Executive director 3.5 Disclosure of Zamefa director s interest Some of the directors of Zamefa, namely, Alan Dickson, Nick Thomson, Johan Steyn and Pieter de Villiers hold shares in the Ultimate Offeror with the result that they have an inconsequential indirect interest in the Ordinary Shares. Reunert confirmed the shareholdings of Zamefa directors in Reunert on 15 June 2017 were as follows: - Alan Dickson Nick Thomson Johan Steyn Pieter de Villiers Other than as disclosed above, none of the directors of Zamefa had, at the Last Practicable Date, any direct, indirect, beneficial or non-beneficial interest in the Ordinary Shares. THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 9

12 4. REASON FOR THE MANDATORY OFFER 4.1 We refer to the Cautionary Announcement by Zamefa issued on 2 September 2016 in which shareholders were advised that PDACC and RIIL had informed the Company that RIIL had acquired Ordinary Shares, representing a 75.39% shareholding in the Company, through a trade on the LuSE at a price equivalent to ZMW 4.82 per Zamefa share. 4.2 The purchase consideration was subject to a post-completion price adjustment exercise which has been concluded and did not result in a change in the price per share. 4.3 Pursuant to Rule 56 of the Takeovers and Mergers Rules, RIIL is by law required to extend an equivalent offer by way of a mandatory offer to the Minority Shareholders registered as Shareholders as at the Record Date to acquire the remaining 24.61% of the Company s Ordinary Shares held by the Minority Shareholders. 4.4 Accordingly, this Mandatory Offer is being made by RIIL to the Minority Shareholders. 5. TERMS AND CONDITIONS OF THE MANDATORY OFFER This section of the Circular provides a summary of the Mandatory Offer made by RIIL to the Minority Shareholders. 5.1 Terms of the Mandatory Offer RIIL is offering to purchase the Ordinary Shares held by Minority Shareholders of Zamefa at the Offer Price to be settled at the close of the Offer Period. THE MINORITY SHAREHOLDERS OF THE COMPANY ARE NOT OBLIGATED TO SELL THEIR SHARES TO RIIL IN TERMS OF THE MANDATORY OFFER. THE OFFER PROVIDES MINORITY SHAREHOLDERS THE OPPORTUNITY, FOLLOWING THE CHANGE IN CONTROL OF THE COMPANY, TO DECIDE WHETHER TO KEEP ALL THEIR SHARES, SELL SOME AND KEEP THE BALANCE, OR SELL THEIR ENTIRE SHAREHOLDING. 5.2 The Mandatory Offer and the Offer Price RIIL hereby makes an unconditional cash offer to purchase Ordinary Shares held by the Minority Shareholders, collectively representing 24.61% shareholding in the Company, which the Minority Shareholders may wish to tender and in respect of which RIIL receives valid acceptances, prior to the Closing Date, in accordance with the legal provisions governing mandatory offers, at the Offer Price to be settled at the close of the Offer period. The Offer Price will be discharged through the payment of cash to the Minority Shareholders who accept the Offer in accordance with the LuSE Listing Rules Minority Shareholders who accept the Offer shall receive the Offer Price for every Ordinary Share acquired by RIIL in terms of the Offer The Offer Price is the price per Ordinary Share at which RIIL acquired its interest in Zamefa from PDACC. 5.3 Remaining shareholders Minority Shareholders who elect not to accept the Offer will remain Shareholders subject to the rights prescribed under the Companies Act and LuSE Listing Rules. 10 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

13 5.4 Offer period The Offer will be open for acceptance for fourteen (14) days from 08:00 on Monday, 31 July 2017 and will close at 17:00 on Monday, 14 August 2017, which will be the deemed effective date of disposal of Ordinary Shares by participating Minority Shareholders that will have accepted the Offer by the Closing Date Please note that the Offer is only applicable to those Minority Shareholders that are recorded in the Register on the Record Date. 5.5 Conditions of the Mandatory Offer There are no conditions to the Offer, nor are there any other arrangements in relation to the Ordinary Shares which are material to the Offer. 5.6 Financial assurance Reunert has intimated to the LuSE its willingness to support the growth and development of the Zambian capital market and specifically to maintain the existing free float level, being the shares currently held by the Minority Shareholders, and listing of Zamefa on the LuSE, subject to compliance with the existing regulations and laws of Zambia. RIIL intends to do this by selling back into the secondary market, at the Offer Price, the Ordinary Shares it will acquire under the Offer Accordingly, the Sponsoring Broker has approached several Zambian and international institutional investors to advise and inform them of the availability of the Ordinary Shares that RIIL intends to sell back into the market to ensure that it is compliant with the LuSE Listing Rules free float requirement Any sale by RIIL of the Ordinary Shares acquired under the Offer, and the immediate purchase of those Ordinary Shares by Zambian and international institutional investors would be conducted as a back-to-back transaction on the settlement date There is no guarantee expressed or implied that any or all of the Ordinary Shares acquired by RIIL in the Offer will in turn be bought from RIIL by the Zambian and international institutional investors under the potential back-to-back transaction referred to above Minority Shareholders should note that Reunert has the financial capacity to complete the Offer as described in this Circular. Furthermore, in the event that a selected number of Zambian or international institutional investors do participate in the back-to-back transaction described herein, RIIL s need for funds to complete the Offer will reduce significantly or be eliminated completely. THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 11

14 6. LETTER FROM THE COMMITTEE OF INDEPENDENT DIRECTORS OF ZAMEFA METAL FABRICATORS OF ZAMBIA PLC (Incorporated in the Republic of Zambia) (Registration number ) Share code: [ZAMEFA] ISIN: ZM July 2017 To: All minority shareholders of Metal Fabricators of Zambia Plc ( Shareholders ) Dear Shareholders, Offer by Reunert International Investments (Mauritius) Limited to minority shareholders of Metal Fabricators of Zambia Plc. 6.1 Background Shareholders are referred to the Cautionary Announcement last issued by Metal Fabricators of Zambia Plc ( Zamefa or the Company ) on 2 September 2016, and the Joint Announcement regarding the conclusion of the post-completion price adjustment exercise and announcement of the terms of the mandatory offer by RIIL to the minority shareholders of Zamefa issued on or about 10 July 2017 (the Joint Announcement ) in compliance with the provisions of the Securities (Takeovers and Mergers) Rules (the Takeovers and Mergers Rules ), issued pursuant to the Zambian Securities Act, No. 41 of 2016 (the Securities Act ), and the Harmonised Listing Rules (the Listing Rules ) of the Lusaka Securities Exchange (the LuSE ) In the Joint Announcement, Shareholders were advised that the Company had received notification from its majority shareholder, Reunert International Investments (Mauritius) Limited( RIIL ) that it is obliged to make a mandatory offer to the minority shareholders of Zamefa in compliance with the Takeovers and Mergers Rules (the Offer ) Zamefa is majority owned by RIIL which holds 75.39% of the ordinary shares of the Company, whilst the balance of 24.61% of the ordinary shares of the Company are held by various institutional and retail investors Reunert Limited, via RIIL, acquired 75.39% of the ordinary shares in Zamefa which were previously held by Phelps Dodge Africa Cable Corporation In compliance with the mandatory offer provisions of the Takeovers and Mergers Rules and the Listing Rules, RIIL has notified the Board of Zamefa that it is obligated to extend an equivalent offer to acquire the remaining 24.61% of the Company s ordinary shares from the minority shareholders of the Company registered as members as at the Record Date of the Offer Accordingly, purely pursuant to Rule 56 of the Takeovers and Mergers Rules, RIIL is making a mandatory offer to acquire the ordinary shares in Zamefa, not owned by RIIL, from the minority shareholders of Zamefa. 6.2 Analysis of the mandatory offer In order to comply with the provisions of Clause 5(1), Section II of the Third Schedule of the Takeovers and Mergers Rules, the board of directors of the Company (the Board ) retained an independent financial adviser to advise it as to whether the Offer is, or is not, fair and reasonable and to render its reasons for this advice. The annexure at the end of this document provides the report on the Offer prepared by Ernst & Young Advisory Services Limited (the Independent Financial Adviser ) the conclusion of which is that the Offer, in their opinion, is fair and reasonable. 12 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

15 6.3 Independent directors view of the mandatory offer Some directors of the Company have a relationship with Reunert which may affect their determination of the Offer. For this reason, the Board, as required under the Takeovers and Mergers Rules, appointed a committee composed of independent directors of their number to discharge the responsibilities of the Board with regard to the Offer (the Committee of Independent Directors ). The Committee of Independent Directors has reviewed the Offer by RIIL to Minority Shareholders of the Company and has noted that the mandatory offer price has been set ZMW 4.82 per share, which is the price at which RIIL acquired its controlling interest in Zamefa on 26 August Further, the Committee of Independent Directors has received and reviewed the valuation analysis conducted and prepared by the Independent Financial Adviser. Accordingly, the view of the Committee of the Independent Directors is that the Offer by RIIL to Minority Shareholders of the Company of ZMW 4.82 per share is acceptable. 6.4 Independent directors recommendation Pursuant to the provisions of Clause 5(2) Section II of the Takeovers and Mergers Rules, the Board has a responsibility to provide its recommendations regarding acceptance of the Offer. In light of the comments made in section 6.3 of this document, Independent Directors view of the Offer, the Committee of Independent Directors believes the Offer is acceptable. However, it is up to each individual minority shareholder of the Company to decide whether or not to sell some or all of the ordinary shares he or she owns in the Company or simply to retain all of his or her ordinary shares, after taking into account all relevant factors and market related considerations including the price of the ordinary shares on the LuSE. In short, no minority shareholder is being compelled to sell some or all of the ordinary shares he or she owns in the Company. 6.5 Actions to be taken by minority shareholders The options open to the minority shareholders of the Company and the actions they must take, depending on the option selected, are included in section 8 of this Circular, Actions to be taken by minority shareholders. In this regard, we would like to emphasise several points, namely: Most importantly, the minority shareholders of the Company are free to choose what they would like to do with regard to their ordinary shares in the Company; Having reviewed this Circular, each minority shareholder, at his or her sole discretion, is free to sell some or all of the ordinary shares he or she owns, or simply to retain all of his or her ordinary shares; No minority shareholder of the Company is in any way being compelled to sell some, or all of his or her ordinary shares; Each minority shareholder of the Company must make his or her own decision based on the options explained in section 5 of this Circular; and THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 13

16 Any minority shareholder having questions should contact his or her broker or the Sponsoring Broker being Stockbrokers Zambia Limited, or seek advice from his or her banker, lawyer, accountant or other professional adviser. Yours faithfully, Committee of Independent Directors Joe M. Chisanga and Chance Kabaghe 7. INDEPENDENT COMMITTEE OF THE BOARD 7.1 Some directors of the Company have a relationship with Reunert which may affect their determination of the Offer. For this reason, on 11 April 2017 at a meeting of the directors of Zamefa, the Board, as required under the Takeovers and Mergers Rules appointed a committee of independent directors (the Committee of Independent Directors ) owing to the potential conflict that may arise by virtue of the fact that some directors of Reunert and RIIL are also directors of Zamefa. The members of the Committee of Independent Directors are as follows: Joe M. Chisanga; and Chance Kabaghe. 7.2 The duty of the Committee of Independent Directors is to discharge the responsibilities of the Board with regard to the Offer. The views of this Committee of Independent Directors are outlined above in paragraph 6.3 of this Circular, Independent directors views of the Offer, whilst its recommendation to the Minority Shareholders is included in paragraph 6.4 of this Circular, Independent directors recommendation. 8. ACTIONS TO BE TAKEN BY MINORITY SHAREHOLDERS The Minority Shareholders have several options available to them. Depending on the option selected, there may or may not be actions that a Minority Shareholder will have to undertake. These are described in detail below. 8.1 A Minority Shareholder may do nothing A Minority Shareholder may choose to do nothing. Taking no action will confirm that a Minority Shareholder does not wish to sell any of the Ordinary Shares he or she currently owns. In this case, a Minority Shareholder will simply retain his or her existing Ordinary Shares in the Company, subject to the Companies Act and the LuSE Listing Rules. 8.2 A Minority Shareholder may sell a portion of his or her Ordinary Shares in the Company As part of the mandatory offer being made by RIIL under the Takeovers and Mergers Rules, a Minority Shareholder may elect to sell a portion of the Ordinary Shares he or she currently owns to RIIL. If a Minority Shareholder elects this option, he or she should contact their broker or the Sponsoring Broker, and tender the Ordinary Shares he or she wishes to sell at the Offer Price of ZMW 4.82 per share by completing the form of tender attached to this Offer Document. This tender of Ordinary Shares by Minority Shareholders wishing to sell only a portion of their Ordinary Shares in the Company must be completed, in writing, during the Offer Period as indicated in the timetable on page 4 of this Offer Document and will be conducted as a normal trade over the LuSE on the trade date at the close of the Offer Period. 14 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

17 8.2.2 Unless otherwise advised by an announcement in the press, offers to sell Ordinary Shares by the Minority Shareholders must be received not later than 17:00 hours on the Closing Date of the Offer Period, namely, Monday, 14 August Postal acceptances postmarked on or before the above date must be received not later than 17:00 hours on Wednesday, 16 August Any changes in these dates will be communicated to Minority Shareholders via an announcement in the daily Zambian press, which will appear on consecutive days in both days in two Zambian national newspapers. 8.3 A Minority Shareholder may sell all of his or her Ordinary Shares in the Company As part of the Offer being made by RIIL as required under the Takeovers and Mergers Rules, a Minority Shareholder may elect to sell all of the Ordinary Shares he or she currently owns to RIIL. If a Minority Shareholder elects this option, he or she should contact their broker or the Sponsoring Broker and tender all the Ordinary Shares he or she holds at the Offer Price by completing the Form of Acceptance attached to this Circular. This tender of Ordinary Shares by Minority Shareholders wishing to sell all of their Ordinary Shares in the Company must be completed, in writing, during the Offer Period as indicated in the timetable on page 4 of this Offer Document and will be conducted as a normal trade over the LuSE on the trade date at the close of the Offer Period Unless otherwise advised by an announcement in the press, offers to sell Ordinary Shares by the Minority Shareholders must be received in writing not later than 17:00 hours on the Closing Date of the Offer Period, namely, Monday, 14 August Postal acceptances postmarked on or before the above date must be received not later than 17:00 hours on Wednesday, 16 August Any changes in these dates will be communicated to Minority Shareholders via an announcement in the Zambian daily press, which will appear on consecutive days in both days in two Zambian national newspapers. 8.4 Note for Shareholders holding Ordinary Share certificates Some Shareholders may be in possession of share certificates in respect of Ordinary Shares held by them. The trading, clearing and settlement arrangements at the LuSE are based on the CSD system which does not use share certificates. Accordingly, those Shareholders holding physical share certificates and intending to participate in the Offer are advised to deposit their Ordinary Shares into the CSD prior to accepting the Offer by contacting any one of the member broking firms of the LuSE. 8.5 Acceptances irrevocable All valid acceptances of the Offer received by either your broker or the Sponsoring Broker on or prior to the Closing Date, shall be irrevocable. 8.6 Transaction receipts The Company or your broker or the Sponsoring Broker will issue no receipts for Forms of Acceptance, surrender and transfer other than stamping the same in the receipt portion of the application form, if tendered in person, unless specifically requested to do so by the Minority Shareholder in question in writing. 8.7 Acceptances of the Mandatory Offer by nominee companies and representatives Such nominee companies and custody accounts may submit in aggregate or in respect of each Minority Shareholder represented, acceptances of the Offer by recognized nominee companies. Any representative accepting the Offer warrants that it is duly authorized to do so. THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 15

18 8.8 No amendment or variation of the Mandatory Offer No amendment or variation of the Offer shall be valid unless made in writing and signed by RIIL after the necessary regulatory approvals. 8.9 Treatment of incomplete Forms of Acceptance RIIL reserves the right, in its discretion, to: treat as invalid, Forms of Acceptance, that are incomplete or illegible; and require proof of the authority of the person signing the Form of Acceptance, surrender and transfer where such proof has not yet been lodged with or recorded by the broker General The Minority Shareholders may accept the Offer in respect of all or part of their Ordinary Shares. Minority Shareholders who do not wish to accept the Offer need not take further action and will be deemed to have declined the Offer. The Minority Shareholders who accept the Offer to sell their Ordinary Shares will be responsible for any taxes or costs that may be levied on such sale. Neither Reunert nor RIIL shall be responsible or liable for any tax liability of any Minority Shareholder on the Ordinary Shares acquired under the Offer from such Minority Shareholder. 9. SETTLEMENT 9.1 Settlement of the Offer Price to the Minority Shareholders will take place in accordance with the normal arrangements for trades conducted on the LuSE. Payment of the Offer Price by RIIL to the Minority Shareholders for the Ordinary Shares acquired shall be made in accordance with the normal LuSE Listing Rules. 9.2 On the first business day following the last day for the receipt of postal acceptances all Ordinary Shares that have been tendered by Minority Shareholders will be traded over the LuSE. Settlement will occur thereafter on the Trade Date plus three working days ( T + 3 ) in accordance with prevailing LuSE Listing Rules. On T + 3, Minority Shareholders who have tendered Ordinary Shares in the Offer may collect the Offer Price to which they are entitled from their respective broker. 9.3 Shareholders are reminded to provide their up-to-date bank account details and forwarding addresses to the Transfer Secretaries (ShareTrack Zambia Ltd) in order to facilitate efficient and expedient payment. In the event that your details have changed, kindly complete the Shareholder Account Detail Form and return it to the Transfer Secretaries. The Account Detail Form can be downloaded from the Transfer Secretaries website ( com) or collected from their offices, details are as provided below: ShareTrack Zambia Ltd Spectrum House Stand 10, Great East Road, Jesmondene, Lusaka Postal Address: P O Box Lusaka, Zambia sharetrack@scs.co.zm Website: sharetrackzambia.com Tel: Tel/Fax: THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

19 9.4 Thereafter, and unless instructed by a Minority Shareholder, all payments not so collected shall, at the Minority Shareholder s risk, be sent to the address of the Minority Shareholder as set forth in the Register. 9.5 Minority Shareholders wishing to participate in the Offer and tender some or all of their Ordinary Shares should complete the attached tender form and submit it to their broker, or the Sponsoring Broker. A list of all the LuSE brokers appears in clause 17 below. 9.6 Acceptance of the Offer may have an effect on an individual Minority Shareholder s tax position. Minority Shareholders are advised to consult their professional advisers about their personal tax positions. 10. IMPLICATIONS OF THE MANDATORY OFFER IN RELATION TO ZAMEFA S LISTING ON THE LUSE The LuSE Listing Rules stipulate that, unless otherwise agreed with the Board of the LuSE, twenty-five percent (25%) of each class of equity shares of a company must be held by the public in order for a company to qualify for a full listing on the LuSE. In the event that the percentage of the Ordinary Shares held by the public further falls below this 25% threshold, the eligibility of Zamefa to be listed on the main board of the LuSE would be affected. Zamefa would nevertheless, continue to qualify to have its Ordinary Shares traded as quoted shares on the second tier of the LuSE market. However Minority Shareholders are advised that a smaller number of shares held by the public could reduce the liquidity and price formation and restrict trading in the Ordinary Shares on the LuSE. 11. SALE BY REUNERT OF PURCHASED ORDINARY SHARES UNDER THE MANDATORY OFFER TO INSTITUTIONAL INVESTORS Reunert has intimated to the LuSE its willingness to support the growth and development of the Zambian capital market and specifically to extend the existing free float level to no more than 25% and maintain the listing of Zamefa on the LuSE main board, subject to compliance with the existing regulations and laws of Zambia. RIIL intends to do this by selling back into the secondary market, at the Offer Price, the Ordinary Shares it will acquire under the Offer. Accordingly, the Sponsoring Broker has approached several Zambian and international institutional investors to advise and inform them of the availability of the Ordinary Shares that RIIL intends to sell back into the market. Therefore to maintain the existing free float level of Zamefa on the LuSE market, the Zambian and international institutional investors have been invited to buy any and all the Ordinary Shares that RIIL would have acquired from the Minority Shareholders under the Offer. Any sale by RIIL of the Ordinary Shares acquired under the Offer, and the immediate purchase of those shares by Zambian and international institutional investors would be done and effected as a back to back arrangement after the settlement date of the Mandatory Offer. There is no guarantee express or implied that any or all of the Ordinary Shares acquired by RIIL in the Offer will in turn be bought from RIIL by the Zambian and international institutional investors under the back to back arrangement mentioned above. Minority Shareholders should note that Reunert, acting through RIIL, has the financial capacity to complete the Offer as described. Furthermore, the willingness by a selected number of Zambian institutional investors to participate in the back to back arrangement as described herein and buy the Ordinary Shares acquired by RIIL in the Offer will reduce significantly the funds required by RIIL if not wholly eliminate the need for such funding by Reunert. THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 17

20 12. COSTS OF THE MANDATORY OFFER The total estimated costs incurred by Zamefa amount to ZMW Payments to advisers and third party service providers in relation to this combined document are for the account of RIIL. Brokerage, SEC and LuSE commissions are the responsibility of the buyer and sellers of Ordinary Shares in the Mandatory Offer. 13. TAX IMPLICATIONS OF THE MANDATORY OFFER There are no capital gains or property transfer taxes on the sale of listed securities in Zambia. Proceeds from the sale of Ordinary Shares, however, may be taxed in the hands of the recipient. Shareholders who sell some or all of their Ordinary Shares in this Offer, therefore, may wish to consult with their accountant, tax adviser or other professional adviser on any tax liability that they may incur. 14. DIRECTORS RESPONSIBILITY STATEMENT 14.1 RIIL Directors Responsibility Statement All directors of RIIL jointly and severally accept full responsibility for the accuracy of the information relating to RIIL and confirm, having made all reasonable inquiry, that to the best of their knowledge, statements expressed in this Circular have been arrived at after due and careful consideration and there are no other facts not contained in this Circular, the omission of which would make any statement in this document misleading Reunert Directors Responsibility Statement All directors of Reunert jointly and severally accept full responsibility for the accuracy of the information relating to Reunert and confirm, having made all reasonable inquiry, that to the best of their knowledge, statements expressed in this Circular have been arrived at after due and careful consideration and there are no other facts not contained in this Circular, the omission of which would make any statement in this document misleading Zamefa Directors Responsibility Statement All directors of Zamefa jointly and severally accept full responsibility for the accuracy of the information contained in this Circular and confirm, having made all reasonable inquiry, that to the best of their knowledge, statements expressed in this Circular have been arrived at after due and careful consideration and there are no other facts not contained in this Circular, the omission of which would make any statement herein, misleading. 15. DOCUMENTS AVAILABLE FOR INSPECTION 15.1 The following documents are available for inspection at the registered office of Zamefa or at the office of the Sponsoring Broker between 08:00 hours and 17:00 hours, Monday through Friday during the Offer Period: the Offer letter from RIIL addressed to the Zamefa Board; the independent Fair and Reasonable Opinion; and signed copy of this Circular, dated 7 July APPLICABLE LAWS The Offer and its acceptances will be governed by the laws of Zambia. This Circular does not constitute an offer in any area or jurisdiction in which it is illegal to make such an offer. In such circumstances, this Circular is sent for information purposes only. 18 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

21 17. LIST OF LuSE BROKERS Below is the list of LuSE brokers that the Minority Shareholders may make use of: Autus Securities The Coliseum, Ground Floor, Block A Bwinjifumu Road, Rhodespark P.O.Box 32308, Lusaka, Zambia Pangaea Securities Zambia Limited Pangea Office Park Great East Road P.O.Box 30163, Lusaka, Zambia Equity Capital Resources Plc 6th Floor, Suite 10, Kulima Tower Building Katungila Street, Town Center P.O. Box 37184, Lusaka, Zambia Madison Asset Management Company Limited LSA House Plot 316 Independence Avenue P.O. Box 37013, Lusaka, Zambia Stockbrokers Zambia Limited 32 Lubu Road, Longacres P.O.Box 38956, Lusaka, Zambia THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 19

22 Annexure A ANNEXURE: REPORT BY THE INDEPENDENT FINANCIAL ADVISOR ON THE OFFER FROM RIIL TO THE MINORITY SHAREHOLDERS OF ZAMEFA Ernst & Young Advisory Services Limited Trinity Office Park, Stand No.16806, Unit 9, 10, Alick Nkhata Road, P O Box 35483, Lusaka 10101, Zambia Tel: /1/3/4 Fax: mike.musonda@zm.ey.com / florence.phiri@zm.ey.com Reliance Restricted The Chairman of the Board of Directors Metal Fabricators of Zambia Plc 140 H. Figov Road Luanshya Zambia 06 July 2017 Dear Sir Fair and reasonable opinion on the terms of the mandatory offer to the minority shareholders of Metal Fabricators of Zambia Plc by Reunert International Investments Limited This letter is prepared for the purpose of inclusion in the circular to the shareholders of Metal Fabricators of Zambia Plc ( Zamefa ) to be dated 07 July 2017 (the Circular ). Words and phrases used in this letter shall have the same meaning as ascribed to them in the Circular. Introduction We understand that Reunert International Investments (Mauritius) Limited ( Reunert ) acquired per cent of the issued shares of Zamefa which is listed on the Main Board of the Lusaka Securities Exchange (the LuSE ). Given that its shareholding in Zamefa is above 35 per cent, Reunert is required to make a mandatory offer to the minority shareholders of Zamefa (the Minority Shareholders ) for the acquisition of the per cent of Zamefa s issued shares held by them (the Proposed Transaction ). The mandatory offer to the Minority Shareholders will be made in compliance with the provisions of the Third Schedule of the Securities (Takeovers and Mergers) Rules, Statutory Instrument No 170 of 1993 (the Takeovers Rules ), issued pursuant to the Securities Act, Chapter 354 of the Laws of Zambia (the Securities Act ). Clause 5(2) of the Takeovers Rules requires that an independent advisor be retained to advise the independent committee of the board of directors of Zamefa on whether or not the offer is fair and reasonable. In terms of the Harmonised Listing Requirements of the LuSE (the Listing Rules ), the fair and reasonable opinion must be included in the Circular. Full details of the Proposed Transaction are contained in the Circular. Our opinion was drafted in line with Schedule 5 of the Listing Rules. Scope Ernst & Young Advisory Services Limited ( EY ) has been retained by the Directors of Zamefa to provide an independent opinion as to the fairness and reasonableness of the Proposed Transaction in terms of Clause 5(2) of the Takeovers Rules which require an independent advisor be retained to advise the independent committee of the board of directors on whether or not the offer and the terms of the Proposed Transaction are fair and reasonable. 20 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

23 Our advice relates to the fairness and reasonableness of the offer price of ZMW 4.82 per share (the Offer Price ) which is being offered by Reunert International Investments Limited to the Minority Shareholders for the purchase of their shares. Definition of fairness and reasonableness for the purposes of our opinion For the purposes of our opinion, fairness is based primarily on quantitative factors. Therefore, the price would be considered fair to the Minority Shareholders if it is in line with or higher than the fair value of Zamefa shares. Reasonableness is based primarily on qualitative factors such as sensibility or appropriateness to the given situation. Fair value is defined as the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. Our approach in considering the Proposed Transaction In assessing the fairness and reasonableness of the terms of the Proposed Transaction, we have calculated the fair value of Zamefa s issued share capital and compared it to the Offer Price. We also took into consideration: section 9 of the Listing Rules(Transactions); prevailing economic and market conditions; an assessment of share price trends; the acquittal of Zamefa s independent directors of their responsibilities to the shareholders; and general compliance with LuSE requirements for independent fairness opinions. Information utilised In the course of our analysis, we relied upon financial and other information, including financial information, obtained from Zamefa management, together with industry-related and other information in the public domain. Our conclusion is dependent on such information being complete and accurate in all material respects. The principal sources of information used in formulating our opinion regarding the terms and conditions of the offer include: the draft circular for the Proposed Transaction; representations and assumptions made available by, and discussions held with the management of Zamefa; historical share trading data relating to Zamefa; audited financial information relating to Zamefa for the financial years ended 31 December 2014, 31 December 2015 and the nine month period ended 30 September 2016; property valuation reports for the Zamefa property portfolio, prepared by R.M. Fumbeshi and Company; Management accounts for the period to 31 March 2017; S&P Capital IQ, a multinational financial information provider, a division of McGraw Hill Financial; and various analysts reports. THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 21