MONTAUK HOLDINGS LIMITED (Incorporated in the Republic of South Africa) Registration number: 2010/017811/06 Share code: MNK ISIN: ZAE000197455 Date of incorporation: 31 August 2010 (Previously HCI International Holdings Limited and Elgabrite Proprietary Limited) ( Montauk Holdings or the Company ) ABRIDGED PRE-LISTING STATEMENT OF MONTAUK HOLDINGS LIMITED - LISTING OF THE ISSUED SHARE CAPITAL OF MONTAUK HOLDINGS ( LISTING ) ON THE MAIN BOARD OF THE JSE LIMITED ( JSE ) 1. INTRODUCTION The abridged pre-listing statement appearing below ( Abridged Pre-listing Statement ) is not an invitation to the public to subscribe for shares in Montauk Holdings, but is issued in compliance with the Listings Requirements of the JSE for the purpose of providing information to the public and investors in respect of Montauk Holdings. The board of directors of the holding company of Montauk Holdings, Hosken Consolidated Investments Limited ( HCI ) have elected to unbundle all of the Montauk Holdings shares held by HCI ( Unbundling ) to its shareholders recorded on the HCI securitities register on Friday, 12 December 2014 ( Record Date ), pursuant to which the entire issued share capital of Montauk Holdings will be listed on the main board of the JSE. 2. OVERVIEW OF MONTAUK HOLDINGS Montauk Holdings develops, owns and operates large scale renewable energy projects utilising landfill methane in the USA. Montauk Holdings and its subsidiaries and associates ( the Group ) has over 20 years experience in permitting, design, construction and operation of energy facilities utilizing landfill gas ( LFG ) and is headquartered in Pittsburgh, Pennsylvania. The Group s expertise and experience includes, inter alia, the following: pipeline quality gas production; electric power generation; carbon reduction and offset credits; renewable energy credits; and LFG collection system operations. The Group s portfolio of LFG processing and power generation assets has the following attractive characteristics: leading market position in the conversion of LFG to pipeline quality natural gas; large-scale LFG projects provide substantial cash flows; attractive pricing on contracts with creditworthy counterparties;
active management with the expertise and experience to support growth initiatives; well-defined expansion opportunities; favourable political and regulatory climate for renewable energy; seasoned, experienced professionals at all levels of organisation; and a strong environmental and safety record. 3. RATIONALE HCI, the holding company of Montauk Holdings, believes that the Unbundling best serves the interests of HCI shareholders and will enhance HCI shareholder value through improving the public profile of, and providing additional information regarding, Montauk Holdings. The HCI board of directors believe that Montauk Holdings has the operational and financial capacity to pursue its envisioned growth strategy independently and the Listing provides Montauk Holdings with the opportunity to raise additional capital to facilitate future expansion, if required. The separate Listing of Montauk Holdings is further intended to provide HCI shareholders with the flexibility to maintain, increase or decrease their investment in Montauk Holdings based on their assessment of its prospects. In addition, through the Unbundling, the Listing is intended to provide HCI shareholders with the opportunity to obtain direct exposure to the LFG sector which offers an alternative risk and return profile to their current shareholding in HCI and which has attractive growth prospects over the medium to long term. Montauk Holdings has in the past been overlooked by investors because of its size relative to other larger and higher profile HCI investments. The Listing will provide visibility and additional information regarding Montauk Holdings which will allow investors to better assess its value. 4. PROSPECTS The Group has a number of planned strategies to achieve strong growth over the medium to long term, which include: strategic acquisitions in a fragmented LFG industry with significant opportunity for consolidation; improved efficiencies of existing operations to achieve optimal economies of scale; and diversification into complimentary energy business lines. 5. LISTING ON THE JSE The JSE has granted Montauk Holdings a listing by way of introduction of all its issued ordinary shares on the JSE main board under the abbreviated name MONTAUK, share code MNK and ISIN ZAE000197455 with effect from the commencement of trade on 8 December 2014. Montauk Holdings will be listed in the Integrated Oil and Gas sector.
6. SHARE CAPITAL At the Listing Date, the authorised share capital of Montauk Holdings will comprise 200 000 000 ordinary shares with no par value and 200 000 000 unclassified shares. Montauk Holdings will have an issued share capital comprising 135 256 156 ordinary shares with no par value ( Montauk Holdings Shares ). The issued share capital has a value of US$166 202 000. There will be no other class of shares authorised or issued by Montauk Holdings at the Listing Date. All the Montauk Holdings Shares rank pari passu in all respects, and all have equal rights to participate in capital, dividends and profit distributions by Montauk Holdings. The Montauk Holdings Shares are fully paid-up and freely transferable. Montauk Holdings does not have any shares held in treasury. There are no convertibility or redemption provisions relating to the Montauk Holdings Shares. 7. MONTAUK HOLDINGS DIRECTORS The full names, ages, business addresses and capacities of the directors of Montauk Holdings are provided below: Full name Age Capacity Business Address D R Herrman 47 Chief Executive Officer S F McClain 40 Chief Financial Officer J A Copelyn 64 Non-executive Chairman Suite 801, 76 Regent Road, Seapoint, Cape Town, 8005, South Africa M H Ahmed 49 52 Intersite Avenue, Umgeni Business Park, Durban, 4001, South Africa MA Jacobson 46 Non-executive N B Jappie 54 B S Raynor 64 A van der Veen 43 Non-executive Suite 61, 14 Narabang Way, Belrose, New South Wales, 2085, Australia 42 Overport Drive, Overport, Durban, 4091, South Africa La Concorde, 57 Main Street, Paarl, 7646, South Africa
8. OWNERSHIP AND CONTROL Immediately following the Unbundling, HCI shareholders will hold Montauk Holdings Shares in proportion to their shareholdings in HCI. Sactwu and certain of the directors and members of management of HCI, who will become shareholders of Montauk Holdings following the Unbundling by virtue of their shareholdings in HCI have entered into an agreement to regulate the manner in which they will conduct themselves in relation to their Montauk Holdings Shares. The agreement establishes a voting pool amongst the parties to the agreement and the parties furthermore grant one another pre-emptive rights in respect of the parties Montauk Holdings Shares. Sactwu and certain of the directors and members of management of HCI have entered into an option agreement comprising a put and call option. Sactwu has indicated that it may divest from its investment in Montauk Holdings as the investment does not fit its investment mandate of supporting businesses that operate in South Africa and as such the option agreement will provide Sactwu with the opportunity to exit its 30% shareholding in Montauk Holdings in an orderly manner which doesn t adversely impact the Company or the other shareholders. The call option provides that the Montauk Holdings Shares held by Sactwu can be acquired by the other parties to the agreement for an aggregate consideration of R142 645 000 (plus an amount of R3.44 per additional Montauk Holdings Share acquired by Sactwu prior to the exercise of the call option) during the call option period of 180 days commencing on the date of Listing. The put option allows Sactwu to sell the Montauk Holdings Shares to the other parties to the agreement at the lesser of the 20 day VWAP prior to the date on which the put option is exercised and the aggregate amount of R142 645 000 (plus R3.44 per additional Montauk Holdings Share acquired by Sactwu prior to exercise of the put option) during the put option period which commences when the call option period ends and lasts for 20 business days thereafter. 9. POSTING OF PRE-LISTING STATEMENT The Pre-listing Statement will be posted to HCI shareholders on Wednesday 19 November 2014 regarding the Listing and containing detailed information regarding the Company ( Pre-listing Statement ). The Pre-listing Statement will also be available on HCI s website at www.hci.co.za. 10. SALIENT DATES RELATING TO THE LISTING The salient dates relating to the Listing and the Unbundling are set out below: Release of the abridged Montauk Holdings Pre-listing Statement on SENS on Declaration and finalisation announcement released on SENS on Last Business Day to trade in HCI Shares on the JSE for settlement by the Record Date, and thereby participate in the Unbundling on Wednesday, 19 November Wednesday, 19 November Friday, 5 December
All trades in HCI Shares from this day will exclude the right to receive Montauk Holdings Shares on Listing of Montauk Holdings Shares on the JSE under the JSE code: MNK and ISIN ZAE000197455 with effect from the commencement of business on Record Date to participate in the Unbundling being the date on which HCI shareholders must be recorded in the Register in order to participate in the Unbundling on Montauk Holdings Shares issued on CSDP or Broker accounts of HCI dematerialised shareholders updated with the Montauk Holdings Shares and share certificates posted to HCI certificated shareholders Montauk Holdings on Monday, 8 December Monday, 8 December Friday, 12 December Monday, 15 December Monday, 15 December 11. COPIES OF THE PRE-LISTING STATEMENT Copies of the Pre-listing Statement will be available for inspection during normal office hours from Wednesday, 19 November 2014 up to and including Monday, 15 December 2014 at the registered office of Montauk Holdings (Suite 801, 76 Regent Road, Seapoint, Cape Town, 8005, South Africa), the offices of the investment bank and sponsor (100 Grayston Drive, Sandown, Sandton, 2196, South Africa) and the offices of the Transfer Secretaries (70 Marshall Street, Johannesburg, 2001) during normal business hours (excluding Saturdays, Sundays and South African public holidays). In addition the Pre-listing Statement will be available electronically on HCI s website, www.hci.co.za. Cape Town 19 November 2014 Investment bank and sponsor Investec Bank Limited Corporate law advisor Edward Nathan Sonnenbergs Inc. Reporting accountants Grant Thornton (Jhb) Inc