Aveng - Aveng Grinaker-LTA Construction disposal

Thursday 8th August, 2019
Following the strategic review concluded in 2018 and as part of the non-core disposal process, Aveng, acting through its wholly owned subsidiary, Grinaker LTA (Pty) Ltd (\"GLTA\" or the \"Seller\"), has entered into a binding sale of business agreement with the Laula Consortium (\"Purchaser\") for the sale of the Grinaker-LTA Building and Civil Engineering business (\"Aveng Grinaker-LTA Construction\") as a going concern (\"proposed transaction\"), subject to certain conditions precedent.

Particulars of the proposed transaction
The proposed transaction includes the Business, all assets and liabilities, including the settlement agreement entered into between the Government of South Africa and Aveng Africa (Pty) Ltd. (\"Settlement Agreement\"), and transferring contracts as agreed between the parties. Certain contracts (mainly those that are at or near practical completion) will not transfer. These contracts will be managed to completion by way of a service level agreement with the Purchaser.

The proposed transaction consideration is R100 million in cash which will be subject to a net working capital
adjustment settled via:
*An initial payment of R30 million settled via 6 equal monthly instalments, commencing on the 25th day of the 6th month following the closing date;
*A further R70 million including the net working capital adjustment, which will be settled by no later than the second anniversary of the closing date.
*Certain security obligations will apply until the final cash consideration is received. The proceeds from the sale will be used to strengthen the financial position of the Aveng.

Consents and conditions precedent
The proposed transaction is subject to the following consents and conditions precedent:
*Approval being granted by, or notification given to, the various financiers who are a party to the Common Terms Agreement concluded with Aveng;
*If required, approval of the competition authorities;
*Entering into a sub-lease between the Purchaser and the Seller in respect of the Jet Park property for a minimum period of twelve months and the cession of various other property leases;
*To the extent necessary, consent obtained from the relevant third parties to cancel or transfer the Bonds, Performance Guarantees and Indemnities;
*The Purchaser having entered into the necessary funding and/or bonding agreements for all new or replacement facilities, and such agreements having become unconditional in their terms;
*Aveng having obtained the consent of the Government of the RSA to assign the Settlement Agreement to the Purchaser; and
*Other required regulatory approvals.

The transaction agreements include warranties normal for a transaction of this nature.

Closing date
The proposed transaction is expected to close no later than 21 November 2019 after all conditions have been met.

Net asset value and loss attributable to the Grinaker-LTA Building and Civil Engineering business as at 30 December 2018
The net asset value attributable to the Business at 31 December 2018 was (R46 million) and a loss after tax of R1.4 million. This information has been extracted from the unpublished management accounts and excludes the impact of those contracts not forming part of the proposed transaction.

The management accounts were prepared in terms of the Company's accounting policies. The Company confirms that it is satisfied with the quality of such management accounts.

The financial information has not been reviewed or reported on by the Group's external auditors.

Categorisation
The proposed transaction is categorised as a Category 2 transaction in terms of the JSE Listings Requirements and accordingly no shareholder approval is required.
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