Aveng : disposal of Aveng Water

In February 2018, Aveng announced the results of its strategic review ('Strategic Review'). The outcome of the review was the adoption by Aveng of a new and focused strategy to be an international infrastructure and resources group operating in selected markets and capitalising on its considerable knowledge and experience. As part of this Strategic Review, the Group announced that it intends to dispose of certain non-core assets and properties. Aveng Water (Pty) Ltd. and the Aveng Namibia Water business (together 'Aveng Water') was identified as one of these non-core assets.

Aveng has entered into a sale and purchase agreement ('SPA') with Cambrose 735 (Pty) Ltd., a special purpose vehicle incorporated as a private company ('Infinity Partners'), for the sale of the shares in Aveng Water (Pty) Ltd. and the Aveng Namibia Water business ('Proposed Transaction').

Infinity Partners is a 100% Black-owned company jointly held by E-Squared Investments (Pty) Ltd. ('E-Squared') and Suzie Nkambule, the current managing director of Aveng Water who has led the successful turnaround of the business for the past 3 years. Suzie Nkambule is a Fellow of the Allan Gray Orbis Foundation and will lead the business as it builds on its strategy and capabilities to become a leading water infrastructure development and technology company operating across sub- Saharan Africa.

E-Squared is a large impact investor whose vision is of an economically sustainable and inclusive South Africa. E-Squared invests in high-impact businesses driven by the Allan Gray Orbis Foundation Fellows who have entrepreneurial ambition and who seek to make meaningful transformation possible in the South African economy. Investing in Infinity Partners is aligned to E- Squared's mission to empower responsible entrepreneurs to become the catalysts for economic development, transformation and social upliftment in South Africa.

This sale is another important step in the delivery of Aveng's Strategic Action Plan and in the refocussing of Aveng to become an international infrastructure and resources group. The Proposed Transaction addresses the retention of all existing jobs, surety for the continuation of existing clients' contracts, and sustainability to ensure the business remains successful well into the future.

Particulars of the Proposed Transaction

Aveng will sell the shares in Aveng Water and the transaction will be structured as follows:

(i) Sale of 100% of the issued shares of Aveng Water (Pty) Ltd.; and

(ii) Sale of the assets and liabilities and the business of the Aveng Namibia Water from Aveng Namibia.

The fully-funded net transaction consideration is R95 million and will be settled in cash on a debt free basis. The proceeds from the sale will be used to strengthen the financial position of the Group and will be applied as working capital to the remainder of the Grinaker-LTA business as previously agreed with the Group's South African Lenders in the Common Terms Agreement. The transaction is expected to close by the end of the first calendar quarter of 2019.

Conditions precedent

The Proposed Transaction is subject to a number of conditions precedent, including:

(i) Satisfactory completion of due diligence;

(ii) Entering into a license agreement in terms of which Aveng Water retains the right to use the 'Aveng Water' brand and all other related brands for a period of six calendar months after the Effective Date;

(iii) To the extent legally required, the Proposed Transaction is approved by the Competition Authorities in all applicable jurisdictions;

(iv) To the extent required, approval of the Proposed Transaction by financiers who are party to the Common Terms Agreement concluded with Aveng on 25 February 2018 and most recently amended on 13 September 2018;

(v) any other required regulatory approvals in respect of the final agreements and the Proposed Transaction; and

(vi) any third-party consents that may be required for the implementation of the Proposed Transaction to the satisfaction of the Aveng.

The SPA incudes representations and warranties that are normally associated with a transaction of this nature.