AEG 201901180001A
Category 2 transaction announcement: Disposal of Aveng Water

AVENG LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1944/018119/06)
ISIN: ZAE000111829
SHARE CODE: AEG
("Aveng" or "the Group")


CATEGORY 2 TRANSACTION ANNOUNCEMENT: Disposal of Aveng Water


Background and rationale


In February 2018, Aveng Limited ("Aveng" or the "Group") 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 Proprietary Limited 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 Proprietary
Limited, a special purpose vehicle incorporated as a private company ("Infinity Partners"), for the
sale of the shares in Aveng Water Proprietary Limited and the Aveng Namibia Water business
("Proposed Transaction").


Infinity Partners is a 100% Black-owned company jointly held by E-Squared Investments Proprietary
Limited ("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 Proprietary Limited; 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 Limited 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.
About Aveng Water


Aveng Water is a leading water treatment process engineering and project delivery business with a
broad service offering from project development to long term operations and maintenance. The
business has a core capability well ahead of its South African peers in mine-impacted water
treatment technology and sea water desalination in Southern Africa. It is well positioned in the
water sector for both public and private water and wastewater reuse developments with strong
international and local partners to meaningfully participate in the delivery of the South African water
and sanitation infrastructure backlog.
Aveng Water was reclassified and reported as Held for Sale in the annual financial statements for the
year ended 30 June 2018. As part of this reclassification, the basis of valuation was changed to fair
value less cost to sell. The net asset value of the business unit amounted to negative R29 million.
The Group reported a profit after taxation of R63 million for the year end 30 June 2018 relating to
Aveng Water.
The historical financial information for Aveng Water was prepared in accordance with International
Financial Reporting Standards.
This 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.


Jet Park
18 January 2019
JSE Sponsor
UBS South Africa Proprietary Limited
Legal advisors
Baker & McKenzie


Enquiries:
Michael Canterbury
Group Executive: Strategy & Investor Relations
Tel: 011 779 2979
Email: michael.canterbury@avenggroup.com

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