AVENG LIMITED - Update in relation to the M&R Tran29 May 2018
AEG AEGCB 201805290002A
Update in relation to the M&R Transaction and the Capital Markets Transaction


(Incorporated in the Republic of South Africa)
(Registration number: 1944/018119/06)
Share code: AEG
Share ISIN: ZAE000194940
JSE 2019 Convertible Bond Code: AEGCB
JSE 2019 Convertible Bond ISIN: ZAE000194940
("Aveng", "the Company" or “the Group”)


1    Introduction

Aveng provides the following information advance of various potential corporate actions ahead of the
general meeting today, 29 May 2018.

Shareholders are referred to the announcements released by Aveng on SENS on Thursday, 26 April
2018 (“Capital Markets Transaction Announcement”) and on Friday, 18 May 2018 (“M&R Transaction
Announcement”) respectively, in which Aveng announced (i) its intention to early redeem the R2 billion,
7.25% senior unsecured convertible registered bonds due 24 July 2019 still in issue (“Early Bond
Redemption”), (ii) its intention to launch a rights offer of up to R500 million (“Proposed Rights Offer”) to
raise cash to fund internal liquidity requirements (the Early Bond Redemption and the Proposed Rights
Offer are collectively referred to as the Capital Markets Transaction), and (iii) that the boards of directors
of Aveng (“Aveng Board”) and Murray & Roberts (“Murray & Roberts Board”) have reached in principle
agreement regarding the proposed terms of a potential combination of Aveng and Murray & Roberts
("M&R Transaction"). Shareholders are further referred to the announcement released by Murray &
Roberts on SENS on Friday, 18 May 2018, regarding the M&R Transaction.

Shareholders are reminded that no formal offer has yet been made by Murray & Roberts and that the
making of a formal offer by Murray & Roberts is subject to the fulfilment and/or waiver of a number of pre-
conditions as set out in the M&R Transaction Announcement. The making of a formal offer by Murray &
Roberts to Aveng is subject to the satisfactory fulfilment or waiver of the following pre-conditions:
   • Murray & Roberts shareholder approval in terms of section 126 of the Companies Act 2008, as
     amended (“Companies Act”), as a consequence of receipt by Murray & Roberts of an offer from
     ATON Gmbh (“ATON”) to acquire all or a portion of the issued shares in Murray & Roberts that it
     does not already own;
   • approval from the Takeover Regulation Panel (“TRP”) in terms of section 126 of the Companies
   • satisfactory completion of reciprocal confirmatory due diligence by Murray & Roberts and Aveng;
   • completion of the Proposed Rights Offer in accordance with its terms;
   • satisfactory terms of the scheme of arrangement confirmed; and
   • execution of final financing agreements by Murray & Roberts in relation to the financing facilities
        of R1.8 billion.
2   Update on M&R Transaction

Shareholders are referred to the announcements released on SENS by ATON on Friday, 25 May 2018,
and Monday, 28 May 2018, regarding ATON’s acquisition of an additional c.18.2 million Murray & Roberts
ordinary shares, increasing its shareholding in Murray & Roberts to c.43.7%, ATON’s withdrawal of its
voluntary offer and its firm intention to make a mandatory offer for Murray & Roberts at an increased offer
price of R17.00 on the basis as set out in the announcement. ATON has also previously released a public
statement stating that it will not support the M&R Transaction.

Despite these recent developments, the Aveng Board remain of the opinion that there is merit in the
potential combination of Aveng and Murray & Roberts, and believes that such a potential combination is
in the best interest of the Company and its stakeholders. The Aveng Board is therefore continuing to
engage with the Murray & Roberts Board and will continue progressing the M&R Transaction.

Aveng will keep shareholders updated with any further developments and progress in relation to the M&R

3   Update on Proposed Rights Offer

Notwithstanding the M&R Transaction, Aveng remains committed to the implementation of the Proposed
Rights Offer. As described in the Capital Markets Transaction it is critical for the Company to maximise
proceeds from the Proposed Rights Offer in order for the Company to meet its interim liquidity
requirements. It is anticipated that Aveng will utilise a further R200 million bank debt (such funding
remains subject to bank approval). Aveng is currently finalising the funding term sheet with its funding
banks in this regard.

Murray & Roberts is supportive of Aveng proceeding to implement the Proposed Rights Offer, irrespective
of whether the M&R Transaction proceeds or not.

The Proposed Rights Offer is conditional on shareholder approval to amend Aveng’s Memorandum of
Incorporation to inter alia increase the authorized share capital of Aveng to facilitate the Proposed Rights
Offer. Additionally, shareholder approval will be required to grant directors authority to issue Aveng
Shares representing more than 30% of the issued share capital of Aveng. The general meeting in order to
pass the requisite resolutions will be held today, 29 May 2018, the notice of which was sent to Aveng
shareholders on Monday, 30 April 2018.

The terms and timing of the Proposed Rights Offer are expected to be announced to shareholders in due

As a result of the engagement with Murray & Roberts under the M&R Transaction, Aveng will need to
apply to the TRP for consent to proceed with the Proposed Rights Offer under section 126 of the
Companies Act.

4   Sale of identified assets and other properties
Shareholders are referred to Aveng’s reviewed interim results for the six months ended 31 December
2017, released on 27 February 2018, in which Aveng announced the results of its strategic review (the
“Strategic Review”). As part of the Strategic Review, Aveng announced its intention to dispose of its non-
core assets, including Aveng Grinaker-LTA, Aveng Trident Steel, the Aveng Manufacturing businesses
and other properties, allowing management to focus on the core operations of Moolmans and McConnell

The Company continues to pursue the sale of the identified assets and has made progress in the
disposals of Aveng Grinaker-LTA, Aveng Trident Steel and other properties. The Company will keep the
shareholders informed as to the progress of the sale of these assets and will announce details to the
market if a transaction is concluded. Aveng has also accelerated the preparation process for the sale of
the Aveng Manufacturing businesses. Aveng will launch disposal processes for these assets shortly.

5   Renewal of cautionary announcements

The Aveng Board continues to progress its engagement with the Murray & Roberts Board with regards to
the M&R Transaction which negotiations may have a material effect on the price of both companies’
securities. Accordingly, shareholders of Aveng are advised to continue exercising caution when dealing in
their securities until further details pertaining to the M&R Transaction are announced. Furthermore, the
Capital Markets Transaction is still ongoing and accordingly shareholders of Aveng are advised to
continue exercising caution when dealing in their securities until further details pertaining to the Capital
Markets Transaction are announced.

6   Responsibility statement

The boards of directors of Aveng accept responsibility for the information contained in this announcement
and certify that, to the best of their knowledge and belief, the information contained in this announcement
is true and nothing has been omitted which is likely to affect the importance of the information.

JSE Sponsor
UBS South Africa Proprietary Limited

Financial advisor and transaction sponsor for the Capital Markets Transaction
Rand Merchant Bank (A division of FirstRand Bank Limited)

Legal advisors
Baker McKenzie

Debt sponsor
Absa Bank Limited, acting through its corporate and investment banking division

29 May 2018
Jet Park

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

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