AVENG LIMITED - Disposal of Aveng Grinaker-LTA Bui8 Aug 2019
AEG 201908080046A
Disposal of Aveng Grinaker-LTA Building and Civil Engineering business

(Incorporated in the Republic of South Africa)
(Registration number: 1944/018119/06)
Share code: AEG
Share ISIN: ZAE000194940
("Aveng" or "the Group" or 'the Company")

Disposal of Aveng Grinaker-LTA Building and Civil Engineering business

1. Background and rationale
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 Proprietary Limited ("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.

Aveng Grinaker-LTA Construction was identified as non-core as part of the strategic review and comprises the
following businesses: Aveng GLTA Buildings Inland, Aveng GLTA Buildings South, Aveng GLTA Buildings KZN, Aveng
GLTA Civil Engineering, Aveng GLTA Plant and Yard, and Aveng GLTA Training School ("Business"). The Business has
an extensive track record of successful contracts and has the resources, skills and project management capabilities
to deliver diverse, multi-disciplinary projects. The Business' experience and expertise spans several market sectors
including: power, public infrastructure, mining infrastructure, commercial, retail, industrial, and oil and gas.

The Laula Consortium is a black-owned consortium which includes Oteo Investments Holdings Proprietary Limited
("Oteo"), Manzini Ventures Proprietary Limited and Upsize Trading Proprietary Limited (together "the Consortium").
The Consortium, which is led by Mlu Manci of Oteo, boasts black senior management experience going back to 1984
and technical experience in major construction projects in South Africa, from large civil infrastructure projects to
complex, commercial buildings.

2. 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 Proprietary Limited ("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.

3. 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.

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

5. 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.

6. 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
8 August 2019

JSE Sponsor
UBS South Africa Proprietary Limited

Legal advisors
Baker & McKenzie

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

Date: 08/08/2019 05:26:00
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