Stefanutti Stocks Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/003767/06)
Share code: SSK      ISIN: ZAE000123766
(“Stefanutti Stocks” or “the company” and, together with its subsidiaries, "the group")


CATEGORY 1 TRANSACTION – DISPOSAL OF SUBSIDIARIES IN MOZAMBIQUE AND MAURITIUS
AND RELATED MATTERS


  1. Introduction


      Stefanutti Stocks shareholders (“Shareholders”) are advised that in terms of Section 9 of the JSE
      Limited Listings Requirements (“Listings Requirements”) the company’s wholly-owned subsidiaries,
      Stefanutti Stocks Mauritius Holdings Limited (incorporated under the laws of Mauritius with company
      number C073385 C1/GBL) ("SSMH"), Stefanutti Stocks International Holdings Proprietary Limited
      (incorporated under the laws of South Africa with registration number 2005/015885/07) ("SSIH"),
      Stefanutti Stocks Proprietary Limited (incorporated under the laws of South Africa with registration
      number 2003/022221/07) ("SSPL") and SS - Construções (Moçambique), Limitada (incorporated under
      the laws of Mozambique with registration number 101201554) ("SS Mozambique"), have (as relevant)
      entered into the following agreements:
      (i)      a sale and purchase agreement last signed on 14 September 2022 between SSMH, SSIH,
               SSPL, CCG-Compass Consulting Group (incorporated under the laws of Mauritius with
               company number C174840 GBC) (the “Purchaser”) and Miles Christian Pelham (the
               "Purchaser Guarantor") (the “Mozambique Sale Agreement”);
      (ii)     a sale and purchase agreement last signed on 14 September 2022 between SSMH, the
               Purchaser and the Purchaser Guarantor (the “Mauritius Sale Agreement”); and
      (iii)    a loan agreement last signed on 14 September 2022 between SS Mozambique, the Purchaser
               and the Purchaser Guarantor (the “Loan Agreement”).


      In terms of:
      (i)      the Mozambique Sale Agreement (a) SSMH will dispose of its entire interest, representing 20%
               of the share capital, in SS Mozambique (“SSMH Quota”) to the Purchaser, (b) SSIH will dispose
               of its entire interest, representing 80% of the share capital, in SS Mozambique (“SSIH Quota”)
               to the Purchaser and (c) SS Mozambique will repay to SSPL all claims in respect of outstanding
               loan, funding, financing, credit or any other indebtedness or financial assistance owing by
               SS Mozambique to SSPL as at 23h59 on 30 June 2022, in the aggregate amount of
               ZAR 113,178,887.00 (the "Trade Receivable") (for which purpose SS Mozambique will receive
               a loan from the Purchaser under the Loan Agreement); and
      (ii)     the Mauritius Sale Agreement, SSMH will dispose of its entire interest, being 100% of the issued
               share capital, in Stefanutti Stocks Construction Ltd (incorporated under the laws of Mauritius
           with company number C160597) ("SS Construction") (“SS Construction Shares”) to the
           Purchaser,
   on the terms and conditions set out in such agreements (the “Proposed Transaction” or the
   “Disposal”).


2. Purchase Consideration and repayment of the Trade Receivable


   In terms of the Mozambique Sale Agreement, the aggregate price payable by the Purchaser for the
   SSMH Quota and the SSIH Quota is:
   (i)     a cash amount of US$12,800,000.00; plus
   (ii)    interest on such amount less the Trade Receivable Adjustment (as defined below), as provided
           for in the Mozambique Sale Agreement; minus
   (iii)   a leakage amount ("Mozambique Leakage") (a) plus an interest amount in respect of the
           Mozambique Leakage; and (b) less the value of any relief available to SS Mozambique in
           consequence of the Mozambique Leakage, as provided for in the Mozambique Sale Agreement;
           minus
   (iv)    an amount equal to the Trade Receivable, converted from ZAR into US $ as provided for in the
           Mozambique Sale Agreement ("Trade Receivable Adjustment"),
   provided that, if as a result of any deduction under (iii) and/or (iv) the purchase price would be less than
   US $ 1.00, the purchase price will be deemed to be US $ 1.00.


   The Purchaser will pay 80% of the purchase price to SSIH and 20% of the purchase price to SSMH by
   crediting such amounts to stipulated Mozambican bank accounts, as provided for in the Mozambique
   Sale Agreement. An amount equal to the Trade Receivable will also be advanced by the Purchaser to
   SS Mozambique, in accordance with the provisions of the Loan Agreement and the Mozambique Sale
   Agreement, to be utilised by SS Mozambique to repay the Trade Receivable as provided for in the
   Mozambique Sale Agreement.


   In terms of the Mauritius Sale Agreement, the price payable by the Purchaser for the SS Construction
   Shares is:
   (i)     a cash amount of US$700,000.00; plus
   (ii)    interest on such amount, as provided for in the Mauritius Sale Agreement; minus
   (iii)   a leakage amount ("Mauritius Leakage") (a) plus an interest amount in respect of the Mauritius
           Leakage; and (b) less the value of any relief available to SS Construction in consequence of the
           Mauritius Leakage, as provided for in the Mauritius Sale Agreement,
   provided that, if as a result of any deduction under (iii) the purchase price would be less than US $ 1.00,
   the purchase price will be deemed to be US $ 1.00.


   The Purchaser will pay the purchase price to SSMH by crediting such amount to a stipulated Mauritian
   bank account, as provided for in the Mauritius Sale Agreement.
   The Mozambique Sale Agreement and the Mauritius Sale Agreement are together referred to as the
   "Sale Agreements".


3. Rationale


   As previously disclosed to Shareholders in various announcements, the Restructuring Plan has been
   approved by both the company’s board of directors and the Lenders and envisages inter alia the sale of
   non-core assets as well as the sale of certain divisions/subsidiaries to achieve its purpose and
   objectives.


   The purpose of the Restructuring Plan is to put in place the optimal capital structure and access to
   liquidity to position the group for long-term growth, and the Proposed Transaction forms part of the
   Restructuring Plan and is in furtherance of achieving the objectives of the Restructuring Plan.


4. Background information on SS Mozambique and SS Construction


   SS Mozambique is a multi-disciplinary construction company, operating in Mozambique since 1995,
   offering a range of services across all industries in the building, civil engineering, geotechnical and roads
   and earthworks markets.


   SS Construction is a construction company which has recently started operating in Mauritius specifically
   in the building sector.


5. The Purchaser


   The Purchaser is a privately owned business, forming part of a group of companies specialising in asset
   development and asset management operating in the energy services and natural resources sectors in
   East Africa, headquartered in Mozambique. The Purchaser (or relevant members of its group) holds
   various prospecting and mining licences and concessions across the African continent.


6. Conditions Precedent


   The Proposed Transaction is subject to the fulfilment and/or waiver of the following conditions precedent
   on or before 28 February 2023 (or such later date/s (i) up to 30 June 2023, as SSIH and SSMH may
   notify the Purchaser in writing from time to time; or (ii) as the Purchaser and SSIH and SSMH may agree
   in writing from time to time):
   •     the company's shareholders approving the Proposed Transaction as a Category 1 transaction in
         terms of Section 9 of the Listings Requirements;
   •     the following regulatory approvals being obtained:
         * approval from the South African Reserve Bank or its authorised agent under the South African
           Currency and Exchanges Act, 9 of 1933 as required for the entry into and/or implementation of
       the Sale Agreements (including for the sale of the SSMH Quota and the SSIH Quota, in relation
       to the repayment of the Trade Receivable, for SSIH to open a Mozambican bank account, to
       extend the 30 day period within which the purchase price for the SSMH Quota and the SSIH
       Quota received in Mozambique is to be repatriated to South Africa and for the sale of the SS
       Construction Shares);
    * approval from the Mozambique competition authority (the Autoridade Reguladora da
       Concorrência) for the sale of the SSMH Quota and the SSIH Quota (pursuant to the Regular
       Form as envisaged in the Mozambique competition laws); and
    * approval from the Bank of Mozambique (Banco de Moçambique) or its authorised agent as
      required for the entry into and/or implementation of the Mozambique Sale Agreement and the
      Loan Agreement (including for the payments envisaged in the Mozambique Sale Agreement, for
      the remittance of the purchase price to bank accounts of SSIH and SSMH held outside
      Mozambique, as required for the loan under the Loan Agreement and as required for the
      guarantee given by the Purchaser Guarantor under Loan Agreement);
•     SSIH and SSMH confirming to the Purchaser that approvals that may be required for the
      regularisation and approval (as may be required) of the Trade Receivable (such that it can be
      repaid to SSPL as envisaged in the Mozambique Sale Agreement) from the Bank of Mozambique
      (Banco de Moçambique) or its authorised agent have been granted;
•     confirmations to the Purchaser that approvals (and releases of security interests) have been
      obtained from the lenders to, and funders and financiers of, the group (the "Lenders"), for the
      entry into and implementation of the Sale Agreements and the Loan Agreement;
•     SS Construction purchasing or incorporating a new private wholly owned South African company
      and such company has (i) been registered with the International Trade Administration
      Commission of South Africa ("ITAC") as an importer and as an exporter, and (ii) has been granted
      an import permit for commercial purposes by ITAC and an export permit for general goods by
      ITAC;
•     the Purchaser providing alternative security arrangements (relating to security provided by
      members of the group or certain third parties for or relating to the obligations of SS Mozambique
      and SS Construction (and joint ventures to which they are parties)), and the relevant beneficiaries
      of such security arrangements agreeing to release the existing security arrangements in the form
      provided for in the Sale Agreements;
•     SSIH and SSMH confirming to the Purchaser that each has opened Mozambican bank accounts
      denominated in US$ and MZN, which are open for transacting; and
•     SSPL confirming to the Purchaser that SS Mozambique has opened a Mozambican bank account
      denominated in ZAR, which is open for transacting.


The Mozambique Sale Agreement is also conditional on the Mauritius Sale Agreement and the Loan
Agreement being signed and on the Mauritius Sale Agreement becoming unconditional (save for any
condition which requires that the Mozambique Sale Agreement becomes unconditional).
   The Mauritius Sale Agreement is also conditional on the Mozambique Sale Agreement being signed
   and becoming unconditional (save for any condition which requires that the Mauritius Sale Agreement
   becomes unconditional).


7. Closing Date


   After the Sale Agreements have become unconditional in accordance with their terms, the sales under
   the Proposed Transaction will be implemented on the second Business Day (any day which is not a
   Saturday, Sunday or public holiday in South Africa, Mauritius or Mozambique) after the day on which
   SSIH, SSMH and SSPL have informed the Purchaser in writing of receipt of (i) the purchase price for
   the SSIH Quota into a stipulated Mozambican SSIH bank account; (ii) the purchase price for the SSMH
   Quota into a stipulated Mozambican SSMH bank account; (iii) the repayment of the Trade Receivable
   into a stipulated SSPL bank account; and (iv) the purchase price for the SS Construction Shares into a
   stipulated Mauritian SSMH bank account, as provided for in each of the Sale Agreements (as relevant),
   or such other date as SSIH, SSMH, SSPL and the Purchaser may agree to in writing from time to time
   (the "Closing Date"). If all relevant implementation obligations are complied with as stipulated in the
   Sale Agreements, the Closing Date will be the effective date of the Proposed Transaction for Listings
   Requirements purposes (and risk, ownership and benefit of the SSMH Quota, the SSIH Quota and the
   SS Construction Shares will pass to the Purchaser on this date).


8. Other significant terms


   In terms of the Sale Agreements, SSIH and SSMH give limited warranties and undertakings to the
   Purchaser relating to the Disposal which are customary for transactions of this nature.


   The Purchaser's obligations under the Sale Agreements and the Loan Agreement are secured by way
   of guarantees given by the Purchaser Guarantor.


   Under the Sale Agreements, the group will be subject to certain non-compete undertakings in
   Mozambique and Mauritius and certain non-solicitation undertakings in relation to employees of SS
   Mozambique and SS Construction, for a two year period after the Closing Date. Provisions regulating
   certain business opportunities during this period have also been agreed in the Sale Agreements.


9. Application of the sale proceeds


   The proceeds of the Proposed Transaction will be applied to the reduction of the current funding facilities
   provided by the Lenders to members of the group, in accordance with the Restructuring Plan.


10. Value of net assets and attributable profits or losses
      The consolidated value of the net assets of SS Mozambique at 28 February 2022 amounted to
      Mozambican Metical (MZN) 819 million. The profit after tax for the period ended 28 February 2022 of
      SS Mozambique was MZN 26 million.


      The consolidated value of the net assets of SS Construction at 28 February 2022 amounted to Mauritian
      Rupee (Rs) 2 million. The loss after tax for the period ended 28 February 2022 of SS Construction was
      Rs 0,3 million.


  11. Categorisation


      The Disposal has been categorised as a Category 1 transaction in terms of the Listings Requirements
      and accordingly the Disposal is required to be approved by an ordinary resolution of Shareholders,
      which will require the support of more than 50% of the voting rights exercised on the resolution at a
      shareholders meeting. The Transaction is not with related parties and there are accordingly no related
      party transaction implications in terms of the Listings Requirements.


  12. Distribution of circular


      A circular containing the full details of the Proposed Transaction, and incorporating a notice convening
      a shareholders meeting, will be distributed to Shareholders in due course. The salient dates and times
      of the Proposed Transaction, including the date of the shareholders meeting, will be announced on the
      Stock Exchange News Services at the time of distributing the circular.




Johannesburg
14 September 2022
Sponsor: Bridge Capital Advisors Proprietary Limited
Legal Advisor: Webber Wentzel
Transaction Advisor: Birkett Stewart McHendrie Proprietary Limited