AVENG LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1944/018119/06)
ISIN: ZAE000302618
SHARE CODE: AEG
("Aveng" or "the Company")



Disposal of Trident Steel and withdrawal of cautionary announcement



1. INTRODUCTION

   Shareholders are referred to the announcement released on SENS on 13 June 2022 regarding negotiations
   for the disposal of Trident Steel (“the Business”), a division of Aveng Africa Proprietary Limited and the
   renewal of cautionary announcements dated 5 July 2022 and 17 August 2022. Shareholders are advised that
   in terms of section 9 of the JSE Limited (“JSE”) Listings Requirements, Aveng has entered into a Sale of
   Business Agreement (“the Agreement”), dated 3 October 2022, to dispose of the business of Trident Steel as
   a going concern to Trident Steel Africa Proprietary Limited (“the Purchaser”) for an amount of R700 million,
   excluding cash on hand (“the Transaction” or “the Disposal”).

   The Purchaser ultimately comprises a consortium of local and USA private capital, including Ambassador
   Enterprises LLC (a US based private equity firm), Joseph Investments Proprietary Limited, Arbor Capital
   Investments Proprietary Limited (South African private investors in manufacturing businesses) and Trident
   Steel management.

   Aveng will provide R210 million of funding to a separate company in order to subscribe for 30% of the equity
   in the Purchaser and will thereby retain a 30% interest in the Business, specifically reserved for BBBEE
   participation, for a period of no longer than one year post closing (“the Maturity Date”). This 30% holding is
   subject to a call option in favour of the Purchaser, exercisable at any time post closing, for R210 million plus
   accrued interest (“the Call Option”) and payment to Aveng is secured by a demand guarantee.

2. RATIONALE FOR THE DISPOSAL

   The Aveng strategy is to restructure the Group in order to ensure the Group’s sustainable future. The Trident
   Steel business falls outside the ambits of infrastructure development, resources and contract mining which
   underpins the Group’s future long-term strategy.

3. NATURE OF TRIDENT STEEL BUSINESS

   Trident Steel is a steel service centre business, conducted in South Africa, primarily focused on the supply of
   steel products to the automotive, rail and mining industries.

4. SALIENT TERMS OF THE DISPOSAL

   The Transaction was concluded as a “locked box” transaction based on the 30 June 2022 (“Locked Box Date”)
   balance sheet, subject to a ticking fee (an amount of R7,45 million per month from Locked Box Date to Closing
   Date), excluding cash on hand and subject to a working capital adjustment at 30 June 2022.

   4.1. Conditions Precedent
        The Agreement contains provisions that are customary for transactions of this nature, including the
        following Conditions Precedent:
       •     the parties obtaining the necessary approval by the competition authorities in terms of the Competition
             Act, 89 of 1998;
       •     Aveng obtaining the necessary approval from its shareholders of (i) the Transaction; and (ii) the
             indirect participation of the Aveng Group Limited as a 30% shareholder in the Purchaser, pursuant to
             the necessary circular to be posted to shareholders, as approved by the JSE and the Takeover
             Regulation Panel;
       •     the parties obtaining the necessary third-party consents, including in relation to/from (i) the transfer
             of material contracts (ii) the transfer of relevant lease agreements (ii) relevant financiers; and
       •     the Purchaser obtaining the requisite banking, trade finance and working capital facilities to
             continue with the operations of the Business as a going concern.

   4.2. Closing
        The Transaction shall close on the first day of the calendar month following the date on which the last
        of the Conditions Precedent are fulfilled or waived, as the case may be (“Closing Date”).

   4.3. Purchase consideration
       The purchase consideration payable by the Purchaser comprises:
       •    the purchase consideration of R700 million;
       •    plus an amount of R264 million representing the net cash portion from the business, due on closing;
       •    plus a ticking fee of R7,45 million per month, due on closing.

        Aveng will provide R210 million of funding to a separate company in order to subscribe for 30% of the
        equity of the Purchaser that is the subject of the Call Option.
        In the event that the Call Option has not been exercised by the Maturity Date, Aveng will be entitled to
        demand repayment of the R210 million plus interest thereon.
   4.4. Use of proceeds
        The proceeds of the Transaction will be applied to the reduction of Aveng’s remaining South African
        debt and to enhance liquidity.

5. FINANCIAL INFORMATION

   5.1. Net value of assets to be disposed
        The value of the net assets of Trident Steel (deemed to be the value of the business assets less business
        liabilities to be disposed of) as at 30 June 2022, being the date of the last consolidated annual financial
        statements, was R409 million.
   5.2. Operating earnings
        Operating earnings for the year ended 30 June 2022 attributable to Trident Steel was R220 million.

   5.3. Earnings after Tax
        Earnings for the year ended 30 June 2022 attributable to Trident Steel was R81 million.

6. CLASSIFICATION OF THE DISPOSAL

   The Disposal has been categorised as a Category 1 transaction in terms of the Listings Requirements and as
   such the Disposal is required to be approved by an ordinary resolution of shareholders.

7. DISTRIBUTION OF CIRCULAR

   A circular containing the full details of the Transaction, incorporating a notice convening a shareholders
   meeting, will be distributed to shareholders in due course as required in terms of the JSE Listing
   Requirements. The salient dates and times of the Transaction, including the date of the shareholders meeting,
   will be announced on SENS at the time of distributing the circular.
8. WITHDRAWAL CAUTIONARY ANNOUNCEMENT

  Shareholders are referred to the cautionary announcement dated 13 June 2022 and the subsequent renewal
  of cautionary announcements dated 5 July 2022 and 17 August 2022, wherein it was advised that negotiations
  were in progress for the sale of Trident Steel.
  As a result of the disclosure contained in this announcement, caution is no longer required to be exercised
  when dealing in the Company’s securities.

   4 October 2022
   Melrose Arch


   JSE Sponsor: Investec Bank Limited
   Legal Advisor to Aveng: Alchemy Law Africa
   Transaction Advisor: DG Capital