EPE Capital Partners Limited (JSE:EPE) News - Voluntary performance update, Brait announcement and new commitment EPE CAPITAL PARTNERS LTD INCORPORATED IN THE REPUBLIC OF MAURITIUS REGISTRATION NUMBER: C138883 C1/GBL ISIN: MU0522S00005 SHARE CODE: EPE ("ETHOS CAPITAL" OR "THE COMPANY") VOLUNTARY PERFORMANCE UPDATE, BRAIT ANNOUNCEMENT AND NEW COMMITMENT Ethos Capital is an investment holding company, registered, and incorporated in Mauritius. It is listed on the Johannesburg Stock Exchange (“JSE”) and offers shareholders potential long-term capital appreciation by making commitments and investments into Funds or co-investments that are actively managed by Ethos Private Equity (Pty) Limited (“Ethos”), providing the Company with exposure to a diversified portfolio of unlisted private equity type investments (“Portfolio Companies”). Below is a voluntary update of the Company since the annual results announcement published in September 2021. Net Asset Value (“NAV”) and NAV per share (“NAVPS”) The NAVPS of Ethos Capital, including the Brait PLC (“Brait”) investment at its NAVPS, increased by 4% in the quarter to 30 September 2021, from R9.19 to R9.57. Based on the Brait share price of R4.18 as at 30 September 2021, the Ethos Capital NAVPS increased by c.14% from R6.67 to R7.58. The Ethos Capital unlisted portfolio continued its strong recovery in profitability which resulted in asset valuations increasing by c.4% in the quarter to 30 September 2021. This increase was driven by a broad base of valuation increases across most of the Portfolio Companies. Brait announced a 3% increase in its NAVPS to R8.14 as at 30 September 2021 (31 March 2021: R7.90). This increase was largely attributable to Premier Foods which grew EBITDA by 20% over the six-month period. The Ethos Capital listed portfolio benefited from a 55% increase in the share price of MTN Zakhele Futhi and a 46% increase in the Brait share price over the quarter. The table below sets out the portfolio valuation and Company’s NAVPS as at 3 0 September 2021: Ethos Capital portfolio (excl. Brait) Brait portfolio Combined portfolio June 21 Sept 21 Sept 21 Sept 21 At R8.14 At R4.18 At R8.14 At R4.18 NAV ('million) 1,458 1,547 1,051 540 2,598 2,087 NAVPS – Rand Invested capital 10.10 8.11 Net liabilities (0.53) (0.53) Total 9.57 7.58 Brait results update Brait announced its interim results for the six months ended 30 September 2021 today, and the launch of a rights offer to its shareholders to subscribe for up to R3.0 billion in 2024 Exchangeable Bonds to be listed on the JSE. The 2024 Exchangeable Bonds will be issued by Brait’s wholly-owned subsidiary, Brait Investment Holdings Limited, and are exchangeable (at the holder’s election) into Brait ordinary shares. Brait’s NAVPS of R8.14 at 30 September 2021 represents a 3.0% increase on 30 June 2021 NAVPS of R7.90 driven by: • Premier’s continued strong operational and financial performance with 1H22 EBITDA up 20% year -on-year driven by volume increases and price inflation; • Virgin Active’s continued recovery from the effects of Coronavirus-induced lockdowns with all clubs now open and operational; and • New Look’s strategy starting to take hold with a strong turnaround in profitability in the business. The Coronavirus related underperformance of Virgin Active has required significant shareholder capital contributions as a result of the restructuring of the business. This has necessitated a comprehensive funding solution for Brait to optimise its exit programme, whilst maximising optionality for shareholders. The Brait board has decided to raise up to R3.0 billion by way of a renounceable rights offer to Brait shareholders of the 2024 Exchangeable Bonds as mentioned above. Brait has secured irrevocable undertakings and underwriting commitments of R2.7 billion to subscribe for the 2024 Exchangeable Bonds. The net proceeds raised from the rights offer will be used to settle a material portion of the drawn balance outstanding on the Brait Mauritius Limited revolving credit facility (“BML RCF”), thereby providing the Brait group with a cost-effective refinancing which will result in estimated interest savings of c.R200 million for calendar year 2022 and a significantly improved liquidity position. The salient terms of the 2024 Exchangeable Bonds are as follows: • To be listed on the JSE; • Fixed 5% coupon payable in cash semi-annually in arrears; • Exchangeable into a fixed number of Brait ordinary shares at the holder’s election ; • Maturity date of 3 December 2024; • Initial exchange price of R4.37 (representing a 5% discount to the 5-business day VWAP of a Brait ordinary share price prior to the announcement of the rights offer); and • Structurally senior to Brait’s existing GBP150 million Convertible Bonds due December 2024 but subordinated versus the existing BML RCF. Participation in Brait rights offer The Ethos Capital Board believes that the 2024 Exchangeable Bond, which provides full equity upside in the Brait share price (which currently trades at a 44% discount to the Brait NAV) while securing significant downside protection given the front-ranking bond nature of the instrument, is an attractive investment opportunity. In support of the Brait rights offer, Ethos Capital made an additional commitment of R171 million to Ethos Direct Investment Partnership (“EDI”) in the ordinary course of business pursuant to its investment strategy. This enabled the Ethos group (as the general partner of the relevant Ethos Funds) to provide Brait with an irrevocable undertaking, on behalf of Ethos Fund VII and EDI, to vote in favour of the requisite Brait shareholder resolutions required to implement the rights offer, and to follow their respective rights under the rights offer. The total implied participation by Ethos Capital in the proposed Brait rights offer, through EDI (R171 million) and Ethos Fund VII (R123 million), is c.R294 million. The EDI participation will be funded by Ethos Capital’s existing debt facilities and the Ethos Fund VII participation will be funded through a new debt facility raised by the Fund (with no recourse to Ethos Capital). For further information on the Brait results, the rights offer, including the expected timing of implementation, please refer to the Brait interim results for the six months ended 30 September 2021 announcement that was published on the Stock Exchange News Service today and is available at http://brait.investoreports.com/investor-relations/results-and-reports/ Disclaimer The financial information on which this announcement is based has not been audited, reviewed, and reported on by the Company’s external auditors. Ebene, Mauritius (with simultaneous circulation in Johannesburg) 23 November 2021 Sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited) Date: 23-11-2021 09:13:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 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