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Aflease - Share Swap Transaction And Withdrawal Of Cautionary Announcement The Afrikander Lease Limited (Incorporated in the Republic of South Africa) AFL (JSE) AFKDY (NASDAQ) (Registration number 1921/006955/06) ("Aflease") (ISIN Number : ZAE00000253 Share Code : AFL) SHARE SWAP TRANSACTION BETWEEN AFLEASE ("THE COMPANY") AND RANDGOLD & EXPLORATION COMPANY LIMITED ("RANDGOLD") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT 1. Introduction Aflease shareholders were advised in an announcement on 12 February 2004 and in the 2003 Annual Report that Aflease had concluded agreements with Randgold in terms of which Randgold would: - Subscribe for 24 million Aflease shares at a price of R 82,5 million and receive an option to subscribe for further Aflease shares ; - Underwrite a R 100 million Aflease rights offer. The changing market conditions, principally driven by the strengthening rand have resulted in both managements of Aflease and Randgold having to re negotiate the terms for future funding. As such Aflease and Randgold ("parties") have agreed, subject to certain conditions precedent, that: - Aflease will acquire 9 400 000 ordinary shares of R0,01 each, fully paid up, in the issued share capital of Randgold ("the Randgold Swap Shares") against the allotment and issue to Randgold of 94 000 000 ordinary shares of 2 cents each, fully paid up, in the issued share capital of Aflease ("the Aflease Swap Shares") ("the transaction"). Based on the closing price of Aflease shares on the JSE Securities Exchange South Africa ("JSE") on 29 July 2004, being the last practicable date before the finalisation of this announcement, the value of the transaction amounts to approximately R125 000 000; and - Randgold will make available a R50 000 000 loan facility to Aflease to be repayable in Aflease shares . ("the Randgold loan"). The transaction will result in Aflease holding an equity interest in Randgold of approximately 12,5% and Randgold"s interest in Aflease increasing to approximately 33%. 2. Terms of the transaction Aflease will acquire the Randgold Swap Shares against the allotment and issue to Randgold of the Aflease Swap Shares. Aflease will pledge the Randgold Swap Shares to Randgold as security for the due and punctual payment by Aflease to Randgold of all amounts due and owing by Aflease to Randgold in terms of the Randgold loan. Aflease intends to dispose of the Randgold Swap Shares in a commercially prudent manner, in consultation with Randgold. Arrangements have been put in place to facilitate the efficient placement of the shares without unnecessary short term disruption of the Randgold share price. The R 50 million loan facility attracts interest at 1,5% margin above the prime interest rate, is secured by the Randgold Swap Shares and will be repaid by Aflease on the last day of the 12 month period following the closure of the transaction by one of the following methods at the election of Randgold: - Conversion of the loan at a share price of R2,75 per Aflease share plus a 3 year option with an exercise price of R3,50 per Aflease share. Conversion of the loan and exercise of the option will inject additional cash funds into Aflease of approximately R 72 milllion and increase Randgold"s shareholding to approximately 41%, or - Conversion of the loan at a share price equal to 90% of the 30-day trade weighted average share price of Aflease. 3. Rationale for the transaction Since the third quarter of 2003 Aflease has identified and has begun positioning the company to sustain its business in a strong rand environment. This strategy resulted in the temporary closure of Aflease"s marginal open cast operations and simultaneous development of the company"s high margin gold assets of Bonanza South and Modder East. Bonanza requires capital funding and will start producing gold during the 2nd quarter of 2005. Modder East requires funding to complete a bankable feasibility study. Aflease owns a number of other prospective gold targets which will be explored in a value accretive manner. The Company believes that the uranium market is in the early phase of a long term upward trend. Aflease owns a world class uranium resource and as such it is imperative to fast track the uranium project. The first phase will be to complete a pre-feasibility study. The company will also retire its long term debt and the refinancing is currently the subject of negotiation with the relevant banks. 4. Conditions precedent The transaction is subject to the fulfilment of, inter alia, the following conditions precedent: - Aflease shareholders approving the issue of 94 000 000 new Aflease shares as a specific issue of shares for cash; - Independent Aflease shareholders (other than Randgold and concert parties) approving the waiver of a mandatory offer by Randgold to Aflease"s independent shareholders as a result of Randgold and concert parties acquiring more than 35% of Aflease issued shares following the transaction; - Aflease shareholders approving the increase in authorised share capital; and - Nedbank Capital consent to the agreements. 5. Warranties Certain warranties which are normal in a transaction of this nature have been provided by the parties. 6. Other terms The remaining terms and conditions of the transaction are standard for a transaction of this nature. Financial effects The unaudited financial effects of the transaction and the Randgold loan, based on the published consolidated audited results of Aflease for the year ended 31 December 2003, are set out below. The pro forma financial information has been prepared for illustrative purposes only and because of its nature may not give a true picture of Aflease"s financial position and results of operations. Per Aflease share Before (1) After the % change transaction and the
Randgold loan (2) Basic loss (3) (217.40) (130.37) 40.0% Fully diluted basic (208.53) (126.99) 39.1% loss (3) Headline loss (3) (95.16) (53.75) 43.5% Fully diluted (91.28) (52.36) 42.6% headline loss (3) NAV (4) 54.14 89.61 65.5% Tangible NAV (4) 54.14 89.61 65.5% Weighted average 188 421 300 603 shares in issue ("000) Shares in issue 210 952 323 134 ("000) Notes 1. Based on the audited results of Aflease for the year ended 31 December 2003. 2. Represents the pro forma effects of the transaction and the Randgold loan based on the assumptions set out below. 3. The pro forma effects on earnings and headline earnings per share after the transaction and the Randgold loan are based on the following assumptions: a. The transaction and the Randgold loan were effective 1 January 2003; b The Randgold Swap Shares were all placed at R13.50 per share on 1 January 2003 and the proceeds utilised as follows: i. R55 million to settle debt; and ii The balance, net of costs, placed on call, earning interest at 9% before tax. 3. The Randgold loan, net of costs, was placed on call, earning interest at 9% before and was repaid on 1 January 2003 through the issue of Aflease shares at R2.75 per share. No account has been made for the effect of the American style option due to the uncertainty surrounding the take-up of such option. Should the option of issuing shares at 90% of the 30 day moving average be elected and such price is below R2.75, such issue will have a dilutionary effect on the pro forma effects presented. 4. The pro forma effects on net asset and tangible net asset value per share of the transaction and the Randgold loan are based on the following assumptions: a. The transaction and the Randgold loan were effective 31 December 2003; b The Randgold Swap Shares were all placed at R13.50 per share on 1 January 2003 and the proceeds utilised as follows: i. R55 million to settle debt; and ii. The balance, net of costs, placed on call. 5. The Randgold loan was placed on call and was repaid on 1 January 2003 through the issue of Aflease shares at R2.75 per share. No account has been made for the effect of the American style option due to the uncertainty surrounding the take-up of such option. Should the option of issuing shares at 90% of the 30 day moving average be elected and such price is below R2.75, such issue will have a dilutionary effect on the pro forma effects presented. 8. Circular to Aflease shareholders Subject to approval by the JSE, SRP and any other regulatory authority, a circular containing full details of the transaction and the Randgold loan will be posted to Aflease shareholders in due course. Withdrawal of cautionary announcement Further to the above, shareholders are advised that they no longer need to exercise caution when dealing in Aflease"s shares. Johannesburg 30 July 2004 Sponsor Attorneys Reporting accountants Nedbank Capital Werksmans PriwaterhouseCoopers Incorporated Date: 02/08/2004 12:05:05 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
