ALTRON LIMITED - Altron board of directors resolves to launch a sustainable ICT skills focussed education trust.

Altron board of directors resolves to launch a sustainable ICT skills focussed education trust.

Altron Limited
(Incorporated in the Republic of South Africa)
(Registration number 1947/024583/06)
Share Code: AEL
ISIN: ZAE000191342
('Altron' or the 'Company')

ALTRON BOARD OF DIRECTORS RESOLVES TO LAUNCH A SUSTAINABLE ICT SKILLS FOCUSSED EDUCATION
TRUST


1.   Introduction

     Altron is committed to the principles and objectives of Broad-Based Black Economic Empowerment ("B-BBEE"). Pursuant to
     this, the Altron board of directors ("Board") is pleased to announce that it has resolved to pursue a new B-BBEE ownership
     transaction (the "Transaction") at the culmination of the recognition period for its previous continuing consequences
     transaction, that will result in the launching of a sustainable ICT skills focussed education trust.

     Altron believes that the Transaction provides a unique opportunity to be a catalyst for South Africa's societal advancement
     and industry innovation. With these core values in mind, the Transaction will be used to enhance the current employee value
     proposition by providing funding to qualifying employees' relatives and other stakeholders within the Altron ecosystem, giving
     them access to information and communication technology ("ICT") related education opportunities to address the increasing
     scarcity of ICT skills in South Africa.

     In addition to the above, the Transaction has been structured to achieve the following objectives:
      •       create a sustainable funding structure that is not solely reliant on external bank funding, share price appreciation, or
              dividend payments;
      •       ensure Altron's South African subsidiaries ("Altron Group") maintain their current B-BBEE rating and achieve full
              points on the BEE ownership scorecard with black-ownership (together with other existing initiatives) exceeding 30%;
              and
      •       complement existing B-BBEE initiatives.

2.   Incorporation and purpose of new Broad-Based Trust

     Altron has incorporated a new sustainable broad-based trust to act as the new B-BBEE partner to the Transaction (the
     "Trust" or "Ascent"). The purpose of the Trust is to align Altron Group's transformation and empowerment objectives with
     the objectives and B-BBEE legislation requirements.

     The Trust will have the following salient features:
     •     Altron TMT Holdings Proprietary Limited ("Altron TMT Holdings" or "Founder"), a wholly owned subsidiary of Altron
           is the founder of the Trust;
     •     the Trust's trustee composition will be at least 50% independent, at least 50% black, at least 25% black women
           trustees and the chairperson will be independent and will not have a casting vote;
     •     the principal objectives of the Trust will be to facilitate and promote the B-BBEE ownership of the Altron Group and
           increase access to education opportunities to address scarce ICT skills in South Africa;
     •     seek to advance sustainable transformation within the Altron Group and South Africa, whilst improving access of
           deserving South Africans to educational opportunities and support to cultivate critical and scarce ICT skills at the
           tertiary levels and improve suitability for employment;
     •     the benefits of the Transaction will accrue in the form of distributions to the qualifying Trust beneficiaries, with eligibility
           determined with reference to a household income of less than R600 000 per annum;
     •     support and recognise valued contributions of the employees of the Altron Group; and
     •     Altron may, as and when required, provide support to the Trust to enable it to annually achieve its stated objectives.


3.   Salient features of the Transaction

     The Trust will obtain a 20% ordinary share interest, through its wholly owned subsidiary Altron Foundation Holdings
     Proprietary Limited ("Foundation Holdings") in a newly incorporated entity, Altron South Africa Holdings Proprietary Limited
     ("HoldCo"), which will hold 100% of Altron TMT SA Group Proprietary Limited ("TMT SA"). As such Foundation Holdings will
     indirectly hold a 20% interest in TMT SA (the "Transaction"). Altron TMT Holdings will hold the remaining 80% in HoldCo
     and its subsidiaries.

     Altron TMT Holdings (being the sole shareholder of TMT SA) will dispose of its shares in TMT SA to HoldCo in exchange for
     cumulative, non-participating, redeemable preference shares ("Preference Shares") in HoldCo, equal to the full market value
     of TMT SA ("Intra-group Transaction").
     The Intra-group Transaction will enable Foundation Holdings to acquire HoldCo ordinary shares ("B-BBEE Subscription")
     at nominal value and without the need to raise acquisition funding and provide it with immediate ownership in HoldCo and
     indirectly all the assets and subsidiaries of HoldCo.

     The Preference Shares will carry a preferred return at a spread to the official Prime lending rate.

4.   Shareholder Approval

     The Transaction does not require Altron shareholder approval, and the Trust is not deemed a related party.

5.   Conditions Precedent

     The remaining conditions precedent to the Transaction, include the entering of appropriate agreements post the conclusion
     of the following, whereby:
                •   Altron TMT Holdings has waived its pre-emptive rights in relation to Foundation Holding's subscription; and
                •   all required documentation in terms of the approvals received from third parties to implement the Transaction is
                    provided.

6.   Effective Date

     Subject to the fulfilment or waiver as the case may be of conditions precedent as stipulated in paragraph 5 above, it is
     anticipated that the Transaction to become effective by 15 July 2024, or such later date as Altron may, in its sole and absolute
     discretion, determine in writing. The completion date is anticipated to be no later than 31 July 2024.

7.   Financial effects of the Transaction

     The valuation of TMT SA and thus HoldCo was performed by Pallidus Capital Proprietary Limited in order to determine the
     value of the Preference Shares and has been signed-off by the Independent Expert (refer below) to confirm that the valuation
     underlying the Transaction is fair.

     The current 5-year option value inherent in the transaction is c.R21 million, this will however be eliminated on consolidation
     in Altron's annual financial statements. The Founder will provide an initial R5 million support to the Trust in FY2025 to assist
     the Trust in meeting its stated objectives.

     Scenario Analysis

     Holdco ordinary shareholders will share in value created over-and-above the value of the Preference Shares (i.e.
     growth/return on capital generated above the Preference Shares rate);

      a)   to the extent that Holdco generates a return on capital at a rate equal to or lower than the Preference Shares rate, no
           incremental value will accrue to the Holdco ordinary shareholders; and

      b)   to the extent that Holdco provides a return on capital at a rate higher than the Preference Shares rate (which may also
           be augmented as a result of Holdco and its subsidiaries' enhanced BEE credentials), additional value would be created
           in the Holdco ordinary shares i.e. value over-and-above the value that has been ringfenced in the Preference Shares.
           Accordingly, such additional value will then accrue to all Holdco ordinary shareholders.

     Fairness Opinion

     Although the Transaction does not require a fairness opinion, the Board resolved that a fairness opinion be conducted on the
     fairness of the transaction for transparency purposes.

     BDO Corporate Finance Proprietary Limited ("Independent Expert") has been appointed as the independent professional
     expert by the Board and provided the Board with a fairness opinion with regard to the Transaction ("Fairness Opinion"), in
     which they have advised the Board that they believe that the terms of the Transaction are fair to Altron shareholders.

     The Fairness Opinion will lie open for inspection at the registered office of Altron being Woodlands Office Park, 20 Woodlands
     Drive, Woodlands Office Park Woodmead, 2191, Gauteng for a period of 28 days from the date of this announcement.

8.   Conclusion

     Following the Board's decision to pursue the Transaction, Werner Kapp, Chief Executive Officer of Altron said: "As South
     Africa's original technology brand, we're passionate about solving real-world problems, from the everyday to the epic.
     Businesses like ours can help tackle the very real problem of rising youth unemployment by bridging the skills gap and
     empowering young people for future jobs. I am proud to introduce Ascent – an ICT skills focused education trust. Ascent will
     support young talent through bursaries and help foster an ecosystem of innovation and growth."

Johannesburg
12 July 2024

Corporate Advisor and Transaction Sponsor
Pallidus Capital Proprietary Limited & Pallidus Exchange Services Proprietary Limited

Legal Advisor
Edward Nathan Sonnenbergs Incorporated (trading as ENS)

JSE Equity Sponsor
Investec Bank Limited

Date: 12-07-2024 07:10:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.