Barloworld - opening of Khula Sizwe public offer











In the furtherance of its broad-based black economic empowerment objectives and as previously described in, inter alia, the following Barloworld announcements: Proposed Broad-Based Black Economic Empowerment Transaction dated 19 November 2018, Results of General Meeting dated 15 February 2019 (indicating that shareholders of Barloworld approved the broad-based black economic empowerment transaction on 14 February 2019) and Amendment to the Terms of the B-BBEE Transaction dated 9 April 2019, Barloworld has entered into the broad-based black economic empowerment transaction which incorporates the public offer to black people and black groups as more fully described in the prospectus to be issued on 10 April 2019 ("Prospectus"). Terms defined in the Prospectus shall have the same meaning in this announcement unless otherwise defined.

The salient features of the B-BBEE Transaction, which is still subject to various conditions precedent, are set out further below, being:
- the Specific Issue of Shares to the Foundation;
- the sale of the Properties by Barloworld to Khula Sizwe Property Holdings (RD) Ltd. ("Khula Sizwe") for the Acquisition Consideration (including the assignment by operation of law of the Property Lease Agreements);
- participation in the B-BBEE Transaction by Employees and Management of the Barloworld Group;
- Financial Assistance to the Foundation, Barloworld Employees and the Management to enable them to participate in the B-BBEE Transaction;
- the External Loan to Khula Sizwe of up to 80% of the Acquisition Consideration; and
- the Public Offer by Khula Sizwe to the Black Public. This announcement outlines the Public Offer and the opening thereof.

Barloworld has entered into the Property Sale Agreement to sell a portion of the Group's South African property portfolio (subject to the Lease, which will assign to Khula Sizwe by operation of law pursuant to the Sale) to Khula Sizwe, which is a Black Company, for the Acquisition Consideration. Khula Sizwe is a company established for the initial purpose of acquiring the Properties and leasing these to the Lessees and other parties in the normal and ordinary course of its business as a property holding and management company. Khula Sizwe will not be prohibited from acquiring other properties from third parties.

The Properties will be sold by Barloworld as a Qualifying Transaction, as contemplated under Statement 102 of the BEE Codes. Khula Sizwe will be entitled, in its sole discretion, to dispose of any of the Properties, after the expiry of three years from the Implementation Date, subject to Barloworld having a right of first refusal to purchase the Properties, provided that they obtain any regulatory and/or Shareholder approvals required at the time. The right of first refusal is granted to Barloworld to ensure its business sustainability insofar as it relates to the operation of its business from the Properties.

The Acquisition Consideration is R2.716 billion, which will be paid in cash by Khula Sizwe on the Implementation Date and/or against transfer of the Properties.

Khula Sizwe will fund the Acquisition Consideration using a combination of the External Loan (80%) and equity (20%) pursuant to the subscriptions for Khula Sizwe Shares by the Management Trust, the Employee Trust and the Black Public (through the Public Offer). Refer to paragraph 6 below for sources of funding.

Rental income collected from the Lessees on a monthly basis, will be applied to reducing the External Loan over its 10-year term.

Public Offer
The purpose of the Public Offer is to raise R163.4 million (i.e. the Target Equity Raise) to be applied towards funding a portion of the Acquisition Consideration for the Properties. The reason it is considered necessary to raise the Target Equity Raise through the Public Offer is to provide members of the Black Public with an opportunity to participate in the indirect ownership of the Properties.

The Public Offer will open on Wednesday, 10 April 2019 at 09:00 and close on Friday, 31 May 2019 at 16:00.

The Khula Sizwe Shares allotted and issued pursuant to the Public Offer will rank pari passu (equally) to each other in all respects. The Khula Sizwe Shares will not be listed on any stock exchange for the first five years and restrictions will apply to the Encumbrance, Disposal of and trading in these Khula Sizwe Shares. It is anticipated that Khula Sizwe may be listed on the B-BBEE segment after the expiry of the Lock-in Period.

The Public Offer is dependent on Khula Sizwe raising a minimum cash amount of at least R120 million (i.e. the Minimum Subscription Amount). If it does not raise the Minimum Subscription Amount, then the Public Offer will be deemed unsuccessful and thus not proceed. In such a case, the entire Target Equity Raise of R163.4 million will be subscribed for by the Management Trust.

In the event that the aggregate money raised from the Black Public pursuant to the Public Offer is at least R120 million, but is less than R163.4 million, the difference will be subscribed for by the Management Trust.

Applicants are required to apply for a minimum of 250 Khula Sizwe Shares amounting to R2 500.

No maximum subscription limit has been set for any one Applicant, and Applicants can therefore apply for as many Khula Sizwe Shares as are available in the Public Offer. Khula Sizwe retains all rights to allocate the shares to Applicants.

Only Black People and Black Groups qualify to participate in the Public Offer.

Management Trust and Employee Trust
Management Trust
All eligible Junior Managers and Senior Managers are beneficiaries of the Management Trust. It is anticipated that the Management Trust will hold a minimum of 38% of the Khula Sizwe Shares or up to a maximum of 68% in the event that the Public Offer is not implemented in full.

Employee Trust
All eligible Employees participate in the Employee Trust. It is anticipated that the Employee Trust will hold 32% of the entire issued share capital of Khula Sizwe (following the issue of the Khula Sizwe Shares to the Management Trust and/or pursuant to the Public Offer).

Copies of the Prospectus
This announcement does not, nor is it intended to, constitute a prospectus prepared and registered under the Companies Act. Copies of the Prospectus, which has been approved and registered with the CIPC, may be obtained from 09:00 on Wednesday, 10 April 2019 until 16:00 on Friday, 31 May 2019 from:

Electronic copies:
- the Khula Sizwe website on www.barloworldkhulasizwe.com





2019-04-10 09:09:10