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PPC - PRETORIA PORTLAND CEMENT COMPANY LD - Announcement of a Second Phas

Announcement of a Second Phase Empowerment Transaction Resulting in 26 Percent Black Ownership of PPC South Africa Pretoria Portland Cement Company Limited Incorporated in the Republic of South Africa Registration number 1892/000667/06 JSE share code PPC ZSE share code PPC JSE ISIN ZAE000125886 ZSE ISIN ZWE000096475 (“PPC” or “the Company”) ANNOUNCEMENT OF A SECOND PHASE EMPOWERMENT TRANSACTION RESULTING IN 26 PERCENT BLACK OWNERSHIP OF PPC SOUTH AFRICA Issuance of 6.5 percent additional PPC shares with transaction value R1.1bn Main beneficiaries will be PPC’s SA employees R733m Existing strategic black partners and new Black women’s groups to be allocated R345m Pretoria Portland Cement Company Limited (PPC) is pleased to announce a second phase broad-based black economic empowerment(“BBBEE”) transaction which entails the placing of an additional 39.3m ordinary shares or 6.5 percent of PPC’s increased share capital under black ownership. Following the first phase BBBEE transaction for 15.3 percent during 2008, this will increase the direct black ownership of the PPC Group to 20.8 percent. Taking into account the 80:20 revenue split between the Group’s South African and international businesses the transaction will result in an effective 26 percent black ownership of PPC’s South African operations and enable the company to meet the South African mining rights conversion requirements as set out by the Department of Mineral Resources in terms of the Mining Charter. Of the additional shares being issued the major portion or 68 percent shares will be issued to the employees of PPC’s South African businesses. 27 percent of shares will be issued to PPC’s existing strategic black partners (“SBPs”) and 5 percent to a newly created trust that will focus on Black women groups in areas where the company operates. The transaction value of approximately R1.1bn is estimated based on the 30 day volume weighted average price of PPC shares as at Monday 9 July, of R27.39 pershare. Paul Stuiver, CEO of PPC, said “This transaction was structured for the benefit of those parties closest to our business. We were particularly keen for our 2400 South African employees to participate at a significant level and this transaction will result in them owning approximately 7 percent of the PPC group. An employee trust has been established to hold the employee shares. All permanent employees of PPC in South Africa will participate. A portion of shares has been set aside for new employees joining the company during the next three years. The SBPs are the same as those which participated in the first phase BBBEE transaction during 2008 being Peu, Nozala, Portland Consortium and Palama Cement Consortium (formerly Capital Edge) who have contributed to the company on a number of fronts during the past four years. PPC has established the Bafati Investment Trust for the purpose of holding shares for black women groups in the vicinity of its operations. The board of trustees for this trust will comprise a majority of women. Paul Stuiver commented “This transaction demonstrates our on-going commitment to transformation and broad-based empowerment in the spirit of the Mining Charter. Additionally it will further enhance our BBBEE credentials. The transaction is being facilitated through notional vendor funding (“NVF”) at a fixed rate of 6 percent over a period of seven years. The estimated facilitation cost to the company is in line with market precedents at 2.05 percent of the company’s market capitalisation. The company will issue new shares at a nominal value of R0.01 (one cent) per share and no capital is required from the participants other than the nominal share value to be paid by the SBPs. The BEE parties will be restricted with regards to disposing or encumbering their shares during the seven year period of the transaction. During the seven year term of the scheme, all participants will enjoy a “trickle dividend” of 20 percent of ordinary dividends, with the balance 80 percent going towards the NVF structure. After 7 years, participants will be allocated the remaining shares after the notional vendor fund balance has been settled. Additionally they will become entitled to 100 percent of dividends and be able to trade their shares. The participants will be entitled to exercise all their voting rights over the new shares from the outset. Paul Stuiver explained “We have put this facilitation structure in place in order to ensure a sustainable transaction that maximises share vesting and value transfer to the BEE participants.” PPC will be cancelling 20 million treasury shares prior to implementing this phase of the BBBEE transaction. These shares were purchased by PPC in order to mitigate the potential dilution to shareholders during the first phase of the transaction. The transaction will also allow PPC to streamline its corporate structure by creating separate South African and international operating entities, thereby aligning the company’s structure with its strategy to expand its footprint on the African continent. At the same time the holding company, Pretoria Portland Cement Company Limited will be renamed to PPC Limited. Paul Stuiver concluded “Aligning our corporate structure with our strategy will result in greater efficiency and better risk management. We were unable to do this prior to converting our South African mining rights. PPC will issue a circular to shareholders during August with further details on the transaction. PPC will publish a notification containing relevant dates and times such as the details of the general meeting at which shareholders will be requested to vote on resolutions relating to implementation of the transaction. 12 July 2012 Contacts PPC Tel 011 386 9000 Paul Stuiver, CEO Tel 011 386 9344 Kevin Odendaal Tel 011 386 9024 College Hill Tel 011 447 3030 Jacques de Bie Mob 082 691 5384 Sponsor Merrill Lynch South Africa (Proprietary) Limited NOTES TO EDITORS PPC PPC is the leading supplier of cement in southern Africa through eight cement manufacturing facilities and three milling depots in South Africa, Botswana and Zimbabwe that can produce eight million tonnes of cement products per year. In addition PPC also produces millions of tonnes of aggregates, metallurgical grade lime, burnt dolomite and limestone. In line with the mining charter’s desire to uplift communities in which mines operate, PPC has completed 14 projects and spent over R28million of a planned R60 million on social and labour projects in the communities near to our operations. PPC’s first broad-based BEE deal has not only resulted in Black ownership of 15.3 percent of the company, but since 2009 has allowed; 1900 members of the PPC Construction Industry Associations Trust to receive accredited training, 6 communities to benefit from projects funded by the PPC Community Trust and more than R80m in dividends paid to employees and employee trust loan funders PPC is currently a level 2 contributor in terms of the DTI’s B-BBEE codes and has qualified as a value adding vendor with procurement recognition level of 156 percent. This is of great significance to its customers who can claim 156 percent of their spend with PPC toward their own empowerment rating. PPCscores level 1 ratings in the categories; management composition, enterprise development and socio-economic development. Peu Peu is an independent black owned and managed investment holding company, established in 1996. The management team comprises individuals, with a combination of skills in finance and investment banking, fostering a culture of entrepreneurship. Peu holds strategic long terminvestments predominantly in the infrastructure and construction sectors. Prior to the formation of Peu, Peter Malangani (the founder and chairman of Peu) was the owner of a construction business which first partnered with PPC in 1993 to build Soweto’s first corporate owned shopping centre. Nozala Nozala is a broad-based women's empowerment investment company that was established in 1996 to ensure economic advancement of black women through constructive partnerships. Its shareholding comprises over 500,000 black women in South Africa with an investment philosophy is to support equity investments with strategic operational involvement through value-adding activities. PPC commenced its partnership with Nozala in 2004 when PPC facilitated the purchase of a 50 percent stake in Afripack by Nozala. The Portland Consortium This consortium was established in 2008 to participate in the first PPC BBBEE transaction and is focused on infrastructure development and construction and project management, power generation and mining exploration. It is led by Dr Mandla Gantsho and Tamela Holdings. Dr Gantsho is currently CEO of Nova Capital Africa and is an expert on infrastructure development finance and has an in-depth knowledge of Africa’s business climate. Tamela Holdings is a black owned and managed investment company established in 2008 by Vusi Mahlangu and Sydney Mhlarhi. Palama Cement Consortium (previously Capital Edge Cement Consortium) Palama Cement Consortium was established by the ordinary shareholders of Capital Edge Cement Consortium who participated in PPC’s first BEEtransaction and is led by Jerry Vilakazi, the founder and Chairman of the Palama Group. The consortium’s diverse member base including meaningful women and youth representation from all nine provinces supports its vision to create employment and realisable skills transfer. Date: 12/07/2012 07:06:00 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. 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