AVENG LIMITED

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AVENG LIMITED Incorporated in the Republic of South Africa (Registration number: 1944/018119/06) Share code: AEG ISIN: ZAE000111829 (“Aveng” or “the Company”)

CIRCULAR TO SHAREHOLDERS

relating to:

a renounceable Rights Offer to Qualifying Shareholders in respect of a maximum of 5 000 000 000 Rights Offer Shares in the ratio of 1 199.98772 Rights Offer Shares for every 100 Aveng Ordinary Shares held at the close of trade on Friday, 15 June 2018 at a price of 10 cents per Rights Offer share

and including:

a Form of Instruction in respect of Letters of Allocation for use by Qualifying Certificated Shareholders only (blue).

The Directors, collectively and individually, accept full responsibility for the accuracy of the information given in this Circular and certify that, to the best of their knowledge and belief, there are no facts the omission of which would make any statement in this Circular false or misleading and that they have made all reasonable enquiries to ascertain such facts and that this Circular contains all information required in law and by the Listings Requirements.

This Circular is issued in compliance with the Listings Requirements, for the purpose of providing information with regard to the Company and the Rights Offer.

Unless otherwise apparent from the context, the definitions and interpretations commencing on page 7 of this Circular apply to this cover page and throughout this Circular.

This Circular is available in English only. Copies may be obtained from the registered offices of the Company, the Transfer Secretaries and Rand Merchant Bank at the addresses set out in the “Corporate Information and Advisors” section of this Circular from Thursday, 14 June 2018 until Friday, 29 June 2018, both days inclusive. The Circular will also be available on the website of the Company (www.aveng.co.za) from Tuesday, 12 June 2018.

The Rights Offer opens at 09:00 on Monday, 18 June 2018 and closes at 12:00 on Friday, 29 June 2018.

Date of issue: Thursday, 14 June 2018

Financial advisor and transaction sponsor Legal advisors

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CORPORATE INFORMATION AND ADVISORS

Company secretary and registered office

M Nana Aveng Park 1 Jurgens Street, Jet Park Boksburg, 1459 Johannesburg (PO Box 6062, Rivonia 2128)

Legal advisor

Baker McKenzie (Registration number 2012/047447/21) 1 Commerce Square 39 Rivonia Road Sandhurst Sandton, 2196

Financial advisor and transaction sponsor

Rand Merchant Bank (a division of FirstRand Bank Limited) (Registration number 1929/001225/06) 1 Merchant Place Corner Fredman Drive and Rivonia Road Sandton, 2196 Johannesburg (PO Box 786273, Sandton, 2146)

Transfer secretaries

Computershare Investor Services Proprietary Limited (Registration number 2004/003647/07) Rosebank Towers 15 Biermann Avenue Rosebank, 2196 (PO Box 61051, Marshalltown, 2107)

Date of incorporation of Aveng

22 November 1944

Place of incorporation of Aveng

South Africa

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The definitions and interpretations commencing on page 7 of this Circular apply, mutatis mutandis, throughout this Circular, including this page.

ACTION REQUIRED

Shareholders are also referred to page 3 of this Circular which sets out the detailed action required by both Certificated Shareholders and Dematerialised Shareholders.

If you are in any doubt as to the action you should take in relation to this Circular, please consult your CSDP, broker, banker, attorney, accountant or other professional adviser immediately.

If you have disposed of all your shares, please forward this Circular to the purchaser of such shares or to the CSDP, broker, banker, attorney, accountant or other agent through whom the disposal was effected.

DISCLAIMER

All transactions arising from the provisions of this Circular and the Form of Instruction shall be governed by and be subject to the laws of South Africa.

The distribution of this Circular, the Form of Instruction, the Letters of Allocation (and the renunciation and transfer thereof), and/or the Rights in jurisdictions other than South Africa may be restricted or affected by the laws of such jurisdiction, and failure to comply with any of those restrictions may constitute a violation of the laws of any such jurisdiction. Non-resident Shareholders should inform themselves about and observe any applicable legal requirements of such jurisdictions in relation to all aspects of this Circular that may affect them, including the Rights Offer. It is the responsibility of any foreign Shareholder to satisfy himself/ herself/itself as to the full observation of the laws and regulatory requirements of the relevant jurisdiction in connection with the Rights Offer, including but not limited to: the obtaining of any governmental, exchange control or other consent; the making of any filings which may be required; the compliance with other necessary formalities; and the payment of any issue, transfer or other taxes or requisite payments due in such jurisdiction.

The Rights Offer is further subject to any applicable laws and regulations of South Africa, including the Companies Act, the Listings Requirements and the Exchange Control Regulations. Any foreign Shareholder who is in doubt as to its position, including without limitation its tax status, should consult an appropriate independent professional adviser in the relevant jurisdiction without delay. The Company and its Directors accept no responsibility for the failure by any Shareholder to inform itself about, or to observe, any applicable legal requirements in any relevant jurisdiction, nor for any failure by the Company to observe the requirements of any jurisdiction.

Non-resident Shareholders are referred to paragraphs 4.13 and 4.14 of this Circular setting out certain Exchange Control Regulations and other restrictions which may be relevant to them.

The Letters of Allocation and the Rights Offer Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (“ U.S. Securities Act ”), or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state and other securities laws of the United States. There will be no public or other offer of the Letters of Allocation and the Rights Offer Shares in the United States. The Letters of Allocation and the Rights Offer Shares are being offered and sold in offshore transactions only.

The Letters of Allocation and the Rights Offer Shares will also not be registered under the securities laws of any Excluded Territories and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within such jurisdictions except pursuant to an applicable exemption. In particular, subject to certain exceptions, this Circular, the accompanying Form of Instruction and any other Rights Offer documents should not be distributed, forwarded to or transmitted in or into the United States or the other Excluded Territories.

The Rights Offer will not constitute an ‘‘offer to the public’’, as envisaged in Chapter 4 of the Companies Act and accordingly this Circular does not, nor does it intend to, constitute a ‘‘registered prospectus’’, as contemplated in Chapter 4 of the Companies Act.

Should any person who is not a Shareholder receive this Circular they should not and will not be entitled to acquire any Shares or Letters of Allocation or otherwise act thereon.

This Circular and any accompanying documentation are not intended to, and do not constitute, or form part of, an offer to sell or an invitation to purchase or subscribe for any securities or a solicitation of any vote or approval in any jurisdiction in which it is unlawful to make such an offer. In those circumstances or otherwise if the distribution of this Circular and any accompanying documentation in jurisdictions outside of South Africa are restricted or prohibited by the laws of such jurisdiction, this Circular and any accompanying documentation are deemed to have been sent for information purposes only and should not be copied or redistributed.

	Page
CORPORATE INFORMATION AND ADVISORS	Inside front cover
TABLE OF CONTENTS	2
ACTION REQUIRED BY QUALIFYING SHAREHOLDERS	3
SALIENT DATES AND TIMES	5
DEFINITIONS AND INTERPRETATIONS	7
CIRCULAR TO SHAREHOLDERS
INFORMATION RELATING TO THE RIGHTS OFFER	10
1 INTRODUCTION	10
2 M&R TRANSACTION	11
3 CAPITAL MARKETS TRANSACTION	12
4 INFORMATION ON THE RIGHTS OFFER	13
5 ESTIMATED EXPENSES IN RELATION TO THE RIGHTS OFFER	21
INFORMATION RELATING TO THE COMPANY	22
6 BACKGROUND INFORMATION	22
7 INFORMATION ON THE SHARE CAPITAL OF THE GROUP	30
8 INFORMATION ON THE DIRECTORS AND SENIOR MANAGEMENT	31
9 DIRECTORS’ RESPONSIBILITY STATEMENT	31
10 CONSENTS	31
11 DOCUMENTS AVAILABLE FOR INSPECTION	31
ANNEXURE 1 TABLE OF ENTITLEMENT	33
ANNEXURE 2 TRADING HISTORY OF THE SHARES ON THE JSE	35

ACTION REQUIRED BY QUALIFYING SHAREHOLDERS

This Circular is important and requires your immediate attention.

If you are in any doubt as to what action you should take, you should consult your CSDP, Broker, banker, legal advisor, accountant or other professional advisor immediately. If you have disposed of all of your Aveng Ordinary Shares, this Circular should be forwarded to the purchaser to whom, or the CSDP, Broker, banker or agent through whom, you disposed of such shares, except that this Circular should not be forwarded or transmitted to any person in any territory other than South Africa unless the Rights Offer can lawfully be made to such person or in such territory.

The Rights that are represented by Letters of Allocation are valuable and may be traded on the JSE. Letters of Allocation can, however, only be traded in Dematerialised form and, accordingly, all Letters of Allocation have been issued in Dematerialised form.

An electronic record for Certificated Shareholders is being maintained by the Transfer Secretaries, and this has made it possible for Qualifying Certificated Shareholders to enjoy similar rights and opportunities as Qualifying Dematerialised Shareholders in respect of the trading of Letters of Allocation on the JSE.

ACTION REQUIRED BY QUALIFYING CERTIFICATED SHAREHOLDERS

A Form of Instruction for completion by Qualifying Certificated Shareholders is enclosed with this Circular and the relevant procedure for participation in the Rights Offer is set out below.

Letters of Allocation will be created in electronic form with the Transfer Secretaries to afford Qualifying Certificated Shareholders the same rights and opportunities as Qualifying Dematerialised Shareholders in respect of the trading of Letters of Allocation on the JSE.

If you do not wish to exercise all of the Rights allocated to you as reflected in the Form of Instruction, you may either dispose of or renounce all or some of your Letters of Allocation as follows:

if you wish to sell all or some of your Letters of Allocation, you must complete Form A in the enclosed Form of Instruction and return it to the Transfer Secretaries so as to be received by no later than 12:00 on Tuesday, 26 June 2018. The Transfer Secretaries will endeavour to procure the sale of the Letters of Allocation on the JSE on your behalf and will remit the net proceeds thereof in accordance with your instructions, provided that such proceeds are not less than R100. In this regard, neither the Transfer Secretaries nor any Broker appointed by them to effect such sale nor Aveng will have any obligation or be responsible for any loss or damage whatsoever in relation to or arising from the timing of such sales, the price obtained, or the failure to dispose of any or all of such Letters of Allocation. Please note that, in respect of Qualifying Certificated Shareholders, the last day to trade Letters of Allocation is Tuesday, 26 June 2018; and
if you wish to renounce some or all of your Letters of Allocation in favour of any named renouncee, you must complete Form B in the enclosed Form of Instruction, and the renouncee must complete Form C in the enclosed Form of Instruction and return it to the Transfer Secretaries, so as to be received by no later than 12:00 on Friday, 29 June 2018, together with payment of the aggregate Rights Offer Price payable in respect of the Rights Offer Shares subscribed for.

If you are a Qualifying Certificated Shareholder and wish to exercise all or some of the Rights allocated to you as reflected in the enclosed Form of Instruction, you must complete the enclosed Form of Instruction in accordance with the instructions contained therein and lodge it, together with payment of the aggregate Rights Offer Price payable in respect of the Rights Offer Shares subscribed for with the Transfer Secretaries so as to be received by the Transfer Secretaries by no later than 12:00 on Friday, 29 June 2018.

You are permitted to apply for additional Rights Offer Shares over and above your entitlement. If you wish to apply for excess Rights Offer Shares you must complete the enclosed Form of Instruction in accordance with the instructions contained therein and lodge it, together with payment of the aggregate Rights Offer Price payable in respect of the Rights Offer Shares subscribed for with the Transfer Secretaries so as to be received by the Transfer Secretaries by no later than 12:00 on Friday, 29 June 2018.

To the extent that you subscribe for Rights Offer Shares, you will receive such Rights Offer Shares in certificated form. You will only be able to sell your Rights Offer Shares on the JSE once such Rights Offer Shares have been Dematerialised.

If the required documentation and payment have not been received in accordance with the instructions contained in this Circular and the Form of Instruction (either from the Qualifying Shareholder or from any person in whose favour the Rights have been renounced) by 12:00 on Friday, 22 June 2018, then the Rights and the relevant number of unsubscribed Rights Offer Shares will be deemed to have been declined and the Rights Offer entitlement will lapse.

ACTION REQUIRED BY QUALIFYING DEMATERIALISED SHAREHOLDERS

If you are a Qualifying Dematerialised Shareholder, you will not receive a Form of Instruction and you should receive notification from your CSDP or Broker regarding the Rights to which you are entitled in terms of the Rights Offer.

Your account with your CSDP or Broker will be credited with the number of Letters of Allocation to which you are entitled and you are required to notify your CSDP or Broker:

whether you wish to follow your Rights in terms of the Rights Offer and, if so, in respect of how many Rights Offer Shares; and/or
whether you wish to sell your Letters of Allocation and, if so, how many Letters of Allocation you wish to sell; and/or
whether you wish to renounce your Letters of Allocation and, if so, how many Letters of Allocation and in favour of whom you wish to renounce such Letters of Allocation.

Rights not exercised will be deemed to have been declined and will lapse and you shall not receive any economic benefit in respect of such lapsed Rights.

If you are a Qualifying Dematerialised Shareholder and wish to follow all or some of your Rights, you are required to notify your duly appointed CSDP or Broker of your acceptance of the Rights Offer in the manner and within the time stipulated in the agreement governing the relationship between you and your CSDP or Broker. If you are not contacted, you should contact your CSDP or Broker and provide them with your instructions. If your CSDP or Broker does not obtain instructions from you, they are obliged to act in terms of the mandate granted to them by you, or if the mandate is silent in this regard, they shall not subscribe for Rights Offer Shares on your behalf in terms of the Rights Offer.

Aveng does not take responsibility and will not be held liable for any failure on the part of your CSDP or Broker to notify you of the Rights Offer and/or to obtain instructions from you to subscribe for the Rights Offer Shares and/or to sell and/or renounce your Letters of Allocation.

You are permitted to apply for additional Rights Offer Shares over and above your entitlement. If you wish to apply for excess Rights Offer Shares you should instruct your CSDP or Broker as to the number of excess Rights Offer Shares for which you wish to apply.

CSDPs effect payment in respect of Dematerialised Shareholders on a delivery versus payment basis. You must ensure that you have sufficient funds in your account to settle the aggregate Rights Offer Price payable in respect of the Rights Offer Shares for which you wish to subscribe.

Non-residents

Shareholders who are non-residents are referred to paragraphs 4.13 and 4.14 of this Circular regarding applicable Exchange Control Regulations and other restrictions which may be relevant to them.

The Letters of Allocation and the Rights Offer Shares have not been and will not be registered under the U.S. Securities Act, or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state and other securities laws of the United States. There will be no public offer of the Letters of Allocation and the Rights Offer Shares in the United States. The Letters of Allocation and the Rights Offer Shares are being offered and sold in offshore transactions only

SALIENT DATES AND TIMES

The definitions and interpretations commencing on page 7 of this Circular apply, mutatis mutandis, to this section (unless specifically defined where used or the context indicates a contrary meaning).

	2018
Declaration date	Tuesday, 5 June
Finalisation date	Thursday, 7 June
Last day to trade in shares in order to participate in the Rights Offer (cum entitlement)	Tuesday, 12 June
Shares commence trading ex-entitlement at 09:00 on	Wednesday, 13 June
Listing of and trading in the Letters of Allocation under code AEGN and ISIN
ZAE000257937 on the JSE commences at 09:00 on	Wednesday, 13 June
Circular and a Form of Instruction, where applicable, posted to Qualifying Certificated
Shareholders on	Thursday, 14 June
Record Date at 17:00 on	Friday, 15 June
Rights Offer opens at 09:00 on	Monday, 18 June
In respect of Qualifying Certificated Shareholders, Letters of Allocation credited to an
electronic account held with the Transfer Secretaries at 09:00 on	Monday, 18 June
In respect of Qualifying Dematerialised Shareholders, CSDP or Broker accounts
credited with Letter of Allocation at 09:00 on	Monday, 18 June
Circular, where applicable, posted to Qualifying Dematerialised Shareholders on	Tuesday, 19 June
Last day to trade Letters of Allocation on the JSE	Tuesday, 26 June
In respect of Qualifying Certificated Shareholders wishing to sell all or some of their
Letter of Allocation, Forms of Instruction to be lodged with the Transfer Secretaries by
12:00 on	Tuesday, 26 June
Listing of Rights Offer Shares and trading therein on the JSE commences at 09:00 on	Wednesday, 27 June
In respect of Qualifying Certificated Shareholders (or their renouncees) wishing to
exercise all or some of their Rights, payment to be made and Forms of Instruction to
be lodged with the Transfer Secretaries by 12:00 on	Friday, 29 June
Rights Offer closes at 12:00 on	Friday, 29 June
Record date for Letters of Allocation on	Friday, 29 June
Rights Offer Shares issued on	Monday, 2 July
In respect of Qualifying Dematerialised Shareholders (or their renouncees), CSDP or
Broker accounts debited with the aggregate Rights Offer Price and updated with
Rights Offer Shares at 09:00 on	Monday, 2 July
In respect of Qualifying Certificated Shareholders (or their renouncees), share
certificates in respect of Rights Offer Shares posted on or about	Monday, 2 July
Results of the Rights Offer announced on SENS on	Monday, 2 July
Results of the Rights Offer published in the press on	Tuesday, 3 July
In respect of successful excess applications (if applicable), Rights Offer Shares issued
to Qualifying Dematerialsed Shareholders and/or share certificates posted by registered
post to Qualifying Certificated Shareholders on or about	Wednesday, 4 July
In respect of unsuccessful excess applications (if applicable), refund payments made to
Certificated Shareholders on or about	Wednesday, 4 July

Notes:

Share certificates in respect of Aveng Ordinary Shares may not be dematerialised or rematerialised between Wednesday, 13 June 2018 and Friday, 15 June 2018, both days inclusive.
If you are a Qualifying Dematerialised Shareholder you are required to notify your duly appointed CSDP or Broker of your acceptance of the Rights Offer in the manner and time stipulated in the agreement governing the relationship between yourself and your CSDP or Broker.
CSDPs effect payment on a delivery versus payment method in respect of Qualifying Dematerialised Shareholders.
All times are South African times.
Share certificates will be posted by registered post at the risk of the Qualifying Certificated Shareholders (or their renouncees).

DEFINITIONS AND INTERPRETATIONS

Throughout this Circular, unless the context indicates otherwise, the words in the column on the left below shall have the meaning stated opposite them in the column on the right below, reference to the singular shall include the plural and vice versa, words denoting one gender include the other and words and expressions denoting natural persons include juristic persons and associations of persons:

“ATON”	ATON Gmbh, a company incorporated in Germany, with headquarters in
	Germany;
“Authorised Dealer”	a person authorised to deal in foreign exchange as contemplated in the
	Exchange Control Regulations;
“Aveng”or“theCompany”	Aveng Limited (registration number 1944/018119/06), a public company duly
	registered and incorporated with limited liability in accordance with the laws
	of South Africa;
“Aveng Ordinary Share”	an ordinary share in the share capital of Aveng;
“Aveng Shareholders”or	holders of Aveng Ordinary Shares;
“Shareholders”
“Board”	the board of Directors, which, as at the Last Practicable Date, comprised the
	persons whose names appear on page 10 of this Circular;
“theBonds”	Aveng’s R2 000 million, 7.25% senior unsecured convertible registered listed
	bonds due 24 July 2019;
“Bondholders”	holders of the Bonds;
“Broker”	a stockbroker as defined in the Financial Markets Act;
“Business Day”	any day other than Saturday, Sunday or any official public holiday in South
	Africa;
“ Capital Markets	collectively, the Rights Offer and the Early Bond Redemption;
Transaction”
“Certificated Shareholders”	holders of Certificated Shares;
“Certificated Shares”	Aveng Ordinary Shares that have not been Dematerialised, the title to which is
	represented by a share certificate or other Document of Title;
“Circular”	this bound document, dated Thursday, 14 June 2018 including the annexures
	hereto and the Form of Instruction, where applicable;
“Common Monetary Area”	collectively, South Africa, the Republic of Namibia and the Kingdoms of Lesotho
	and Swaziland;
“Companies Act”	the Companies Act No. 71 of 2008, as amended;
“CSDP”	a central securities depository participant, being a participant as defined in
	section 1 of the Financial Markets Act, appointed by a shareholder for purposes
	of, and in regard to, Dematerialisation and to hold and administer securities or
	an interest in securities on behalf of a shareholder;
“Dematerialisation”or	the process by which Certificated Shares are converted to or held in electronic
“Dematerialised”	form as uncertificated securities and recorded in a sub-register of securities
	holders maintained by a CSDP, after the Documents of Title have been validated
	and cancelled by the Transfer Secretaries and captured onto the Strate system
	by the selected CSDP or Broker, and the holding of securities is recorded
	electronically;
“ Dematerialised	holders of Dematerialised Shares;
Shareholders”
“Dematerialised Shares”	Aveng Ordinary Shares which have been through the Dematerialisation
	process;

“Designated Bank Account”	the bank account into which Qualifying Certificated Shareholders can make
	payment by way of electronic funds transfer, the details of which will be
	provided on request from the Transfer Secretaries, contactable during ordinary
	business hours on 011 370 5000;
“Directors”	the directors of Aveng, being both non-executive and executive directors;
“Documents of Title”	share certificates, certified transfer deeds, balance receipts, or any other
	documents of title to Shares;
“Early Bond Redemption”	redemption of the Bonds prior to their scheduled maturity date, being
	Wednesday, 24 July 2019, further details of which will be set out in separate
	documentation to be distributed to holders of the Bonds;
“EFT”	electronic funds transfer;
“ Exchange Control	the Exchange Control Regulations, 1961, as amended, promulgated in terms of
Regulations”	section 9 of the South African Currency and Exchanges Act, No 9 of 1933, as
	amended;
“Excluded Territories”	the United States, Australia, Canada, Japan and Hong Kong and any other
	jurisdiction where the extension or making of the Rights Offer would be
	unlawful or in contravention of certain regulations;
“Financial Markets Act”	the Financial Markets Act, No 19 of 2012, as amended;
“Form of Instruction”	a printed, personalised form of instruction in respect of Letters of Allocation
	reflecting the Rights of Qualifying Certificated Shareholders and on which
	Certificated Shareholders are entitled to indicate whether they wish to take up
	their Rights or sell or renounce all or a portion of their Letters of Allocation;
“the Group”	Aveng and its subsidiaries;
“JSE”	the stock exchange operated by the JSE Limited;
“JSE Limited”	JSE Limited (registration number 2005/022939/06), a public company duly
	registered and incorporated with limited liability in accordance with the laws
	of South Africa and which is licensed to operate an exchange in terms of the
	Financial Markets Act;
“Last Practicable Date”	Wednesday, 6 June 2018, being the last practicable date prior to the finalisation
	of this Circular;
“Letter of Allocation”	a renounceable (nil paid) letter of allocation issued by the Company to
	Qualifying Shareholders in Dematerialised form, conferring a Right on the
	holder thereof;
“Listings Requirements”	the JSE Limited Listings Requirements, as amended;
“MOI”	the Memorandum of Incorporation of Aveng;
“Murray & Roberts”	Murray & Roberts Holdings Limited (registration number 1948/029826/06), a
	public company duly registered and incorporated with limited liability in
	accordance with the laws of South Africa;
“M&R Transaction”	the transaction proposed by Murray & Roberts, consisting of the Potential
	Share Offer and the Potential Bond Offer, pursuant to which, if implemented
	Murray & Roberts may acquire Aveng;
“ M&R Early Bond	the potential early redemption of the Bonds at par value of R2.0 billion plus
Redemption”	accrued interest, pursuant to the M&R Transaction;
“M&R Offer”	the potential offer from Murray & Roberts in relation to the M&R Transaction,
	comprising the Potential Share Offer and Potential Bond Offer;
“Non-resident”	a person who is not considered to be ordinarily resident in South Africa in
	terms of the Exchange Control Regulations;
“Potential Bond Offer”	Murray & Roberts’ proposal to early redeem the Bonds at par plus accrued
	interest calculated up to and including the date of settlement, being the date of
	closing of the M&R Transaction;
“Potential Offer Shares”	all the issued Aveng Ordinary Shares at the time that the M&R Offer is made;

“Pre-conditions”	pre-conditions set out in paragraph 2.3 of this Circular;
“ Qualifying Certificated	Qualifying Shareholders who hold Certificated Shares;
Shareholders”
“ Qualifying Dematerialised	Qualifying Shareholders who hold Dematerialised Shares;
Shareholders”
“Qualifying Shareholder”	a Shareholder registered as such on the Register on the Record Date that is not
	a Restricted Shareholder;
“ Rand”or“R”or“ZAR”	South African Rand and cents, the official currency of South Africa;
and“cents”
“Record Date”	the last day for Shareholders to be recorded in the Register in order to
	participate in the Rights Offer, being 17:00 on Friday, 15 June 2018;
“Register”	the register of Certificated Shareholders maintained by the Transfer Secretaries
	and the sub-register of Dematerialised Shareholders maintained by the relevant
	CSDPs in accordance with section 50 of the Companies Act;
“Restricted Shareholders”	a Shareholder with a registered address or who is resident or located in any
	Excluded Territory on the Record Date;
“Right/s”	the right/s to subscribe for Rights Offer Shares at the Rights Offer Price
	pursuant to the Rights Offer;
“Rights Offer”	the renounceable rights offer to Qualifying Shareholders of a maximum of
	5 000 000 000 Rights Offer Shares at the Rights Offer Price, in the ratio of
	1 199.98772 Rights Offer Shares for every 100 Aveng Ordinary Shares held on
	the Record Date;
“Rights Offer Price”	the subscription price payable per Rights Offer Share, being 10 cents;
“Rights Offer Shares”	a maximum of 5 000 000 000 new Aveng Ordinary Shares to be issued pursuant
	to the Rights Offer;
“SENS”	the Stock Exchange News Service of the JSE;
“Shareholder Undertakings”	the agreements, entered into between Aveng, Coronation, Allan Gray and an
	institutional Shareholder, in terms of which they have undertaken to follow
	Rights as detailed in paragraph 4.5;
“South Africa”	the Republic of South Africa;
“ Special Bondholder	the meeting of Bondholders to approve amendments to the terms and conditions
Meeting”	of the Bonds to enable the Early Bond Redemption, which meeting is to be
	convened on or about Tuesday, 3 July 2018;
“Strate”	Strate Proprietary Limited (registration number 1998/022242/07), a private
	company duly registered and incorporated with limited liability in accordance
	with the laws in South Africa and which is a registered central securities
	depository in terms of the Financial Markets Act, and which manages the
	electronic clearing and settlement system for transactions that take place on
	the JSE as well as off-market trades;
“Transfer Secretaries”or	Computershare Investor Services Proprietary Limited (registration number
“Computershare”	2004/003647/07), a private company duly registered and incorporated with
	limited liability in accordance with the laws of South Africa; and
“TRP”	the Takeover Regulations Panel as established in terms of the Companies Act;
“VAT”	Value-added tax, payable in terms of the Value-Added Tax Act, No. 89 of 1991
	as amended.

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Incorporated in the Republic of South Africa (Registration number: 1944/018119/06) Share code: AEG ISIN: ZAE000111829 (“Aveng” or “the Company”)

Directors

Executive

Independent Non-executive

EK Diack (Executive Chairman and KW Mzondeki (Lead Independent Director) Chief Executive Officer) SJ Flanagan AH Macartney (Group CFO) MA Hermanus JJA Mashaba (Group Executive Director) PA Hourquebie MJ Kilbride

CIRCULAR TO SHAREHOLDERS

INFORMATION RELATING TO THE RIGHTS OFFER

1. INTRODUCTION

Aveng Shareholders are referred to the announcement released on SENS on Friday, 18 May 2018, in which Shareholders were advised that on or about 17 May 2018, Aveng received an expression of interest from Murray & Roberts relating to the acquisition of all the issued Aveng Ordinary Shares and the early redemption of the Bonds. Aveng and Murray & Roberts have reached in principle agreement to continue discussions and to pursue a formal offer.

Shareholders are advised that no formal offer has yet been made by Murray & Roberts. The making of a formal offer by Murray & Roberts is subject to the fulfilment and/or waiver of a number of Pre-conditions. If the M&R Offer is made, the M&R Transaction will also be subject to the fulfilment and/or waiver of a number of suspensive conditions. There is no certainty at this stage that Murray & Roberts will make an offer or, if the M&R Offer is made that the M&R Transaction will be completed.

Aveng Shareholders are also referred to the announcement released on SENS on Thursday, 26 April 2018 in which Aveng announced its intention to early redeem the Bonds partly in cash and partly through the issue of new Aveng Ordinary Shares. Regardless of the outcome of the M&R Transaction, Aveng intends to proceed with the implementation of the Capital Markets Transaction. In light of the M&R Transaction, Aveng intends to raise R500 million through the Rights Offer in order to fund internal capital requirements, which Rights Offer is supported by Murray & Roberts.

At a general meeting of Shareholders held on Tuesday, 29 May 2018, Shareholders approved the following resolutions in order to implement the Rights Offer:

authorisation to convert par value shares to no par value shares and the amendment of the MOI to take account of the conversion;
authorisation to increase authorised Share Capital from 882 034 263 shares to 180 882 034 263 shares; and
the granting of authority to the Directors to issue such number of new Aveng Ordinary Shares as may be required for the purposes of implementing the Capital Markets Transaction, including authorisation to issue new Aveng Ordinary Shares for that purpose with voting power that may, upon issue, exceed 30% of the existing power of the Aveng Ordinary Shares currently in issue.

The special resolutions relating to the conversion of Aveng Ordinary Shares from par value to no par value shares, the increase in authorised share capital and the amendment of the MOI were lodged with the CIPC on Tuesday, 29 May 2018.

The purpose of this Circular is to provide Shareholders with information in relation to the Rights Offer, the terms and conditions of the Rights Offer and information on participating in the Rights Offer.

2. M&R TRANSACTION

2.1 Key commercial terms of the M&R Transaction

Subject to the fulfilment or waiver of the Pre-conditions, Murray & Roberts proposes to make an all share offer to acquire the Potential Offer Shares.

If a firm offer is made, the proposed aggregate value that will be attributable to the Potential Offer Shares at that time will be R1.0 billion (“Proposed Transaction Value”) assuming that Aveng raises at least R300 million in new capital in the Rights Offer (“Minimum Rights Offer Proceeds”). The Proposed Transaction Value will be reduced on a Rand for Rand basis by any shortfall in the Minimum Rights Offer Proceeds. The final Proposed Transaction Value and therefore final implied offer price per Aveng Ordinary Share will be communicated at the time of making a formal offer (if made) post completion of the Rights Offer and fulfilment of the Pre-conditions.

The final Proposed Transaction Value will be settled in new Murray & Roberts ordinary shares to be issued at an issue price based on the prevailing 30-day volume weighted average price of Murray & Roberts ordinary shares calculated on the last practicable date prior to the implementation date of the Potential Share Offer.

In addition to the Potential Share Offer, Murray & Roberts proposes to early redeem the Bonds in terms of the Potential Bond Offer, at par plus accrued interest, calculated up to and including the date of settlement of the M&R Early Bond Redemption, being the date of closing of the M&R Transaction.

The M&R Early Bond Redemption will be funded by Murray & Roberts from a combination of new financing facilities of R1.8 billion (“New Facilities”) and available cash resources. Murray & Roberts has procured a credit approved term sheet from two funding banks for the New Facilities, which are subject to typical terms and conditions including executing final financing agreements.

2.2 Mechanism of the M&R Transaction

The Potential Share Offer, if made, will be implemented by way of a scheme of arrangement in terms of section 114 of the Companies Act, requiring, amongst other things, that a special resolution be passed by the requisite quorum of Aveng shareholders (“Scheme”). If the Scheme is implemented, Murray & Roberts intends to delist Aveng.

The M&R Transaction is expected to constitute a Category 1 transaction for Murray & Roberts in terms of the Listings Requirements. Prior to the implementation of the Scheme, the M&R Transaction will therefore require the approval of Murray & Roberts’ shareholders in a general meeting by way of an ordinary resolution.

The M&R Early Bond Redemption will be implemented by amending the Bond terms and conditions in order to facilitate the early redemption of the Bonds. The terms of the redemption are subject to Bondholder approval.

2.3 Pre-conditions to making a formal offer

The making of a formal offer by Murray & Roberts to Aveng is subject to the satisfactory fulfilment or waiver of the following pre-conditions:

Murray & Roberts’ shareholder approval in terms of section 126 of the Companies Act, as a consequence of receipt by Murray & Roberts of an offer from ATON to acquire all or a portion of the issued shares in Murray & Roberts that it does not already own. ATON currently holds c.40% of the issued shares in Murray & Roberts;
approval from the TRP in terms of section 126 of the Companies Act;
satisfactory completion of reciprocal confirmatory due diligence by Murray & Roberts and Aveng;
completion of the Rights Offer in accordance with its terms;
satisfactory terms of the Scheme confirmed; and
execution of final financing agreements in relation to the New Facilities.

2.4 Firm offer

The Potential Share Offer and the Potential Bond Offer are inter-conditional. As detailed in 2.1, the final Proposed Transaction Value and accordingly the implied final offer price per Aveng Ordinary Share will be determined following the satisfactory completion of the confirmatory due diligence

and the completion of the Rights Offer. Murray & Roberts intends to submit a firm offer post the closing of the Rights Offer, subsequent to which a firm intention announcement will be made by Aveng. The firm offer will be subject to the suspensive conditions as set out in 2.5 below.

2.5 Suspensive conditions to the M&R Transaction

The M&R Transaction will be subject to the timeous fulfilment of the following suspensive conditions:

a special resolution of the Aveng Shareholders approving the Scheme;
Murray & Roberts shareholders approving the Category 1 transaction, in terms of the Listings Requirements and placing sufficient ordinary shares under the control of the directors of Murray & Roberts;
the approval of the Aveng Bondholders to amend the terms and conditions of the Bonds to facilitate the early redemption of the Bonds and to approve the terms of the redemption;
approval of competition authorities in South Africa, Australia, New Zealand and certain other jurisdictions as required; and
any other necessary statutory and/or regulatory and/or third-party approval(s).

2.6 Other terms

In the event that (i) the firm intention letter is not received; or (ii) the circular to Murray & Roberts shareholders in respect of the Category 1 transaction is not posted in time for the general meeting to vote on the Category 1 transaction by 30 August 2018 or such later date as agreed between the parties, Aveng shall be entitled, at its sole discretion, to terminate the M&R Transaction and any further negotiations between the parties.

3. CAPITAL MARKETS TRANSACTION

3.1 Overview

3.1.1 Early Bond Redemption

Aveng remains of the view that the Early Bond Redemption is in the best interest of all stakeholders should the M&R Offer not be made or should the M&R Transaction not be successful. As such Aveng is continuing with the process to amend the Bond terms and conditions, to facilitate the Early Bond Redemption as soon as practically possible should the M&R Transaction not be successful.

To enable the Early Bond Redemption, Aveng will convene a special meeting for all Bondholders to seek approval for the changes required to the existing terms and conditions of the Bonds and to facilitate the early redemption of the Bonds. The Special Bondholder Meeting requires a quorum of 75% of Bondholders to be quorate and at the Special Bondholder Meeting, approval of not less than 66.67% of Bondholders is required to effect the required amendments to the Bond terms and conditions. The foregoing amendments will also be subject to approval of the JSE.

A notice of the Special Bondholder Meeting and information relating to the proposed amendments to the terms and conditions of the Bonds will be distributed through SENS to Bondholders on or about Tuesday, 12 June 2018. The salient dates pertaining to the Special Bondholder Meeting as published on SENS will also be contained in the notice.

3.1.2 Rights Offer

Aveng is looking to raise an amount of R500 million through the Rights Offer irrespective of whether the M&R Offer is made or the M&R Transaction proceeds. The proceeds of the Rights Offer will be used to fund internal capital requirements. If the M&R Offer is made, the M&R Transaction will be subject to various approvals and the implementation thereof may take more than six months. As such, Aveng requires new capital to be raised from the Rights Offer to ensure its interim liquidity requirements are met even if the M&R Offer is made and the M&R Transaction proceeds.

In order to effect the implementation of the Rights Offer, Shareholders approved the following resolutions at the general meeting of Shareholders held on Tuesday, 29 May 2018:

authorisation to convert par value shares to no par value shares and the amendment of the MOI to take account of the conversion;
authorisation to increase authorised Share capital from 882 034 263 shares to 180 882 034 263 shares; and

the granting of authority to the Directors to issue such number of additional Aveng Ordinary Shares of the authorised but unissued Aveng Ordinary Shares as may be required for the purposes of implementing the Capital Markets Transaction, including authorisation to issue additional Aveng Ordinary Shares for that purpose with voting power that may, upon issue, exceed 30% of the existing power of the Aveng Ordinary Shares currently in issue.

3.1.3 Bond Settlement

To the extent the M&R Transaction is successful, the Bonds will be redeemed by the M&R Early Bond Redemption.

To the extent that the M&R Offer is not made or the M&R Transaction is not successful, Aveng intends to early redeem the outstanding Bonds as soon as practically possible. The amended terms and conditions of the Bonds will allow for the early redemption of the outstanding Bonds, which redemption is to be settled in cash or by the issue of new Aveng Ordinary Shares or both. In the event that the M&R Transaction is not successful, Aveng will consider the viability of raising new cash from either the issue of new equity or a new debt instrument to settle all or a portion of the outstanding Bonds. To the extent this is not viable, the outstanding Bonds will be settled in the issue of new Aveng Ordinary Shares. In this event, Aveng will allot and issue such Aveng Ordinary Shares to the Bondholders as a specific issue of shares for cash in accordance with the applicable requirements of the Listings Requirements and the provisions of the Companies Act (“Specific Issue”). The Specific Issue will be conditional on approval from independent Shareholders.

The terms of the redemption, which will be subject to Bondholder approval, will be finalised once it is clear to Aveng that the M&R Transaction is not successful or will not proceed.

3.2 Rationale

As at 31 December 2017, Aveng had gross debt of R3.25 billion including bank debt of R1.25 billion and Bonds of R2 billion. As at the Last Practicable Date, Aveng has utilised a further R620 million of bank debt and has recently secured an additional R200 million bank debt facility of which R150 million has been drawn immediately. These current debt levels within the Group are considered to be unsustainable. As such, deleveraging the Company to reduce the existing debt-burden will be critical to unlock shareholder value. In particular, the Bonds and interim liquidity requirements are creating significant constraints on Aveng.

The Board has considered alternatives for the potential refinancing of the Bonds prior to their maturity. In addition to the difficult trading conditions the Company has been facing, the Board believes that uncertainty as to the Group’s ability to refinance the Bonds has contributed to the decline in Aveng’s share price over the recent months.

The Capital Markets Transaction will remove the refinance risk related to the Bonds, provide a solution to the interim liquidity requirements and assist in restructuring Aveng Group’s balance sheet to a more appropriate and sustainable level.

4. INFORMATION ON THE RIGHTS OFFER

4.1 Terms of the Rights Offer

In terms of the Rights Offer:

4.1.1 Qualifying Shareholders will be entitled to subscribe for a maximum of 5 000 000 000 Rights Offer Shares, upon the terms set out in this Circular;
4.1.2 Each Qualifying Shareholder will be entitled to subscribe for 1 199.98772 Rights Offer Shares for every 100 Aveng Ordinary Shares held on the Record Date; and
4.1.3 The subscription price will be 10 cents per Rights Offer share.

Qualifying Shareholders recorded in the Register at 17:00 on Friday, 15 June 2018 will be entitled to participate in the Rights Offer. The Rights Offer will open at 09:00 on Monday, 18 June 2018 and will close at 12:00 on Friday, 29 June 2018. Letters of Allocation in respect of the Rights Offer Shares will be listed and able to be traded on the JSE from 09:00 on Wednesday, 13 June 2018 until 17:00 on Tuesday, 26 June 2018.

The Rights Offer Shares will, upon allotment and issue, rank pari passu with all other existing Aveng Ordinary Shares in all respects, including in terms of both voting rights and dividends. The Rights Offer Shares do not have any convertibility or redemption provisions.

The Rights Offer Shares, once issued, will be fully paid up and freely transferable.

4.2 Entitlement

The number of Rights Offer Shares to which Qualifying Shareholders will be entitled, determined by reference to the number of Aveng Ordinary Shares held on the Record Date, is set out in the Table of Entitlement in Annexure 1 to this Circular.

The entitlement of each Qualifying Certificated Shareholder is reflected in the appropriate block in the Form of Instruction, which is enclosed with this Circular. Qualifying Certificated Shareholders will have their entitlements credited to a nominee account with the Transfer Secretaries.

If you are a Qualifying Dematerialised Shareholder, you will not receive a Form of Instruction. Instead, you should receive notification from your CSDP or Broker regarding the Rights to which you are entitled in terms of the Rights Offer. Qualifying Dematerialised Shareholders will have their CSDP or Broker accounts automatically credited.

4.3 Fractional entitlement

Rights Offer Shares representing fractional entitlements will not be issued to Qualifying Shareholders. Where necessary, entitlements to Rights Offer Shares of 0.5 or greater will be rounded up and less than 0.5 will be rounded down to the nearest whole number.

4.4 Holdings of odd lots in multiple other than 100 shares

Qualifying Shareholders holding less than 100 Shares, or not holding a whole multiple of 100 Shares, will be entitled, in respect of such holdings, to participate in the Rights Offer in accordance with the Table of Entitlement in Annexure 1 to this Circular.

4.5 Shareholder undertakings and indication of support

4.5.1 Shareholder undertakings

The Company has received undertakings to follow or support rights, as applicable, for approximately R245 million, subject to the restrictions listed below.

Details of the Shareholder Undertakings are set out below:

			Number of
		Number of	Rights Offer
		Aveng	Shares in
		Ordinary	the ratio of
		Shares	1199.98772
	Number of	subject to	for every
	Aveng	the	100 Aveng	Value	% of
	Ordinary	Shareholder	Ordinary	(Rand	Rights
Shareholder	Shares held	Undertaking	Shares	million)	Offer
Allan Gray1,2	100 511 612	83 334 187	1 000 000 011	100.0	20.0
Coronation3,4	85 889 168	83 334 187	1 000 000 011	100.0	20.0
Institutional
Shareholder5	50 000 442	37 500 000	449 995 395	45.0	9.0
				245.0	49.0

Notes:

Allan Gray Proprietary Limited (“Allan Gray”) is the appointed discretionary investment manager of clients who are beneficial and/or registered holders of Aveng ordinary shares. Allan Gray is not the beneficial owner of the shares and has irrevocably undertaken to recommend to its clients follow their rights. This commitment is subject to the continuing mandates of its clients in their current form and in the absence of any instructions from its clients to the contrary. Allan Gray has limited its commitment such that its clients’ rights need not be followed by the clients to the extent that the exercise thereof would result in Allan Gray’s clients’ aggregate holding of the issued shares in the capital of Aveng exceeding 34.9%.
Allan Gray has limited its clients’ commitment to 83 334 187 shares, representing R100 million, subject to the restrictions outlined in (1).
Coronation Asset Management Proprietary Limited (“Coronation”) holds the shares on behalf of its clients that are the beneficial owners of the shares in terms of a revocable investment mandate. Coronation has limited its commitment such that its clients’ rights need not be followed by the clients to the extent that the exercise thereof would result in Coronation aggregate holding of the issued shares in the capital of Aveng exceeding 30% .
Coronation has limited its commitment to R100 million, representing 83 334 187 shares, subject to the restrictions outlined in (3).
An institutional asset manager (“Institutional Shareholder”) acts as investment manager and agent for and on behalf of various clients, entitling them to deal with the shares in terms of the mandates entered into between themselves and their clients. The Institutional Shareholder has limited its commitment to 75% of the shares currently held by its clients. This commitment is subject to the continuing mandates of its clients in their current form and an absence of any instructions from its clients to the contrary.

4.5.2 Impact of restrictions on Shareholder Undertakings

The impact of the restrictions on the Shareholder Undertakings in notes (1) and (3) above is that the effective committed amount – if no other Shareholder follows their rights in terms of the Rights Offer and no excess applications are made, is approximately R154 million.

4.6 Working capital statement

The Board are satisfied that, following the raising of the additional R200 million super senior debt, and following the implementation of the Rights Offer considering the current Shareholder Undertakings to participate in the Rights Offer as outlined in paragraph 4.5, the Company will be able to pay its debts as they become due in the ordinary course of business for a period of 12 months following the date on which this test was considered, being 4 June 2018. As such, following both transactions, the liquidity, solvency and working capital of the Company will be significantly improved.

4.7 Excess applications

Qualifying Shareholders are entitled to apply for additional Rights Offer Shares over and above their entitlement.

Should there be excess Rights Offer Shares available, such excess Rights Offer Shares will be allocated equitably, taking cognisance of the number of Aveng Ordinary Shares held by the Qualifying Shareholder just prior to such allocation, including those taken up as a result of the Rights Offer, and the number of excess Rights Offer Shares applied for by such Qualifying Shareholder.

Non-equitable allocations of excess Rights Offer Shares will only be allowed in instances where they are used to round holdings up to the nearest multiple of 100.

4.8 Procedures for acceptance of Rights Offer entitlements

4.8.1 Qualifying Certificated Shareholders and/or their renouncees who wish to exercise all or some of their Rights as set out in the Form of Instruction, must complete the Form of Instruction in accordance with the instructions contained therein and lodge it, together with payment of the aggregate Rights Offer Price payable in respect of the Rights Offer Shares for which they intend to subscribe, with the Transfer Secretaries at either of the address set out in the “Corporate Information and Advisors” section of this Circular, so as to be received by the Transfer Secretaries by no later than 12:00 on Tuesday, 26 June 2018. Once received by the Transfer Secretaries, the exercise of Rights is irrevocable and may not be withdrawn.

If payment is not received on or before 12:00 on Friday, 29 June 2018, the Qualifying Certificated Shareholder or renouncee concerned will be deemed to have declined its Rights and the Right to subscribe for the relevant number of Rights Offer Shares in terms of the Form of Instruction will lapse regardless of who holds it.

Qualifying Certificated Shareholders are advised to take into consideration postal delivery times when posting their Forms of Instruction, as no late postal deliveries will be accepted. Qualifying Certificated Shareholders are advised to deliver their completed Forms of Instruction together with payment to the Transfer Secretaries by hand or by courier, where possible.

4.8.2 Qualifying Dematerialised Shareholders will not receive a Form of Instruction. Instead, they should receive notification from their CSDP or Broker regarding the Rights to which they are entitled in terms of the Rights Offer.

Qualifying Dematerialised Shareholders and/or their renouncees who wish to exercise all or some of their Rights are required to notify their duly appointed CSDP or Broker of their acceptance of the Rights in the manner and time stipulated in the agreement governing the relationship between themselves and their CSDP or Broker.

Aveng does not take responsibility and will not be held liable for any failure on the part of any CSDP or Broker to notify Qualifying Dematerialised Shareholders of the Rights Offer and/or to obtain instructions from Qualifying Dematerialised Shareholders to subscribe for the Rights Offer Shares and/or to sell and/or renounce Letters of Allocation.

4.9 Procedures for sale or renunciation of Letter of Allocation

4.9.1 Qualifying Certificated Shareholders who do not wish to exercise all or some of the Rights allocated to them as reflected in their Form of Instruction, may either dispose of or renounce all or some of their Letters of Allocation as follows:
i. Qualifying Certificated Shareholders who wish to sell all or some of their Letters of Allocation, must complete Form A in their Form of Instruction and return it to the Transfer Secretaries so as to be received by no later than 12:00 on Tuesday, 26 June 2018. The Transfer Secretaries will endeavour to procure the sale of Letters of Allocation on the JSE on behalf of such Qualifying Certificated Shareholders and will remit the net proceeds of the sale in accordance with the instructions set out in the Forms of Instruction, provided that net proceeds amounting to less than R100 will accrue for the benefit of the Company. In this regard, neither the Transfer Secretaries, nor the Broker appointed by them to effect the sale nor Aveng will have any obligation or be responsible for any loss or damage whatsoever in relation to or arising from the timing of such sales, the price obtained, or the failure to dispose of such Letters of Allocation.
ii. Qualifying Certificated Shareholders who wish to renounce all or some of their Letters of Allocation in favour of any named renouncee, must complete Form B in their Form of Instruction, and the renouncee must complete Form C in their Form of Instruction and return it to the Transfer Secretaries, so as to be received by no later than 12:00 on Friday, 29 June 2018, together with payment of the aggregate Rights Offer Price payable in respect of the Rights Offer Shares to be subscribed for.

Qualifying Certificated Shareholders wishing to sell or renounce all or some of their Letters of Allocation will be liable to pay brokerage charges and associated expenses.

4.9.2 Qualifying Dematerialised Shareholders who wish to sell or renounce all or some of their Letters of Allocation should make the necessary arrangements with their CSDP or Broker in the manner and time stipulated in the agreement governing the relationship between themselves and their CSDP or Broker.

Qualifying Dematerialised Shareholders wishing to sell or renounce all or some of their Letters of Allocation will be liable to pay brokerage charges and associated expenses.

4.10 Procedures for application for additional Rights Offer Shares

4.10.1 Qualifying Certificated Shareholders wishing to apply for excess Rights Offer Shares must complete the attached Form of Instruction in accordance with the instructions contained therein and, once completed, lodge same, together with payment of the Rights Offer Price, with the Transfer Secretaries, so as to be received by the Transfer Secretaries by no later than 12:00 on Friday, 29 June 2018.

Refund payments in respect of unsuccessful applications by Certificated Shareholders for additional Rights Offer Shares will be made to the relevant applicants, at their risk, on or about Wednesday, 3 July 2018. No interest will be paid on monies received in respect of unsuccessful applications. If the applicant concerned is not a Shareholder and gives no address in the attached Form of Instruction, then the relevant refund will be held by Aveng until collected by the applicant and no interest will accrue to the applicant in respect thereof.

4.10.2 Qualifying Dematerialised Shareholders wishing to apply for excess Rights Offer Shares should instruct their CSDP or Broker, in terms of the custody agreement entered into between themselves and their CSDP or Broker, as to the number of excess Rights Offer Shares for which they wish to apply.

4.11 Payment

The amount due on acceptance of the Rights Offer is payable in Rand.

4.11.1 Qualifying Certificated Shareholders (or their renouncees) must make payment of the aggregate Rights Offer Price payable in respect of the Rights Offer Shares to be subscribed for by them, by way of:
i. a bank-guaranteed cheque (crossed, marked “not transferable” and with the words “or bearer” deleted) or a bankers’ draft (drawn on a bank registered in South Africa) for the aggregate Rights Offer Price payable in respect of the Rights Offer Shares to be subscribed for, made payable to “Aveng Limited – Rights Offer” to the Transfer Secretaries as follows:

By hand or courier: By post: C/o Computershare Investor Services C/o Computershare Investor Services Proprietary Limited Proprietary Limited Rosebank Towers PO Box 61763 15 Biermann Avenue Marshalltown, 2107 Rosebank, 2196

or;

ii. an electronic funds transfer into the Designated Bank Account (details of which are available from the Corporate Actions department of the Transfer Secretaries, contactable during ordinary business hours on 011 370 5000)

so as to be received, together with their duly completed Form of Instruction, by no later than 12:00 on Friday, 29 June 2018.

Payment will constitute an irrevocable subscription by the Qualifying Certificated Shareholder (or renouncee) for the Rights Offer Shares upon the terms set out in this Circular and in the Form of Instruction.

Delivery of any bank guaranteed cheque or banker’s draft will be at the risk of the Qualifying Certificated Shareholder (or renouncee) concerned.

All bank-guaranteed cheques or bankers’ drafts received by the Transfer Secretaries will be deposited immediately for payment. The payment will constitute an irrevocable subscription by the Qualifying Certificated Shareholder (or renouncee) for the Rights Offer Shares upon the terms set out in this Circular and in the Form of Instruction.

In the event that any cheque or bankers’ draft is dishonoured, Aveng may, in its sole discretion, treat the acceptance of Rights Offer Shares and the completed Form of Instruction as void or may tender delivery of the relevant Rights Offer Shares to which such cheque or banker’s draft relates, against payment in cash of the aggregate Rights Offer Price in respect of such Rights Offer Shares.

4.11.2 Payment by Qualifying Dematerialised Shareholders (or their renouncees) will be effected on their behalf by their CSDP or Broker. The CSDP or Broker will make payment in respect of Qualifying Dematerialised Shareholders (or their renouncees) on a delivery versus payment basis. Qualifying Dematerialised Shareholders must ensure that they place their CSDP or Broker in sufficient funds so as to enable them to settle the aggregate Rights Offer Price payable in respect of the Rights Offer Shares for which they wish to subscribe.

4.12 Lapsing of Rights

Qualifying Shareholders that do not take up their Rights will continue to own the same number of Aveng Ordinary Shares, but their percentage holding in Aveng will be diluted.

Rights not exercised will be deemed to have been declined and will lapse and the relevant Qualifying Shareholder shall not receive any economic benefit in respect of such lapsed Rights.

4.13 Exchange Control Regulations

The following summary is intended only as a guide and is, therefore, not comprehensive. If Shareholders are in any doubt as to the appropriate course of action they are advised to consult their professional advisor.

Non-residents

In terms of the Exchange Control Regulations, Non-resident Qualifying Shareholders, excluding former residents (emigrants), of the Common Monetary Area will be allowed to:

exercise Rights allocated to them in terms of the Rights Offer;
purchase Letters of Allocation on the JSE; and
subscribe for the Rights Offer Shares arising in respect of the Letter of Allocation purchased on the JSE provided that payment is received through normal banking channels in foreign currency or Rand from a non-resident Rand account.

In terms of the Exchange Control Regulations of South Africa, Non-residents of the Common Monetary Area will be allowed to purchase excess shares that have been applied for in terms of the offer (if applicable).

Where a Right in terms of the offer falls due to a former resident of the Common Monetary Area, which Right is based on shares controlled in terms of the Exchange Control Regulations, only funds

in the emigrant’s capital account may be used to take up this Right. In addition, such funds may also be used to purchase excess shares that have been applied for in terms of the offer (if applicable).

All applications by Non-residents for the above purposes must be made through an Authorised Dealer. Electronic statements issued in terms of Strate and any Share certificates issued pursuant to such applications will be endorsed “Non-resident”.

Emigrants

Where a Right becomes due to a Qualifying Shareholder who is a former resident (emigrant) of the Common Monetary Area, which Right is based on shares blocked in terms of the Exchange Control Regulations, then only emigrant blocked funds may be used to:

take up the Rights allocated to them in terms of the Rights Offer;
purchase Letters of Allocation on the JSE; and
subscribe for the Rights Offer Shares arising in respect of the Letters of Allocation purchased on the JSE.

All applications by emigrants using blocked funds for the above purposes must be made through the Authorised Dealer controlling their blocked assets.

New share certificates issued to an emigrant will be endorsed “non-resident” and placed under the control of the Authorised Dealer through whom the payment was made. The proceeds due to emigrants from the sale of the Letters of Allocation, if applicable, will be returned to the Authorised Dealer for credit of such emigrants’ blocked accounts.

Where the emigrant’s Aveng Ordinary Shares are in Dematerialised form with a CSDP, any shares issued pursuant to the use of emigrant blocked funds will be credited to their blocked share accounts at the CSDP controlling their blocked portfolios. The electronic statement issued in terms of Strate will be dispatched by the CSDP or Broker to the address of the emigrant in the records of the CSDP or Broker.

Any Qualifying Shareholder resident outside the Common Monetary Area who receives this Circular and/or Form of Instruction should obtain advice as to whether any governmental and/or other legal consent is required and/or any other formality must be observed to enable a subscription to be made in terms of such form of instruction.

4.14 Foreign Shareholders

The Rights Offer does not constitute an offer in the Excluded Territories and this Circular and Form of Instruction should not be forwarded or transmitted by you to any person in any territory other than where it is lawful to make such an offer.

Although Letters of Allocation may be credited to the CSDP or broker securities accounts of Dematerialised Shareholders registered as such on the Record Date: (i) with a registered address, or resident, in one of the Excluded Territories, (ii) in the United States or (iii) with a registered address, or who hold on behalf of persons located in the United States, or who hold on behalf of any person on a non-discretionary basis who is in the United States, or any state of the United States, such crediting of Letters of Allocation do not constitute an offer to Restricted Shareholders and such Restricted Shareholders will not be entitled to take up or transfer Letters of Allocation in the Rights Offer or acquire Rights Offer Shares unless such action would not result in the contravention of any registration or other legal requirement in any jurisdiction.

Restricted Shareholders should consult their professional advisers to determine whether any governmental or other consents are required or other formalities need to be observed to allow them to take up the Rights Offer, or trade the Rights to which they are entitled.

Shareholders holding Aveng Ordinary Shares on behalf of persons who are Restricted Shareholders are responsible for ensuring that taking up the Rights Offer, or trading in their entitlements under that offer, does not breach regulations in the relevant overseas jurisdictions. To the extent that Restricted Shareholders are not entitled to participate in the Rights Offer or trade the Rights to which they are entitled as a result of the aforementioned restrictions, the allocated Rights in respect of such Restricted Shareholders shall revert to the Company and such Rights will lapse.

Specific restrictions relating to certain jurisdictions are set out below.

Member states of the European Economic Area

In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) with effect from and including the relevant implementation date, no Rights Offer Shares or Letters of Allocation have been offered or will be offered pursuant to the Rights Offer to the public in that Relevant Member State prior to the

publication of a prospectus in relation to the Rights Offer Shares or Letters of Allocation which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in the Relevant Member State, all in accordance with the Prospectus Directive, except for, with effect from and including the relevant implementation date, offers of Rights Offer Shares or Letters of Allocation which may be made in that Relevant Member State:

to any person or legal entity which is a qualified investor as defined under the Prospectus Directive;
to fewer than 100, or, if the Relevant Member State has implemented the relevant provisions of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) in such Relevant Member State subject to obtaining the prior consent of the Managers; or
in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such Rights Offer Shares or Letters of Allocation shall result in a requirement for the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

For the purposes of this paragraph, the expression “an offer of Rights Offer Shares or Letters of Allocation to the public” in relation to any Rights Offer Shares or Letters of Allocation in any Relevant Member State means the communication, in any form and by any means, of sufficient information on the terms of the Rights Offer and the Rights Offer Shares and Letters of Allocation to be offered, so as to enable an investor to decide to purchase or subscribe for the Rights Offer Shares or Letters of Allocation, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. The expression “Prospectus Directive” means Directive 2003/71/EC (and any amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

In the case of any Rights Offer Shares or Letters of Allocation being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such financial intermediary will be deemed to have represented, acknowledged and agreed that the Rights Offer Shares or Letters of Allocation acquired by it in the Rights Offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in a Relevant Member State in circumstances which may give rise to an offer of any Rights Offer Shares or Letters of Allocation to the public other than their offer or resale in a Relevant Member State to qualified investors as defined under the Prospectus Directive. The Company and its affiliates and others will rely upon the truth and accuracy of the foregoing representation, acknowledgement and agreement.

United Kingdom

This Circular is only being distributed to, and is only directed at, persons in the United Kingdom who are “qualified investors” as defined in section 86(7) of the Financial Services and Markets Act, 2000, as amended (the “FSMA”) or otherwise in circumstances which do not require the publication by the Company of a prospectus pursuant to section 85(1) of the FSMA.

In the United Kingdom, this Circular is only being distributed to, and is only directed at, and any investment or investment activity to which this Circular relates is available only to, and will be engaged in only with, persons: (i) having professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act, 2000 (Financial Promotion) Order 2005 (the “Order”); or (ii) who are high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). Persons who are not relevant persons should not take any action on the basis of this Circular and should not act or rely on it.

Persons located in the United Kingdom that satisfy such requirements will be able to exercise their Rights under the Rights Offer provided that any such person, by subscribing for all or some of their Rights to which they are entitled, will be deemed to represent, warrant, agree and confirm that such person is a “qualified investor” as defined in section 86(7) of the FSMA and a relevant person. The Rights Offer does not constitute an offer to, and this Circular is not being distributed to or directed at, any person in the United Kingdom who is not (i) a “qualified investor” as defined in section 86(7) of the FSMA and (ii) a “relevant person”.

Canada, Australia and the Republic of Ireland

This Circular will not be sent and should not be forwarded to Shareholders with registered addresses in Canada, Australia or the Republic of Ireland. Letters of Allocation may not be transferred, sold or delivered in or into any of Canada, Australia or the Republic of Ireland.

The Letters of Allocation have not been and will not be registered under the Securities Act of Canada or with any security regulatory authority of any state or other jurisdiction in Canada and, subject to certain exceptions, may not be offered or sold within Canada.

In addition, due to restrictions under the securities laws of Australia and the Republic of Ireland, no Letters of Allocation are being offered nor is the Rights Offer being made in terms of this Circular to Shareholders with registered addresses in, or to residents of Australia or the Republic of Ireland.

United States of America

This Circular, the Letters of Allocation and the Rights Offer Shares have not been approved by the U.S. Securities and Exchange Commission, any state securities commission in the United States or any other U.S. regulatory authority, nor have any of such regulatory authorities passed upon or endorsed the merits of the Rights Offer or the accuracy or adequacy of this Circular. Any representation to the contrary is a criminal offence in the United States.

The Letters of Allocation and the Rights Offer Shares have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States.

Accordingly, the Company is not offering the Letters of Allocation or the Rights Offer Shares into the United States unless an exemption from the registration requirements of the U.S. Securities Act is available and, subject to certain exceptions, this Circular does not constitute nor will it constitute an offer or an invitation to apply for, or an offer or an invitation to acquire, any Letters of Allocation or Rights Offer Shares in the United States.

Subject to certain exceptions, any person who acquires Letters of Allocation or Rights Offer Shares will be deemed to have declared, warranted and agreed, by accepting delivery of this Circular, exercising their Rights, selling or renouncing their Letters of Allocation or accepting delivery of the Letters of Allocation or the Rights Offer Shares that it is not, and that at the time of acquiring the Letters of Allocation or the Rights Offer Shares it will not be, in the United States or acting on behalf of, or for the account or benefit of, a person on a non-discretionary basis in the United States or any state of the United States.

In addition, until 40 days after the commencement of the Rights Offer, an offer, sale or transfer of the Rights Offer Shares or the Letters of Allocation within the United States by a dealer (whether or not participating in the Rights Offer) may violate the registration requirements of the U.S. Securities Act.

Notice to New Hampshire Residents

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES (“RSA”) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

4.15 South African law

All transactions arising from the provisions of this Circular and the accompanying Form of Instruction will be governed by, and be subject to, the laws of South Africa.

4.16 Tax consequences

Qualifying Shareholders are advised to consult their tax and financial advisors regarding any taxation implications pertaining to them regarding the acceptance of their Rights in terms of the Rights Offer.

4.17 Documents of Title

New share certificates to be issued to Qualifying Certificated Shareholders (or their renouncees) in respect of those Rights Offer Shares for which they have validly subscribed, will be posted by registered post to Qualifying Certificated Shareholders (or their renouncees), by registered post, at their risk, on or about Monday, 2 July 2018.

New share certificates to be issued to Qualifying Certificated Shareholders (or their renouncees) in respect of successful applications for additional Rights Offer Shares, will be posted by registered post to Qualifying Certificated Shareholders (or their renouncees), by post, at their risk, on or about Wednesday, 3 July 2018. Qualifying Certificated Shareholders receiving the Rights Offer Shares must note that such Certificated Shares may not be traded on the JSE until they have been Dematerialised.

Qualifying Dematerialised Shareholders (or their renouncees) that have validly subscribed for Rights Offer Shares will have their accounts with their CSDP or Broker updated with the Rights Offer Shares to which they are entitled, on Monday, 2 July 2018.

Qualifying Dematerialised Shareholders (or their renouncees) that have successfully applied for additional Rights Offer Shares will have their accounts with their CSDP or Broker updated with the Rights Offer Shares, on or about Wednesday, 3 July 2018.

4.18 JSE listings

The Issuer Regulation Division of the JSE Limited has approved the listings on the JSE of:

the Letters of Allocation, JSE code: AEGN and ISIN: ZAE000257937, in respect of all of the 5 000 000 000 maximum Rights Offer Shares with effect from the commencement of trade on Wednesday, 13 June 2018 to the close of trade on Tuesday, 26 June 2018, both days inclusive; and
a maximum of 5 000 000 000 Rights Offer Shares with effect from the commencement of trade on Wednesday, 27 June 2018.

5. ESTIMATED EXPENSES IN RELATION TO THE RIGHTS OFFER

It is estimated that Aveng’s expenses relating to the Rights Offer will amount to approximately R1 429 000. The expenses (excluding VAT) relating to the Rights offer are detailed below:

Nature of expense	Paid/payable to	R’000
Legal advisors	Baker McKenzie	850
Printing, publication and distribution	Ince	60
Transfer Secretaries	Computershare	105
Listing fee	JSE Limited	388
Documentation inspection fee	JSE Limited	26
Total		1 429

INFORMATION RELATING TO THE COMPANY

6. BACKGROUND INFORMATION

6.1 History and nature of business

Aveng is a limited liability company incorporated and domiciled in the Republic of South Africa whose shares are publicly traded. The Group operates in the construction, engineering and mining environments and as a result the revenue is not seasonal in nature, but is influenced by the nature and execution of the contracts currently in progress.

The Group operates under four reportable segments including Construction and Engineering (South Africa and rest of Africa), Construction and Engineering (Australasia and Asia), Mining and Manufacturing and Processing.

In February 2018, Aveng announced the results of the strategic review following a thorough and robust interrogation of all parts of the organisation to identify businesses and assets that support its long-term strategy of becoming an international infrastructure and resources group with a footprint in developing and fast-growing regions and with access across the chosen markets. As part of the strategic review, Aveng announced its intention to dispose of its non-core assets including Aveng Grinaker-LTA, Aveng Trident Steel, the Aveng Manufacturing businesses and properties, allowing management to focus on the core operations of Moolmans and McConnell Dowell. This simplification will remove the business complexity, eliminate non-core losses and allow the Aveng head office to be restructured commensurate with the operating model. Management believes the implementation of the strategic review will take up to 36 months.

6.1.1 Core operations

6.1.1.1 McConnell Dowell

McConnell Dowell specialises in the construction and maintenance of tunnels and pipelines, railway infrastructure maintenance and construction, marine and mechanical engineering, industrial building projects, oil and gas construction and mining and mineral construction in Australia, New Zealand and Pacific, Built Environ, Southeast Asia and Middle East.

6.1.1.2 Moolmans

Moolmans is a South African-based leader in open cut contract mining across Africa, involved in all aspects across the mining value chain, with brand equity through strong customer relationships, a good delivery track record and an excellent operational performance offering.

6.1.2 Non-core operations

Aveng is in the process of disposing of its non-core operations including Aveng GrinakerLTA, Aveng Trident Steel, the Aveng Manufacturing businesses and properties.

6.2 Prospects of the Group

6.2.1 M&R Transaction

As detailed in paragraphs 2 in this Circular, subject to the fulfilment or waiver of the Preconditions, Murray & Roberts proposes to make an all share offer to acquire the entire issued share capital of Aveng. In addition to this Potential Share Offer, Murray & Roberts proposes to early redeem the Bonds, at a par value of R2.0 billion plus accrued interest under the Potential Bond Offer.

Murray & Roberts is a multinational engineering and construction group with a focus on the natural resources market, specifically the mining, oil and gas and power and water sectors primarily in the southern Africa, North America and Australasia regions.

Murray & Roberts has indicated that, to the extent that the M&R Transaction is successful, Murray & Roberts would combine their oil and gas and underground mining platforms with Aveng’s McConnell Dowell and Moolmans’ businesses. This would establish a large multinational engineering and construction group.

To the extent that Murray & Roberts makes a firm offer, the M&R Transaction will be subject to the suspensive conditions as set out in paragraph 2.5.

Regardless of whether Murray & Roberts makes the M&R Offer or whether the M&R Transaction proceeds, Aveng management continue to focus on operating the Group’s business as effectively as possible. Priority for the Group will be the implementation of the strategic plan, which implementation will focus in broad terms on

sustaining the operational performance;
reducing the debt levels; and
managing the liquidity of Aveng.

6.2.2 Core operations markets and operational performance

The markets serviced by McConnell Dowell are expected to continue to offer growth opportunities with the continued roll-out of large- and medium-sized projects in the major Australian cities. In Southeast Asia, opportunities exist in infrastructure in Singapore, Malaysia, Thailand, Indonesia and the Philippines. Government investment in large scale transport and water projects will fuel growth in the New Zealand market.

The Group has identified the need for improved operational performance across the Company. The turnaround at the Australian based division, McConnell Dowell, remains on track, however, it is imperative that the division is able to replenish its order book. As stated previously, the markets serviced by McConnell Dowell offer significant opportunities, but the market remains competitive despite the volume of new project opportunities. At 30 April 2018, McConnell Dowell’s two-year order book was AUD0.9 billion vs AUD1.5 billion in December 2017. Winning new work continues to be a key focus for the business. McConnell Dowell is involved in a number of Early Client Involvement (ECI) discussions. In this type of process, clients engage with a preferred contractor to fully develop the scope and costs associated with the project. Due to the collaborative nature of this process, there is a higher likelihood that this will result in awarded contracts. The approximate value of ECI work in McConnell Dowell is AUD1 billion. Whilst the likelihood of converting this to work in the order book is higher, there is no certainty of this.

Within South Africa, Moolmans is focused on addressing underperformance within its portfolio of projects, where performance has been significantly below expectations. Management has engaged on various initiatives to address this, including engaging with the clients to negotiate improved commercial and operational terms, seeking to exit non-performing contracts, as well as investment to improve performance of machinery. Additionally, all projects are being reviewed to ensure that aspects such as costs and equipment performance are further improved.

Moolmans, like McConnell Dowell, must replenish its order book. Moolmans’ two-year order book as at 30 March 2018 was R5.7 billion versus R6.7 billion in December 2017. There are a number of opportunities that are being pursued within a competitive market. As these contracts are generally long term in nature (three to five years), the adjudication period tends to be longer than associated with construction type contracts. As new contracts and renewals come through, the impact of the lower pricing required during the downturn is expected to be reduced.

6.2.3 Current trading and prospects of non-core operations

Domestically the outlook for the infrastructure market remains subdued with limited visibility on large-scale projects. However, recent changes in the political environment have led to an improved sentiment in South Africa.

Aveng Trident Steel continues to show improvements with volumes remaining static and a higher selling price per ton being achieved. An overall improvement on the financial performance is expected for the full year.

The Aveng Manufacturing businesses continue to experience headwinds. Persisting difficult market conditions, which are expected to continue for the short- to medium-term in the water, infrastructure, rail and mining products are impacting the majority of the business issues. In light of this, management has intensified cost reduction initiatives in conjunction with operational efficiencies, which are yielding results, as well as scaling down non-core activities and operations within the business. Overall the businesses remain loss making.

Aveng Grinaker-LTA continues to experience underperformance due to losses on Civil Engineering projects and two projects in the Buildings division. The remainder for the businesses including Mechanical & Electrical, Aveng Rand Roads, Aveng Ground

Engineering and Aveng Water continue to show positive results, although these are insufficient to offset the losses incurred in Civil Engineering.

6.2.4 Reduction in debt levels and restructure of the balance sheet

As at 31 December 2017, Aveng had gross debt of R3.25 billion, including bank debt of R1.25 billion and the Bonds of R2.0 billion. As at the Last Practicable Date, Aveng has utilised a further R620 million of bank debt and has recently secured an additional R200 million bank debt facility of which R150 million has been drawn immediately.

These current debt levels within the Group are considered to be unsustainable. The current banking facilities mature in October 2018. The Group is engaged in discussions with its bank funders to reset and extend the facilities beyond that date, however, this will be dependent on the outcome of the Capital Markets Transaction and a number of other conditions. These discussions are on-going.

Reducing the current debt burden is critical to the sustainability of the Group. In particular, Aveng’s Bonds are creating significant constraints on Aveng’s capital structure. In order to implement a solution, the Group has announced its intention to early settle the Bonds. Further, as part of the M&R Transaction, Murray & Roberts proposes to early redeem the Bonds, at a par value of R2.0 billion plus accrued interest. If the M&R Transaction is successful, Aveng’s existing gross debt will improve significantly. To the extent that the M&R Offer is not made or the M&R Transaction is not successful, Aveng remains committed to early redeem the outstanding Bonds as soon as practically possible in cash or shares, or both. In order to achieve the early redemption of the Bonds, the terms and conditions of the Bonds will have to be amended to allow for such early redemption, with settlement in cash or by the issue of new Aveng Shares or both. Aveng will call a special meeting of Bondholders to to seek approval for the amendments required to the existing terms and conditions of the Bonds to facilitate the early redemption of the Bonds. The foregoing amendments will also be subject to approval of the JSE. A notice of the Special Bondholder Meeting and information relating to the proposed amendments to the terms and conditions of the Bonds will be distributed through SENS to Bondholders on or about Tuesday, 12 June 2018.

In the event that the M&R Transaction is not successful, Aveng will consider the viability of raising new cash from either the issue of new equity or a new debt instrument to settle all or a portion of the outstanding Bonds. To the extent this is not viable, the outstanding Bonds will be settled in the issue of new Aveng Shares. In this event, Aveng will allot and issue such Aveng Shares to the Bondholders as a specific issue of shares for cash in accordance with the applicable requirements of the Listings Requirements and the provisions of the Companies Act (“Specific Issue”). The Specific Issue will be conditional on approval from independent shareholders.

6.2.5 Other associated cost

6.2.5.1 Corporate head office cost

The corporate head office cost, for the current year, continues to be impacted as a result of additional costs that are being incurred as a result of the initiatives associated with the Capital Markets Transactions, banking discussions, increased liquidity management and recently announced M&R Transaction. Management continues to monitor these costs.

6.2.5.2 Interest cost

Due to the current debt levels of the Group and the utilisation levels of the current facilities, the finance charges have increased. Details of Aveng’s finance charges as at 31 December 2017 are available in their interim financial statements.

6.2.5.3 Liquidity management

The suboptimal operational performance in conjunction with the current debt levels has required that the Group apply increased focus to its liquidity management. An enhanced process has been implemented and is yielding results. The risk to the liquidity process remains poor operational performance especially within the SA Construction division. The timeous disposal of non-core assets is required to ensure that the Group is able to meet its planned cash flow budgets, which includes the estimated negative impact of loss making contracts within the SA Construction division.

In order to meet its interim liquidity requirements and provide a platform to implement its strategy, Aveng requires an additional c.R500 million of funding. The Group has recently secured an additional R200 million bank debt facility in order to provide more certainty to its short-term liquidity position.

The proceeds raised in the Rights Offer, of which Aveng needs to retain the order of R300 million, will be used to meet the balance of its internal liquidity requirements.

6.2.6 Disposal of non-core assets

As previously announced Aveng intends to dispose of the Aveng Grinaker-LTA and Trident Steel divisions first, followed by the Manufacturing businesses. The planned completion of all disposals was to be by June 2019. The Board has subsequently decided to accelerate this process as far as possible without unduly impacting the value realised.

The processes in relation to Trident Steel, Aveng Grinaker-LTA and a number of Manufacturing assets have commenced and progress has been made in this regard. However, given the difficult market conditions faced by these businesses and the recent past underperformance, the ability to execute the disposal within the timeframe envisaged at acceptable value remains challenging.

The current market conditions, performance of the businesses and the planned disposal horizon will lead Aveng to consider the realisable values of the non-core assets during the financial year-end close period. As the Group is not yet in the position to make an announcement with regards to any disposals, these assets will be considered for impairments, which is required during each reporting period. Consideration will also be given, pending on firm offers, whether any of the mentioned assets meet the definition of being classified as held for sale.

As delays in achieving the timeous disposal of some of the non-core assets will have a negative impact on liquidity (due to increased periods of potential negative cash flow), this area remains a high priority for management.

6.3 Risk factors for the Group

6.3.1 Risk factors relating to the Group’s business and markets it operates in

a. The business activities of the Group, especially the construction activities and the mining activities, involve risks and hazards, many of which are outside of the control of the Group.

There could be work stoppages, delays, damage to property, injuries to personnel and the like. All of these could materially increase project and other costs (and thus profitability) and could lead to material delays and potential legal liability to third parties that cannot be quantified or insured against.

b. The Group is exposed to material price volatility, making predictions and forecasts difficult and imprecise.

A material portion of the Group’s revenues are derived from fixed contract prices where the Group is not able to pass on all underlying price increases to its customers. Also, in light of the very competitive tendering processes that the Group is exposed to when tendering for projects, it is often required to tender a contract price that does not allow it to recover any underlying price increases.

c. Currency fluctuations may affect the Group’s revenue and costs.

The Group operates in a variety of markets and jurisdictions and is thus exposed to significant currency volatility and fluctuations, all of which could adversely affect the Group’s revenue, costs, cash flows and ability to repay debt.

d. The Group is exposed to high inflation risks in certain markets that could affect its financial condition and results of operations.

Inflation rates in sub-Saharan Africa are generally higher than in other markets where the Group operates. These higher inflation rates affect the rate at which key costs (such as labour, materials sources from these markets, etc.) increase and the Group may not be able to recover such increases from its customers.

e. Labour instability may affect the Group negatively.
Industrial unrest in South Africa results in project delays and disruptions, affecting safety and productivity, thus increasing costs and reducing profitability.
f. The Group depends on key management and operational personnel and may not be able to retain them in future.

The Group’s ability to manage its operations (and hence its success) depends in large part on its ability to retain current key management personnel and to attract and retain personnel (including management, technical and unskilled workers). The loss of the services of one or more key employees could have a material adverse effect on its ability to manage and expand its business. The retention of management and operational personnel cannot be guaranteed. Accordingly, the loss of any key management of the Group may have an adverse effect on the future of its business.

g. The Group’s operations are subject to extensive regulation (including environmental and health and safety regulations) which could have a material impact on the Group’s results of operations, cash flow, financial condition and reputation.

The Company’s operations and activities are subject to extensive laws and regulations which include laws and regulations and the cost to the Group of complying therewith are significant. Further, there is a risk of fines or other penalties being incurred under such laws and regulations, which may adversely affect the Group (including materially increasing the Group’s cost of doing business or materially affecting its ability to carry on operating in any area). Moreover, it is possible that future regulatory developments, such as increasingly strict environmental protection laws, regulations and enforcement policies thereunder, and claims for damages to property and persons resulting from the Group’s operations, could result in additional substantial costs and liabilities, restrictions on or suspension of its activities and delays. Failure to comply with applicable environmental, health and safety laws can result in injunctions, damages, suspension or revocation of permits and imposition of penalties. There can be no assurance that the Group has been or will be at all times in complete compliance with such laws or permits, that compliance will not be challenged or that the costs of complying with current and future environmental, health and safety laws and permits will not materially or adversely affect the Group’s future cash flow, results of operations, reputation and financial condition.

h. The Group may be unable to successfully implement its strategic plan.

The Group announced its intention to dispose of non-core assets and focus on its two core operations in mining and construction. There is risk that the Group cannot improve the operational performance and consequently successfully implement the turnaround plan at the Australian based division, McConnell Dowell. There is further risk that Aveng cannot replenish its order books at its core operations McConnell Dowell and Moolman’s as expected.

i. The Group’s focus on its core operations may not result in the growth, benefits, synergies or efficiencies expected.

The Group intends to focus on its two core operations in mining and construction. The benefits, synergies or efficiencies expected therefrom may take longer than expected to be achieved or may not be achieved at all. Both core businesses need to replenish their order books and Moolmans needs to address its currently underperforming contracts.

j. The non-core asset disposal process may be delayed or may not be implemented at all.

The Group is running processes to dispose of the non-core assets. There is no certainty on the proceeds that will be raised upon disposal. Furthermore, there is risk that the disposals will occur below net asset value, resulting in further impairments to the Group. To the extent the sales of the non-core assets are delayed, the Group will likely incur further negative cash flows, putting additional strain on the liquidity requirements of the Company.

k. The Group may be unable to compete successfully for employees, resources, capital funding, equipment and contracts, development and construction services with its competitors.

The industry in which the Group is active is very competitive in all of its phases and many of the Group’s competitors have greater financial resources and a better operating

history than the Group. The Group may also encounter competition from other companies in its efforts to hire experienced professionals. In addition, competition for resources at all levels is intense. Increased competition could adversely affect the Group’s ability to attract necessary capital funding, to acquire it on acceptable terms, or to win suitable contracts in the future. Any of these outcomes could materially increase costs, result in project delays, or both.

l. The Group’s credit facilities contain restrictions and covenants that it could fail to meet.

The Group’s current facilities as well as those currently in negotiation beyond October 2018 contain various restrictions and financial and other covenants. The ability of the Group or certain of its operating subsidiaries to comply with these ratios and to meet these restrictions may be affected by events beyond their control, and the Group cannot be sure that they will continue to be able to do so. The failure to comply with these obligations could lead to a default under these credit facilities unless the Group can obtain waivers or consents in respect of any breaches of these obligations under these credit facilities. The Group cannot be sure that these waivers or consents will be granted. A breach of any of these covenants or requirements, the inability to comply with them could result in a default under these credit facilities. In the event of any default under these credit facilities, the lenders under these facilities will not be required to lend any additional amounts and could elect to declare all outstanding borrowings, together with accrued interest, fees and other amounts due thereunder, to be immediately due and payable.

m. An inability to obtain suitable financing might adversely affect the Group’s results of operations, financial condition and cash flow.

The Group requires significant amounts of on-going capital to maintain and improve its operations, invest in large-scale projects with long lead times, and manage uncertain development and permitting timelines and the volatility associated therewith. The Group’s ability to continue therewith will depend on market demand and thereby on consumer behaviour and on the cyclical nature of the industry, and which may, in turn, affect its ability to attract financing, including joint venture financing, debt or bank financing, equity financing or other financing arrangements. Failure to obtain, or difficulty or delay in obtaining, requisite financing could result in delay or postponement of projects. Failure to obtain affordable financing could have a material adverse effect on the Group’s business, result of operations and financial condition.

n. The Group requires significant amounts of on-going project guarantees and bonds to participate in projects.

Failure to obtain project guarantees and bonds, or difficulty or delays in obtaining these facilities could have a material adverse effect on the Group’s business and may preclude the Group from bidding on projects.

o. The Group operates across different sectors and geographies and is affected by economic dynamics beyond its control.

The current outlook in South Africa remains subdued, limiting organic growth in the South African construction, manufacturing and steel markets. Recent changes in the political environment have led to an improved sentiment in South Africa. The market in Australasia is showing steady growth, however, the entry of international contractors increases competition, placing pressure on margins. The outcome of the revised Mining Charter remains uncertain.

p. Disputes and two large claims in Australia requiring resolution

The Group, as a large organisation, is involved, from time to time, in dispute related proceedings. Disputes, by their nature, involve inherent uncertainties and, as a result, the Group faces risks associated with adverse judgments or outcomes in such matters. During the process of such disputes, the Group may incur legal and other costs in order to enforce its rights, and may suffer reputational damage as a result of its involvement therewith.

Whilst uncertified revenue has significantly reduced, there remains two large claims in Australia requiring resolution. Whilst there is confidence in the claims and these have received both internal and external review of the validity and quantum in that a conservative approach has been adopted, the process is a legal process and hence the very nature of this process could result in an unfavourable award/s in not attaining the levels booked and hence would result in an impairment.

q. Current condition of the Group may impact reputation and client relationships

Reputation and client relationships are vital components of securing future work. Given the current fragility of the Group, potential clients may be hesitant in awarding work to the Group thus impacting the success of securing future work.

r. The Group’s failure to maintain its current BEE score may have a negative impact on the performance of the business.

Declining spend on skills development is resulting in lower than expected B-BBEE scoring creating risk of dropping points. Additionally, resignations, triggered by uncertainty may lead to reduced scoring for the employment equity element of the B-BBEE scorecard. In particular, the resignation of the company secretary has significant consequences on the B-BBEE score of the Group.

A reduction in the current B-BBEE rating levels will add significant pressure from clients and suppliers. Furthermore, the Group will struggle to secure new work if their B-BBEE levels are not in line with competitors. To the extent the Group drops to a lower B-BEEE rating levels, the Group faces the risk of losing current work, as well as future contract wins. Such a drop may additionally result in breaches to certain contracts, some of which require a retention or improvement in B-BBEE rating levels.

s. The Group’s failure to meet the equity disposal requirements under the VRP agreement may result in penalties.

A failure to meet the equity disposal requirements under the VRP agreement, means the Group would need to have identified and concluded a program with one or more Emerging Contractors (as defined in the VRP agreement) by end November 2017 (unless an extension to this date is granted by government). Management of Aveng is currently in discussions with the Minister to grant the extension to Aveng to conclude a program with one or more of the Emerging Contractors (as defined in the VRF agreement). Failure to comply with, or meet the targets required by, the Emerging Contractor programme could result in the Group facing financial penalties. Potential reputational risk from failing to meet the VRP requirements, may have a negative impact on contract wins and consequently adversely affect the performance of the South African businesses.

6.3.2 Risk factors relating to the Group’s current debt levels

a. Aveng’s bank debt will be restructured in October 2018. There is no certainty on the structure and terms of the bank debt.

The Group’s current bank facilities extend until October 31 and the current agreements with the Group’s bankers require the Group to restructure its debt by October 2018. The Group has reached agreement in principal with its bank funders on how its bank facilities will be restructured beyond that date. The legal terms of the bank funding post the restructure have not yet been finalised. Furthermore, future bank funding is conditional on Aveng addressing the maturity of the Bonds and other conditions.

b. There is no certainty on the implementation of the Early Bond Redemption.

There is risk on the implementation of the M&R Early Bond Redemption as well as the Early Bond Redemption, both of which require Bondholder approval, and the latter additional independent shareholder approval. If the Bonds are not redeemed early under either the M&R Early Bond Redemption or the Early Bond Redemption, then the Board will have to evaluate other options which may include business rescue.

c. There is a risk that Aveng will not be classified as a going concern in their 2018 financial statements.

The Bonds are due in July 2019 and as such will be classified as current liabilities in the Aveng June 2018 annual financial statements. The current challenging trading conditions as well as Aveng’s existing debt burden will result in Aveng not having sufficient liquidity to repay the Bonds when they become due and there is a risk that Aveng’s auditors will issue a qualified audit opinion, qualifying Aveng’s going concern status.

6.3.3 Risk factors relating to the Group’s liquidity

a. There is a risk that Aveng cannot obtain the additional cash required to meet its liquidity requirements.

In order for Aveng to meet its day-to-day liquidity requirements, Aveng requires additional capital of R500 million of capital. As at the Last Practicable Date, Aveng has finalised the terms of an additional R200 million super senior debt facility, of which it has drawn down R150 million. Aveng thus requires a further R300 million, which is to be raised in the Rights Offer. It is critical that Aveng raises in the order of R300 million in the Rights Offer, however, there is no certainty on the quantum of proceeds raised in the Rights Offer and thus there is risk that Aveng will not be able to meet its day-to-day liquidity requirements over the next few months. This would create pressure on meeting supplier and sub-contractor payment terms which will be disruptive to operations and potentially delay or halt projects resulting in material financial implications.

Furthermore, given the current liquidity stresses within the Group, Aveng will likely not be able to fund any call on a bond or guarantee from clients, in the event of the Group not able to meet contractual or other obligations. This will result in further constraints on the Group’s liquidity position which would have material implications.

Failure to either successfully restructure the debt or manage liquidity will result in the Board having to consider alternative options which may include the option of embarking on business rescue.

b. If the Rights Offer is not successful, the Group is unlikely to have sufficient funds to meet its obligations and commitments as they fall due.

The Group’s operating cash position is such that if the Rights Offer does not raise in the order of R300 million, Aveng is unlikely to have sufficient liquidity to meet its obligations and commitments as they fall due. As outlined above, this would result in the Board having to consider alternative options which may include the option of embarking on business rescue.

6.3.4 Risk factors relating to the M&R Transaction

a. There is no certainty that the M&R Transaction will be completed.

No formal offer has yet been made by Murray & Roberts. The making of a formal offer by Murray & Roberts is subject to the fulfillment and/or waiver of a number of preconditions and thus there is no certainty that Murray & Roberts will make a formal offer. Even if a formal offer is made, there are significant risks to the implementation of the M&R Transaction and there is no certainty at this stage that the M&R Transaction will be completed.

6.3.5 Risk factors relating to the Rights Offer

a. The price of the Rights Offer Shares will fluctuate and may decline as a result of a number of factors, some of which are outside of the Group’s control.
The market price of the Rights Offer Shares could be volatile and subject to significant fluctuations due to a variety of factors, some of which do not relate to the Group’s financial performance, including changes in general market conditions, the general performance of the JSE, changes in sentiment in the market, regulatory changes affecting the Group’s operations and variations in the Group’s operating results.
b. An active trading market in Letters of Allocation may not develop.
Given that the Letters of Allocation are expected to have a lower value than the Rights Offer Shares and will only have a limited trading life, an active trading market in the Letters of Allocation may not develop during that period. Accordingly, the market for Letters of Allocation may be highly illiquid and the price of the Letters of Allocation may be highly volatile.
c. Shareholders who do not participate, or who are prohibited by law from participating, in the Rights Offer may experience significant dilution.

Shareholders who do not participate, or who are prohibited by law from participating, in the Rights Offer will experience significant dilution if the Rights Offer proceeds. Whilst Shareholders who do not participate, or who are prohibited by law from participating, in the Rights Offer may benefit from the sale of Nil Paid Rights or Letters of Allocation to which they are entitled there can be no guarantee that such Nil Paid Rights or Letters of Allocation will be sold at a premium to the issue price or, if they are sold at a premium, that such premium will be sufficient to compensate such Shareholders for the dilution they will experience as a result of not participating in the Rights Offer.

d. Shareholders in certain jurisdictions outside South Africa may not be able to participate in the Rights Offer.

Any Shareholder who is not entitled to participate in the Rights Offer will suffer significant dilution if the Rights Offer proceeds.

6.4 Trading history of Aveng Ordinary Shares on the JSE

A table setting out the price history of the Shares on the JSE has been included in Annexure 3 to this Circular.

7. INFORMATION ON THE SHARE CAPITAL OF THE GROUP

7.1 Authorised and issued shares

As at the Last Practicable Date, the authorised and issued shares before and after the implementation of the Rights Offer is as follows:

of the Rights Offer is as follows:
	Share capital
Before the Rights Offer	(R’million)
Authorised share
180 882 034 263 ordinary shares of no par value
Issued shares (including treasury shares)
416 670 931 ordinary shares of no par value	2 125
Shares held in treasury (1)
19 853 833 ordinary shares of no par value	(116)
Issued shares outstanding
396 817 098 ordinary shares of no par value	2 009
Note:

Includes 6 018 386 shares held by Aveng Share Purchase Trust; 8 586 593 shares held by Aveng Management Company (Proprietary) Limited and 5 248 854 shares held in terms of equity-settled share-based payment plan.

	Share capital
After the Rights Offer	(R’million)
Authorised share
180 882 034 263 ordinary shares of no par value
Issued shares (including treasury shares)
5 416 670 931 ordinary shares of no par value	2 625
Shares held in treasury (1)
19 853 833 ordinary shares of no par value	(116)
Issued shares outstanding
5 396 817 098 ordinary shares of no par value	2 509

Treasury share totalling 19 853 833 are held by the Aveng Share Purchase Trust, Aveng Management Company Proprietary Limited and by employee participants in an Equity-settled share-based payment plan. The holders of these shares do not intend to participate in the Rights Offer.

7.2 Major Shareholders

In so far as it is known to the Directors, the Shareholders (other than Directors) that, directly or indirectly, are beneficially interested in 5% or more of the issued Shares, together with the amount of each such Shareholder’s interest as at the Last Practicable Date are as follows:

	Number of	Shareholding
Shareholder	Shares held	(%)
Allan Gray Proprietary Limited	100 511 612	24.1
Coronation Asset Management Proprietary Limited	85 889 168	20.6
Investec Asset Management	50 000 442	12.0
Mazi Capital	27 295 088	6.6

8. INFORMATION ON THE DIRECTORS AND SENIOR MANAGEMENT

There will be no changes to the Board or senior management of Aveng as a result of the Rights Offer. The Directors’ remuneration will not be varied as a consequence of the Rights Offer or any related transaction.

8.1 Directors’ interests in shares

The direct and indirect beneficial interests in Shares held by all the Directors (including Directors who have resigned in the last 18 months) and their associates as at 30 June 2017, are shown below.

	Direct	Indirect		% of
Name	beneficial	beneficial	Total	shares
Executive Directors
EK Diack	–	–	–	0.00
AH Macartney	–	–	–	0.00
JJA Mashaba	89 661	–	89 661	0.02
HJ Verster(1)	105 800	–	105 800	0.03
Executive Directors’ total	195 461	–	195 461	0.05

Note:

1. Resigned effective 26 September 2017

	Direct	Indirect		% of
Name	beneficial	beneficial	Total	shares
Non-executive Directors
MJ Kilbride	10 000	–	10 000	0.00
KW Mzondeki	–	–	–	0.00
SJ Flanagan	–	–	–	0.00
MA Hermanus	–	–	–	0.00
PA Hourquebie	–	–	–	0.00
Non-executive Directors Total	10 000	–	10 000	0.00
Total	205 461	–	205 461	0.05

There have been no changes in Directors’ interests between 30 June 2017 and the Last Practicable Date.

9. DIRECTORS’ RESPONSIBILITY STATEMENT

10. CONSENTS

Each of the financial advisor and transaction sponsor, legal advisors, and the Transfer Secretaries, have consented and have not, prior to the Last Practicable Date, withdrawn their written consent to the inclusion of their names and, where applicable, reports in the form and context in which they appear in this Circular.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the registered offices of Aveng and Rand Merchant Bank at the addresses set out in the “Corporate Information and Advisers” section of this Circular during normal business hours on Business Days from the date of issue of this Circular up to and including Friday, 29 June 2018:

the Memorandum of Incorporation of Aveng;
the audited annual financial statements of Aveng for the three financial periods ended 30 June 2015, 2016 and 2017;
unaudited interim results of Aveng for the six months ended 31 December 2017;
a copy of the standard Directors’ letter of engagement;
the written consents referred to in paragraph 10 above;

a signed copy of this Circular and a Form of Instruction, as approved by the JSE;
signed copies of the Shareholder Undertakings;
a signed copy of the extraordinary general meeting circular; and
a copy of the notice to Bondholders.

Signed at Johannesburg by or on behalf of Aveng, in terms of the resolutions of the Directors dated Wednesday, 6 June 2016.

For and on behalf of the Board

AH Macartney

Group CFO

Johannesburg Wednesday, 6 June 2018

ANNEXURE 1

TABLE OF ENTITLEMENT

The number of Rights Offer Shares to which Qualifying Shareholders will be entitled is set out below, on the basis that Qualifying Shareholders will be entitled to 1 199.98772 Rights Offer Shares for every 100 Shares held on the Record Date. Shareholders’ entitlements will be rounded up or down, as appropriate in accordance with the standard rounding convention with fractions of 0.5 and above being rounded up and fractions of less than 0.5 being rounded down, and only whole numbers of Rights Offer Shares will be issued, in accordance with the Listings Requirements.

Shares held	Entitlement	Shares held	Entitlement
1	11.99988	48	575.9941
2	23.99975	49	587.994
3	35.99963	50	599.9939
4	47.99951	51	611.9937
5	59.99939	52	623.9936
6	71.99926	53	635.9935
7	83.99914	54	647.9934
8	95.99902	55	659.9932
9	107.9989	56	671.9931
10	119.9988	57	683.993
11	131.9986	58	695.9929
12	143.9985	59	707.9928
13	155.9984	60	719.9926
14	167.9983	61	731.9925
15	179.9982	62	743.9924
16	191.998	63	755.9923
17	203.9979	64	767.9921
18	215.9978	65	779.992
19	227.9977	66	791.9919
20	239.9975	67	803.9918
21	251.9974	68	815.9916
22	263.9973	69	827.9915
23	275.9972	70	839.9914
24	287.9971	71	851.9913
25	299.9969	72	863.9912
26	311.9968	73	875.991
27	323.9967	74	887.9909
28	335.9966	75	899.9908
29	347.9964	76	911.9907
30	359.9963	77	923.9905
31	371.9962	78	935.9904
32	383.9961	79	947.9903
33	395.9959	80	959.9902
34	407.9958	81	971.9901
35	419.9957	82	983.9899
36	431.9956	83	995.9898
37	443.9955	84	1 007.98968
38	455.9953	85	1 019.98956
39	467.9952	86	1 031.98944
40	479.9951	87	1 043.98932
41	491.995	88	1 055.98919
42	503.9948	89	1 067.98907
43	515.9947	90	1 079.98895
44	527.9946	91	1 091.98882
45	539.9945	92	1 103.98870
46	551.9944	93	1 115.98858
47	563.9942	94	1 127.98846

Shares held	Entitlement	Shares held	Entitlement
95	1 139.98833	2 800	33 599.65613
96	1 151.98821	2 900	34 799.64385
97	1 163.98809	3 000	35 999.63157
98	1 175.98796	3 100	37 199.61928
99	1 187.98784	3 200	38 399.60700
100	1 199.98772	3 300	39 599.59472
200	2 399.97544	3 400	40 799.58244
300	3 599.96316	3 500	41 999.57016
400	4 799.95088	3 600	43 199.55788
500	5 999.93859	3 700	44 399.54560
600	7 199.92631	3 800	45 599.53332
700	8 399.91403	3 900	46 799.52103
800	9 599.90175	4 000	47 999.50875
900	10 799.88947	4 100	49 199.49647
1 000	11 999.87719	4 200	50 399.48419
1 100	13 199.86491	4 300	51 599.47191
1 200	14 399.85263	4 400	52 799.45963
1 300	15 599.84034	4 500	53 999.44735
1 400	16 799.82806	4 600	55 199.43507
1 500	17 999.81578	4 700	56 399.42279
1 600	19 199.80350	4 800	57 599.41050
1 700	20 399.79122	4 900	58 799.39822
1 800	21 599.77894	5 000	59 999.38594
1 900	22 799.76666	10 000	119 998.77
2 000	23 999.75438	100 000	1 199 987.72
2 100	25 199.74210	1 000 000	11 999 877.19
2 200	26 399.72981	10 000 000	119 998 771.88
2 300	27 599.71753	100 000 000	1 199 987 718.85
2 400	28 799.70525
2 500	29 999.69297
2 600	31 199.68069
2 700	32 399.66841

ANNEXURE 2

TRADING HISTORY OF THE SHARES ON THE JSE

The trading history of Aveng Ordinary Shares on the JSE, for each day over the 30 days preceding the Last Practicable Date and for each month over the 12 months prior to the Last Practicable Date, is set out below:

	High	Low	Volume traded	Value traded
	(cents)	(cents)	(shares)	(Rand)
Month ended
30 June 2017	585	502	387 702	2 240 440
31 July 2017	637	360	2 593 474	14 475 700
31 August 2017	370	256	1 473 132	5 351 959
29 September 2017	294	242	892 292	2 444 131
31 October 2017	255	243	345 820	863 755
30 November 2017	260	180	890 617	2 195 175
29 December 2017	200	185	1 175 030	2 332 518
31 January 2018	195	142	382 079	730 597
28 February 2018	166	93	1 303 054	1 986 263
29 March 2018	114	93	8 019 655	8 050 335
30 April 2018	111	93	2 419 413	2 445 535
31 May 2018	45	32	1 093 118	463 633
Day ended
24 April 2018	166	131	2 783 450	4 185 642
25 April 2018	155	128	529 260	729 536
26 April 2018	138	101	1 294 422	1 591 271
30 April 2018	111	93	2 419 413	2 445 535
2 May 2018	100	93	806 113	772 804
3 May 2018	105	91	543 875	522 900
4 May 2018	95	84	1 852 441	1 702 269
7 May 2018	94	83	377 469	328 657
8 May 2018	89	69	512 407	415 817
9 May 2018	91	80	376 209	319 797
10 May 2018	99	85	504 516	446 703
11 May 2018	89	80	248 144	207 164
14 May 2018	86	83	58 899	49 684
15 May 2018	89	83	255 910	220 925
16 May 2018	99	90	581 818	548 549
17 May 2018	95	88	1 548 075	1 419 421
18 May 2018	120	84	4 151 433	3 966 946
21 May 2018	95	78	757 385	635 065
22 May 2018	84	59	2 354 338	1 601 361
23 May 2018	67	36	3 358 726	1 676 559
24 May 2018	54	41	795 094	375 868
25 May 2018	50	43	856 676	386 424
28 May 2018	47	28	2 291 901	814 008
29 May 2018	43	29	1 675 836	555 258
30 May 2018	42	28	1 971 168	649 040
31 May 2018	45	32	1 093 118	463 633
1 June 2018	46	41	1 195 886	524 769
4 June 2018	55	45	1 028 142	512 313
5 June 2018	58	49	878 650	456 205
6 June 2018	46	32	4 267 971	1 557 026

Note: The above information was sourced from Thomson Reuters

PRINTED BY INCE (PTY) LTD

REF. JOB016018

AI assistant

AVENG LIMITED — Capital/Financing Update 2018

48675_rns_2018-06-13_6db50130-ea36-46c2-85c6-c8cb555fce9a.pdf

CIRCULAR TO SHAREHOLDERS

a Form of Instruction in respect of Letters of Allocation for use by Qualifying Certificated Shareholders only (blue).

CORPORATE INFORMATION AND ADVISORS

Company secretary and registered office

Legal advisor

Financial advisor and transaction sponsor

Transfer secretaries

Date of incorporation of Aveng

Place of incorporation of Aveng

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

ACTION REQUIRED

DISCLAIMER

TABLE OF CONTENTS

ACTION REQUIRED BY QUALIFYING SHAREHOLDERS

ACTION REQUIRED BY QUALIFYING CERTIFICATED SHAREHOLDERS

ACTION REQUIRED BY QUALIFYING DEMATERIALISED SHAREHOLDERS

Non-residents

SALIENT DATES AND TIMES

Notes:

DEFINITIONS AND INTERPRETATIONS

AVENG LIMITED

Directors

Executive

Independent Non-executive

CIRCULAR TO SHAREHOLDERS

INFORMATION RELATING TO THE RIGHTS OFFER

1. INTRODUCTION

2. M&R TRANSACTION

2.2 Mechanism of the M&R Transaction

2.3 Pre-conditions to making a formal offer

2.4 Firm offer

2.5 Suspensive conditions to the M&R Transaction

2.6 Other terms

3. CAPITAL MARKETS TRANSACTION

3.1 Overview

3.1.1 Early Bond Redemption

3.1.2 Rights Offer

3.1.3 Bond Settlement

3.2 Rationale

4. INFORMATION ON THE RIGHTS OFFER

4.1 Terms of the Rights Offer

4.2 Entitlement

4.3 Fractional entitlement

4.4 Holdings of odd lots in multiple other than 100 shares

4.5 Shareholder undertakings and indication of support

4.5.1 Shareholder undertakings

Notes:

4.5.2 Impact of restrictions on Shareholder Undertakings

4.6 Working capital statement

4.7 Excess applications

4.8 Procedures for acceptance of Rights Offer entitlements

4.9 Procedures for sale or renunciation of Letter of Allocation

4.10 Procedures for application for additional Rights Offer Shares

4.11 Payment

4.12 Lapsing of Rights

4.13 Exchange Control Regulations

Emigrants

4.14 Foreign Shareholders

Member states of the European Economic Area

United Kingdom

Canada, Australia and the Republic of Ireland

United States of America

Notice to New Hampshire Residents

4.15 South African law

4.16 Tax consequences

4.17 Documents of Title

4.18 JSE listings

5. ESTIMATED EXPENSES IN RELATION TO THE RIGHTS OFFER

INFORMATION RELATING TO THE COMPANY

6. BACKGROUND INFORMATION

6.1 History and nature of business

6.1.1 Core operations

6.1.1.1 McConnell Dowell

6.1.1.2 Moolmans

6.1.2 Non-core operations

6.2 Prospects of the Group

6.2.1 M&R Transaction

AVENG LIMITED Capital/Financing Update 2018