Rights offer declaration annoucement
1. INTRODUCTION
Shareholders are hereby advised that RACEC intends to proceed with a fully underwritten renounceable rights offer whereby the company will issue 25 000 007 new RACEC shares at an issue price of 40 cents per share in order to raise R10 million (”the rights offer”). 2. RATIONALE AND PURPOSE OF THE RIGHTS OFFER
RACEC has recently been awarded two large electrical projects with a total contract value of approximately R140 million namely, the Electrical Installation at the Cape Town Container Terminal on behalf of Tansnet Limited and the N1 Street Lighting Installation on behalf of the Western Cape Provincial Administration. A further large contract for the rehabilitation of a railway in North West Africa is expected to be signed in due course (”the contracts”). Having considered the company`s current working capital and in order to fulfil its obligations in terms of the contracts, RACEC requires additional working capital. Consequently, RACEC and Solethu Civils (Proprietary) Limited (”Solethu Civils” or “the underwriter”) have entered into the loan and underwriting agreement whereby Solethu Civils have agreed to loan the amount of R10 million to RACEC. This will allow RACEC to facilitate the effective performance of the contracts and to ensure completion at the earliest possible date. The loan bears interest at the prime interest rate plus 2% (two percent), which amount will be payable on finalisation of the rights offer. To facilitate the repayment of the loan, the directors have elected to initiate the rights offer.
3. SALIENT TERMS OF THE RIGHTS OFFER
RACEC hereby offers for subscription, by way of a rights offer to shareholders, 25 000 007 shares in the ratio of seventeen rights offer shares for every 100 shares held at the close of business on the record date of the rights offer, Friday, 18 June 2010 at 40 cents per share. The rights offer price represents a 9% premium to the 30 day volume weighted average price and a 21% premium to the closing price on 14 May 10.
In terms of the loan and underwriting agreement and in order to allow Solethu Civils to increase their investment in RACEC, certain of the directors of RACEC who are also shareholders, being C J Harrod, G L Harrod, W Ollewagen and M J Uys have agreed with the underwriter not to follow or renounce their rights in terms of the rights offer and accordingly, have provided Solethu Civils with written irrevocable undertakings in this respect.
Set out in the table below are the shareholders of RACEC who have provided written irrevocable undertakings:
Name of shareholder Current % prior to shareholding rights offer
Charles and Tertia Harrod Trust 17 290 000 11.8
Ollewagen Family Trust 15 260 000 10.4
Mike and Jen Uys Trust No 2 13 969 840 9.5
Gary Harrod Family Trust 9 860 000 6.7
Total 56 379 840 38.4
4. UNDERWRITING
In terms of the loan and underwriting agreement, the underwriter has irrevocably undertaken to underwrite the rights offer at an issue price of 40 cents per share, on the basis that any rights offer shares not subscribed for by RACEC shareholders shall be allocated to the underwriter.
As Solethu Civils has agreed to loan to RACEC an amount of R10 million, which amount bears interest at the prime interest rate plus 2% (two percent) from the date on which the funds are received by RACEC, being 15 April 2010, to underwriting fee is or will become payable by RACEC to the underwriter in respect of the rights offer.
5. SUSPENSIVE CONDITONS TO THE RIGHTS OFFER
The following suspensive conditions pertaining to the loan and underwriting agreement were met on or before 22 April 2010:
- the board resolving in writing to enter into the loan and underwriting agreement, and to undertake the
rights offer on the basis of the loan and underwriting agreement;
- the board of directors of SolethuCivils resolving to enter into the loan and underwriting agreement; and
- the written irrevocable undertakings being received by Solethu Civils.
6. SALIENT DATES AND TIMES
The salient dates and times of the rights offer are set out below:
Last day to trade in RACEC shares in order to settle trades by the record date for the rights
offer and to qualify to participate in the rights offer (cum entitlements) Thursday 10 June 2010
Listing and trading of letters of allocation on Friday, 11 June the JSE while shares trade ex rights commences at 09:00 Friday 11 June 2010
Record date for the rights offer at the close of business on Friday, 18 June 2010
Rights offer opens at 09:00 on Monday, 21 June 2010
Rights offer circular and form of instruction (where applicable) posted to shareholders Monday 21 June 2010
Dematerialised shareholders will have their accounts with their CSDP or broker automatically credited with their entitlements Monday 21 June 2010
Certificated shareholders will have their letters of allocation credited to an electronic register at the transfer secretaries Monday 21 June 2010
Last day to trade in letters of allocation in order to settle trades by the close of the rights offer and participate in the rights offer at the close of business Friday 2 July 2010
Last day for forms of instruction of certificated shareholders wishing to sell all or part of their entitlement to be lodged with the transfer secretaries by 12:00 Friday 2 July 2010
Listing and trading of rights offer shares on the JSE commences at 09:00 Monday 5 July 2010
Record date for letters of allocation for purposes of determining the holders of letters of allocation that are entitled to subscribe for the rights offer shares Friday 9 July 2010
Rights offer closes at 12:00 on Friday, 9 July
Payment to be made and forms of instruction to be lodged by certificated shareholders with the transfer secretaries by 12:00 on (see note 2 below)
Expected date from which CSDP/broker accounts are credited with rights offer shares and debited with any payments due in respect of dematerialised rights offer shares Monday 12 July 2010
Rights offer share certificates posted to certificated shareholders on or about Monday 12 July 2010
Results of rights offer released on SENS Monday, 12 July 2010
Notes:
1. All times referred to in this circular are local times in South Africa.
2. Dematerialised shareholders are required to inform their CSDP or broker of their instructions in terms
of the rights offer in the manner and time stipulated in the custody agreement.
3. Share certificates may not be dematerialised or rematerialised between Friday, 11 June and Friday, 18
June 2010, both days inclusive.
4. Dematerialised shareholders will have their accounts at their CSDP automatically credited with their
rights and certificated shareholders will have their rights credited to an account at
Computershare.
5. CSDPs effect payment in respect of dematerialised shareholders on a delivery versus payment
method.
7. EXCESS APPLICATIONS
No applications for rights offer shares in addition to those allocated to you in terms of the rights offer will be accepted.
8. RESTRICTIONS ON THE RIGHTS OFFER
The rights offer shares will not be freely transferable from South Africa and will have to be dealt with in terms of the Exchange Control Regulations. Shareholders who are resident outside the common monetary area should obtain advice as to whether any governmental and/or other legal consent is required and/or whether any other formality must be observed to follow their rights in terms of the rights offer.
9. FURTHER ANNOUNCEMENT AND CIRCULAR
RACEC intends to release a finalisation date announcement on SENS on or about Friday, 4 June 2010 and post a circular, containing full details of the rights offer, on or about Monday, 21 June 2010.
Cape Town
25 May 2010
Designated Adviser
Merchantec Capital
Date: 26/05/2010 15:59:02 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
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