Readmission Document - July2014

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
IT CONTAINS
THE RESOLUTIONS TO BE VOTED ON AT THE GENERAL MEETING OF PME AFRICAN
INFRASTRUCTURE OPPORTUNITIES PLC TO BE HELD ON 11 AUGUST 2014. IF YOU ARE IN ANY
DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED TO IMMEDIATELY
CONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT OR OTHER
INDEPENDENT FINANCIAL ADVISER WHO IS AUTHORISED FOR THE PURPOSE OF THE
FINANCIAL SERVICES AND MARKETS ACT 2000 IF YOU ARE IN THE UNITED KINGDOM OR, IF
NOT, FROM ANOTHER APPROPRIATELY AUTHORISED INDEPENDENT FINANCIAL ADVISER.
This document, dated 17 July 2014, comprises an admission document for the purposes of the AIM Rules and
has been prepared in connection with the Companys application for Readmission. This document does not
constitute, and the Company is not making, an offer of transferable securities to the public requiring an
approved prospectus under section 85 of the FSMA. Accordingly, this document does not constitute an approved
prospectus for the purposes of the FSMA and has not been prepared in accordance with the Prospectus Rules or
approved by or led with, the Financial Conduct Authority or by any other authority which could be a
competent authority for the purposes of the Prospectus Directive.
Application will be made for the Enlarged Share Capital to be admitted to trading on the AIM market operated
by the London Stock Exchange. The Existing PME Shares are not, and the Enlarged Share Capital will not, on
Readmission, be dealt on any other recognised investment exchange and no application has been or is will be
made for the Existing PME Shares or the Enlarged Share Capital to be admitted to any such exchange. It is
expected that the Enlarged Share Capital will be admitted to trading on AIM, and that dealings in the PME
Shares will commence, on 12 August 2014.
AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to
be attached than to larger or more established companies. AIM securities are not admitted to the Ofcial List of the
United Kingdom Listing Authority. A prospective investor should be aware of the risks of investing in such
companies and should make the decision to invest only after careful consideration and, if appropriate, consultation
with an independent nancial adviser. Each AIM company is required pursuant to the AIM Rules for Companies to
have a nominated adviser. The nominated adviser is required to make a declaration to the London Stock Exchange
on admission in the form set out in Schedule Two to the AIM Rules for Nominated Advisers. The London Stock
Exchange has not itself examined or approved the contents of this document.
PME African Infrastructure Opportunities plc
(Incorporated under the Isle of Man Companies Acts 1931 to 2004 and registered in the Isle of Man
with registered number 120060C)
Readmission to trading on AIM
Notice of Extraordinary General Meeting
Nominated Adviser
Smith & Williamson Corporate Finance Limited
Broker
Oriel Securities Limited
The Company, the Existing Directors and the Proposed Directors, whose names appear on page 5 of this
document, accept responsibility for the information contained in this document. To the best of the knowledge of
the Company, the Existing Directors and the Proposed Directors (who have taken all reasonable care to ensure
that such is the case), the information contained in this document is in accordance with the facts and does not
omit anything likely to affect its import.
Smith & Williamson Corporate Finance Limited, which is authorised and regulated in the United Kingdom by
the Financial Conduct Authority, is acting exclusively as nominated adviser to the Company in connection with
the arrangements set out in this document and is not acting for any other person and will not be responsible to
any other person for providing the protections afforded to customers of Smith & Williamson or for advising any
other person in connection with the arrangements set out in this document. In addition, Smith & Williamson, as
nominated adviser to the Company under the AIM Rules, owes certain responsibilities solely to the London
Stock Exchange which are not owed to the Company or the Directors or to any other person. Smith &
Williamson has not authorised the contents of any part of this document and without limiting the statutory
rights of any person to whom this document is issued, no liability whatsoever is accepted by Smith & Williamson
for the accuracy of any information or opinions contained in this document or for the omission of any material
information, for which the Company, the Existing Directors and Proposed Directors are solely responsible. The
information contained in this document has been prepared solely for the purposes of Readmission and is not
intended to inform or be relied upon by any subsequent purchasers of PME Shares (whether on or off exchange)
and accordingly no duty of care is accepted in relation to them.
Proof 6: 17.7.14
Oriel Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct
Authority, is acting as broker to the Company in connection with the arrangements set out in this document and
is not acting for any other person and will not be responsible to any other person for providing the protections
afforded to customers of Oriel Securities or for advising any other person in connection with the arrangements
set out in this document. Oriel Securities has not authorised the contents of, or any part of, this document and
(without limiting the statutory rights of any person to whom this document is issued) no liability whatsoever is
accepted by Oriel Securities for the accuracy of any information or opinions contained in this document or for
the omission of any material information from this document, for which the Company, the Existing Directors
and Proposed Directors are solely responsible. Oriel Securities will not be offering advice and will not otherwise
be responsible for providing customer protections to recipients of this document in respect of any acquisition of
PME Shares.
Your attention is drawn to Part IV of this document, which sets out the risk factors relating to an investment in
PME Shares. All statements regarding the Enlarged Groups business, nancial position and prospects should be
viewed in light of the factors set out in Part IV of this document.
Other than the issue of the Consideration Shares to the Vendors, the Company is not offering any new PME
Shares or any other securities in connection with Readmission.
The PME Shares have not been, and will not be, registered under the US Securities Act, or the securities laws of
any state or other jurisdiction of the United States. Consequently, none of the PME Shares may be offered, sold,
taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States or
to, or for the benet of, US persons (within the denition of such term under Regulation S made under the US
Securities Act) except in accordance with the US Securities Act or an exemption therefrom. Subject to certain
exemptions, this document should not be distributed, forwarded, transferred, copied or otherwise transmitted to
any persons within the United States or to US persons.
The distribution of this document into a jurisdiction other than the United Kingdom may be restricted by law
and therefore persons into whose possession this document comes should inform themselves about and observe
any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities
laws or regulations of any such jurisdictions.
A notice convening an extraordinary general meeting of the Company to be held at its registered ofce at
Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB at 10:00 a.m. on 11 August 2014 is set out at
the end of this document. To be valid the Form of Proxy accompanying this document must be completed and
returned in accordance with the instructions printed thereon so as to be received by the Registrars as soon as
possible but, in any event, not later than 48 hours before the time xed for the meeting. Completion of a Form of
Proxy will not preclude a member from attending the meeting and voting in person.
2
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CONTENTS
Page
Readmission and Acquisition statistics 4
Expected timetable of principal events 4
Directors, secretary and advisers 5
Denitions 7
PART I Letter from the Chairman of PME 11
PART II Information on PME and the Acquisition 20
PART III Information on Sheltam 28
PART IV Risk Factors 33
PART V Financial Information 41
PART VI Additional Information 149
Notice of Extraordinary General Meeting 179
3
READMISSION AND ACQUISITION STATISTICS
Number of PME Shares in issue before the Acquisition 76,753,897
Number of Consideration Shares to be issued pursuant to the
Acquisition 19,741,160
Consideration Shares as a percentage of Enlarged Share Capital 20.46%
Number of PME Shares in issue on Readmission 96,495,057
Market capitalisation of the Company on Readmission US$19.30 million
(1)
TIDM PMEA
TIDM following Readmission STAM
ISIN number IM00B1WSL611
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Posting of this document and Form of Proxy 18 July 2014
Last time and date for receipt of Forms of Proxy for the
Extraordinary General Meeting 10:00 a.m. on 9 August 2014
Extraordinary General Meeting 10:00 a.m. on 11 August 2014
Readmission effective and dealings in Enlarged Share Capital
commence 12 August 2014
Completion of the Acquisition 12 August 2014, on Readmission
Notes
(1) At a price of US$0.20 per share, the closing mid-market price on AIM on 25 June 2014, being the trading day immediately prior to the
Suspension Date.
(2) The above times and/or dates may be subject to change and in the event of any such change, the revised times and/or dates will be
notied to Shareholders by an announcement through a Regulatory Information Service.
(3) References to times in this document are references to London time unless otherwise stated.
(4) Unless otherwise stated, the following exchange rates are used throughout this document, being the rates of exchange at the close of
business on 16 July 2014 (the last practicable date prior to the date of this document):
US$1.71: 1.00
ZAR10.70: US$1.00
4
DIRECTORS, SECRETARY AND ADVISERS
Existing Directors Paul Martin Macdonald (Executive Chairman)*
Lawrence (Larry) Albert Kearns (Executive Director)*
* will become non-executive Directors following Readmission
Proposed Directors Roy Puffett (proposed Chief Executive Ofcer)
Trevor Garth Karg (proposed Chief Operating Ofcer)
Steyn Delport (proposed Chief Financial Ofcer)
Wesley Kruger (proposed Commercial Director)
Andrew James Peggie (proposed Non-Executive Director)
all of the registered ofce below
Registered Ofce Millennium House
46 Athol Street
Douglas
Isle of Man
IM1 1JB
PME website www.pmeinfrastructure.com
Sheltam Group website and the website of
the Enlarged Group from Readmission
www.sheltam.com
Nominated Adviser Smith & Williamson Corporate Finance Limited
25 Moorgate
London
EC2R 6AY
Broker Oriel Securities Limited
150 Cheapside
London
EC2V 6ET
English Legal Adviser to the Company Hogan Lovells International LLP
Atlantic House
50 Holborn Viaduct
London EC1A 2FG
South African Legal Adviser to the
Company
Hogan Lovells (South Africa)
22 Fredman Drive
Sandton
Johannesburg 2196
South Africa
Isle of Man Legal Adviser to the
Company
Appleby (Isle of Man) LLC
33-37 Athol Street
Douglas
Isle of Man IM1 1LB
Legal Adviser to the Nominated Adviser
and Broker
McDermott Will & Emery LLP
Heron Tower
110 Bishopsgate
London EC2N 4AY
5
Reporting Accountants KPMG Audit LLC
Heritage Court
41 Athol Street
Douglas
Isle of Man
IM99 1HN
Auditors PricewaterhouseCoopers LLC
Sixty Circular Road, 3rd Floor
Douglas
Isle of Man IM1 1SA
Administrator and Current Registrar Galileo Fund Services Limited
Millennium House
46 Athol Street
Douglas
Isle of Man
IM1 1JB
Offshore Registrar Capita Registrars (Isle of Man) Limited
Clinchs House
Lord Street
Douglas
Isle of Man
IM99 1RZ
Registrar on Readmission Capita Registrars (Isle of Man) Limited
Clinchs House
Lord Street
Douglas
Isle of Man
IM99 1RZ
6
DEFINITIONS
The following denitions shall apply throughout this document unless the context otherwise requires:
Acquisition the proposed acquisition by PME RSACO from the Vendors of the
50 per cent. of the share capital of Sheltam not already owned by
PME RSACO and the benet of the Sheltam Shareholder Loans
Act the Companies Acts 1931-2004 of the Isle of Man
acting in concert this term has the meaning attributed to it in the City Code
AIM the AIM market operated by the London Stock Exchange
AIM Rules the AIM Rules for Companies and the AIM Rules for Nominated
Advisers, both published by the London Stock Exchange,
governing admission to and the operation of AIM
BEE broad based black economic empowerment as provided for under
the Broad-Based Black Economic Empowerment Act, No. 53 of
2003 of South Africa.
Board the board of directors of PME (or any committee of the board)
from time to time
C30 Locomotives the ten General Electric C30 3,000 HP diesel electric locomotives
owned by the Group and currently leased to Sheltam under the
Finance Lease
CapAfrica Bhambatha Capital (Pty) Limited trading as CapAfrica
City Code or Takeover Code the City Code on Takeovers and Mergers of the United Kingdom
issued from time to time by or on behalf of the Panel
Company or PME PME African Infrastructure Opportunities plc
Consideration Shares 19,741,160 PME Shares to be issued and allotted to the Vendors on
completion of the Acquisition
CREST the computerised settlement system to facilitate the transfer of title
to securities in uncerticated form, operated by Euroclear UK &
Ireland Limited
CREST Regulations the Uncerticated Securities Regulations 2005 (SD 754/05) of the
Isle of Man
Directors the directors of the Company from time to time
Dovetel Dovetel (T) Limited, a company incorporated in Tanzania
DRC the Democratic Republic of Congo
Econet Wireless Burundi Econet Wireless Global Ventures Limited, a company incorporated
in Mauritius
Enlarged Group the Company and its subsidiaries following Readmission and
completion of the Acquisition and the Restructuring
Enlarged Share Capital the issued share capital of the Company at Readmission comprising
the Existing PME Shares and the Consideration Shares
Executive Share Option Plan or
ESOP
the executive share option plan proposed to be adopted by the
Company, subject to the approval of Shareholders at the EGM, as
further described in paragraph 15 of Part VI of this document
Existing Board or Existing
Directors
the directors of the Company as at the date of this document,
whose names are set out on page 5 of this document
Existing PME Shares the existing 76,753,897 PME Shares in issue as at the date of this
document
Existing Shareholders holders of Existing PME Shares
7
Extraordinary General Meeting
or EGM
the extraordinary general meeting of the Company convened for
10:00 a.m. on 11 August 2014, or any adjournment thereof, for the
purposes of considering and, if thought t, approving the
Resolutions, a notice of which accompanies this document
FCA or Financial Conduct
Authority
the UK Financial Conduct Authority
Finance Lease the nance lease dated 15 April 2009 in respect of the C30
Locomotives owned by PME Locomotives, entered into by PME
Locomotives, Sheltam and Sheltam Pty, as amended on 11 August
2011
Form of Proxy the form of proxy accompanying this document to be used by
Existing Shareholders in respect of the EGM
FSMA the Financial Services and Markets Act 2000
Group the Company and its subsidiaries from time to time
Introduction Agreement the agreement relating to Readmission described in paragraph 10.3
of Part VI of this document
Investment Manager PME Infrastructure Managers Limited, the Companys investment
manager from 2007 to 2012
London Stock Exchange London Stock Exchange plc
Merger Control Approval approval of the Acquisition from the South African Competition
Commission
Net Asset Value the net asset value of the Company from time to time
Net Asset Value per PME Share the Net Asset Value divided by the number of PME Shares
New Board the Existing Directors and the Proposed Directors, who shall
together comprise the board of directors of the Company upon
Readmission
New Shareholder Group the Vendors and PUG, who are acting in concert for the purposes
of the Takeover Code
Notice of EGM notice of the EGM accompanying this document
Ofcial List the Ofcial List of the UK Listing Authority
Oriel Securities Oriel Securities Limited, acting in its capacity as the Companys
broker
Panel or Takeover Panel the Panel on Takeovers and Mergers
Peninsula House Peninsula House, Plot No 251 Toure Drive, Oyster Bay, Dar es
Salaam, Tanzania
PME Properties PME Properties Limited, a wholly owned subsidiary of the
Company
PME Locomotives PME Locomotives (Mauritius) Limited, a wholly owned subsidiary
of the Company
PME RSACO PME RSACO (Mauritius) Limited, a wholly owned subsidiary of
the Company
PME Shares ordinary shares of US$0.01 each in the capital of the Company
Proposals the Acquisition, Readmission, the Restructuring, the change of the
Companys name to Sheltam plc, the ESOP and the adoption of
revised memorandum and articles of association
Proposed Directors the proposed directors of the Company following completion of the
Acquisition, whose names are set out on page 5 of this document
Prospectus Directive Directive 2003/71/EC of the European Parliament and of the
Council of the European Union, as amended
Prospectus Rules the prospectus rules made by the FCA under Part VI of the FSMA,
as amended
8
PUG or PUG Investments PUG Investments Limited
QIA Qatar Investment Authority
Readmission admission of the Enlarged Share Capital to trading on AIM
becoming effective in accordance with the AIM Rules
Registrars Galileo Fund Services Limited
Resolutions the resolutions proposed to be passed by Shareholders at the EGM,
as set out in the Notice of EGM
Restructuring the restructuring of the Group and its operations proposed to be
undertaken immediately following completion of the Acquisition,
as further described in paragraph 2.3 of Part II of this document
Retail Prices Index means the retail prices index published in the UK by the Ofce for
National Statistics
Shareholders holders of PME Shares from time to time
Shareholders Agreement the agreement described in paragraph 10.11 of Part VI of this
document
Sheltam Sheltam Holdings (Proprietary) Limited
Sheltam Group Sheltam and its subsidiary undertakings from time to time
Sheltam Mozambique Sheltam Mozambique Limitada
Sheltam Pty Sheltam (Proprietary) Limited
Sheltam Rail the Sheltam Groups locomotive and rail division
Sheltam Rail Logistics Sheltam Rail Logistics (Proprietary) Limited
Sheltam Rail Trust the Sheltam Rail Trust, a trust duly registered with the Master of
the High Court of the Republic of South Africa with IT number
1600/96
Sheltam Shareholder Loans the loans from the Vendors to Sheltam in an aggregate amount of
ZAR 74,122,232 (approximately US$6.9 million) which are to be
transferred to the Group pursuant to the Acquisition
Sheltam Shares the 200 ordinary shares of ZAR 1 each in the capital of Sheltam to
be acquired by the Group from the Vendors pursuant to the
Acquisition
Smith & Williamson Smith & Williamson Corporate Finance Limited, acting in its
capacity as the Companys Nominated Adviser
South Africa the Republic of South Africa
SPA the acquisition agreement dated 17 July 2014 between the
Company, PME RSACO and the Vendors pursuant to which
PME RSACO has conditionally agreed to acquire the Sheltam
Shares and the Sheltam Shareholder Loans
Stabilisation and Relationship
Agreement
the stabilisation and relationship agreement between the Company,
Smith & Williamson, the Vendors and PUG described at paragraph
10.2 of Part VI
Sterling or the lawful currency of the UK
Suspension Date 26 June 2014, being the date on which trading in PME Shares was
suspended as a result of PMEs announcement of its intention to
carry out the Acquisition
TMP Uganda TMP Uganda Limited, a Ugandan telecommunication provider
UK or United Kingdom the United Kingdom of Great Britain and Northern Ireland
UK Listing Authority the FCA, in its capacity as the competent authority for the
purposes of the admission of securities to the Ofcial List
9
US or United States the United States of America (including any states of the United
States of America and the District of Columbia), its possessions
and territories, and all other areas subject to its jurisdiction
US person a US person as dened in Regulation S under the United States
Securities Act of 1933 (as amended)
US Securities Act the US Securities Act of 1933, as amended, and the rules and
regulations promulgated by the US Securities and Exchange
Commission thereunder
US$ the lawful currency of the US
Vendors Roy Puffett and the Sheltam Rail Trust, each currently holders of
25 per cent. of the issued share capital of Sheltam
ZAR or Rand the lawful currency of South Africa
10
PART I
LETTER FROM THE CHAIRMAN OF PME
PME African Infrastructure Opportunities plc
(Incorporated and registered in the Isle of Man under the Isle of Man Companies Acts 1931 to 2004
Existing Directors: Registered Ofce:
Paul Martin Macdonald (Executive Chairman)
Lawrence Albert Kearns (Executive Director)
Millennium House,
46 Athol Street,
Douglas,
Isle of Man IM1 1JB
17 July 2014
To holders of Existing PME Shares
Dear Shareholder
Proposed acquisition of Sheltam Holdings (Proprietary) Limited
Readmission to AIM
Change of name to Sheltam plc
Executive Share Option Plan
Revisions to the Companys memorandum and articles of association to remove
reference to C Shares
Introduction
PME has announced that it has entered into an agreement pursuant to which the Group is to acquire
the 50 per cent. of the issued share capital of Sheltam Holdings (Proprietary) Limited not already
held by it from the Vendors (being Roy Puffett, the founder of Sheltams business and Managing
Director of Sheltam, and the Sheltam Rail Trust), together with certain shareholder loans made by
the Vendors to Sheltam. The Acquisition will be satised entirely by the issue of the Consideration
Shares, being 19,741,160 new PME Shares, to the Vendors, with completion of the Acquisition being
conditional, inter alia, on readmission of the Companys Enlarged Share Capital to trading on AIM.
The Acquisition, if completed, will result in the Company being re-named Sheltam plc and the
cessation of the Companys current investing policy, under which the Existing Directors have sought
to realise the Companys remaining assets and, eventually, wind up the Company. The Acquisition
will result in PME becoming the holding company of a trading group focused on the provision of
transportation services in Africa. The Directors believe that Sheltams consolidated shareholding
structure under the Company will help facilitate the securing of debt nancing on more favourable
terms than are currently available to the Sheltam Group as well as better development prospects for
the Sheltam Groups business through organic growth, and acquisition or joint venture opportunities.
The enhanced access to capital should enable the business to capitalise on the opportunities available
both in South Africa and more widely within Africa. The restructuring and re-alignment of the
structure of the Enlarged Group will allow better assessment of the value of the business which, in
turn, should encourage a more representative, and positive, market valuation of PME Shares.
The Consideration Shares will be issued to the Vendors at an effective issue price of US$0.3040 per
Share, representing a discount of approximately 33.9 per cent. to the audited Net Asset Value per
PME Share of US$0.46 as at 31 December 2013 and valuing the Sheltam Shares and Sheltam
Shareholder Loans at approximately US$6.0 million. The effective issue price represents a premium of
52.0 per cent. to the mid-market closing share price of PME Shares of US$0.20 on 25 June 2014,
being the trading day immediately prior to the Suspension Date. The Consideration Shares will
represent approximately 20.46 per cent. of the Enlarged Share Capital of the Company on
Readmission.
If the Acquisition is completed, the Enlarged Group will undertake a restructuring of the existing
locomotive leasing and related arrangements, as further described under the heading Restructuring
in this Part I and in section 2.3 of Part II of this document.
11
Readmission to trading on AIM
As the Acquisition will result in a fundamental change in PMEs business and board control, the
Acquisition will constitute a reverse takeover of PME under the AIM Rules and the Companys
current investing policy will also cease on completion of the Acquisition. As a result, the Acquisition
requires the approval of Shareholders. The Company has therefore convened an extraordinary general
meeting of Shareholders, to be held at 10:00 a.m. on 11 August 2014 at Millennium House, 46 Athol
Street, Douglas, Isle of Man IM1 1JB, to approve the Acquisition and pass certain related
resolutions. Notice of the Extraordinary General Meeting is set out at the end of this document.
If Resolution 1 is duly passed at the EGM, the Companys existing quotation on AIM will be
cancelled and the Company will apply for the Enlarged Share Capital to be re-admitted to trading on
AIM following the passing of Resolution 1.
In connection with the Acquisition, the Vendors have entered into the Shareholders Agreement with
PUG, an Existing Shareholder, pursuant to which the Vendors will sell 5,715,667 PME Shares to
PUG, following completion of the Acquisition and issue of the Consideration Shares. As a result,
following Readmission and completion of such sale, the New Shareholder Group (comprising PUG
and the Vendors) will each hold 14,025,493 PME Shares and an aggregate of 28,050,986 PME Shares
representing 29.07 per cent. of the Enlarged Share Capital.
As a result of the Shareholders Agreement, PUG and the Vendors are deemed to be acting in concert
for the purposes of the Takeover Code.
The purpose of this document is to provide you with information on the Proposals and to explain
why the Existing Board considers the Proposals to be in the best interests of the Company and the
Shareholders, and why they recommend that Existing Shareholders vote in favour of the Resolutions
to be proposed at the Extraordinary General Meeting.
Background to and reasons for the Acquisition
On 19 October 2012, Shareholders approved, inter alia, a new investing policy for the Company
pursuant to which the Existing Directors have sought to realise the remaining assets of the Company
and return both the Companys cash reserves and proceeds from realisations to Shareholders. In
addition, Shareholders approved the return of cash through one or more tender offers and the
Company has since returned a total of approximately US$19.6 million to Shareholders.
The Companys remaining assets consist of its transport assets being a 50 per cent. shareholding
interest in, together with shareholder loans made to, Sheltam, a South African based transportation
services business, and ten General Electric C30 diesel locomotives leased to Sheltam under the
Finance Lease together with the benet of the remaining 24 years of a 30 year lease of a
commercial premises called Peninsula House in Dar es Salaam, Tanzania.
In line with the investing policy adopted in 2012, and with the aim of returning cash to Shareholders
during 2013, the Existing Directors undertook a sale process in respect of the Groups interests in
Sheltam and the C30 Locomotives. However, during this process it became clear that, under the
terms of the existing shareholders agreement between PMEs subsidiary, PME RSACO, and the
Vendors in respect of Sheltam, there was a misalignment of interests in relation to the proposed
divestment by the Group. This misalignment reduced the attractiveness of both Sheltam and the C30
Locomotives to any potential purchaser and it was not possible to reach agreement for sale on terms
which the Directors considered acceptable. Furthermore the relationship between Sheltam and PME
as both a shareholder and a provider of locomotives under the Finance Lease made it difcult to
structure any third party nancing for Sheltam.
Whilst no sale was concluded, the sale process did highlight Sheltams attractiveness as an investment
in the transport services market in South Africa and how a re-alignment of the respective interests of
its shareholders and its corporate and operational structure would benet the shareholders in Sheltam,
and ultimately the shareholders in PME. Under the terms of the Acquisition (if completed), Sheltam
will become a wholly-owned subsidiary of PME (through PME RSACO), and the other shareholders
in Sheltam (being the Vendors) will exchange their shares in Sheltam for a stake in PME. Under the
Restructuring, the corporate structure of the Enlarged Group and the leasing arrangements for the
C30 Locomotives will also be changed.
12
The advantages of these arrangements are as follows:
* Sheltam is a signicant player in the privately owned rail services market in southern Africa and
overall has demonstrated an improving operating performance in recent years. It has been
hampered in its development by the terms of the Finance Lease for the C30 Locomotives and
arrears in payments under the Finance Lease which had built up with the Group from the early
years of operations and severely restricted Sheltams ability to grow its operations. The removal
of these obstacles under the Restructuring will improve cash ow and protability and is
expected by the Existing Directors and the Proposed Directors to, in time, provide additional
nancial resources for Sheltam management to pursue growth opportunities. By enhancing
Sheltams cash ow, protability and access to funding, the Acquisition and Restructuring may
also help facilitate the development of relationships with future customers and potential business
partners.
*
There are signicant opportunities for Sheltam to exploit its position as a transport services
provider, offering its current customer base additional services, and participating in new
transportation solutions in a number of countries in which the Sheltam Group is not currently
active. Sheltam would thus become an increasingly attractive partner for other businesses
wishing to position themselves as full service providers to the mining, transportation and
national railway industries. A number of opportunities are currently being examined.
*
The simplication of the Sheltam Group corporate structure pursuant to the Acquisition and the
Restructuring is expected to allow PME to obtain future borrowings for the Enlarged Group on
more favourable terms than have been available.
*
By reducing the pressure on Sheltam in servicing debt under the Finance Lease, the prospects of
the Enlarged Group paying a dividend will be signicantly enhanced. The Existing Directors and
the Proposed Directors intend to review PMEs dividend policy in conjunction with the results
for the year ending 31 December 2014.
* The shareholding structure and leasing arrangements within the Group and the Sheltam Group
has made it difcult for investors to assess the potential value of the Sheltam Group. The
Acquisition and Restructuring will create a more transparent ownership structure and a more
efcient operating and capital structure, which will enable investors and market analysts to
better assess the value and performance of the Enlarged Group.
* By focusing on a trading operation based on the development of rail assets in a growing
southern Africa market, with a more robust capital structure, the Directors believe that the
PME share price should more accurately reect the underlying value of the business.
*
The restructuring of the Enlarged Group and the leasing and operating services arrangements
between members of the Enlarged Group will enhance operational exibility and is expected to
improve revenue and protability for the Enlarged Group.
Information on PME
PME was admitted to AIM on 12 July 2007 having raised US$180.5 million, with the objective of
investing in infrastructure projects and related opportunities across a range of countries in sub-
Saharan Africa. The Group subsequently made three investments in the telecommunications sector
Econet Wireless Burundi, TMP Uganda and Dovetel, as well as its investment in transport assets,
namely the 50 per cent. interest in Sheltam and twelve C30 Locomotives. The Group also acquired its
interest in Peninsula House in Dar es Salaam. The aggregate investment value of these assets was
approximately US$89.5 million.
Against a backdrop of difcult economic conditions following the global economic downturn in 2008,
in February 2009 the Board implemented a policy to buy back PME Shares using cash balances at a
substantial discount to the prevailing Net Asset Value, which it believed would enhance the value of
the remaining PME Shares.
In December 2009, the Group successfully realised its investment in Econet Wireless Burundi,
achieving an annualised return of approximately 40 per cent. based on an initial investment of US$10
million. Unfortunately, the Groups other two telecommunications assets were less successful, with the
Board taking the decision to place TMP Uganda into a voluntary liquidation process and Dovetel
being placed into voluntary administration, both in December 2011. The Group subsequently sold its
interest in Dovetel for a nominal amount in June 2012 (although certain shareholder loans remained
13
payable by Dovetel, more detail on which is set out in paragraph 14 of Part VI of this document),
but retained ownership of its property asset, Peninsula House.
In July 2012 the agreement with the Investment Manager was terminated (following a 12 month
notice period) and the Board assumed responsibility for the management of the Groups remaining
assets, with Lawrence Kearns and me taking on executive responsibilities.
In October 2012 a revised investing policy was approved by Shareholders which mandated the Board
to realise the assets of the Company, return capital to Shareholders and, eventually, wind up the
Company. The Company has, since then, returned a total of US$19.6 million to Shareholders through
two tender offers completed in October 2012 and December 2013 respectively.
As a result of these divestments and tender offers for PME Shares, the Companys net asset value as
at 31 December 2013 was US$35.0 million and the Group now has the following remaining
investments:
Transport Assets
The Companys most signicant assets are its 50 per cent. shareholding interest in, and shareholder
loans to, Sheltam (further described below) and the ten C30 Locomotives currently leased to Sheltam
under the Finance Lease.
Dar es Salaam Property
PMEs wholly owned subsidiary, PME Properties, has the benet of the remaining 24 years of a
leasehold interest in Peninsula House. The leasehold interest, which runs for 30 years from January
2009, was acquired by PME Properties from Dovetel in June 2010.
The property is located in a prime commercial/residential neighbourhood, 6 kilometres away from
Dar es Salaams central business district, and overlooks the Indian Ocean. The property comprises a
substantial three storey ofce building with one generator house and two security gate houses. The
property is currently fully let although part of the property is let to Dovetel, which is in
administration. The Group is currently taking action in the Tanzanian Courts with a view to
removing Dovetel as a tenant and recovering unpaid rent. Further details of the action are set out in
paragraph 14 of Part VI of this document.
The Company continues to seek to realise the property. The Existing Directors expect that a
successful outcome to the action being taken in the Tanzanian Courts will permit the realisation of
the property.
Further information on the Group is set out in Part II of this document.
Information on Sheltam
Sheltams business was founded in 1987 by Roy Puffett. Sheltam is currently owned 50 per cent. by
PME (through its subsidiary PME RSACO) and 50 per cent. by the Vendors. Sheltam has developed
into a transportation services business with operations throughout southern Africa, and from time to
time in various other sub-Saharan countries including the Democratic Republic of Congo, Kenya,
Uganda, Tanzania and Namibia, employing 400 employees.
Sheltams locomotive and rail division, Sheltam Rail, has historically been Sheltams core business
and, if the Acquisition is completed, it is intended that this will be the focus of the Enlarged Groups
activities going forward. Sheltam Rail is headquartered in Port Elizabeth in South Africa, with
branches in Randfontein and Witbank in South Africa. Its 38 diesel electric locomotives constitute
one of the largest privately owned and operated eets in southern Africa. The eet is currently
deployed in South Africa, the Democratic Republic of Congo, Mozambique and Swaziland.
Sheltam Rail leases, operates, refurbishes and maintains locomotives for, and provides operations and
logistics management to, mining, industrial and public sector businesses including businesses who
own their own privately-owned railway networks. These are typically used for the transportation of
products such as coal, gold ore, ferrochrome, platinum, iron ore, copper and cobalt. Clients include a
number of multinational corporations and state owned enterprises.
Being fully ISO 9001:2008 accredited and licensed in terms of the Railway Safety Regulator, services
include the leasing of locomotives, with or without maintenance services, as well as the maintenance
and repair of various makes of diesel and electrical locomotives operating in South Africa (together
with rolling stock). Maintenance and repairs are undertaken in the Sheltam Groups workshops and
services range from the rebuilding and refurbishing of locomotives to the operation of closed railway
14
systems and logistics management in respect to the haulage of product. By way of example, Sheltam
operates a closed rail system for a gold mining client in Randfontein as well as providing its overall
maintenance and repairs. Sheltam provides a similar operational service to another client in Virginia.
In addition, at Randfontein, Sheltam also maintains and manages the track and signalling system
infrastructure.
Sheltams engineers service the eet throughout southern Africa, providing technical support and
emergency maintenance and repair to locomotives in remote areas. Capabilities include complete track
maintenance as well as the installation of new railway lines. In addition to the above, through its
training school, Sheltam provides railway related training solutions to the African market. As an
example, Sheltam has recently assisted a state owned enterprise in Nigeria in its locomotive driver
training requirements.
In the year ending 31 December 2013, Sheltam recorded turnover of approximately ZAR
329.6 million, pre-tax losses of ZAR 48.8 million and as at 31 December 2013 had net assets of ZAR
143.2 million. Losses in 2013 arose primarily as a result of the US Dollar denominated Finance Lease
and loan from PME Locomotives to the Sheltam Group. In 2013 there was a sharp decline in the
value of the South African Rand, resulting in a relatively large unrealised exchange rate loss during
2013. Sheltam experienced similar losses in 2011. Sheltams nancial statements for the three years
ended 31 December 2013 are set out in Section B of Part V of this document.
Further information on Sheltam is set out in Part III of this document.
Intentions regarding the Company and the Enlarged Group
On completion of the Acquisition, the Company will cease to operate as an investment company and
will become the holding company of a trading group focused on the provision of African
transportation services. The Board will continue to seek to dispose of Peninsula House in Dar es
Salaam.
The initial strategy for the Enlarged Group will be to continue to offer full levels of service to
Sheltams current customer base. The New Board intends to expand Sheltams current workshop
capabilities from which its African strategy will be supported.
Going forward, the New Board intends to use the Sheltam management teams experience of
operating in a number of countries and across borders to participate in new logistics solutions in
Africa, taking advantage of the anticipated continued expansion of rail networks in southern Africa,
which is being supported by the World Bank, and is expected to be enhanced by direct investment in
such infrastructure by host governments and inward investment by multi nationals active in the
natural resources sector.
It is anticipated that the Sheltam management team will seek to open up new opportunities, teaming
up with national rail operators or their foreign partners to improve the utilisation of both existing
and new rail networks. In many cases the development of new logistics solutions will best be served
by offering customers packaged solutions, including rail and road transportation, as well as handling
facilities. To participate in these developments, it is planned that Sheltam will partner with other
companies who have the requisite experience in road transportation and freight handling.
The private rail sector in southern Africa is still relatively small and the Board believes that there are
opportunities to grow the Sheltam business through selective mergers, acquisitions and joint ventures
as well as by organic growth.
The Board will continue to evaluate the performance of Sheltams other businesses, namely the
Sheltam Marine division and the Sheltam Aviation division on an ongoing basis to ensure the optimal
allocation of the Enlarged Groups resources.
The Acquisition
Under the terms of the Acquisition, PME RSACO will acquire the Sheltam Shares and the Sheltam
Shareholder Loans from the Vendors, for the allotment and issue by PME of the Consideration
Shares at an effective issue price of US$0.3040 per Share. The effective issue price represents a
discount of approximately 33.9 per cent. to the Net Asset Value per PME Share of US$0.46 as at
31 December 2013 and a premium of 52.0 per cent. to the mid-market closing share price of PME
Shares of US$0.20 on 25 June 2014, being the trading day immediately prior to the Suspension Date.
The Acquisition values the Sheltam Shares and Sheltam Shareholder Loans at approximately US$6.0
million. The carrying value of the Groups existing 50 per cent. interest in Sheltam was
15
US$6.84 million as at 31 December 2013. The New Board believes that the combined holding will be
value enhancing for Shareholders for the reasons stated above under the heading Background to and
reasons for the Acquisition.
The Acquisition is conditional, inter alia, on the passing of Resolution 1 at the EGM, Merger
Control Approval, receipt of consent from a third party lender to the Sheltam Group and
Readmission taking place. Merger Control Approval and lender consent is expected to be granted
prior to the date of the EGM. The Acquisition will not complete if these conditions have not been
satised by 31 August 2014 or such later date as PME and the Vendors may decide.
Details of the Consideration Shares
The Consideration Shares will be issued credited as fully paid and will, in aggregate, represent
approximately 20.46 per cent. of the Enlarged Share Capital on Readmission. The Consideration
Shares will rank pari passu with the Existing PME Shares in all respects, including the right to receive
all dividends or other distributions declared, made or paid after the date of this document.
New Board and Management
On Readmission, Lawrence Kearns and I will stand down from our roles as executive directors of the
Company, becoming non-executive directors and in my case I shall remain as Chairman. In addition,
with effect from Readmission, Roy Puffett, Trevor Karg, Steyn Delport, Wes Kruger and James
Peggie will be appointed as directors of the Company. Roy Puffett will also become the Chief
Executive Ofcer of the Company, Trevor Karg the Chief Operating Ofcer, Steyn Delport the Chief
Financial Ofcer and Wes Kruger the Commercial Director.
On Readmission, the Board of Directors will therefore comprise the following:
Paul Macdonald (Non-Executive Chairman)
Roy Puffett (Chief Executive Ofcer)
Trevor Karg (Chief Operating Ofcer)
Steyn Delport (Chief Financial Ofcer)
Wes Kruger (Commercial Director)
Larry Kearns (Non-Executive Director)
James Peggie (Non-Executive Director)
Biographies for each of the Existing Directors and the Proposed Directors can be found in Part II of
this document.
The Company intends to identify and appoint an additional independent non-executive director in due
course.
The New Board intends to put in place new management incentive arrangements with effect from
completion of the Acquisition, in which executive Directors from time to time (other than Roy
Puffett) and certain senior management of the Group will be eligible to participate, including the
Executive Share Option Plan, subject to approval by Shareholders at the EGM. These proposed
management incentive arrangements are described in Part II of this document.
Dealings and trading
Application will be made by the Company for the Enlarged Share Capital to be admitted to trading
on AIM. It is expected that Readmission will take place and trading in the PME Shares will
commence on the rst dealing day following that on which Resolution 1 is passed at the
Extraordinary General Meeting, subject to receipt of Merger Control Approval and lender consent
both of which are expected to be received prior to the date of the EGM. All PME Shares, including
the Consideration Shares, may be held in either certicated or uncerticated form (i.e. in CREST).
CREST
CREST is a paperless security transfer system, which enables securities to be held otherwise than by a
certicate and transferred otherwise than by written instrument. The PME Shares will continue to be
eligible for settlement in CREST following Readmission.
Accordingly, settlement of transactions in the PME Shares may take place within the CREST system
if the relevant holders so wish. CREST is a voluntary system and holders of PME Shares who wish
to receive and retain share certicates will be able to do so.
16
The Takeover Code
The terms of the Shareholders Agreement give rise to certain considerations under the City Code. The
City Code is issued and administered by the Panel. The City Code applies to all takeover and merger
transactions, however effected, where the offeree company has its registered ofce in the United
Kingdom, the Channel Islands or the Isle of Man, and shares of the offeree company are admitted to
trading on a regulated market or a multilateral trading facility (such as AIM) in the United
Kingdom, the Channel Islands, or the Isle of Man. The Company is such a company and its
shareholders are entitled to the protection of the City Code.
Under Rule 9 of the City Code, when (i) a person acquires an interest in shares which, taken
together with shares in which he and persons acting in concert with him are interested in, carry 30
per cent. or more of the voting rights of a company subject to the City Code, or (ii) any person who,
together with persons acting in concert with him, is interested in shares which in aggregate carry not
less than 30 per cent. of the voting rights of a company, but does not hold shares carrying more than
50 per cent. of the voting rights of the company subject to the City Code, and such person, or any
persons acting in concert with him, acquires an interest in any other shares which increases the
percentage of the shares carrying voting rights in which he is interested, then in either case, that
person together with the persons acting in concert with him, is normally required to make a general
offer in cash, at the highest price paid by him, or any persons acting in concert with him, for shares
in that company or an interest in shares in that company within the preceding 12 months, for all the
remaining equity share capital of that company.
Under the City Code, a concert party arises, inter alia, when persons who, pursuant to an
agreement or understanding (whether formal or informal), co-operate, to obtain or consolidate control
of that company. Under the City Code, control means an interest, or interests, in shares carrying in
aggregate 30 per cent. or more of the voting rights of a company, irrespective of whether such
interest or interests give de facto control. In this context, voting rights means all the voting rights
attributable to the capital of the company which are currently exercisable at a general meeting.
The members of the New Shareholder Group are or will be shareholders in the Company.
Information on the members of the New Shareholder Group and the arrangements agreed between
them is set out in Part VI of this document. The members of the New Shareholder Group are
deemed to be acting in concert within the meaning of the City Code.
Following completion of the Acquisition, the members of the New Shareholder Group will hold in
aggregate 28,050,986 PME Shares, representing 29.07 per cent. of the Enlarged Share Capital.
For as long as the members of the New Shareholder Group are considered as acting in concert for
the purposes of the provisions of Rule 9 of the City Code, any increase in that aggregate interest in
PME Shares to 30 per cent. or more will be subject to the provisions of Rule 9 of the City Code.
Related arrangements
Shareholders Agreement
In connection with the Acquisition, the Vendors have entered into the Shareholders Agreement with
PUG, an Existing Shareholder, pursuant to which the Vendors will sell 5,715,667 PME Shares to
PUG immediately following completion of the Acquisition and Readmission at a price of US$0.30
per PME Share. The Vendors and PUG have also agreed arrangements relating to voting their
ongoing holdings of PME Shares. Further details of the Shareholders Agreement are set out in
paragraph 10.11 Part VI of this document.
Stabilisation and Relationship Agreement
The members of the New Shareholder Group have entered into the Stabilisation and Relationship
Agreement with the Company and Smith & Williamson pursuant to which they have agreed, with
limited exceptions, not to, and to procure that their respective associates and concert parties do not,
dispose of PME Shares to, or acquire PME Shares from any third party during a period of twelve
months from completion of the Acquisition. In addition, the Vendors and PUG have agreed to
exercise their rights as Shareholders so as to ensure that the Company is capable of carrying on its
business independently of them. Further details of the Stabilisation and Relationship Agreement are
set out in paragraph 10.2 of Part VI of this document.
Restructuring
On completion of the Acquisition, it is intended that the existing Finance Lease in place between
PME Locomotives, Sheltam and Sheltam Pty (pursuant to which the Group leases the C30
17
Locomotives to the Sheltam Group) will be terminated and replaced by a master operating lease
between Sheltam Pty and PME Locomotives, under which three locomotives will be leased to Sheltam
Pty, two of which are the subject of a sublease to a third party. Another sublease under which a
further three locomotives are leased by the Sheltam Group to a third party will be assigned to PME
Locomotives with effect from completion of the Acquisition. In addition, Sheltam and Sheltam Pty
will sell to PME Locomotives equity interests representing 99.9 per cent. of the equity capital of
Sheltam Mozambique in consideration for payment of a cash amount calculated based on the net
asset value of Sheltam Mozambique and Sheltam Pty will acquire certain tools used for operation and
maintenance of the C30 Locomotives from PME Locomotives, provided such sale of equity interests
in Sheltam Mozambique and tools will be conditional on grant of exchange control approval by the
Bank of Mozambique. A new master operating lease will also be entered into between PME
Locomotives and Sheltam Mozambique to facilitate the current sublease by Sheltam Mozambique of
four C30 Locomotives to a third party. It is expected that two of the C30 Locomotives which are
subject to the new operating lease with Sheltam Pty, together with one further C30 Locomotive which
is subject to the Finance Lease and is used by Sheltam Pty, will revert to PME Locomotives on
expiry of the relevant sublease and thereafter be leased directly by PME Locomotives to third parties
so that over time all ten C30 Locomotives will be leased directly or indirectly by PME Locomotives
to third party lessees.
Sheltam Pty and PME Locomotives have entered into an operating and maintenance services
agreement, effective on completion of the Acquisition, for the provision of services by Sheltam Pty to
PME Locomotives, in respect of the C30 Locomotives other than those which are subject to the
master operating lease between Sheltam Pty and PME Locomotives.
On completion of the Acquisition, Sheltam and PME Locomotives will enter a master operating lease
under which locomotives owned by Sheltam can be leased to PME Locomotives from time to time.
Sheltam Pty and PME Locomotives will also enter into an operating and maintenance services
agreement which will permit the provision of operating and maintenance services by Sheltam Pty to
PME Locomotives for locomotives leased under the master operating lease.
Further details of the agreements being entered into in order to effect this restructuring are set out in
paragraph 10 of Part VII of this document.
Dividends and Shareholder returns
The return of further capital to Shareholders, including payment of any future dividends, will depend
on the future earnings of the Company. The Board intends to review the Companys dividend policy
in 2015 on the basis of the Groups nancial results for the year ended 31 December 2014.
The Board also intends, provided that it appears to the Directors to be commercially appropriate at
the relevant time and subject to securing appropriate debt nancing for the Group, to undertake a
tender offer after Readmission.
Taxation
General information relating to United Kingdom and Isle of Man taxation of Shareholders in the
context of Readmission is set out in paragraph 11 of Part VI of this document. If you are in any
doubt as to your tax position, you should contact your professional adviser immediately.
Extraordinary General Meeting
At the end of this document, you will nd a notice convening an Extraordinary General Meeting of
the Company, which is to be held at 10:00 a.m. on 11 August 2014 at its registered ofce at
Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB. The resolutions to be proposed
at the EGM will be as follows:
(1) to approve the Acquisition for the purposes of Rule 8 and Rule 14 of the AIM Rules;
(2) to approve a new management incentive share option scheme of the Company;
(3) to change the name of the Company to Sheltam plc; and
(4) to amend the memorandum and articles of association of the Company to remove references to
C Shares.
Resolutions 1 and 2 will be proposed as ordinary resolutions while Resolutions 3 and 4 will be
proposed as special resolutions. The Vendors are not Existing Shareholders and will not be eligible to
vote on the Resolutions.
18
Resolution 1 is a condition of the Acquisition and it will only proceed if this Resolution is carried.
Resolutions 2, 3 and 4 are conditional on Resolution 1 being passed, and will only be proposed if
Resolution 1 is carried.
Action to be taken
You will nd enclosed with this document a Form of Proxy, for use in connection with the EGM.
Whether or not you intend to be present at the EGM, you are asked to complete and return the
Form of Proxy in accordance with the instructions printed on them so as to be received at the ofces
of the Registrars, Galileo Fund Services Limited, Millennium House, 46 Athol Street, Douglas, Isle of
Man IM1 1JB as soon as possible and, in any event, not later than 10:00 a.m. on 9 August 2014.
Completion and return of the Form of Proxy will not preclude you from attending and voting at the
meeting in person should you so wish.
Recommendation and voting intentions
The Board recommends that you vote in favour of the Resolutions to be proposed at the
Extraordinary General Meeting as Lawrence Kearns (being the only Existing Director who holds an
interest in PME Shares) has irrevocably undertaken to do in respect of his own benecial holding,
which amounts to 74,000 PME Shares representing approximately 0.1 per cent. of the Existing PME
Shares.
In addition, the Company has also received an irrevocable undertaking from PUG to vote in favour
of the Resolutions in respect of the 8,309,826 Existing PME Shares it holds, representing
approximately 10.83 per cent. of the Existing PME Shares.
As a result, the Company has received irrevocable undertakings to vote in favour of the Acquisition
in respect of a total of 8,383,826 Existing PME Shares, representing approximately 10.92 per cent. of
the Existing PME Shares.
Further information
Your attention is drawn to the further information set out in the remainder of this document and, in
particular, to the risk factors set out in Part IV of this document.
Yours faithfully
Paul Macdonald
Chairman
19
PART II
INFORMATION ON PME AND THE ACQUISITION
1. INFORMATION ON PME
1.1 History
PME was admitted to trading on AIM in 2007, having raised US$180.5 million with the objective of
investing in infrastructure projects and related opportunities across a range of countries in sub-
Saharan Africa. The Group subsequently made investments in the telecommunications sector, in
various transportation assets and in a commercial property in Dar es Salaam, Tanzania. The
aggregate investment value of these assets was approximately US$89.5 million.
In telecommunications, PME invested in:
*
TMP Uganda: A start-up telecommunications enterprise that had been awarded licences to
provide telecommunications, broadband services in particular, throughout Uganda.
*
Dovetel: A telecommunications start up in Tanzania, trading as SASATEL, which had been
awarded a national licence to deploy and provide a 3G network, including broadband, data and
voice services.
*
Econet Wireless Burundi: An existing GSM telecommunications network in Burundi.
In transport, PME invested in:
*
Sheltam: A South African based business focused on providing locomotive and aviation leasing,
maintenance, refurbishment and other related services to clients in South Africa and elsewhere in
sub-Saharan Africa. PME acquired 50 per cent. of the shares in Sheltam and made certain
shareholder loans to Sheltam.
*
Locomotives: twelve General Electric C30 diesel locomotives, of which ten are still owned by the
Group and leased to Sheltam Pty under the Finance Lease.
In property, PME invested in:
*
Peninsula House in Dar es Salaam, Tanzania, acquiring a leasehold interest running for 30 years
from 2009
Against a backdrop of difcult economic conditions following the global economic downturn in 2008,
in February 2009 the Board implemented a policy to buy back PME Shares using cash balances at a
substantial discount to the prevailing Net Asset Value, which it believed would enhance the value of
the remaining PME Shares.
In December 2009, the Group successfully realised its investment in Econet Wireless Burundi,
achieving an annualised return of approximately 40 per cent. based on an initial investment of US$10
million. Unfortunately, the Groups other two telecommunications assets were less successful, with the
Board taking the decision to place TMP Uganda into a voluntary liquidation process and Dovetel
being placed into voluntary administration, both in December 2011. The Group subsequently sold its
interest in Dovetel for a nominal amount in June 2012 but retained ownership of the Groups
property asset in Dar es Salaam, Peninsula House.
In May 2012, two of the C30 locomotives owned by the Group and leased to Sheltam under the
Finance Lease were involved in a serious accident and were subsequently written off, with the Group
agreeing a settlement amount with the insurance company in May 2013. These two locomotives have
subsequently been salvaged by Sheltam, with a view to Sheltam re-commissioning them.
In May 2014 two C30 Locomotives leased to, and operated by, a customer overturned in
Mozambique when several of the coal wagons to which they were coupled derailed, pulling the two
C30 Locomotives from the rails. These two C30 Locomotives have subsequently been moved to
workshop facilities in Beira, Mozambique for damage assessment and repair. The cost of repairs will
be met by Sheltams insurers on a pre-payment basis.
Under the terms of the relevant lease for the two C30 Locomotives, if it is shown that the derailment
was the result of the negligence or wilful act of the lessee or a third party, the lessee is obliged to
continue making lease payments in full in accordance with the lease. An investigation into the cause
of the incident is ongoing. However, based on the circumstances of the derailment and informal
discussions with the lessee, Sheltam management believe that lease payments, including all unpaid
arrears, will recommence following completion of the investigation. At this stage it is not intended
that replacement locomotives will be provided to the lessee.
20
The two C30 Locomotives are expected to re-enter active operation in the second half of 2014.
In July 2012 the agreement with the Investment Manager was terminated (following a 12 month
notice period) and the Board assumed responsibility for the management of the Groups remaining
assets, with Paul Macdonald and Lawrence Kearns taking on executive responsibilities. In October
2012 a revised investing policy was approved by Shareholders which mandated the Board to realise
the assets of the Company, return capital to Shareholders and, eventually, wind up the Company.
The Company has since then returned a total of US$19.6 million to Shareholders through two tender
offers completed in October 2012 and December 2013 respectively.
Current investments
As at the date of this document, the Groups remaining assets are:
* the 50 per cent. interest in Sheltam shares and the Sheltam Shareholder Loans;
* the ten C30 Locomotives (which are currently leased to Sheltam under the Finance Lease); and
*
the interest in Peninsula House in Dar es Salaam.
The Sheltam Group business and the Finance Lease contribute the majority of PMEs net assets and
cash ows. These assets are cash generative and show potential for future growth. Further details
about the Sheltam Group are given in Part III of this document.
The Groups interest in Peninsula House is held through PMEs wholly owned subsidiary, PME
Properties. PME Properties has the benet of the remaining 24 years of a 30 year leasehold interest
in Peninsula House.
Peninsula House is located in a prime commercial/residential neighbourhood, 6 kilometres away from
Dar es Salaams central business district, and overlooks the Indian Ocean. The property comprises a
substantial three storey ofce building with one generator house and two security gate houses. The
property is currently fully let although part of it is let to Dovetel, which is in administration. The
Group is currently taking action in the Tanzanian Courts with a view to removing Dovetel as a
tenant and recovering unpaid rent. Further details of the action are set out in paragraph 14 of Part
VI of this document.
In March 2013 the current owners of Dovetel registered a caveat over Peninsula House requiring their
consent for any sale of Peninsula House. The Directors intend to realise a sale of the property but
such a sale is likely to occur only when the current legal process with Dovetel is resolved.
1.2 Current Group Structure
The current corporate structure of the Group is illustrated in the following diagram.

The entities in the Group other than PME include the following. The Sheltam Group (which does
not currently form part of the Group) is described in further detail in Part III of this document.
(a) PME TZ Property (Mauritius) Limited
PME TZ Property (Mauritius) Limited owns a 99.99 per cent. interest in PME Properties Limited.
21
(b) PME Tanco (Mauritius) Limited
This is the Group entity that invested into Dovetel (which is currently in administration). This entity
also holds 0.01 per cent. of the issued share capital of PME Properties Limited.
(c) PME RSACO (Mauritius) Limited
PME RSACO holds 50 per cent. of the issued share capital of Sheltam and has made certain
shareholder loans to Sheltam.
(d) PME Locomotives (Mauritius) Limited
PME Locomotives owns the C30 Locomotives and is the Group entity which is party to the Finance
Lease.
(e) PME Properties Limited
PME Properties has the benet of the remaining 24 years of a 30 year lease over Peninsula House
which commenced in 2009. The property is located in a prime commercial/residential neighbourhood,
6 kilometres from Dar es Salaam Central Business District, and overlooks the Indian Ocean. The
property comprises a substantial three storey ofce building with one generator house and two
security gate houses. The property is currently fully let although part of the ofce is let to Dovetel
which is currently in administration.
An independent valuation was carried out in December 2013, which valued the property at
US$6.7 million (based on the assumption that the building is fully let). Dovetel occupies
approximately 20 per cent. of the lettable area of the building but is currently not paying rent and
there is litigation between PME and Dovetel, and between PME and the owners of Dovetel as
described in paragraph 14 of Part VI of this document. Using certain of the valuation metrics and
assumptions used in the independent valuation carried out in December 2013, and excluding Dovetel
rentals, returns a valuation of US$4.8 million.
1.3 Corporate Governance, Directors and Senior Management
Board of Directors
The current Directors of the Company are Paul Macdonald (Executive Chairman) and Larry Kearns
(Executive Director). With effect from Readmission it is intended that the following changes to the
Board and senior management of the Company will take place:
(a) Paul Macdonald and Larry Kearns will stand down from their roles as executive directors of the
Company, becoming non-executive directors, with Paul Macdonald remaining as Chairman;
(b) James Peggie will be appointed as a non-executive director of the Company;
(c) Roy Puffett, Trevor Karg, Steyn Delport and Wes Kruger, each of whom are currently directors
of Sheltam, will be appointed as executive directors of the Company; and
(d) Roy Puffett will become the Chief Executive Ofcer of the Company, Steyn Delport will become
the Chief Financial Ofcer, Trevor Karg will become the Chief Operating Ofcer and Wes
Kruger will become the Commercial Director.
The composition of the Board from completion of the Acquisition will therefore be as follows:
Executive Directors
*
* Trevor Karg (Chief Operating Ofcer)
*
* Wes Kruger (Commercial Director)
Non-Executive Directors
*
Paul Macdonald (Non-Executive Chairman)
*
Lawrence Kearns
*
James Peggie
If the Acquisition is not effected, the existing Board structure and roles will continue.
Brief biographical details of each of the Existing Directors and the Proposed Directors are set out
below.
22
Paul Martin Macdonald, Independent Non-Executive Chairman, aged 61
Paul Macdonald qualied as a chartered accountant in 1979. He worked for Pilkington plc for sixteen
years, the last seven of these in Germany. In Germany he was managing director for Pilkington
Deutschland GmbH (holding company) and managing director at both Flachglas AG (glass
manufacturer) and Dahlbusch AG (property and holding company). For the last fteen years Paul
has been active in the private equity market and has been successful in developing a number of
companies covering a number of industries including Sirona Beteiligungs GmbH (Germany), a
leverage buyout from Siemens. Paul is Chief Executive of Helvetica Deutschland GmbH, a Berlin
based property services company and he is also a non-executive director of Qatar Investment Fund
plc.
Roy Puffett, Chief Executive Ofcer, aged 62
Roy Puffett is the Founder and Managing Director of the Sheltam Group. He founded the Sheltam
Group in 1987 after the Electro-Motive Division of General Motors South Africa closed its
manufacturing facility in Port Elizabeth where he had served for 10 years as Senior Field Service
Engineer in the Sales and Service Department. He has grown the Sheltam Group to become one of
the largest privately owned locomotive owners and service providers on the African continent. Roy
led the Sheltam Group in winning the railway concession in Kenya and Uganda where he founded
the Rift Valley Railways group in October 2005 to manage the railway concession. Roy served as
managing director of Rift Valley Railways for several years. His involvement with this company
ended in November 2009, when the shareholding in Rift Valley Railways held by an entity controlled
by Mr. Puffett was sold.
Trevor Garth Karg, Chief Operating Ofcer, aged 62
After graduating from Rhodes University in 1974 with a B.Comm Honours degree, Trevor
commenced his career in the banking sector, before joining Ford Motor Company in 1978. Trevor
spent eight years with Ford Motor Company as Project Controller, with his responsibilities including
the acquisition of board approval for all capital expenditure for the introduction of new model
derivatives. Following Ford Motor Companys decision to disinvest from South Africa, Trevor joined
Executive Projects, a then newly formed business management and consultancy Company, which was
founded by three of the senior directors of Ford Motor Company in South Africa. Trevor spent
fteen years in consulting and joined the Sheltam Group in 2000 as Financial Manager, rising to the
position of Finance Director in 2005. Trevor is a board member of the Sheltam Group companies
and has been a key member of management in the growth of the Sheltam Group in its growth to its
current position as one of the largest privately owned locomotive companies in South Africa.
Steyn Gerhard Delport, Chief Financial Ofcer, aged 35
Steyn has been a consultant to PME since November 2010 and was appointed as a non-executive
director of the Sheltam board of directors in December 2010. Steyn graduated from the University of
Johannesburg in 2001 with a B.Comm Honours degree in Accounting and joined the FirstRand
Banking Group in 2002. Steyn worked in various areas of the bank which included First National
Bank Retail, FNB Leverage Finance, Rand Merchant Bank Private Equity, FRB International, Tax
and Internal Audit. Steyn left the group in 2006 and joined a niche regulatory and economic capital
consultancy, Monocle Solutions, where he obtained international experience in the Basel II Regulatory
and Economic Capital frameworks. Steyn joined Masazane Capital, a boutique advisory business, in
2007 where he gained a wide range of corporate nance, debt restructuring, non-recourse nance,
general capital market and BEE advisory experience. Steyn joined Symphony Capital, which
specialises in non-recourse nance with a particular application in BEE, in 2011 as a director.
Steyn holds Chartered Accountant (South Africa) and Chartered Financial Analyst qualications.
Wes Kruger, Commercial Director, aged 45
Wes Kruger joined the Sheltam Group in 1999 and has played key roles in the development and
negotiation of successful bids for long term railway concessions in the Republic of the Congo
(Brazzaville), Ethiopia and Djibouti and Wes also previously played a key role in the successful bid
and nancial closure for the joint railway concession companies in Kenya and Uganda. Prior to
joining the Sheltam Group, Wes spent ve years with the Standard Bank of South Africa where he
obtained an Associate Diploma from the Institute of Bankers (SA). He left banking to obtain an
MBA from the University of Cape Town Graduate School of Business and then provided strategy
consulting services to small businesses before joining the Sheltam Group. Wes is currently on the
23
board of several private companies of which three are Public Benet Organisations/not-for-prot
companies. Wes achieved a B Comm Honours degree in Economics in 1992.
Lawrence Albert Kearns, Independent Non-Executive Director, aged 66
Larry was formerly Chairman of Anglo Irish Bank Corporation (I.O.M.) P.L.C. and its subsidiaries
in the Isle of Man. Prior to that he was Managing Partner of Ernst & Young in the Isle of Man
from 1990 to 2002. After the sale of Ernst & Young duciary business in 2002 to Anglo Irish Trust
Co Ltd, he became an executive director of that company. On his retirement in 2004 he assumed the
position of Chairman. Following a management buyout in December 2006, Anglo Irish Trust Co Ltd
was acquired by Equiom Limited, of which Larry is the Chairman. Larry was Chairman of the Isle
of Man Society of Chartered Accountants in 1988 and President of the Chamber of Commerce from
1991-1993.
Andrew James Peggie, Non-executive Director, aged 43
James Peggie has a legal background in mergers and acquisitions. He is a director of Principle
Capital Advisors Limited based in London, where he takes responsibility for the corporate nance,
legal and transactional aspects of the Principle Capital groups investment projects. He has extensive
experience of the South African investment markets and has advised on a number of corporate
transactions and property related investments in South Africa. He is a non-executive director of Sirius
Real Estate Limited, a German real estate company and of Earthchild Clothing (Waterfront)(Pty)
Limited, a South African childrenswear and womenswear retailer. Between 2006 and 2010 he was a
non-executive director of Liberty plc, the owner of Londons famous store. Prior to the Principle
Capital group, he was responsible for the corporate nance, legal and transactional affairs of the
Active Value group. He is a qualied solicitor and prior to joining Active Value, he worked in the
corporate nance division of Sinclair Roche & Temperley (now Stephenson Harwood), an
international law rm. James graduated from Oxford University in 1992 and in 1994 from The
College of Law (with Distinction).
Details of the terms of appointment for the Existing Directors following the Acquisition and the
Proposed Directors are set out in paragraph 7 of Part VI of this document.
It is anticipated that certain executive directors and key employees will participate in the management
incentive arrangements described below.
Management incentive arrangements
The Directors believe that it is important that executive directors and senior management of the
Group are appropriately motivated and rewarded and, accordingly, the Existing Directors and the
Proposed Directors are proposing to seek Shareholder approval for the Executive Share Option Plan
in which executive directors (other than Roy Puffett, who will not be eligible) and other senior
management of the Enlarged Group will be eligible to participate. The Executive Share Option Plan
would be implemented following completion of the Acquisition and option grants shall be determined
by the remuneration committee of the Board, provided that at no time will options granted under the
ESOP exceed 5 per cent. of the Enlarged Groups issued ordinary share capital.
Further details of the new Executive Share Option Plan are set out in paragraph 15 of Part VI of
this document. The Directors have no intention at present to introduce an all-employee share plan.
In addition to the new Executive Share Option Plan the Existing Directors and the Proposed
Directors anticipate adopting a new executive bonus scheme, pursuant to which certain executive
directors and other senior management of the Group will be eligible to receive an annual bonus. The
terms of the new bonus scheme will be determined by the remuneration committee of the Board
following completion of the Acquisition.
Corporate governance
The Company is not obliged to comply with the UK Corporate Governance code or any Isle of Man
corporate governance code. However, the Existing Directors and Proposed Directors recognise the
importance of sound corporate governance and intend to continue to comply with the Quoted
Companies Alliances Corporate Governance Guidelines for Small and Mid-Size Quoted Companies.
In particular, the Directors are responsible for overseeing the effectiveness of the internal controls of
the Company designed to ensure that proper accounting records are maintained, that the nancial
information on which business decisions are made and which is issued for publication is reliable and
that the assets of the Company are safeguarded.
24
The Directors will meet regularly and will be responsible for strategy, performance, approval of major
capital projects and the framework of internal controls.
The Board will take all proper and reasonable steps to ensure compliance with the AIM Rules
relating to directors dealings and will also take all reasonable steps to ensure compliance by the
Companys applicable employees and has adopted a share dealing code for this purpose.
The Proposed Directors have determined that, following Readmission, Paul Macdonald and Lawrence
Kearns will constitute independent non-executive directors of the Company. Whilst they each
currently holder ofce as executive directors of the Company, this has been as a temporary measure
while the Company sought to realise its assets and they are considered by the Proposed Directors to
be independent with regard to the Sheltam Group, which will comprise the primary business of the
Enlarged Group following the Acquisition. Initially the New Board will not have a senior
independent non-executive director but this will be reviewed in due course.
Audit, remuneration and nomination committees
With effect from completion of the Acquisition and Readmission, the Board will reconstitute a new
audit committee, remuneration committee and nomination committee, each with formally delegated
duties and responsibilities, and each comprising not less than two independent non-executive directors
of the Board. The Board will no longer have a management engagement committee as the Directors
believe that this will not be relevant for the Enlarged Group.
The composition of these new committees from Readmission will be as described below.
Audit Committee
The audit committee will comprise Lawrence Kearns (as chairman), Paul Macdonald and James
Peggie. Trevor Karg and Steyn Delport may be invited by the committee to attend meetings but will
have no voting rights.
The audit committee will meet at least twice a year and will be responsible for ensuring that the
nancial performance of the Company is properly reported on and monitored, including reviews of
the annual and interim accounts, results announcements, internal control systems and procedures and
accounting policies. The audit committee will receive and review reports from the Companys
management and auditors and will have unrestricted access to the Companys auditors.
Remuneration Committee
The remuneration committee will comprise James Peggie (as chairman), Paul Macdonald and
Lawrence Kearns.
The remuneration committee will, amongst other things, make recommendations to the Board on
matters relating to the remuneration of the Chief Executive Ofcer and other executive directors. The
remuneration committee will also make recommendations to the Board on proposals for the granting
of share options and other equity incentives pursuant to the Executive Share Option Plan, or any
other share option scheme or equity incentive scheme in operation from time to time and in relation
to granting of bonuses under the management bonus scheme proposed to be adopted following
completion of the Acquisition.
Nomination Committee
The nomination committee will comprise Paul Macdonald (as chairman), James Peggie, Lawrence
Kearns and Roy Puffett.
The nomination committee will have responsibility for leading the process of new board appointments
and will make recommendations to the Board.
If the Acquisition does not complete, the existing structure and composition of Board committees
(including the management engagement committee) will be retained.
2 THE ACQUISITION AND RESTRUCTURING
2.1 Background to the Acquisition
On 19 October 2012, Shareholders approved, inter alia, a new investing policy for the Company
pursuant to which the Existing Directors have sought to realise the remaining assets of the Company
and return both the Companys cash reserves and proceeds from realisations to Shareholders. In
addition, Shareholders approved the return of cash through one or more tender offers and the
Company has since returned a total of approximately US$19.6 million to Shareholders.
25
The Companys remaining assets consist of its transport assets being a 50 per cent. shareholding
interest in, together with shareholder loans made to, Sheltam, a South African based transportation
services business, and ten C30 Locomotives leased to Sheltam under the Finance Lease together
with the benet of the remaining 24 years of a 30 year lease of Peninsula House, in Dar es Salaam.
In line with the investing policy adopted in 2012, with the aim of returning cash to Shareholders, the
Existing Directors undertook a sale process in respect of the Groups interests in Sheltam and the
C30 Locomotives. This process resulted in a number of parties indicating interest but the Board
considered that the indicative offers received did not ascribe adequate value to these assets and, that
it would not be in the best interests of Shareholders to pursue any of these bids. During this process
it became clear to the Directors that, under the terms of the existing shareholders agreement between
PMEs subsidiary, PME RSACO, and the Vendors in respect of Sheltam, there was a misalignment of
interests in relation to the proposed divestment by the Group. Moreover, this misalignment reduced
the attractiveness of both Sheltam and the C30 Locomotives to any potential purchaser. Furthermore
the relationship between Sheltam and PME as both a shareholder and a provider of locomotives
under the Finance Lease made it difcult to structure any third party nancing for Sheltam.
Whilst no sale was concluded, the process did highlight Sheltams attractiveness as an investment in
the transport services market in South Africa and how a re-alignment of the respective interests of its
shareholders and its corporate and operational structure would benet the shareholders in Sheltam,
and ultimately the shareholders in PME. Subsequently, the Existing Directors entered into discussions
with the Vendors with a view to the Group acquiring the remaining 50 per cent. of Sheltams shares
which it did not already own and on 11 February 2014, the Company, the Vendors and PUG entered
into a Co-operation Agreement to work toward implementation of the Acquisition, the Readmission,
and the Restructuring, conditional on completion of the Acquisition. A summary of the Co-operation
Agreement is set out in paragraph 10.12 of Part VI of this document.
2.2 The Acquisition
The Company has entered into the SPA, a conditional share sale and purchase agreement with the
Vendors and PME RSACO, under which PME RSACO will acquire the Sheltam Shares and Sheltam
Shareholder Loans from the Vendors. In consideration for the acquisition of the Sheltam Shares and
Sheltam Shareholder Loans, the Consideration Shares, being 19,741,160 new PME Shares, will be
issued to the Vendors ranking pari passu with the existing ordinary shares in the Company.
The effective issue price of the Consideration Shares is US$0.3040 per Share, representing a discount
of approximately 33.9 per cent. to the Net Asset Value per PME Share of US$0.46 as at 31 December
2013 and a premium of 52.0 per cent. to the mid-market closing share price of PME Shares of
US$0.20 on 25 June 2014, being the trading day immediately prior to the Suspension Date. The
Consideration Shares value the Sheltam Shares and Sheltam Shareholder Loans at approximately
US$6.0 million and will represent approximately 20.46 per cent. of the Enlarged Share Capital of the
Company on Readmission.
The Acquisition will constitute a reverse takeover for the Company under Rule 14 of the AIM Rules
for Companies as the Acquisition (i) will result in a fundamental change in the Companys business
and board control, in particular the Company will cease to be an investing company and will become
a trading company, and (ii) will result in a material departure by the Company from its current
investing policy. Shareholders are therefore being asked to approve the Acquisition under Resolution
1. The Acquisition is also conditional on, amongst other things, receipt of Merger Control Approval,
and Readmission taking place on or before 31 August 2014.
Immediately following the Acquisition and the issue of Consideration Shares, 5,715,667 Consideration
Shares, being approximately 29 per cent. of the Consideration Shares, will be acquired by PUG from
the Vendors in cash pursuant to the Shareholders Agreement further described in Part VI of this
document.
The Sheltam Shares will be acquired by PME RSACO free from all liens, charges, equitable interests,
encumbrances and third party rights and together with all rights attaching to the Sheltam Shares,
including the right to all dividends and other distributions.
2.3 The Restructuring
On completion of the Acquisition, it is intended that the existing Finance Lease in place between
PME Locomotives, Sheltam and Sheltam Pty (pursuant to which the Group leases the C30
Locomotives to the Sheltam Group) will be terminated and replaced by a master operating lease
26
between Sheltam Pty and PME Locomotives, under which three locomotives will be leased to Sheltam
Pty, two of which are the subject of a sublease to a third party. Another sublease under which a
further three locomotives are leased by the Sheltam Group to a third party will be assigned to PME
Locomotives with effect from completion of the Acquisition. In addition, Sheltam and Sheltam Pty
will sell to PME Locomotives equity interests representing 99.9 per cent. of the equity capital of
Sheltam Mozambique in consideration for payment of a cash amount calculated based on the net
asset value of Sheltam Mozambique and Sheltam Pty will acquire certain tools used for operation and
maintenance of the C30 Locomotives from PME Locomotives, provided such sale of equity interests
in Sheltam Mozambique and tools will be conditional on grant of exchange control approval by the
Bank of Mozambique. A new master operating lease will also be entered into between PME
Locomotives and Sheltam Mozambique to facilitate the current sublease by Sheltam Mozambique of
four C30 Locomotives to a third party. It is expected that two of the C30 Locomotives which are
subject to the new operating lease with Sheltam Pty, together with one further C30 Locomotive which
is currently subject to the Finance Lease and is used by Sheltam Pty, will revert to PME Locomotives
on expiry of the relevant sublease and thereafter be leased directly by PME Locomotives to third
parties so that over time all ten C30 Locomotives will be leased directly or indirectly by PME
Locomotives to third party lessees.
Sheltam Pty and PME Locomotives have entered into an operating and maintenance services
agreement, effective on completion of the Acquisition, for the provision of services by Sheltam Pty to
PME Locomotives, in respect of C30 Locomotives but other than those which are subject to the
master operating lease between Sheltam Pty and PME Locomotives.
On completion of the Acquisition, Sheltam and PME Locomotives will enter a master operating lease
under which locomotives owned by Sheltam can be leased to PME Locomotives from time to time.
Sheltam Pty and PME Locomotives will also enter into an operating and maintenance services
agreement which will permit the provision of operating and maintenance services by Sheltam Pty to
PME Locomotives for locomotives leases under the master operating lease.
Further details of the agreements being entered into in order to effect this restructuring are set out in
paragraph 10 of Part VI of this document.
2.4 Tax effect of the Acquisition and the Restructuring
The Existing Directors have obtained advice from tax advisers as to the potential impact of the
Acquisition and the Restructuring on the Groups tax position. This advice conrms that the
Acquisition and the Restructuring and the manner in which the Board intends to conduct governance
of the Enlarged Group following completion of the Acquisition will not cause any change in the tax
residency of the Company or any of the other members of the Group. Certain tax charges may apply
in South Africa, Mauritius and Mozambique in respect of the Acquisition and the Restructuring.
However, on the basis of this advice, the Existing Directors consider that the Acquisition and the
Restructuring will have no material adverse effect on the tax position of the Group as compared to
the tax position of the Group prior to the Acquisition and the Restructuring.
27
PART III
INFORMATION ON SHELTAM
Background
Sheltams business was founded in 1987 by the current Managing Director, Roy Puffett. Since
incorporation, Sheltam has grown from its beginnings as a provider of only technical services to the
rail industry into a multi-faceted company delivering a wide range of services and systems to support
the rail, marine, stationary power and aviation sectors.
Sheltam currently employs 400 staff members and is currently active, or has previously operated, in
South Africa, Zimbabwe, Angola, Mozambique, Zambia, Malawi, Swaziland, Botswana, Namibia,
Kenya, Uganda, Tanzania, the Democratic Republic of Congo and the Seychelles. Sheltam continues
to pursue operations further into Africa and this geographic expansion is considered a core part of
Sheltams organic growth strategy going forward. Sheltam currently derives the majority of its
revenues from outside South Africa.
Sheltams business and operations
Sheltams operations are spread across three business divisions, through which it offers its services,
namely Rail, Aviation and Marine with some work being performed in the stationary power market.
Work is carried out for mining, manufacturing, general freight and timber clients in sub-Saharan
Africa.
The diagram below shows the current Sheltam Group structure.

Notes: (1) The Sheltam Rail Trust is a related party to Roy Puffett. The trustees of The Sheltam Rail Trust are Roy Puffett and his wife
and the beneciary of the trust is his family trust.
Sheltam Rail
Sheltams rail division, Sheltam Rail, is headquartered in Port Elizabeth, South Africa, and has
branches in Randfontein and Witbank in South Africa. Sheltam Rail leases, operates, refurbishes and
maintains locomotives for its clients and provides operations and logistics management to mining and
industrial businesses that have privately owned railway networks. These are typically used for the
bulk transportation of products such as coal, gold ore, ferrochrome, platinum ore, iron ore, copper
and cobalt.
Sheltam Rail has historically been Sheltams core business generating approximately 75 per cent. of
Sheltam Group revenue in the year ended 31 December 2013.
28
Sheltam Rails clients include various multi-national corporations operating in southern Africa. The
locomotive eet is one of the largest privately owned and operated eets in southern Africa,
consisting of 38 operational diesel locomotives. Of these, 28 locomotives are fully owned by Sheltam
including three low power support locomotives and certain locomotive cores awaiting rebuild. The
remainder of the eet consists of the ten heavy haul C30 Locomotives currently leased from PME
Locomotives under the Finance Lease. In addition, Sheltam salvaged two C30 locomotives previously
leased from the PME Group that were involved in an accident in Mozambique in 2012 and which
were written off. It is anticipated that one of the locomotives could be made operational before the
end of 2014, bringing the eet owned or leased by Sheltam to 39 operational locomotives.
All locomotives in the Sheltam eet are serviced, maintained and overhauled by the Sheltam eld
services team, Sheltam Field Services.
The locomotive eet is currently deployed in South Africa, the Democratic Republic of Congo,
Mozambique and Swaziland, servicing the industries set out below. As such, Sheltam Rail derives its
revenues from a number of locomotive units servicing multiple industries:
Coal and Ferrochrome Industry
Sheltam Rail provides services to the coal mining and ferrochrome metal industries in Mpumalanga
situated near the city of Witbank, in the north east of South Africa. Services include the leasing of
locomotives and the maintenance and repair of diesel and electrical locomotives (together with rolling
stock). Maintenance and repairs are undertaken at workshops and services range from the rebuilding
and refurbishing of locomotives to logistics management in respect to the haulage of coal and
ferrochrome.
Gold Industry
Sheltam operates a closed rail system for a gold mining client at Randfontein in South Africa and
also provides a maintenance and repair service for third party locomotives and rolling stock in the
region. The gold mines in this area have some of the longest privately owned railway lines in
southern Africa. Sheltam Rail hauls gold ore from mine shafts to the renery, where gold is extracted
from ore. At Randfontein, Sheltam Rail also provides track maintenance services.
Paper And Pulp Industry
Sheltam Rail also provides services to the paper and pulp industries in southern Africa. Located in
the Nelspruit area of South Africa, Sheltam focuses mainly on operating locomotives on a private rail
system hauling timber products for clients. The locomotives used in providing services to this industry
are maintained by Sheltam Field Services.
Platinum Industry
Sheltam is contracted to support one of the worlds largest platinum miners in its railway operations.
The miner purchased from Sheltam eight of the rst General Electric C30 locomotives that were
brought into South Africa in 2007. Since then Sheltam has entered into a technical support contract
to ensure the locomotives continue to operate with high levels of availability and reliability.
Activities outside South Africa
Sheltams primary operations outside South Africa are railway activities in the Democratic Republic
of the Congo, Swaziland and Mozambique. In the DRC, Sheltam supports the local para-statal
railway company in meeting its operational haulage requirements from Lubumbashi in the south to
Illebo in the north west, approximately 1,500 kilometres into the heart of the DRC. Products
transported include copper, cobalt, agriculture, containers, petro chemical products and general
freight.
The second railway operation outside South Africa is the lease and operation of locomotives for the
conveyance of iron ore from Swaziland to Mozambique, with Sheltam operating locomotives on the
Swaziland and Mozambique railways.
The third signicant non-South African operation is based on a contract under which Sheltam leases
and maintains locomotives in connection with the conveyance of coal from the Tete region to the
port of Beira in Mozambique.
Sheltam Field Services
Sheltam Field Services consists of diesel electric technicians and their assistants and is based in
Witbank and Randfontein in South Africa. The division is able to service the eet of Sheltam owned
29
and operated locomotives throughout southern Africa. A eet of service vehicles enables the provision
of technical support and emergency maintenance and repairs to locomotives in remote areas.
Sheltam Track Services
This division is situated in Randfontein in South Africa and maintains and upgrades railway lines for
customers on an ongoing basis. The divisions capabilities include complete track maintenance and the
installation of new railway lines on a non-mechanised basis.
Sheltam Rail Logistics (Pty) Ltd
Certain South African operational contracts are contracted through Sheltams 74 per cent. owned
subsidiary, Sheltam Rail Logistics. The remaining 26 per cent. of Sheltam Rail Logistics is owned by
CapAfrica, a BEE investment vehicle. Sheltam Rail Logistics was formed for the purpose of applying
a BEE component to the renewal of existing South Africa based operational (non-technical support)
contracts, as well as for new South African freight management contracts. CapAfrica has the right to
elect whether to participate in all existing South African railway operational contracts that are
renewed/extended and any new freight management contracts. If this right is exercised, a 5 to 10 per
cent. gross prot margin on the relevant contract will be retained in Sheltam Rail Logistics and will
be allocated between the shareholders of Sheltam Rail Logistics in proportion to their respective
shareholdings.
Sheltam Aviation
With facilities in Durban and Port Elizabeth, Sheltams aviation division is the Sheltam Groups
second largest operational division contributing approximately 23 per cent. of Sheltam Group
revenue and 19 per cent. of the Sheltam Groups EBITDA in the year ended 31 December 2013.
Sheltam owns a eet of ten aircraft and offers air charter for business and leisure travel in southern
Africa, aircraft maintenance, fuel sales and hangar services. Sheltam Aviations staff are licensed to
service and repair a range of piston and turbine aircraft.
The eet consists of both pressurised and non-pressurised aircraft with helicopters available on
request. Refuelling facilities and an after-hours call out service are also available.
Sheltam Aviation Fleet Summary
Model Quantity
Third Party
Finance
Beech Craft King Air B200 1 Yes
Beech Craft Baron B58 1 No
Rockwell Aero Commander 690B 1 Yes
Piper Cherokee * 1 No
Cessna Grand Caravan * 1 No
Cessna 152 RG 5 No
*These assets are currently being offered for sale
Sheltam Marine
Sheltams marine division is based in Cape Town and provides spare parts/components, maintenance
and technical support services for a broad spectrum of diesel marine engines for vessels operated by
offshore diamond mining and exploration companies, both onshore and at sea.
Sheltam Marine generated approximately 2 per cent. of the Sheltam Groups revenue for the year
ending 31 December 2013. The Sheltam directors are currently considering the strategic options for
Sheltam Marine.
Market Overview and Strategy of the Enlarged Group
The Directors believe that the key short term growth opportunities for the Enlarged Group lie in the
Sheltam Rail division for activities outside South Africa. The Directors consider that most of the
mining developments with potential for Sheltams business are taking place in East and West Africa.
Sheltam has a strong market reputation in southern Africa and is included in the procurement
processes for most existing or new railway infrastructure developments that become available. Due to
the high capital nature of developing railway projects, many of these new developments require
nancial assistance from the state or from development nancial institutions from inception to
30
commissioning. As a result, new rail project opportunities in Sheltams market can require up to ten
years to achieve all necessary approvals and full development.
In South Africa the national mainline network is currently monopolised by the South African rail
state owned enterprise, Transnet, which has shown reluctance to allow private freight players to
compete with or even support its activities.
As such, the initial strategy for the Enlarged Group is to continue to offer full levels of rail leasing,
operating and maintenance services to Sheltams current customer base. The Board intends to expand
Sheltams current workshop capabilities to meet current demand and to attract new business.
In the longer term, the Board intends to use the Sheltam teams experience of operating in a number
of countries and across borders to participate in new logistics solutions in Africa, taking advantage of
the anticipated sustained expansion of rail networks in southern Africa, which is supported by the
World Bank, and is being facilitated by direct investment made by host governments, development
nance institutions and by multi-nationals active in the natural resources sector.
It is anticipated that Sheltam will seek to open up these new routes, teaming up with national rail
operators or their foreign partners to improve the utilisation of both existing and new rail networks.
In many cases the development of new logistics solutions will be best served by offering the market
packaged solutions, including rail and road transport, as well as handling facilities. To participate in
these developments, it is planned that Sheltam will partner with other companies who have the
requisite experience in road transportation and freight handling.
The private rail sector in southern Africa is still relatively small and the Board believes that there are
opportunities to grow the Sheltam business through selective mergers, acquisitions and joint ventures,
as well as through organic growth.
Financial Summary
The table below sets out selected key historical nancial information for the Sheltam Group for the
three years ended 31 December 2013 which has been extracted from the nancial information set out
in Section B of Part V of this document.
12 months
ended
31 December
2013
R000
12 months
ended
31 December
2012
R000
12 months
ended
31 December
2011
R000
Revenue 329,635 349,481 240,208
Gross prot 220,744 233,202 153,517
Prot/(loss) before tax and impairments (note) (48,814) 9,528 (64,364)
Prot/(loss) after tax (note) (36,932) 7,174 (46,356)
Net assets 143,198 140,277 127,397
Note:
Losses in 2013 and 2011 arose primarily as a result of the US Dollar denominated Finance Lease and loan from PME Locomotives to the
Sheltam Group. In both 2013 and 2011 there was a sharp decline in the value of the South African Rand towards the end of the period,
resulting in relatively large unrealised exchange rate losses during both 2013 and 2011.
Competition
The African market is relatively underdeveloped and fragmented. However, large logistics companies
consider rail to be an important component in offering a pit to port or pit to plant service, in
addition to road and shipping services. Notwithstanding the above, very few private companies have
the operating structure and experience to compete with Sheltam in the rail sector in southern Africa.
With the lack of investment into skills and capital railway equipment in most countries in the region,
Sheltam has capacity to offer support to African para-statal companies and commercial operators
requiring assistance in rail services.
Based on the experience of the Sheltam management team, the Directors believe that the domestic
competitors to Sheltam in South and southern Africa are, and will continue to be, Grindrod Rail,
African Rail, Traction Services and Saog Locomotive Services. All of these competitors are active
within South Africa, and certain of them have operations in other southern African countries in
which Sheltam operates, or intends to operate. In southern Africa, Transnet, the South African state
31
owned integrated freight transport company with a eet of more than 2,000 locomotives, appears to
have ambitions to compete in the private sector.
Sheltam management understand that many large industrial organisations have, over a period of time,
acquired their own rail capacities. Whilst these industrial organisations would not normally provide
services to third parties or compete with Sheltam, this internal capacity within the industrial sector
may serve to limit the overall size of the market to Sheltam and its competitors.
Recent Trends and Prospects
Sheltams trading in 2014 has been in line with the Directors expectations and the Directors believe
that the Enlarged Group will be well-positioned to take advantage of increasing African rail
requirements. The New Board intends to expand Sheltams current workshop capabilities from which
its African strategy will be supported.
32
PART IV
RISK FACTORS
An investment in PME Shares is subject to a number of risks. Accordingly, investors should carefully
consider the following risk factors in addition to the rest of the information contained or incorporated by
reference in this document. Additional risks and uncertainties not presently known or currently deemed
immaterial may also have a material adverse effect on the Group and, if the Acquisition is completed,
the Enlarged Group.
If any of the risks described below were to occur, it could have a material adverse effect on the business,
results of operations, nancial condition and/or growth prospects of the Group and, if the Acquisition is
completed, the Enlarged Group. The risks described below should not be considered to be an exhaustive
statement of all the potential risks and uncertainties that the Group faces and that the Enlarged Group
may face if the Acquisition is completed. There may be additional risks that are unknown or that are
considered to be immaterial at the date of this document that may become known and/or materially and
adversely affect the Group and, if the Acquisition is completed, the Enlarged Group. If this were to lead
to a decline in the market price of the PME Shares, investors may lose all or part of their investment.
The order in which the following risks are presented does not necessarily reect the likelihood of their
occurrence or the relative magnitude of their potential effect on the Group and, if the Acquisition is
completed, the Enlarged Group, or the market price of the PME Shares.
RISKS RELATING TO THE ENLARGED GROUPS BUSINESS, AND THE INDUSTRIES AND
JURISDICTIONS IN WHICH IT OPERATES
The Enlarged Groups business is exposed to operational risks
Sheltams businesses, like all similar businesses, are subject to many and varied operational risks,
which could result in losses, delays and business interruption and could adversely impact Sheltams
ability to provide services to its customers or ensure the timely delivery of customer cargo. These
risks include, but are not limited to the following:
*
inadequate or failed internal systems and processes, including those for identifying, managing
and controlling risks;
*
equipment loss or failures in or unavailability of the infrastructure required to operate
equipment;
* failure to comply with regulatory requirements;
* theft of copper cables and other infrastructure; and
* other operational risks relevant to the transportation services industry, including land disaster,
mechanical failure, collisions, loss of life, injury, loss of or damage to xed and moveable assets,
decreases or disturbances in demand for services, cargo loss or damage.
Although Sheltam has implemented risk controls and mitigation programmes and substantial
resources are devoted to developing efcient and effective procedures and to staff training, it is not
possible to be certain that such procedures will be effective in identifying, managing and controlling
each of the operational risks faced by Sheltam.
The operation of any transportation service activity carries with it an inherent risk of catastrophe,
collision and loss of life or property as a result of equipment loss or failure, failure in or
unavailability of infrastructure, natural disasters, severe weather, human error, acts of terrorism and
other circumstances or incidents that are outside of Sheltams control. Collisions, spills, other
environmental incidents or other accidents can result in business interruption, damage to or loss of
Sheltams assets or cargoes and serious bodily injury, death and property loss and damage,
particularly when such accidents occur in heavily populated areas. In such circumstances, Sheltam
may not be able to rebuild or repair its property or restore operations in a timely manner, or at all,
and could be subject to losses or third party liability.
If any of these risks materialise after the Acquisition is completed, it could have a material adverse
effect on the Enlarged Groups business, results of operations, nancial condition and prospects.
33
The Enlarged Group is subject to risks associated with the availability and cost of key inputs for its business
and the business of its key clients
Key input items in Sheltams cost base, including salaries and other personnel costs, energy costs,
material costs, maintenance costs, operating lease costs and equipment costs are sensitive to increases
in general price levels in South Africa and elsewhere. The Enlarged Groups business and protability
could be adversely affected if the costs of its basic inputs materially increase and these costs cannot
be recovered from customers.
Fuel
Fuel represents one of Sheltams major operating costs, making up approximately 10 per cent. of
total operating costs in the nancial year ended 31 December 2013. As a result of this, even a small
increase in the price of fuel could have a signicant negative impact on the Enlarged Groups
operating costs. Instability caused by imbalances in the worldwide supply and demand for oil, and the
global economic downturn, has resulted in signicant uctuations in fuel prices. The Directors expect
this volatility to continue in at least the short to medium term. Although a majority of Sheltams
customer contracts require the customer to pay all fuel costs or allow Sheltam to pass signicant fuel
price increases on to the customer, a signicant continuing upward trend in fuel costs may not be
immediately recoverable from customers and could therefore lead to material increases in Sheltams
operating costs, and/or could cause customers to cease to obtain services from Sheltam, which in each
case could have a material adverse effect on the Enlarged Groups business, results of operations,
nancial condition and/or growth prospects.
Electricity
Although electricity costs have not historically formed a signicant part of Sheltams operating costs
they do form a substantial cost component for a number of Sheltams key customers and Sheltam is
therefore exposed to continuing increases in energy costs which will result in increases in operating
costs for Sheltams clients which are substantial consumers of electricity. In February 2013 NERSA
determined that the electricity prices charged by Eskom, the state owned generator of electricity in
South Africa, would be increased by 8 per cent. per annum over the next ve years (from the
nancial year ended 31 December 2014). Eskom is the sole third-party supplier of electricity in South
Africa, and no signicant alternative sources of supply are available to Sheltams customers. Such
increases could adversely impact the protability of Sheltams clients, which could in turn result in
reductions in volumes of goods transported by Sheltam, the reduction in trains leased and use of rail
service from Sheltam, and downward pressure on Sheltams revenues. Furthermore, Sheltams
operations and the operations of its key customers could be adversely affected by electricity shortages.
In the last decade South Africa experienced electricity shortages that resulted in rolling blackouts and
load shedding by Eskom. Additionally, Eskom has experienced and is continuing to experience
electricity capacity expansion challenges mainly as a result of technical problems and labour unrest.
While slower economic growth has reduced demands for electricity, the Directors believe that
electricity consumption in South Africa will increase signicantly, and that the increased demand for
electricity may outstrip the increases in electricity generation capacity planned by Eskom for the
medium-term, which could cause future load shedding and rolling blackouts. Such blackouts could
severely disrupt or delay the businesses of Sheltams key customers, which could have a material
adverse effect on the Enlarged Groups business, results of operations, nancial condition and
prospects.
Spare parts
The locomotives used by Sheltam in the operation of its business are relatively old. Whilst spare parts
are currently readily available, there can be no guarantee that spare parts for the types of locomotives
used by Sheltam will continue to be manufactured or otherwise be available. While Sheltam is
currently able to obtain a good supply of spare parts for its locomotives and the Directors have no
reason to believe that this will change in the near term, there is no guarantee that this will continue
in the longer term as the existing supply of locomotives of the same type declines through
redundancy or by being provided to other operators. A signicant shortfall in the availability of
appropriate spare parts for an extended period could cause a substantial disruption to Sheltams
operations, which could materially adversely affect the Enlarged Groups business, results of
operations, nancial condition and/or growth prospects.
34
Ination in the cost of other inputs
Consumer price ination in South Africa, as measured by the consumer price index, averaged 5.0 per
cent. in 2011, 5.6 per cent. in 2012 and 5.7 per cent. in 2013. While Sheltams customer contracts
generally contain inationary protection provisions which allow Sheltam to pass on increased
operating costs to its customers, these cannot always be passed on as a result of competitive
pressures, contractual provisions, regulatory limits on tariffs and other factors. Inationary pressure
may also lead to a reduction in demand for Sheltams services. Accordingly, if the recent inationary
trend continues, there can be no assurance that Sheltam will be able to maintain or increase its prot
margins. Furthermore, many of Sheltams suppliers may seek to pass on increases in material or other
costs to Sheltam. Any increases in the prices of materials or other goods or services purchased by
Sheltam which cannot be passed on to customers could impair Sheltams ability to perform its
services cost effectively. The occurrence of any of the foregoing could have a material adverse effect
on the Enlarged Groups business, results of operations, nancial condition and prospects.
The Enlarged Group is exposed to risks associated with structural changes in commodity prices leading to a
reduction of demand for Sheltams services
A number of Sheltams key customers operate in the mining industry and their businesses are
therefore dependent on the prices which they are able to obtain for the commodities which they
produce. A structural change in the relevant commodity prices may render production uneconomic
for some of Sheltams customers over the long term, which may cause them to curtail the level of
their operations or cease operating entirely. Any such reduction in operations could cause the relevant
Sheltam customers to reduce the level of services which they obtain from Sheltam and could therefore
have an adverse effect on Sheltams revenues. A decline in commodity prices may also cause
Sheltams customers to seek to obtain transport services from other non-rail sources. A signicant
continuing downward trend in commodity prices over an extended period could therefore have a
material adverse effect on the Enlarged Groups business, results of operations, nancial condition
and prospects.
The majority of Sheltams customer contracts are of a relatively short term and/or are terminable on short
notice
As the Directors believe is standard for the rail transport industry in South Africa, the majority of
Sheltams customer contracts are for a relatively short term (12 to 24 months on average) or are
terminable by the customer on short notice (typically 2 to 3 months). While most customers have
generally continued to roll over their contracts with Sheltam, there can be no guarantee that they will
continue to do so in the future. In particular, Sheltams customers may be affected by operating or
market conditions which reduce their demand for services from Sheltam. In addition, Sheltams xed
costs are relatively high in respect of the assets to which the contracts relate, and a relatively small
reduction in the level of Sheltams services can therefore have a disproportionate effect on its prot
margins. If any event or events occurred which caused a signicant number of Sheltams customers to
terminate their existing contracts or to fail to renew those contracts on expiry, and such contracts
cannot be replaced with new contracts on substantially similar terms in a short period of time, this
could have a material adverse effect on the Enlarged Groups business, results of operations, nancial
condition and prospects.
The Enlarged Group is subject to risks associated with the age and impairment of its equipment and
infrastructure
Sheltams business and operations depend on the performance of its equipment and other working
assets, such as its locomotives and wagons, and of the infrastructure (and particularly the track
network) used by Sheltam in the operation of its business. As its equipment and the infrastructure it
uses ages, their performance and effectiveness becomes impaired, which can lead to reduced
productivity as well as delays and costly maintenance. If Sheltam is unable to replace, maintain or
repair its equipment, or if the infrastructure used in its operations is not replaced, maintained or
repaired, in a timely manner, it will face increased costs, delays and lost revenue, which may have a
and prospects.
The Enlarged Group will be exposed to uctuations in the exchange rate between the US dollar and the Rand
While the Companys nancial information is presented in US dollars (and the Directors intend that
the Group will continue to report its nancial results in US dollars in the future), the majority of
35
Sheltams costs, including substantially all of its labour costs, are incurred in Rand. In addition, a
majority of Sheltams revenue is denominated in Rand. Fluctuations in the exchange rate between the
Rand and the US dollar could therefore adversely affect the Enlarged Groups results of operations,
nancial condition and prospects.
The insurance coverage available to the Enlarged Group may not cover all potential losses, liabilities and
damages related to its business
Sheltam maintains insurance that the Directors believe is consistent with industry practice within the
countries in which Sheltam operates against the risks involved in the conduct of its business.
However, this insurance may not be sufcient to cover, in whole or in part, damages to Sheltam or
others and insurance may not continue to be available on similar terms or at commercially reasonable
rates. In addition, the severity or frequency of events may result in losses or expose Sheltam to
liabilities in excess of its insurance cover. Sheltam does not fully insure against certain risks. Should
an incident occur in relation to which Sheltam has no insurance cover or inadequate insurance cover,
it may be nancially liable for related losses. Losses or third party claims for damages could have a
and prospects.
Labour disputes could lead to disruptions in operations
Labour relations is an important focus for the transport and associated industries in Africa, given
there is always the potential for labour disputes relating to, for example, annual wage increases or
working conditions, which can lead to disruption in production or services. This is particularly the
case in South Africa, which has a progressive labour market and active trade unions. There was
widespread labour unrest experienced in the country in 2012 and 2013 which has had an adverse
effect on the mining industry.
Sheltam generally has a strong track record of good labour relations and, while there has been
industrial unrest affecting Sheltam in the past, this has not had any signicant impact on operations.
As at the date of this document, Sheltams labour relations are stable and the Directors are not
aware of any specic issues with regard to labour disputes. However, there remains potential for
future labour disputes in relation to Sheltams workforce (including disputes arising from periodic
retrenchment exercises in relation to Sheltams workforce to reect demand or anticipated demand for
its services) as well as ongoing labour disputes in the transport sector in South Africa and in
Sheltams other countries of operation. There is also potential for labour disputes in the industries in
which Sheltams customers operate, in the mining industry in particular. Failure to resolve these
disputes could result in industrial action which could, in turn, result in work stoppages and disruption
to Sheltam and the transport sector, or signicant disruptions to the business of Sheltams customers,
and could thereby have a material adverse effect on the Enlarged Groups business, results of
operations, nancial condition and prospects.
The Enlarged Group may not be able to secure nancing on suitable terms to nance the operation,
development and expansion of its business in the longer term
The Enlarged Group may need to make substantial future capital investment for the development and
continuing operation of its business. The Enlarged Group may, therefore, seek to raise further funds
through equity or debt nancing, or to enter into joint ventures, or otherwise bring in a partner to
share costs. There can be no assurance that such additional nancing or a suitable partner will be
available when needed or, if such nancing is available, that the terms of the nancing will be
commercially acceptable to the Enlarged Group. Further, any such additional debt nancing, if
available, may involve onerous costs or restrictions on other nancing and on operating activities. For
example, the Enlarged Group may become subject to increased interest expenses, covenants requiring
that the Group maintain prescribed nancial ratios and/or covenants restricting certain aspects of its
business, including, for example, restrictions on additional future borrowings and indebtedness levels
and permitted future acquisition activity, as well as security interests placed over certain of its assets.
If interest costs were to increase signicantly in the future, this could hinder the Enlarged Groups
ability to raise new nancing or service and renew existing indebtedness, reduce the funding options
available to the Group and render it more vulnerable to economic downturns.
Failure of the Enlarged Group to obtain sufcient nancing for its activities and future projects could
have a material adverse effect on the Enlarged Groups business, results of operations, nancial
condition and/or growth prospects.
36
The Enlarged Group operates in a highly competitive market
The level of competition in the African rail transportation industry is high. Rail operators compete
primarily on freight charges, frequency and reliability of service, safety record and locomotive
availability. Sheltams main competitors include South African based operators as well as alternative
means of transport, including freight trucking and pipelines in the mining industry. Some of Sheltams
competitors are much larger and have signicantly greater nancial and other resources (including
some state owned enterprises seeking opportunities) which may enable such competitors to reduce
charges and make Sheltams services less competitive. Sheltams competitors may also seek to protect
or gain market share by offering discounted charges, introducing new routes, offering more frequent
schedules or services.
Sheltam is expected to provide a certain level of service as provided in its contracts and as expected
by its customers, including as to quality, reliability and safety. Failure to meet service levels may
result in liability or loss of revenue for Sheltam and failure to meet customer expectations in respect
of service levels may result in contracts not being renewed, in favour of competitors, or customers
choosing to use alternative means of transport.
There can be no guarantee that Sheltam will be able to continue to compete effectively with other rail
operators, any new entrants to the industry or with alternative forms of transport. The sustained loss
of a signicant number of Sheltams customers to competing rail operators or other forms of
transport could have a material adverse effect on the Enlarged Groups business, results of
operations, growth prospects and/or nancial condition.
The Enlarged Group will rely on certain key personnel
Sheltams business is dependent on retaining the services of a small number of key personnel of the
appropriate calibre. Sheltams success is, and will continue to be, to a signicant extent dependent on
the expertise and experience of the Directors and Senior Management. Whilst the Enlarged Group
has entered into contractual arrangements with the aim of securing the services of the existing
management team, the retention of their services cannot be guaranteed. In addition, the majority of
senior management are on service contracts which can be terminated on relatively short notice
(typically one month). The loss of key personnel could have a material adverse effect on the Enlarged
Groups business, nancial condition, results of operations and prospects.
In addition, the properly skilled technical staff needed for the operation of Sheltams business are
generally in short supply in the countries in which Sheltam operates, and Sheltam has experienced
shortages of such employees in the past. Sheltam may have to spend signicant amounts of time
recruiting and training employees with the appropriate expertise and experience, at a substantial cost
to Sheltam. Any signicant shortage of properly trained or specialised employees could cause
disruptions to the operation of Sheltams business and/or lead to increased costs, which may have a
material adverse effect on the Enlarged Groups business, results of operations and prospects
The Enlarged Group is exposed to an event damaging Sheltams reputation or brand
As part of its overall business model, Sheltam relies on its reputation and positive brand recognition,
amongst other things, to attract and retain customers. Damage to Sheltams reputation or brand
through either a single event or a series of events such as accidents or environmental or health and
safety incidents could adversely impact Sheltams ability to market its services and attract and retain
customers, and could ultimately have a material adverse effect on the Enlarged Groups business,
results of operations, growth prospects and/or nancial condition.
Emerging markets such as those in which the Group currently operates are subject to greater risks than more
developed markets and any material adverse effect on the economies of such markets could disrupt the
Enlarged Groups business
Generally, investment in companies with a signicant proportion of their assets and/or operations
located in emerging markets is only suitable for sophisticated investors who fully appreciate the
signicance of the risks involved in, and are familiar with, investing in such companies. Emerging
markets such as those in which the Group and Sheltam currently operate are subject to rapid change
and greater risks than more developed markets. If there is an economic or nancial crisis in any of
the jurisdictions in which the Enlarged Group operates, the Enlarged Group may face severe
difculties in the operation of its business and the value of its assets in such jurisdictions may
decrease, resulting in a material adverse effect on the Enlarged Groups business, results of
operations, nancial condition and prospects.
37
Changes in the political, scal and legal systems or conditions, or civil unrest in the countries in which the
Group or Sheltam operate may affect the ownership or operation of the Enlarged Groups interests
Some of the countries in which the Group and Sheltam operate have been subject to political and
economic uncertainty and civil unrest in recent years. The Enlarged Group may incur signicant costs
as a result of the continuing and/or any increase in the instability in the countries in which it
operates. In addition, any changes that occur in their political, scal and legal systems may affect the
ownership or operation of the Enlarged Groups interests which may in turn materially and adversely
affect the Enlarged Groups nancial position. These risks include terrorism, military conict or
repression, arbitrary interference with private ownership of contract or other rights, nationalisation,
change in legislation, extreme uctuations in currency exchange rates, high rates of ination, and
changes to exchange controls, taxation and other laws or policies affecting foreign trade, investment,
taxation or business operations. Any changes in regulations and policies or a shift in political
attitudes in the countries where the Enlarged Group operate may adversely affect the Enlarged
Groups business, results of operations, nancial condition and prospects.
Compliance with BEE requirements could impose signicant costs on the Enlarged Group and a failure to
comply with those requirements could have a material adverse effect on the Enlarged Groups business
In South Africa, Sheltam is required to consider in its commercial activities the Broad Based Black
Economic Empowerment Act, No. 53 of 2003(the B-BBEE Act), the primary objective of which is
to broaden entrepreneurial ownership and management opportunities for black people, as that term
is dened in the B-BBEE Act.
In terms of the B-BBEE Act and the codes which have been promulgated in terms of its provisions,
every entity can be measured according to prescribed categories in order to determine its broad-based
black economic empowerment (BEE) status. The greater an entitys BEE rating the more
favourably the entity will be regarded by various branches of the South African government when
considering whether to enter into commercial dealings with the entity concerned and an entitys BEE
status is often a signicant factor taken into consideration by government when implementing bid
processes for the awarding of commercial contracts.
One of the elements assessed in determining an entitys BEE status is the extent to which such entity
procures its goods and services from black persons or entities that while not being, black people,
have a BEE status of a particular rating. The risk that this creates for an entity such as Sheltam, is
that any customers which need to maintain a certain BEE status in order to continue or increase
business dealings with the government, may seek to increase their BEE status by sourcing their
services from entities which have a higher BEE rating than Sheltam. In addition, there is a risk that
the authorities will take a more aggressive approach towards BEE if, in the authorities view,
sufcient progress is not being made towards advancing black economic empowerment in the
industries in which customers and potential customers of Sheltam operate.
Local health conditions could have an adverse effect on the Enlarged Groups business
HIV and AIDS, tuberculosis, malaria and other diseases are prevalent in the areas in which the
Sheltam Group operates. Increased mortality rates due to these diseases and viruses could result in
loss of employee man-hours, loss of trained and experienced employees, increased absenteeism,
depressed morale and reduced productivity, in addition to increased recruitment and replacement
costs, insurance premiums, benets payments and other costs of providing treatment. These could
have an adverse effect on the Enlarged Groups business, nancial condition or results of operations.
Capital ows to and from South Africa are limited by exchange controls
The ability of Sheltam and its South African subsidiaries and their operations, to transfer funds out
of South Africa and to enter into agreements which require or potentially require the transfer of
funds out of South Africa (for example through payment of the amounts due under the operating
lease between PME Locomotives and the Sheltam Group or in the event of a breach of warranties
given under the SPA) is subject to South African exchange control regulations.
The legal framework of South African exchange control is the Currency and Exchanges Act 1933 and
the Exchange Control Regulations 1961. The Minister of Finance has delegated the day to day
administration of the exchange control rules to the South African Reserve Bank (SARB), which
administers the exchange control rules through its Financial Surveillance Department.
These South African exchange controls restrict the export of capital without approval from the SARB
and potentially limit the extent to which Sheltam can borrow funds from non-South African sources
38
for use in South Africa. From 1993, the authorities began phasing out existing exchange controls and
since then there has been continued gradual relaxation of the controls and the way in which they are
applied, which the Directors expect to continue in the future. However, there can be no assurance
that transfers will be approved or guarantee that this continued relaxing of the exchange control
restrictions will occur or that the current approach will not be reversed and that exchange controls
will not be tightened again in the future. Any failure to obtain the necessary exchange control
approval, in particular in connection with any future nancing of Sheltam, or the imposition of any
restrictions on Sheltam or its South African subsidiaries in respect of any transfer of funds may have
a material adverse effect on the Enlarged Groups business, results of operations, nancial condition
and prospects.
The exchange control rules permit the transfer of dividends and prot distributions from quoted
companies, non-quoted companies and other entities to non-residents in proportion to their
percentage shareholding and/or ownership. Such transfers are subject to the production of
documentary evidence such as the annual nancial statements and, where applicable, the board
resolution conrming the amount of the dividend/prots due to shareholders.
The Groups operations are subject to strict environmental regulation and enforcement
Sheltams operations are subject to existing and any future environmental legislation, regulations and
actions governing, amongst other things, the loading, unloading and storage of hazardous materials
and the protection of the environment which impose signicant costs and burdens on Sheltam Group
both in terms of compliance and potential penalties, liabilities and remediation or decommissioning
costs. The cost of compliance with environmental laws and regulations has been signicant and is
expected to continue to be signicant due to a growing body of environmental legislation. Breach of
any environmental obligations could result in penalties and civil liabilities and/or suspension of
operations, any of which could adversely affect the Enlarged Group.
Any failure to comply with applicable environmental laws or regulations, even if based on historical
industry practice, or due to changes in laws or regulations (or the interpretation or enforcement
thereof) or otherwise inadvertent, and any applications for rectication could result in a material
interruption or restriction of Sheltam Groups operations, and/or in the imposition of nes, penalties
or other liabilities, which could have a material adverse effect on the Enlarged Groups business,
results of operations, nancial condition and prospects.
Sheltam is exposed to risks and costs related to health and safety
Sheltams operations are subject to health and safety laws and regulations designed to improve and to
protect the safety and health of employees and the public. Although the Directors believe that
Sheltam has an excellent health and safety record and complies in all material respects with applicable
regulations, there can be no guarantee that injuries or fatalities will not occur as a result of Sheltams
operations. Safety incidents may lead to business interruptions, loss of assets, harm to employees and
the public, damage to the environment and adverse publicity resulting in damage to Sheltams
reputation. The costs of complying with health and safety laws and regulations, the imposition of
civil or criminal liability for violations and/or liability for damages arising under personal injury or
other legal actions could have a material adverse effect on the Enlarged Groups business, results of
operations, nancial condition and prospects. In addition, if these laws and regulations were to
change and if material expenditure were then required in order to comply with such new laws and
regulations, this could adversely affect the Enlarged Groups business, results of operations, nancial
condition and prospects.
RISKS RELATING TO THE ACQUISITION
There are a number of conditions that must be satised for the Acquisition to be completed
The Acquisition is conditional on a number of factors, including:
(a) the Company having received approval for the Acquisition from the merger control authorities
in South Africa;
(b) lender consent;
(c) the passing of Resolution 1 at the Extraordinary General Meeting; and
(d) Readmission becoming effective.
There is no guarantee that all of these conditions will be satised or waived (as applicable). If these
conditions are not satised or waived, the Acquisition will not be able to be completed.
39
RISKS RELATING TO THE PME SHARES
Investments in AIM companies may attract a high degree of risk
The prices of publicly quoted securities can be volatile. The price of securities is dependent upon a
number of factors, some of which are general or market or sector specic and others that are specic
to the Company. The PME Shares will not be listed on the Ofcial List of the UK Listing Authority
and, although the PME Shares will be traded on AIM, this should not be taken as implying that
there will always be a liquid market in the PME Shares. In addition, the market for shares in smaller
public companies is less liquid than for larger public companies. Therefore, an investment in the PME
Shares may be difcult to realise and the price of the PME Shares may be subject to greater
uctuations than might otherwise be the case.
An investment in shares quoted on AIM may carry a higher risk than an investment in shares quoted
on the Ofcial List of the UK Listing Authority. AIM has been in existence since June 1995 but its
future success and liquidity in the market for the PME Shares cannot be guaranteed. Investors should
be aware that the value of the PME Shares may be volatile and may go down as well as up and
investors may therefore not recover their original investment.
The Company may not pay cash dividends on the PME Shares
The Company has not declared or paid any dividends on the PME Shares since July 2011 and cannot
assure investors that it will pay dividends in the future. Any decision to declare and pay dividends in
the future will be made at the discretion of the Board and will depend on, among other things,
applicable law, regulations, restrictions, results of operations, nancial condition, cash requirements,
contractual restrictions, future projects and plans and other factors that the Board may deem
relevant. In addition, the Companys ability to pay dividends may depend on the extent to which it
receives dividends from its subsidiaries and there can be no assurance that its subsidiaries will pay
dividends.
40
PART V
FINANCIAL INFORMATION
Section A: PME Historical Financial Information
1. Financial information on the Company
The following information is incorporated into this document by reference.
Information Source of information
Turnover, net prot or loss before and after
taxation, the charge for tax, extraordinary
items, minority interest, the amount absorbed
by dividends and earnings and dividends per
share for the Group for each of the three years
ended 31 December 2013
PME annual report and accounts 2012; page 10
A statement of the assets and liabilities shown
in the audited accounts for the Group and the
Company for each of the three years ended
31 December 2013
PME annual report and accounts 2012; pages 12 and 13
PME annual report and accounts 2013; pages 12 and 13
A cash ow statement as provided in the
audited accounts for the Group and the
Company for each of the three years ended
31 December 2013
PME annual report and accounts 2013; page16
Signicant accounting policies together with
any points from the notes to the accounts which
are of major relevance to an appreciation of the
gures
Audit reports PME annual report and accounts 2011, page 11
2. Availability of documentation
The Companys results for each of the three years ended 31 December 2013 are available free of
charge on the Companys website www.pmeinfrastructure.com or in hard copy (on request only) from
Smith & Williamson, 25 Moorgate, London EC2R 6AY, telephone 020 7131 4000. Except to the
extent expressly set out above in paragraph 1 of Section A of this Part V above, neither the content
of the Companys website (or any other website) nor the content of any website accessible from
hyperlinks on the Companys website (or any other website) is incorporated into, or forms part of,
this document and investors should not rely on it.
41
Section B: Sheltam Historical Financial Information
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
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67
68
69
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81
82
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86
87
88
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94
95
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107
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112
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114
115
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126
127
128
129
130
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132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
Section C: Pro forma Statement of Net Assets
Unaudited Pro forma nancial information
Basis of preparation
The following unaudited pro forma statement of net assets of the Group set out below has been
prepared to illustrate the effect of the Acquisition and the Restructuring as if the Acquisition and the
Restructuring had taken place on 31 December 2013 and also providing for costs and expenses
incurred by the Group in connection with the Acquisition, Restructuring and Readmission. The
unaudited pro forma statement of net assets has been prepared for illustrative purposes only and,
because of its nature, addresses a hypothetical situation and therefore does not represent the Groups
actual nancial position or results.
Adjustments
Group
audited net
assets as at
31 December
2013
Acquisition
of Vendors
interests in
Sheltam and
the
Restructuring
Expenses
associated
with the
Acquisition
and
Readmission
Enlarged
Group
unaudited pro
forma net
assets as at
31 December
2013
US$000 US$000 US$000 US$000
Note 1 Note 2 Note 3 Note 4
Assets
Non-current assets
Investment in property 4,226 4,226
Intangible assets 6,257 6,257
Investment in associate
Loan due from associate
Property plant and equipment 54,321 54,321
Finance lease receivables 15,490 (15,490)
Trade and other receivables
Total non-current assets 19,716 45,088 64,804
Current assets
Finance lease receivables 2,670 (2,670)
Inventory 3,785 3,785
Loan due from associate 11,063 (11,063)
Trade and other receivables 570 3,457 4,027
Cash and cash equivalents 2,005 1,861 3,866
Total current assets 16,308 (4,630) 11,678
Total assets 36,024 40,458 76,482
147
Adjustments
Group
audited net
assets as at
31 December
2013
Acquisition
of Vendors
interests in
Sheltam and
the
Restructuring
Expenses
associated
with the
Acquisition
and
Readmission
Enlarged
Group
unaudited pro
forma net
assets as at
31 December
2013
US$000 US$000 US$000 US$000
Note 1 Note 2 Note 3 Notes 4
Equity
Capital and reserves attributable to
owners of the Parent:
Issued share capital 768 197 965
Share premium 5,803 5,803
Foreign currency translation reserve (1,654) 19,775 18,121
Capital redemption reserve 1,037 1,037
Revaluation reserve 6,840 6,840
Retained earnings 34,828 (10,306) (3,190) 21,332
34,979 22,309 (3,190) 54,098
Non-controlling interests
Total equity 34,979 22,309 (3,190) 54,098
Non-current liabilities
Long term liabilities 2,528 2,528
Bank loan payable
Total non-current liabilities 2,528 2,528
Current liabilities
Trade and other payables 327 15,621 3,190 19,138
327 15,621 3,190 19,138
Liabilities of disposal group classied as
held for sale 718 718
Total current liabilities 1,045 15,621 3,190 19,856
Total liabilities 1,045 18,149 3,190 22,384
Total equity and liabilities 36,024 40,458 76,482
Notes
1. The Group net assets as at 31 December 2013 have been extracted without adjustment from the nancial information presented in
the audited annual accounts as at 31 December 2013 incorporated into this document by reference. No account has been taken of
the results of the Group since this date.
2. The Group will acquire the remaining 50 per cent. interest in Sheltam from the Vendors in consideration for the issue of
19,741,160 PME Shares.
3. The aggregate expenses payable by the Company associated with the Acquisition, the Restructuring and Readmission are
estimated to be approximately US$3.2 million.
4. The Enlarged Groups unaudited pro forma net assets as at 31 December 2013 following Readmission.
148
PART VI
ADDITIONAL INFORMATION
1. Responsibility
1.1 The Existing Directors and the Proposed Directors, whose names, business addresses and
functions appear on page 5 of this document, accept responsibility for all the information
contained in this document and including collective and individual responsibility for compliance
with the AIM Rules. To the best of the knowledge and belief of the Existing Directors and the
Proposed Directors (who have taken all reasonable care to ensure that such is the case) the
information contained in this document is in accordance with the facts and does not omit
anything likely to affect the import of such information.
2. The Company and its subsidiaries
(a) The Company is registered and domiciled in the Isle of Man, having been incorporated with
limited liability in the Isle of Man under the Act with registered number 120060C on 19 June
2007. The Company has an unlimited life.
(b) The principal companies legislation under which the Company operates is the Act and the
regulations made thereunder.
(c) The Companys registered ofce and its principal place of business are in the Isle of Man and
are located at Millennium House, 46 Athol Street, Douglas, Isle of Man, IM1 1JB. Its telephone
number is +44 (0)1624 698000.
(d) Following the Acquisition, the Companys activity will be that of a holding company and the
main activity of the Enlarged Group will be as described in Part I under the heading
Intentions Regarding the Company.
(e) On 12 July 2007, the Companys PME Shares were admitted to trading on AIM.
3. Share capital
(a) At incorporation the authorised share capital of the Company was US$10 million divided into
500 million PME Shares of US$0.01 each and 5 million C shares of US$1 each of which two
PME Shares were issued as subscriber shares to the two subscribers to the Memorandum and
Articles of Association of the Company. Neither the Act nor the Articles impose pre-emption
rights on the issue of new shares. Accordingly, at incorporation, the Directors were generally
and unconditionally authorised to allot securities in the Company up to the authorised but
unissued share capital of the Company and such power was not limited in duration.
(b) As at 1 January 2011 (being the start of the period covered by the historical nancial
information included or incorporated by reference in this document) the issued share capital of
the Company was 143,744,752 PME Shares. Since 1 January 2011 the following changes to the
issued share capital of the Company have occurred:
*
On 31 October 2012 the Company bought back 41,283,992 PME Shares from its
shareholders pursuant to a tender offer. These shares have all been cancelled.
* On 11 December 2013 the Company bought back 25,706,863 PME Shares from its
shareholders pursuant to a tender. These shares have all been cancelled.
(c) Should Shareholders pass the Resolutions, it is expected that the Consideration Shares to be
issued under the Acquisition will be allotted (conditional upon Readmission) pursuant to a
resolution of the Board to be passed shortly before Readmission.
(d) The existing authorised, issued and fully paid up share capital of the Company as at the date of
this document is:
Authorised PME Shares
Issued and fully paid
up PME Shares
Number Amount Number Amount
500,000,000 US$10,000,000 76,753,897 US$767,538.97
(e) No C Shares have been allotted by the Company and the Resolutions include a resolution to
amend the Memorandum and Articles of Association of the Company so that the C Shares no
longer form part of the authorised share capital of the Company.
149
(f) The International Securities Identication Number (ISIN) for the PME Shares is
IM00B1WSL611.
(g) Following Readmission, the PME Shares may be held in either certicated or uncerticated
form.
(h) The Existing Shares and the Consideration Shares will be in registered form. Otherwise than
pursuant to the Acquisition, none of the issued or to be issued PME Shares have been sold or
are available in whole or in part to the public in conjunction with the application for such PME
Shares to be admitted to AIM.
(i) The Company does not have in issue any securities not representing share capital and there are
no outstanding convertible securities issued by the Company.
(j) The Existing PME Shares have been admitted to trading on AIM. They are not listed or dealt
in on any other recognised investment exchange. Trading in the Existing PME Shares was
suspended on 26 June 2014, as a result of PMEs announcement of its intention to carry out the
Acquisition and pursuant to the requirements of the AIM Rules. Application will be made for
the Enlarged Share Capital to be admitted to trading on AIM.
(k) Save as disclosed in this document:
(i) no share or loan capital of the Company has been issued or is proposed to be issued;
(ii) no person has any preferential subscription rights for any share capital of the Company;
(iii) no share or loan capital of the Company is under option or agreed conditionally or
unconditionally to be put under option; and
(iv) no commissions, discounts, brokerages, or other special terms have been granted by the
Company since its incorporation in connection with the issue or sale of any share or loan
capital of the Company.
(l) The holders of Existing PME Shares will be diluted by the issue of the Consideration Shares.
The effective dilution rate of the Acquisition is 25.7 per cent.
4. Subsidiary Undertakings
PME acts as the holding company of the Group. Following the Acquisition, the Companys main
activity will be that of a holding company and the main activity of the Enlarged Group will be as
described in Part I under the heading Intentions Regarding the Company. The following table sets
out the Companys subsidiaries before and after completion of the Acquisition:
Name
% share capital
owned by the
Company or its
wholly-owned
subsidiaries
Place of
Incorporation/
residence
Current Subsidiaries
PME TZ Property (Mauritius) Limited 100% Mauritius
PME Tanco (Mauritius) Limited 100% Mauritius
PME RSACO (Mauritius) Limited 100% Mauritius
PME Locomotives (Mauritius) Limited 100% Mauritius
PME Properties Limited 100% Tanzania
Entities which will become subsidiaries of the Company on completion of the Acquisition
Sheltam Holdings (Proprietary) Limited 100%
(1)
South Africa
Sheltam (Proprietary) Limited 100% South Africa
Sheltam Rail Logistics (Proprietary) Limited 74% South Africa
Sheltam Mozambique Limitada 100% Mozambique
Notes
(1) Indicates the Companys percentage holding following completion of the Acquisition.
5. Memorandum and Articles of association
Set out below is a summary of the Articles as at the date of this document. Pursuant to the
Proposals, the Shareholders will be asked to approve amendments to the Articles to delete the
150
provision for C Shares. If the Resolutions are passed, the Companys share capital will not include
any C Shares and the provisions relating to C Shares described at 5.2 below will no longer apply.
The Memorandum of Association of the Company does not restrict the way in which it may exercise
its rights, powers and privileges. The Companys share capital is US$10,000,000 divided into
500,000,000 ordinary shares of US$0.01 each and 5,000,000 C Shares of US$1.00 each.
Persons seeking a detailed explanation of any provisions of Isle of Man law or the differences
between it and the laws of England and Wales or any jurisdiction with which they may be more
familiar are recommended to seek legal advice.
5.1 Shares
(a) Issuance
Subject to the Articles, the unissued shares are at the disposal of the Board, who may
allot, grant options over or otherwise dispose of them to such persons and on such terms
and conditions as they determine, provided that no shares are to be issued at a discount.
(b) Commission and brokerage
The Company may also pay such brokerages and/or commissions as may be lawful.
(c) Non-recognition of trusts
Unless the Articles, the law or a competent court requires otherwise, the Company may
not recognise the holding of any shares on trust and will not be bound by or recognise
any interest in any share or fractional part of a share that is not an absolute right to the
entirety of the share.
(d) Variation of Rights
The special rights attached to any class of shares may be varied or abrogated with the
consent in writing of the holders of three quarters of the issued shares of the class or with
the authority of a resolution passed at a separate meeting of the holders of such shares.
The quorum for such meeting is two persons holding (or representing by proxy) one third
of the issued shares of the class. If such a meeting is adjourned, the quorum of the
adjourned meeting will be one person.
5.2 C Shares and Deferred Shares
The Articles provide for the Board to issue C Shares, convertible into new ordinary shares and
Deferred Shares at a specied ratio in certain specied circumstances. C Shares would entitle
their holders to participate in dividends and distributions, and Deferred Shares would entitle
their holders to a non-cumulative dividend at a xed rate and C Shares and Deferred Shares
would entitle their holders to specic rights in a distribution of capital. The Deferred Shares
would also be redeemable.
No C Shares have ever been issued by the Company.
5.3 Power to require disclosure
(a) Disclosure of substantial interests in shares
Members must notify the Company without delay if their percentage of directly or
indirectly held voting rights:
(i) reaches, exceeds or falls below 3 per cent., 4 per cent., 5 per cent., 6 per cent., 7 per
cent., 8 per cent., 9 per cent. or 10 per cent. and each 1 per cent. threshold thereafter
up to 100 per cent.; or
(ii) reaches, exceeds or falls below an applicable threshold in (i) as a result of events
changing the breakdown of voting rights and on the basis of information disclosed by
the Company in accordance with this paragraph.
A notication given to the Company in accordance with this paragraph 5.3(a) must include
the following information:
(i) the percentage of voting rights held, or the resulting situation in terms of voting
rights and the date on which the relevant threshold was reached or crossed;
(ii) if applicable, the chain of controlled undertakings through which voting rights are
effectively held;
151
(iii) so far as it is known, the identity of the shareholder (even if that shareholder holds
shares on behalf of another person) and of the person entitled to exercise the relevant
voting rights;
(iv) the price, amount and class of shares concerned;
(v) in the case of a holding of qualifying nancial instruments (as dened in DTR 5.2.3R
of the Disclosure and Transparency Rules of the FCA):
A. for qualifying nancial instruments with an exercise period, an indication of the
date or time period where shares will or can be acquired, if applicable;
B. the date of maturity or expiration of the qualifying nancial instruments;
C. the identity of the holder;
D. the name of the underlying company; and
E. the detailed nature of the qualifying nancial instruments, including full details
of the exposure to ordinary shares; and
(vi) any other information required by the Company.
On receipt of such a notication, the Company must promptly pass on the information it
contains to a Regulatory Information Service for distribution to the public.
The Company must, at the end of each calendar month during which an increase or
decrease has occurred, disclose to the public the total number of voting rights and capital
in respect of each class of share which it issues.
(b) Register of substantial interests
The Board must keep a register of substantial interests for the purposes of paragraph 5.3
and ensure that any information received by the Company pursuant to paragraph 5.3(a) is
entered into this register against the persons name, together with the date of inscription,
within three working days.
(c) Power to require disclosure
The Board may serve notice on any member requiring that member to disclose to the
Company the identity of any other person who has an interest in the shares held by the
member and the nature of such interest. Such a notice will require any information in
response to be given within such reasonable time (no less than ten days and no more than
thirty days from the date of despatch) as the Directors shall specify in the notice.
If any member fails to supply the required information within the prescribed period, the
Board has an absolute discretion, at any time following 14 days from the expiry of the
prescribed period, to serve a disenfranchisement notice on the member. In this notice, the
Board may take away the members right to vote (in general meetings or class meetings)
with respect to the shares concerned. Where these shares represent at least 0.25 per cent. of
the class of shares concerned, the disenfranchisement notice will also provide for dividends
on such shares to be retained by the Company (without interest) and for no transfer of the
shares (other than a transfer authorised under the Articles) to be registered until the
default is rectied.
5.4 Transfer
The Articles are consistent with CREST membership and allow for the holding and transfer of
shares in uncerticated form.
Any member may transfer certicated shares by instrument of transfer, in any form which the
Board approves, signed by or on behalf of the transferor. Uncerticated shares may be
transferred without a written instrument in accordance with the CREST Regulations.
The Board may refuse to register any transfer of shares unless the instrument of transfer is
lodged at the registered ofce accompanied (except where a certicate was not required to be
issued) by the relevant share certicate(s) and such other evidence as the Board may reasonably
require to show the right of the transferor to make the transfer.
152
(a) Registration of a certicated share transfer
The Board may in its absolute discretion and without giving any reason refuse to register a
transfer of a certicated share unless:
(i) the relevant share is fully paid up;
(ii) the Company has no lien on the relevant share;
(iii) the transfer only concerns one class of shares;
(iv) the transfer is to a single transferee or no more than four joint transferees; and
(v) the transfer is delivered for registration to the registered ofce of the Company or
such other place as the Board may determine, accompanied (except where a certicate
was not required to be issued) by the certicate for the shares being transferred and
such other evidence as the Board may reasonably require to prove the title of the
transferor and the due execution by him of the transfer or, if the transfer is executed
by some other person on his behalf, the authority of that person to do so. The
Board may not exercise this discretion in such a way as to prevent dealings from
taking place on an open and proper basis.
The Board may suspend the registration of transfers for such a period as they determine,
up to a maximum of 30 days in any year.
(b) Registration of an uncerticated share transfer
The Board must register a transfer of title to any uncerticated share in accordance with
the CREST Regulations. However, subject to any relevant requirements applicable to AIM
or any other investment exchange to which the shares of the Company are admitted, the
Board may refuse to register any such transfer which is in favour of more than four
persons jointly or in any other circumstance permitted by the CREST Regulations.
5.5 Alteration of capital
Subject to the provisions of the Act, the Company may purchase its own shares (including any
redeemable shares) in any manner authorised by the Act.
The Company may by ordinary resolution increase its share capital, consolidate and/or divide
any of its share capital into shares of larger or smaller amounts than its existing shares;
subdivide any of its shares into shares of a smaller amount than is xed by the Companys
memorandum of association; convert any of its share capital into different classes of shares than
its existing shares; cancel any shares which at the date of the resolution have not been taken or
agreed to be taken and diminish its authorised share capital accordingly; and convert any fully
paid up shares into stock and reconvert that stock into paid up shares of any denomination.
The Company may by special resolution reduce its share capital, any capital redemption reserve,
any share premium account or any undistributable reserve in any manner permitted by and with
and subject to any rights attached to the shares and any consent required by the Act.
5.6 Directors
(a) Powers and duties of the Board
The management and control of the business of the Company is to be from the Isle of
Man or such other place outside the United Kingdom as the Board may determine.
Subject to the Act, the Companys Memorandum of Association and the Articles and to
any directions given by special resolution of the Company, the business of the Company is
to be managed by the Board, which may exercise all the powers of the Company whether
relating to the management of the business or not.
(b) Voting at Board meetings
Save as mentioned below, a director of the Company may not vote or be counted in the
quorum on any resolution of the Board (or a committee of the Board) in respect of any
matter in which, directly or indirectly, he has, together with any person connected with
him, a material interest (other than by virtue of his interest, directly or indirectly, in shares
or debentures or other securities of or otherwise through the Company) or a duty which
conicts with the interests of the Company.
153
Subject to the Act, a director of the Company is entitled to vote (and be counted in the
quorum) in respect of any resolution concerning any of the following matters:
(i) the giving of any guarantee, security or indemnity in respect of money lent or
obligations incurred by him or any other person for the benet of the Company or
any of its subsidiaries;
(ii) the giving of any guarantee, security or indemnity in respect of a debt or obligation
of the Company or any of its subsidiaries for which the relevant director himself has
assumed responsibility, in whole or in part and whether alone or jointly with others,
under guarantee or indemnity or by the giving of security;
(iii) a contract, arrangement, transaction or proposal concerning the offer of shares,
debentures or other securities of the Company or its subsidiaries where he is or may
be entitled to participate in the offer or in its underwriting or sub-underwriting;
(iv) a contract, arrangement, transaction or proposal concerning any other company in
which he is interested, directly or indirectly, as an ofcer, creditor, shareholder or
otherwise, provided that he, together with persons connected with him, is not to his
knowledge the holder of or benecially interested in 1 per cent. or more of any class
of the equity share capital of any such company (or of any third company through
which his interest is derived) or of the voting rights of such company;
(v) a contract, arrangement, transaction or proposal for the benet of employees of the
Company or any of its subsidiaries which accords to the relevant director only such
privileges and advantages as are generally accorded to the employees to whom the
arrangement relates; or
(vi) a contract, arrangement, transaction or proposal for the purchase or maintenance of
insurance for the benet of the relevant director or persons including the relevant
director.
Subject to the Act, any director of the Company may act by himself or by his rm in a
professional capacity for the Company, other than as auditor. Such a director or his rm
shall be entitled to remuneration for professional services as if he were not a director on
such terms as the remuneration committee may arrange. Subject to the Act, any director
may be a director, managing director, manager or other ofcer or member of a company
promoted by or promoting the Company or in which the Company is otherwise interested,
and any such director will not be accountable to the Company for any remuneration or
other benets received by him.
(c) Notication of interest
A director of the Company who, to his knowledge, is directly or indirectly interested in
any contract, arrangement, transaction or proposal with the Company must declare the
nature of his interest at the meeting of the Board when the question of entering into the
contract, arrangement, transaction or proposal is rst considered if he knows his interest
then exists or, in any other case, at the rst meeting of the Board after he becomes aware
of his interest.
(d) Remuneration of directors
The directors of the Company are entitled to fees for their services, to be determined by
the Board, provided that the aggregate amount of such fees shall not exceed 300,000 per
annum (or such greater sum as may be determined by ordinary resolution of the
Company). The directors are also entitled to be paid all reasonable out of pocket expenses
properly incurred by them in attending general meetings, board or committee meetings or
otherwise in connection with the performance of their duties.
A director may hold any other ofce or place of prot under the Company (other than the
ofce of auditor) in conjunction with his ofce of director on such terms as to tenure of
ofce and otherwise as the Board may determine.
The Board may from time to time appoint one or more of their body to hold any
executive ofce including the ofce of managing director on such terms and for such
periods as they may determine.
154
(e) Retirement of directors
A director of the Company who was elected or last re-elected at or before the annual
general meeting held three years prior will retire by rotation at the next annual general
meeting.
The Company may, by ordinary resolution, remove any director before the expiration of
his period of ofce and appoint another willing person to be a director in his place.
5.7 Dividends
The Company may by ordinary resolution (in accordance with the Act) declare that dividends
be paid to members out of prots available for distribution according to the respective rights
and interests of such members. No dividend shall exceed the amount recommended by the
Board. The Board may, if it thinks t, pay the members such interim dividends as appear to be
justied by the prots of the Company in accordance with the Act. No dividend or other
amount payable to any shareholder shall bear interest against the Company.
All dividends and other amounts payable to shareholders left unclaimed for 12 months after
becoming repayable may be invested or otherwise used for the benet of the Company until
claimed and the Company shall not become a trustee in respect of such amounts. All dividends
unclaimed for a period of 5 years after having been declared or becoming due for payment will
be forfeited and revert to the Company.
If cheques, warrants or orders for dividends or other sums payable in respect of a share sent by
the Company to the relevant shareholder by post are returned to the Company undelivered or
left uncashed on two consecutive occasions, the Company is not obliged to send any further
dividends or other moneys payable in respect of that share to that person until he noties the
Company of an address to be used for that purpose.
Subject to prior authority being granted by ordinary resolution of the Company and to such
conditions as the Board may determine, and provided that the Company has sufcient unissued
shares and undistributed prots or reserves to give effect to it, the Board may offer to any
holder of shares the right to receive shares of the same class credited as fully paid, in whole or
in part, instead of cash in respect of the whole or some part (to be determined by the Board) of
any dividend specied by the ordinary resolution.
On the recommendation of the Board, the Company may direct by ordinary resolution that
payment of any dividend declared may be satised wholly or partly by the distribution of assets,
and in particular, of fully paid up shares or debentures of any other company or in any one or
more of such ways.
The Board is also empowered to create reserves before recommending or declaring any dividend.
All such reserves may be applied, at the discretion of the Board, for any other purpose to which
the prots of the Company may be applied and pending such application may either be
employed in the business of the Company or be invested in such investments as the Board
thinks t. In such a case, there is no need to keep any investment from the reserve separate or
distinct from any other investment of the Company. The Board may divide the reserve into such
special funds as it thinks t and may consolidate into one fund any such special fund (or any
part thereof) as it thinks t. The Board must not mix sums it carries to reserve out of the
unrealised prot of the Company with any reserve to which prots available for distribution
have been carried. The Directors may also, without placing the same to reserve, carry forward
any prots as they think prudent not to distribute.
The members shall be entitled to receive and participate in any dividends or other distributions
out of the prots of the Company arising from the assets of the Company attributable to the
ordinary shares and resolved to be distributed in respect of any accounting period or any other
income or rights to participate therein in accordance with the Articles.
5.8 Distribution of assets on a winding up
The Board has the power, on behalf of the Company, to present a petition to the court for the
Company to be wound up.
If the Company is wound up, the surplus assets remaining after payment of all creditors are to
be divided among the members in proportion to the capital paid on their respective shares at
the commencement of the winding up. If such surplus assets are insufcient to repay the whole
155
of the paid up capital, they are to be distributed so that, as much as possible, the losses are
borne by the members in proportion to the capital paid up on their respective shares at the
commencement of the winding up. If the Company is wound up, the liquidator may, with the
authority of a special resolution and subject to the Act, divide amongst the members in specie
the whole or any part of the assets of the Company (whether or not the assets consist of
property of one or different kinds), and may for such purposes set what value he deems fair
and determine how such division should be carried out as between the members or different
classes of members. The liquidator may, with the same authority, vest the whole or any part of
the assets in trustees on such trusts for the benet of the members as he determines but no
member shall be compelled to accept any assets on which there is a liability.
A special resolution authorising a transfer or sale to another company and duly passed pursuant
to section 222 of the Isle of Man Companies Act 1931 may authorise the distribution of any
shares or other consideration receivable by the liquidator among the members otherwise than in
accordance with their existing rights. Any such determination shall be binding on all the
members, subject to the right of dissent and consequential rights conferred by section 222.
5.9 Borrowing
Subject to the Act, the Board may exercise all powers of the Company to borrow money, to
guarantee, to indemnify and to mortgage or charge its undertaking, property, assets (present and
future) and uncalled capital and to issue debentures and other securities, whether outright or as
collateral security for any debt, liability or obligation of the Company or any third party.
5.10 Meetings of shareholders
(a) Quorum
No business should be transacted at any general meeting unless a quorum is present when
the meeting proceeds to business. The absence of a quorum does not preclude the choice
or appointment of a chairman, which will not be treated as part of the business of the
meeting.
The quorum for a general meeting is two persons entitled to attend and to vote on the
business to be transacted, each being a member present in person, a proxy for a member
or a duly authorised representative of a corporation which is a member. If a quorum is
not present within 15 minutes (or such longer interval, not exceeding one hour, as the
chairman in his absolute discretion thinks t) from the time appointed for the meeting, or
ceases to be present during the meeting, the meeting, if convened on the requisition of
members, will be dissolved. In any other case, the meeting must be adjourned to a week
later, at the same time and place, or to such other day, time and place as the chairman
(or, in default, the Board) may determine. If at such an adjourned meeting a quorum is
not present within 15 minutes from the time appointed for the meeting, one member
present in person or by proxy or (for a corporation) by a duly authorised representative
will constitute a quorum. If no such quorum is present or, if during the adjourned meeting
a quorum ceases to be present, the adjourned meeting will be dissolved.
(b) Voting
Members have the right to receive notice of, and to vote at, general meetings of the
Company. Each member who is present in person at a general meeting has one vote on a
show of hands. On a poll, every member who is present in person or by proxy has one
vote in respect of each share held.
At any general meeting a resolution put to a vote of the meeting will be decided on a
show of hands unless (before or immediately after the declaration of the result of the show
of hands or on the withdrawal of any other demand for a poll) a poll is duly demanded in
accordance with the Articles.
(c) Proxies
Any person (whether a member of the Company or not) may be appointed to act as a
proxy. The deposit of an instrument of proxy does not preclude a member from attending
and voting in person at the meeting for which the proxy is appointed or at any
156
adjournment of it. At the expense of the Company, the Board must send forms of
appointment of proxy, together with the notice convening any general meeting, to members
entitled to vote at the meeting.
(d) Frequency of meetings
Subject to the Act, annual general meetings are to be held at such time and place as the
Board may determine. All general meetings other than annual general meetings are to be
called extraordinary general meetings.
The Board may convene an extraordinary general meeting whenever it thinks t. At any
such meeting (or any meeting requisitioned pursuant to section 113 of the Isle of Man
Companies Act 1931) no business must be transacted except that stated by the requisition
or proposed by the Board. If there are not within the Isle of Man sufcient members of
the Board to convene a general meeting, any Director or any member of the Company
may call a general meeting.
(e) Notice of meetings
An annual general meeting and an extraordinary general meeting convened for the passing
of a special resolution, a resolution appointing a person to the Board or (save as provided
by the Act) a resolution of which special notice has been given to the Company must be
convened by no less than 21 clear days notice in writing. Other extraordinary general
meetings must be convened by no less than 14 clear days notice in writing. The accidental
omission to send a notice of meeting or an instrument of proxy (in cases where it is
intended that it be sent out with the notice) or the non-receipt of either by any person
entitled to receive it will not invalidate the proceedings at that meeting
The above is a summary only of certain provisions of the Articles, the full provisions of
which are available for inspection as set out in paragraph 18(a) of this Part VI.
6. Interests of Directors and others
(a) The interests, all of which are benecial unless stated otherwise, of the Existing Directors and
the Proposed Directors and their families (within the meaning of the AIM Rules) in the share
capital of the Company as at the date of this document and after Readmission are as follows:
At present After Readmission
Director
Number of
PME
Shares
Percentage
of Existing
PME
Shares
Number of
PME
Shares
Percentage
of Enlarged
Share
Capital
Paul Macdonald 0 0.00% 0 0.00%
Roy Puffett 0 0.00% 14,025,493
(1)
14.53%
Trevor Karg 0 0.00% 0 0.00%
Steyn Delport 0 0.00% 0 0.00%
Wes Kruger 0 0.00% 0 0.00%
Larry Kearns 74,000 0.1% 74,000 0.08%
James Peggie 0 0.00% 0 0.00%
Notes
1. Including 7,012,747 PME Shares held by the Sheltam Rail Trust, of which Mr. Puffett is a trustee
157
(b) Irrevocable undertakings to vote in favour of all the Resolutions to be proposed at the EGM
have been given by the following Shareholders in respect of the following numbers of PME
Shares (the only circumstances in which these undertakings will cease to be binding is if the
EGM has not been held by 31 August 2014):
Shareholder
Number of
PME
Shares
Percentage
of Existing
PME
Shares
PUG Investments Limited 8,309,826 10.83%
Larry Kearns 74,000 0.1%
Total 8,383,826 10.92%
(c) No loan or guarantee has been granted or provided by the Company to any Existing Director
or Proposed Director or any person connected with them.
(d) Save as disclosed above, none of the Existing Directors or the Proposed Directors nor any
member of their respective families (within the meaning of the AIM Rules) has any interest,
whether benecial or non-benecial, in any share capital of the Company.
(e) Save for the following holdings and those disclosed in paragraph 6(a) above, the Company is
not aware of any persons who, directly or indirectly, at the date of this document and on
Readmission, have an interest of 3 per cent. or more in the ordinary issued share capital of the
Company:
At present After Readmission
Shareholder
Number of
PME
Shares
Percentage
of issued
share
capital
Number of
PME
Shares
Percentage
of Enlarged
Share
Capital
Qatar Investment Authority 30,886,653 40.24% 30,886,653 32.01%
PUG Investments Limited 8,309,826 10.83% 14,025,493 14.53%
(f) None of the major shareholders of the Company set out above has different voting rights from
any other holder of PME Shares in respect of any PME Shares held by them.
(g) Neither the Company, nor the Directors are aware of any arrangements which may at a
subsequent date result in a change of control of the Company.
158
(h) Save as set out below, no directorship of any company, other than the members of the Enlarged
Group, has been held or occupied over the previous ve years by any of the Existing Directors
or Proposed Directors nor over that period has any of the Existing Directors or Proposed
Directors been a partner in a partnership:
Current Previous
Paul Macdonald Aragon 12 VV GmbH
Aragon 13 VV GmbH
Aragon 14 VV GmbH
Aragon 15 VV GmbH
Aragon 16 VV GmbH
Beragon VV GmbH
Ceragon VV GmbH
Deragon VV GmbH
Eragon VV GmbH
Faragon VV GmbH
Geragon VV GmbH
Heragon VV GmbH
Helvetica Deutschland GmbH
Helvetica Construction GmbH
Iragon VV GmbH
Jaragon VV GmbH
Karogan VV GmbH
Laragon VV GmbH
Maragon VV GmbH
Naragon VV GmbH
Oragon VV GmbH
Paragon VV GmbH
Prospect Epicure J-REIT Value PLC
Amber Erste VV GmbH
Amber Zweite VV GmbH
Amber Dritte GmbH
Amber Vierte VV GmbH
Amber Neunte VV GmbH
Helvetica Services GmbH
Epicure Qatar Opportunities Holdings
Limited
Qatar Investment Fund plc
Amber Funfte VV GmbH
Amber Sechste VV GmbH
Amber Sechste VV GmbH
Amber Siebente VV GmbH
Amber Achte VV GmbH
Amber Zehnte VV GmbH
Amber Elfte VV GmbH
Amber Zwolfte VV GmbH
Amber Dreizehnte VV Gmbh
Amber Vierzehnte VV GmbH
Amber Funfzehnte VV GmbH
TMP Uganda Limited
(1)
Dovetel (T) Limited
(2)
Roy Puffett Comazar (Pty) Limited
The Port Elizabeth Apple Express Inc.
(3)
Railroad Association of South Africa
RPG Leasing (Pty) Limited
Cheemun Corporation
Rift Valley Ferry Services Uganda Ltd
Rift Valley Railways Holdings Ltd
Rift Valley Railways (Kenya) Limited
Rift Valley Railways (Uganda) Limited
RVR Investments (Pty) Ltd
Sheltam Rail Company (Pty) Ltd
Trevor Karg Comazar (Pty) Limited
Steyn Delport Ethical Generics Pty Limited
Symphony Capital Pty Limited
Thabilo Financial Consulting Services CC
Kupela Holdings CC
Wes Kruger Comazar (Pty) Ltd
The Port Elizabeth Apple Express Inc.
(3)
Trumpets and Torches Leadership
(trading as The Developing Leaders
Foundation)
Harvest Christian School
RPG Leasing (Pty) Limited
Rift Valley Ferry Services Uganda Ltd
Rift Valley Railways Holdings Ltd
Rift Valley Railways (Kenya) Limited
Rift Valley Railways (Uganda) Limited
RVR Investments (Pty) Ltd
159
Current Previous
Larry Kearns Restart Limited
Skanco Consultancy Limited
Gibbs Amphibian Holdings Limited
Chelseld Limited
Gibbs Properties Limited
Plexor Group Limited
Bifrost Limited
Loki Limited
Demanda Limited
Demanda (Two) Limited
Demanda (Three) Limited
Coelacanth Limited
Snaker Properties Limited
Novabridge Limited
Greenpoint Investments Limited
Corina Limited
Equiom Group Limited
Equiom Holdings Limited
Fordex Limited
Agrimark Limited
Cambridge Place (IOM) & Aston Partners
LTD.
Ccucas PLC
Loxwood Limited
Speymill Macau PLC
Anglo Irish Bank (IOM) Limited
Galileo Fund Services Limited
James Peggie Principle Capital Advisors Limited
Earthchild Clothing (Pty) Limited
Proteus Property Advisors (Pty) Limited
Principle Capital Advisors (South
Africa)(Pty) Limited
Pointer Investments Limited
JJP Limited
PGW Productions Limited
Sirius Real Estate Limited
Liberty plc
Principle Capital African Private Equity
Advisors (Pty) Limited
Principle Oil (Pty) Limited
Varla Group Limited
SAPSPV Clayville Property Investments
(Pty) Limited
SAPSPV Holdings RSA (Pty) Limited
Crimson King Properties 378 (Pty)
Limited
Madison Park Properties 36 (Pty) Limited
SAPSPV Imbonini Property Investments
(Pty) Limited
Royal Albatross Properties 313 (Pty)
Limited
Imbonini Park (Pty) Limited
8 Mile Investments 504 (Pty) Limited
Wonderwall Investments 18 (Pty) Limited
Longland Investments (Pty) Limited
Breeze Court Investments 31 (Pty)
Limited
Breeze Court Investments 35 (Pty)
Limited
Dream World Investments 551 (Pty)
Limited
Business Venture Investments No 1239
(Pty) Limited
(Pty) Limited
160
Current Previous
(Pty) Limited
(Pty) Limited
(Pty) Limited
(Pty) Limited
(Pty) Limited
(Pty) Limited
(Pty) Limited
(Pty) Limited
(Pty) Limited
Living 4 U Developments (Pty) Limited
Cranes Crest Investments 28 (Pty)
Limited
Tangmere Investment Corporation (Pty)
Limited
Business Venture Investments No. 1205
(Pty) Limited
Blue Waves Properties 2 (Pty) Limited
(Pty) Limited
(Pty) Limited
Notes:
(1) The Board placed TMP Uganda into a voluntary liquidation in December 2011.
(2) Dovetel owes PME approximately US$356,000 in respect of outstanding shareholder loans made by PME and Dovetel is also in
arrears on its rental payments in respect its tenancy of part of Peninsula House. Further details of the winding up order lodged by the
Company and an administration order in respect of Dovetel are detailed at paragraph 14 of Part VI of this document.
(3) It is intended that a liquidator will be appointed in respect of The Port Elizabeth Apple Express Inc. in the near future. A preliminary
estimate of credtiors deciencies is currently estimated to be in the order of approximately ZAR 500,000 to ZAR 1,000,000. This
estimation is both preliminary and subject to conrmation on appointment of a liquidator.
(j) Save as disclosed above, none of the Existing Directors or Proposed Directors:
(i) has any unspent convictions in relation to any indictable offences or has been made
bankrupt or has been made the subject of an individual voluntary arrangement; or
(ii) has been a director of any company at the time of or within the twelve months preceding
any receivership, compulsory liquidation, creditors voluntary liquidation, administration or
voluntary arrangement of the company or any composition or arrangement with its
creditors generally or any class of creditors; or
(iii) has been a partner of any partnership at the time of or within twelve months preceding
any compulsory liquidation, administration or partnership voluntary arrangement of the
partnership; or
(iv) has had any asset which has been subject to a receivership or has been a partner of any
partnership at the time of or within the twelve months preceding any assets of the
partnership being subject to a receivership; or
(v) has been publicly criticised by any statutory or regulatory authority (including any
recognised professional body) or has been disqualied by a court from acting as a director
of, or in the management or conduct of, the affairs of any company.
161
(k) No Existing Director or Proposed Director nor any family member of an Existing Director or
Proposed Director nor any persons connected with such persons within the meaning of the AIM
Rules has any nancial product (including a xed odds bet) whose value is determined directly
or indirectly by reference to the price of the PME Shares.
7. Existing Directors and Proposed Directors Service Contracts and Letters of Appointment
(a) The Existing Directors and the Proposed Directors have each entered into new service contracts
(in the case of executive directors) or letters of appointment (in the case of non-executive
directors) with the Company which are conditional on and take effect from Readmission. In the
case of the Existing Directors these letters of appointment also terminate their existing letters of
appointment. If Readmission does not occur, the Existing Directors will remain subject to their
existing letters of appointment.
The service contracts between the Company and the new executive Directors relate to services to
be provided to the Group other than the members of the Sheltam Group. The executive
directors have also entered into service contracts with Sheltam which relate to services to be
provided to the Sheltam Group and which also take effect from Readmission.
The terms of the new service contracts and letters of appointment for each of the Existing
Directors and the Proposed Directors (together with, in the case of the Existing Directors, their
existing letters of appointment in place as at the date of this document) is set out below.
Executive Directors
Service contract with PME
Roy Puffett will enter into a service contract with PME which will become effective on
Readmission, on which date Roy Puffetts continuous employment with the Company will
commence. Roy Puffetts appointment is terminable on six months notice by either party.
Roy Puffetts salary is 30,000 per annum. The agreement does not provide for any other
benets.
Service contract with Sheltam
Roy Puffett will enter into a service contract with Sheltam which will become effective on
Readmission. Roy Puffetts period of continuous employment under the contract is deemed to
have commenced on 1 November 1987. Roy Puffetts appointment is terminable on six months
notice by either party. Roy Puffetts appointment will also terminate at the end of the month in
which he turns 65 years of age, unless he and Sheltam agree otherwise.
Roy Puffetts salary is ZAR 2,229,800 per annum. The agreement also entitles Roy Puffett to be
a member of a pension scheme, to which the Sheltam Group will contribute on his behalf, and
of the Sheltam Groups medical aid scheme.
Trevor Karg (Chief Operating Ofcer)
Trevor Karg will enter into a service contract with PME which will become effective on
Readmission, on which date his continuous employment with the Company will commence.
Trevor Kargs appointment is terminable on six months notice by either party.
Trevor Kargs salary is 30,000 per annum. Under the contract, Trevor Karg is also entitled to
participate in the Executive Share Option Plan (details of which can be found below at
paragraph 15 of this Part VI) and any bonus scheme of the Company, the applicability of which
in each case is subject to the Boards discretion.
Trevor Karg will enter into a service contract with Sheltam which will become effective on
Readmission. Trevor Kargs period of continuous employment under the contract is deemed to
have commenced on 1 May 2000. Trevor Kargs appointment is terminable on six months
notice by either party. Trevor Kargs appointment will also terminate at the end of the month
in which he turns 65 years of age, unless he and Sheltam agree otherwise.
162
Trevor Kargs salary is ZAR 831,000 per annum. The agreement also entitles Trevor Karg to be
Trevor Karg has an existing contract of employment with the Sheltam Group which will
terminate upon Readmission. Trevor Karg has agreed to receive a cash amount in lieu of
accrued leave under the existing agreement.
Steyn Delport will enter into a service contract with PME which will become effective on
Readmission, on which date his continuous employment with the Company will commence.
Steyn Delports appointment is terminable on six months notice by either party.
Steyn Delports salary is 30,000 per annum. Under the contract, Steyn Delport is also entitled
to participate in the Executive Share Option Plan (details of which can be found below at
paragraph 15 of this Part VII) and any bonus scheme of the Company, the applicability of
which in each case is subject to the Boards discretion.
Consultancy agreement with Sheltam
From Readmission, Steyn Delport will provide services to Sheltam as a director under a
consultancy agreement between Thabilo Financial Consulting Services CC and Sheltam. The
consultancy agreement is for an initial term of twelve calendar months from Readmission, after
which it will continue on a rolling basis until terminated by either party on three months
written notice. Sheltam may also terminate the agreement without notice in specied
circumstances.
An annual fee of ZAR 1,052,720 is payable to Thabilo Financial Consulting Services CC under
the consultancy agreement.
Wes Kruger (Commercial Director)
Wes Kruger will enter into a service contract with PME which will become effective on
Readmission, on which date his continuous employment with the Company will commence. Wes
Krugers appointment is terminable on six months notice by either party, or in the event that
Readmission does not occur by 31 August 2014.
Wes Krugers salary is 30,000 per annum. Under the contract, Wes Kruger is also entitled to
participate in the Executive Share Option Plan (details of which can be found below at
paragraph 15 of this Part VI) and any bonus scheme of the Company, the applicability of which
in each case is subject to the Boards discretion.
Wes Kruger will enter into a service contract with Sheltam which will become effective on
Readmission. Wes Krugers period of continuous employment under the contract is deemed to
have commenced on 19 August 1999. Wes Krugers appointment is terminable on six months
notice by either party, or in the event that Readmission does not occur by 31 August 2014. Wes
Krugers appointment will also terminate at the end of the month in which he turns 65 years of
age, unless he and Sheltam agree otherwise.
Wes Krugers salary is ZAR 775,293 per annum. The agreement also entitles Wes Kruger to be
Wes Kruger has an existing contract of employment with the Sheltam Group which will
terminate upon Readmission and Wes Kruger has agreed to receive a cash payment (in multiple
installments) in lieu of leave accrued under the existing agreement.
Non-Executive Directors
Paul Macdonald
Existing letter of appointment
Paul Macdonald entered into a letter of appointment as an executive director of the Company
on 5 February 2013, effective as of 6 July 2012. The appointment is subject to retirement by
rotation in accordance with PMEs Articles of Association and earlier termination with
163
immediate effect in specied circumstances. The annual fee payable to Paul Macdonald under
the letter of appointment is 75,000 and Paul Macdonald is not entitled to any other benets.
The appointment will continue until Readmission, on which date a new letter of appointment
(described below) will come into effect, terminating the existing letter of appointment.
New letter of appointment
Paul Macdonald has entered into a letter of appointment with PME which will become effective
on and from Readmission, terminating his existing letter of appointment. The appointment will
be subject to retirement by rotation in accordance with PMEs Articles of Association and
earlier termination with immediate effect in specied circumstances. The annual fee payable to
Paul Macdonald under the new letter of appointment will be 45,000 per annum.
Larry Kearns
Existing letter of appointment
Larry Kearns entered into a letter of appointment as an executive director of the Company on
5 February 2013, effective as of 6 July 2012. The appointment is subject to retirement by
rotation in accordance with PMEs Articles of Association and earlier termination with
immediate effect in specied circumstances. The annual fee payable to Larry Kearns under the
letter of appointment is 75,000 and Larry Kearns is not entitled to any other benets. The
appointment will continue until Readmission, on which date a new letter of appointment
(described below) will come into effect, terminating the existing letter of appointment.
Larry Kearns has entered into a letter of appointment with PME which will become effective on
and from Readmission, terminating his existing letter of appointment. The appointment will be
subject to retirement by rotation in accordance with PMEs Articles of Association and earlier
termination with immediate effect in specied circumstances. The annual fee payable to Larry
Kearns under the new letter of appointment will be 35,000 per annum.
James Peggie
James Peggie has entered into a letter of appointment with PME which will become effective on
and from Readmission, terminating his existing letter of appointment. The appointment will be
subject to retirement by rotation in accordance with PMEs Articles of Association and earlier
termination with immediate effect in specied circumstances. The annual fee payable to James
Peggie under the letter of appointment will be 30,000 per annum.
Save as set out above, and in paragraph 13 of this Part VI, no contracts with any of the
Existing Directors or Proposed Directors have been entered into or amended within six months
of the date of this document.
(b) The aggregate emoluments (including benets in kind and pension contributions) of the Existing
Directors in respect of the current nancial period ending on 31 December 2014 is estimated to
amount to 157,000 and, from Readmission, the aggregate emoluments (including benets in
kind and pension contributions) of the Proposed Directors in respect of the current nancial
period ending on 31 December 2014, assuming Readmission, is estimated to amount to 138,000
under the arrangements in force at the date hereof.
(c) Save as disclosed in this document, none of the Existing Directors nor the Proposed Directors
has or has had any interest in transactions effected by the Company since its incorporation
which are or were unusual in their nature or conditions or which are or were signicant to the
business of the Company.
(d) Save as disclosed above there are no service contracts between any director and the Company
providing for benets upon termination.
164
8. Employees
(a) Other than the Existing Directors, the Company currently has no employees.
(b) At 10 July 2014, the Sheltam Group had 400 employees. The number of employees of the
Sheltam Group at the end of the last three nancial years, the last of which ended on
31 December 2013, was as follows:
Dec 11 Dec 12 Dec 13
Total 450 500 441
9. New Shareholder Group
(a) The New Shareholder Group is acting in concert within the meaning of the City Code. Roy
Puffett and the Sheltam Rail Trust are currently shareholders of Sheltam and PUG is currently
a shareholder in PME. On completion of the Acquisition all members of the New Shareholder
Group will be shareholders in PME.
10. Material contracts
The following contracts, not being contracts entered into in the ordinary course of business, have
been entered into by the Company or members of the Group and members of the Sheltam Group in
the two years preceding the date of this document and are, or may be, material:
10.1 Sheltam Share Purchase Agreement
On 17 July 2014, the Company entered into an agreement with PME RSACO and the Vendors
pursuant to which PME RSACO has agreed to acquire the Sheltam Shares and the Sheltam
Shareholder Loans from the Vendors (the SPA). The consideration under the SPA is the issue
by the Company and allotment to the Vendors of the Consideration Shares.
Completion of the SPA is conditional upon the satisfaction or waiver of various conditions
including:
(i) the receipt of merger approval and all other necessary consents and approvals in relation
to the Acquisition, including the approval of the Acquisition by the Existing Shareholders;
(ii) the receipt of consent in relation to the Acquisition from First Rand Bank Limited (acting
through its First National Bank Division) in connection with the facility provided by it to
Sheltam Pty; and
(iii) each condition to the PME Shares being readmitted to trading on AIM being satised.
Each of the Vendors and PME and PME RSACO have provided warranties in relation to their
capacity and authority to enter into the SPA and, in the case of the Vendors, in relation to title
in the Sheltam Shares that are to be transferred under the SPA. Each of the warranties is to be
repeated immediately prior to completion.
The SPA also provides for the termination of the shareholders agreement to which the Vendors
and PME RSACO are party in relation to Sheltam.
In consideration for the allotment and issue by the Company to the Vendors of the
Consideration Shares under the SPA, PME RSACO has agreed to issue a loan note in favour
of the Company in an amount equal to the aggregate effective issue price of the Consideration
Shares.
10.2 Stabilisation and Relationship Agreement
On 17 July 2014, the Vendors, PUG, the Company and Smith & Williamson entered into a
Stabilisation and Relationship Agreement pursuant to which the Vendors and PUG have agreed
that, subject to completion of the Acquisition, each of them and their respective associates and
concert parties will not:
(i) dispose of PME Shares to any third party; or
(ii) acquire PME Shares from any third party which would result in any of them (together
with their respective concert parties) holding interest in 30 per cent. or more of the voting
rights in PME (provided that, if a whitewash is granted under rule 9 of the City Code and
the New Shareholder Group holds more than 30 per cent. of the voting rights in PME as
165
a result of other Shareholders disposing of PME Shares in connection with any tender
offer or buyback conducted by PME, such event will not breach the terms of the
Stabilisation and Relationship Agreement),
during a period of twelve months from completion of the Acquisition (the Stabilisation
Obligations).
The Stabilisation and Relationship Agreement contains certain exceptions to the Stabilisation
Obligations including:
(i) disposals pursuant to any tender offer or buyback conducted by PME;
(ii) disposals between members of the New Shareholder Group;
(iii) disposals to a person having made a general offer to acquire the entire issued share capital
of PME; or
(iv) disposals made following a compromise or arrangement between PME and its creditors.
In addition, the Vendors and PUG have given certain undertakings to the Company relating to
the exercise of their rights as Shareholders and the exercise of rights of any Directors appointed
by them, so as to ensure that the Company is capable of carrying on its business independently
of the members of the New Shareholder Group and that transactions and other arrangements
between members of the New Shareholder Group and the Company are at arms length and on
normal commercial terms.
10.3 Introduction Agreement
The Company, the Directors, Smith & Williamson and Oriel Securities entered into an
agreement on 17 July 2014 pursuant to which the Company has appointed Smith & Williamson
to act as nominated adviser and Oriel Securities to act as broker in connection with the
Readmission (the Introduction Agreement).
Under the Introduction Agreement and the engagement letters with Smith & Williamson and
Oriel Securities respectively, the Company has agreed to pay certain fees to Smith & Williamson
and Oriel Securities, in connection with the Proposals.
The Introduction Agreement contains customary warranties from the Company in favour of
Smith & Williamson and Oriel Securities in relation to PME, its business, this document and
certain related matters, and more limited warranties from the Directors. The liability of the
Directors in respect of the warranties given by them and otherwise under the Introduction
Agreement is limited. PME has also agreed to indemnify Smith & Williamson and Oriel
Securities and their respective associated companies, ofcers and employees in respect of losses
incurred in connection with the Readmission, subject to certain carve-outs.
Smith & Williamson and Oriel Securities may (acting jointly) terminate the Introduction
Agreement in certain circumstances, including as a result of any material breach of the
Introduction Agreement by PME or a Director, a material adverse change in either Sheltam or
PMEs nancial position or prospects having occurred since the date of the Introduction
Agreement or Readmission not having become effective by 31 August 2014.
10.4 Deed of Termination in respect of the Finance Lease
On 17 July 2014, PME Locomotives, Sheltam and Sheltam Pty entered into a deed of
termination in relation to the Finance Lease (the Deed of Termination). Under the Deed of
Termination, the parties have agreed that subject to and with effect from completion of the
Acquisition, the Finance Lease will be terminated and the parties will release each other from
their mutual rights and obligations under the Finance Lease.
10.5 Master Operating Lease Agreement between PME Locomotives and Sheltam Pty
On 17 July 2014, PME Locomotives and Sheltam Pty entered into a master operating dry lease
arrangement in respect of certain of the C30 Locomotives owned by PME Locomotives (the
Sheltam Pty MOLA). The obligations of the parties under the Sheltam Pty MOLA are
conditional on termination of the Finance Lease.
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Under the Sheltam Pty MOLA, the parties have agreed that either party may, from time to
time, request that PME Locomotives shall lease to Sheltam Pty certain of the C30 Locomotives
owned by PME Locomotives, provided that the parties agree on the other commercial terms
applicable to the leasing of the relevant locomotives by executing a separate lease conrmation.
Sheltam Pty has agreed that upon execution of any lease conrmation, it will operate the
relevant leased locomotives and carry out regular maintenance, refurbishment and repair of the
relevant leased locomotives in accordance with the relevant manufacturers locomotive manual
requirements and good industry practice. Unless agreed otherwise by the parties in a lease
conrmation, Sheltam Pty is obliged to maintain, at its cost, insurance in respect of any relevant
leased locomotive on terms reasonably satisfactory to PME Locomotives and, where applicable,
its nanciers.
The Sheltam Pty MOLA and/or the leasing of any locomotive under any lease conrmation is
terminable on occurrence of certain agreed termination events which include, among others,
non-payment of rent and failure to comply with the insurance obligations relating to the
relevant leased locomotive, and automatically on destruction of the relevant leased locomotive.
Unless agreed otherwise by the parties in a lease conrmation, the leasing of any locomotive
under any lease conrmation is also terminable by either party on giving 45 business days
written notice. In addition, if a leased locomotive which is currently the subject of a sublease to
a third party becomes no longer the subject of such sublease following expiry or termination of
such sublease, the leasing of the relevant locomotive will automatically terminate. On
termination or expiry of the leasing of any locomotive under any lease conrmation, Sheltam
Pty will be required to redeliver, at its risk and cost, the relevant locomotive held by it to a
location agreed with PME Locomotives. Sheltam Pty will also be required to ensure that any
redelivered locomotive will be in a good, safe and serviceable condition and state of repair
(other than fair wear and tear) and comply with the specic redelivery conditions set out in the
Sheltam Pty MOLA.
As at the date of this document, the parties have executed two lease conrmations pursuant to
which Sheltam Pty has agreed to lease two C30 Locomotives (which are currently the subject of
a sublease to a third party) and one C30 Locomotive respectively, in each case subject to and
with effect from termination of the Finance Lease and with the scheduled expiry date of
28 February 2015.
10.6 Master Operating Lease Agreement between PME Locomotives and Sheltam Mozambique
On 17 July 2014, PME Locomotives and Sheltam Mozambique entered into a master operating
lease agreement in respect of certain locomotives owned by the Enlarged Group (the Sheltam
Mozambique MOLA). The obligations of the parties under the Sheltam Mozambique MOLA
are conditional on termination of the Finance Lease.
Under the Sheltam Mozambique MOLA, the parties have agreed that either party may, from
time to time, request that: (i) PME Locomotives shall lease to Sheltam Mozambique certain of
the C30 Locomotives owned by PME Locomotives; and/or (ii) PME Locomotives shall lease to
Sheltam Mozambique such other locomotives as PME Locomotives and Sheltam Mozambique
may specify in writing from time to time (which may include certain of the locomotives owned
by Sheltam which are leased to PME Locomotives pursuant to the PME Locomotives MOLA
as dened and discussed in paragraph 10.7 below), provided that the parties agree on the other
commercial terms applicable to the leasing of the relevant locomotives by executing a separate
lease conrmation.
A lease conrmation under the Sheltam Mozambique MOLA is permitted to stipulate that PME
Locomotives, instead of Sheltam Mozambique, supply the operators for the relevant leased
locomotives, carry out regular maintenance, refurbishment and repair of the relevant leased
locomotives in accordance with the relevant manufacturers locomotive manual requirements and
good industry practice and provide insurance in respect of the leased locomotives. Where PME
Locomotives assumes operation and maintenance obligations in lieu of Sheltam Mozambique, a
lease conrmation would also disapply certain other provisions of the Sheltam Mozambique
MOLA, including, among others, inspection and condition of the redelivered locomotives and
payment of sums on destruction of the leased locomotive. The other terms of the Sheltam
Mozambique MOLA largely mirror those of the Sheltam Pty MOLA save that Sheltam
Mozambique is the relevant lessee.
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As at the date of this document, the parties have executed one lease conrmation pursuant to
which Sheltam Mozambique has agreed to lease four C30 Locomotives (which are currently the
subject of a sub-lease to a third party), subject to and with effect from termination of the
Finance Lease and with the scheduled expiry date of 21 March 2015. Under this lease
conrmation, PME Locomotives has agreed to operate and maintain the relevant C30
Locomotives and intends that such obligations will be outsourced to Sheltam Pty by way of the
C30 OMSA (as dened and discussed in paragraph 10.7 below).
10.7 Master Operating Lease Agreement between Sheltam and PME Locomotives
On 17 July 2014, Sheltam and PME Locomotives entered into a master operating wet lease
agreement in respect of the locomotives owned by Sheltam (the PME Locomotives MOLA).
The obligations of the parties under the PME Locomotives MOLA are conditional on
termination of the Finance Lease.
Under the PME Locomotives MOLA, the parties have agreed that either party may, from time
to time, request that Sheltam shall lease to PME Locomotives certain of the locomotives owned
by Sheltam, provided that the parties agree on the other commercial terms applicable to the
leasing of such locomotives by executing a separate lease conrmation. The other terms of the
PME Locomotives MOLA largely mirror those of the Sheltam Pty MOLA save that Sheltam is
the relevant lessor and PME Locomotives is the relevant lessee.
As at the date of this document, no lease conrmation has yet been executed by the parties.
10.8 Operating and Maintenance Services Agreement relating to certain C30 Locomotives
On 17 July 2014, PME Locomotives and Sheltam Pty entered into an operation, maintenance
and services agreement in respect of certain C30 Locomotives owned by PME Locomotives (the
C30 OMSA). The obligations of the parties under the C30 OMSA are conditional on
termination of the Finance Lease.
Under the C30 OMSA, the parties have agreed that Sheltam Pty will act as the agent and lease
manager of PME Locomotives in respect of the C30 Locomotives owned by PME Locomotives
which may be leased by PME Locomotives to lessees including any C30 Locomotives to be
leased by PME Locomotives to Sheltam Mozambique under the Sheltam Mozambique MOLA,
but excluding any C30 Locomotives to be leased by PME Locomotives to Sheltam Pty under
the Sheltam Pty MOLA. PME Locomotives has agreed to pay Sheltam Pty a management fee
calculated by reference to the services called on under the C30 OMSA.
In relation to management of leases entered into between PME Locomotives and lessees,
Sheltam Pty has agreed to provide services to PME Locomotives which include, among others,
and on request calculation, invoicing and collection of rental payments, record keeping, accounts
management, tax management, dispute management, giving of notices and management and/or
provision of insurance in respect of the C30 Locomotives leased by PME Locomotives. Sheltam
Pty has also agreed to advise PME Locomotives in respect of the obligations of PME
Locomotives under a relevant lease on the occurrence of certain agreed events, as well as
procuring performance of the relevant leases by PME Locomotives and enforcing performance
of the relevant leases by the relevant lessees.
In addition, Sheltam Pty has agreed to procure regular maintenance, refurbishment, inspection
and repair of the C30 Locomotives which are the subject of the C30 OMSA, whether or not
they are leased to lessees at any given time. Sheltam has agreed to provide marketing services
for any C30 Locomotives which are from time to time cease to be the subject of a lease as a
result of expiry or termination of any lease, to secure new operating leases.
The services provided under the C30 OMSA in respect of any C30 Locomotive are terminable
by either party giving the other party not less than 60 days written notice. On such termination
Sheltam Pty will be required to redeliver to PME Locomotives any off-lease C30 Locomotive
which is in its possession as well as all documents and records within its possession which relate
to any relevant lease, C30 Locomotive or other arrangement contemplated under the C30
OMSA.
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10.9 Operating and Maintenance Services Agreement relating to the locomotives owned by Sheltam
On 17 July 2014, PME Locomotives and Sheltam Pty entered into an operation, maintenance
and services agreement in respect of certain locomotives owned by Sheltam leased to PME
Locomotives under the PME Locomotives MOLA (the Non-C30 OMSA). The obligations of
the parties under the Non-C30 OMSA are conditional on termination of the Finance Lease.
Under the Non-C30 OMSA, the parties have agreed that Sheltam Pty will act as the agent and
lease manager of PME Locomotives in respect of the locomotives owned by Sheltam which are
leased by Sheltam to PME Locomotives pursuant to the PME Locomotives MOLA. PME
Locomotives has agreed to pay Sheltam Pty a management fee calculated by reference to the
services called on under the Non-C30 OMSA.
The other terms of the Non-C30 OMSA largely mirror those of the C30 OMSA save that the
Non-C30 OMSA only covers the locomotives owned by Sheltam which are leased to PME
Locomotives under the PME Locomotives MOLA and does not cover maintenance or marketing
of the other locomotives owned by Sheltam.
10.10Other restructuring agreements
(a) Assignment Agreement in respect of the Salgaocar lease
On 17 July 2014, Sheltam Pty and PME Locomotives entered into an assignment
agreement (the Assignment Agreement) pursuant to which Sheltam has agreed to cede to
PME Locomotives its rights and obligations under the operating lease, maintenance and
support services agreement dated 28 December 2011 and entered into between Sheltam Pty
and Salgaocar Resources Africa Limited (the Salgaocar Lease). Under a separate
addendum to the Salgaocar Lease, Salgaocar Resources Africa Limited has given its
consent to the cession and assignment of the Salgaocar Lease by Sheltam Pty to PME
Locomotives. The cession and assignment under the Assignment Agreement is conditional
on completion of the Acquisition.
(b) Purchase Agreement
On 17 July 2014, PME Locomotives, Sheltam and Sheltam Pty entered into an agreement
pursuant to which: (i) PME Locomotives has agreed to acquire the equity interests
representing in aggregate, 99.9 per cent. of the capital of Sheltam Mozambique which are
held by Sheltam and Sheltam Pty; and (ii) Sheltam Pty has agreed to acquire certain tools
used for operation and maintenance of the C30 Locomotives (the Purchase Agreement).
Completion of the Purchase Agreement is conditional on, among others, completion of the
Acquisition and the prior written consent of the Bank of Mozambique in connection with
the foreign exchange laws of the Republic of Mozambique.
The consideration for the transfer of shares in Sheltam Mozambique is a cash amount
calculated based on the net asset value of Sheltam Mozambique (the Share
Consideration), and the consideration for the transfer of tools owned by PME
Locomotives is nominal (the Asset Consideration). The parties have agreed that the
amount of Asset Consideration shall be set off against the amount of Share Consideration,
and that PME Locomotives shall pay the balance of the sums to an account designated by
any of Sheltam and Sheltam Pty, so that such sum can be allocated between Sheltam and
Sheltam Pty in accordance with the terms of the Purchase Agreement.
Each of Sheltam, Sheltam Pty and PME Locomotives has provided warranties in relation
to their capacity and authority to enter into the Purchase Agreement. Sheltam and Sheltam
Pty have jointly and severally provided additional warranties in relation to title in the
shares in Sheltam Mozambique Limitada that are to be transferred under the Purchase
Agreement, whereas PME Locomotives has provided additional warranties to Sheltam Pty
in relation to the assets to be transferred under the Purchase Agreement. Each of the
warranties is to be repeated immediately prior to completion.
10.11New Shareholder Groups Shareholders Agreement
In connection with the Acquisition the members of the New Shareholder Group entered into a
shareholders agreement in relation to the Company. The obligations of the parties under the
Shareholders Agreement are conditional on the satisfaction or waiver of various conditions
including the completion of the Acquisition and Readmission.
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Under the Shareholders Agreement, the Vendors have agreed to sell 5,715,667 PME shares to
PUG immediately following completion of the Acquisition and Readmission at a price of
US$0.30 per PME Share (the Share Sale). The Shareholders Agreement contains a provision
according to which the obligation to carry out the Share Sale cannot be waived or amended
without prior written consent of the Company (provided that the Company may not
unreasonably withhold or delay its consent).
Under the Shareholders Agreement, the New Shareholder Group have also agreed to be bound
by certain conduct provisions relating to their holding of the PME Shares following completion
of the Share Sale, which cover, among others, exercise of shareholder votes, conduct of the
parties so as to not trigger an offer under Rule 9 of the City Code, compliance with relevant
laws and regulations in respect of market abuse, and restrictions on transfers of PME Shares to
third parties.
The Shareholder Agreement is terminable (i) after the expiry of an initial two year period by a
party on giving not less than one years written notice or (ii) in certain other circumstances,
including if the New Shareholder Groups aggregate holding in PME shares reduces to below 10
per cent.
10.12Co-operation Agreement
The Company, the Vendors and PUG entered into a Co-operation Agreement dated 11 February
2014 (as amended on 30 May 2014 and as further amended and restated on 24 June 2014),
which sets out the parties intentions regarding the structure and implementation of the
Acquisition, the Readmission and the Restructuring.
Under the Co-operation Agreement, the parties have agreed, among others, to co-operate with
each other and do and execute, or procure the doing and executing of, each necessary or
desirable act, document and thing reasonably within its power to implement these transactions.
The parties have also agreed not to take any action which would or might reasonably be
expected to be materially prejudicial to the implementation of these transactions.
In consideration of their entry into the Co-operation Agreement, the Vendors and the Company
agreed to pay certain third party costs and expenses incurred by each other in connection with
implementing these transactions where either of them breaches its or their material obligations
under the Co-operation Agreement.
Unless terminated earlier in accordance with its terms (including as a result of any material
breach by a party), the Co-operation Agreement will be in full force and effect until completion
of the Acquisition.
10.13Administration Agreement
The Company and Galileo Fund Services Limited (the Administrator) have entered into an
Administration Agreement which will enter into force upon Readmission, pursuant to which the
Administrator is appointed to act as administrator of the Company and to provide a company
secretary and registered ofce facilities.
For the provision of a company secretary and registered ofce facilities, the Administrator will
make an annual charge, in advance, of 3,000. The Administrator shall provide general
administrative, accounting and secretarial services to the Company for which it shall receive a
minimum monthly fee of 3,000. Additional fees, calculated by reference to time spent and
hourly rates to be agreed with the Company, will apply where the cost of hours worked in any
month exceeds the minimum monthly fee. For attendance at meetings not held in the Isle of
Man an additional attendance fee of 1,000 per day or part thereof will be charged. The
Administrator shall assist in the preparation of the interim and annual nancial statements of
the Company for which it shall receive a minimum fee of 1,500 per set.
The Administrator shall also be entitled to reimbursement of out-of-pocket expenses properly
incurred by the Administrator in carrying out its duties. The Agreement contains an indemnity
in favour of the Administrator against claims against it except to the extent that the claim is
due to the negligence, wilful default or fraud of the Administrator. The Agreement may be
terminated by either party giving to the other not less than 90 days notice in writing or
otherwise in certain circumstances, including inter alia, if one of the parties goes into
liquidation.
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10.14Registrar Agreement
The Company and Capita Registrars (Isle of Man) Limited have entered into a Registrar
Agreement dated 17 July 2014 (the Registrar Agreement). Pursuant to the Registrar
Agreement, the Shares will at all times be registered on the register of members kept in the Isle
of Man. The Company appoints the Registrar to act as the registrar in respect of the Shares
with effect from Readmission.
The Registrars fees shall be payable to the Registrar by the Company based on the number of
shareholder accounts appearing on the register in the relevant year. The Registrar is entitled to
a minimum annual fee of 5,442.20 and is entitled to increase the fees annually at the rate of
the Retail Prices Index prevailing at that time.
The Company agrees to indemnify the Registrar, its afliates and their respective directors,
agents, ofcers and employees from and against all liabilities which may be suffered or incurred
by the Registrar or its directors, agents, ofcers and employees which arise in connection with
the Registrar Agreement except if the liabilities arise out of the fraud, negligence or wilful
default of the Registrar, its afliates, or their respective directors, agents, ofcers or employees.
The Registrar Agreement may be terminated by either party giving not less than three months
notice of termination to other party, on specied notice if a party materially breaches the
agreement, or if either party goes into liquidation or administration or similar processes.
11. Taxation
The following statements are intended as a general guide only to the ownership or disposal of the PME
Shares and do not concern the consequences of Readmission or the Acquisition. No statements are made
with respect to the tax treatment of the ownership or disposal of the PME Shares in any jurisdiction
other than the Isle of Man and the UK. They are not intended to be exhaustive and investors who are
subject to tax in any jurisdiction other than the United Kingdom or the Isle of Man or who are in any
doubt as to their tax position are strongly advised to seek independent professional advice without delay
in connection with the tax consequences of investing in, trading in and disposing of the PME Shares.
11.1 United Kingdom taxation
The comments set out below summarise certain aspects of the UK taxation treatment of holders
of the PME Shares following the Acquisition and Readmission. They are based on existing law
and on what is understood to be current HM Revenue & Customs practice, which is subject to
change at any time. The comments are intended as a general guide only and apply to
Shareholders resident for tax purposes in the UK (save where express reference is made to
persons resident outside the UK) who hold PME Shares, who are the absolute benecial owners
thereof and may not apply to certain types of shareholders such as dealers in securities or
insurance companies. Shareholders who are in any doubt about their taxation position, or who
are resident or otherwise subject to taxation in a jurisdiction outside the UK, should consult
their own professional advisers immediately.
Tax treatment of UK resident holders
UK resident companies that are small, as dened in Part 9A Corporation Tax Act 2009, will be
liable to UK tax on the dividend paid by the Company at the prevailing corporation tax rate.
However a UK resident company that is small for these purposes may seek relief for the
underlying tax, if any, associated with the dividend where the UK company owns 10 per cent.
or more of the voting rights in the Company. However, the credit given in the UK for overseas
tax suffered on the dividend cannot exceed the UK corporation tax liability on the dividend.
A UK resident company that is not small for the purposes of Part 9A Corporation Tax Act
2009 will generally be exempt from UK corporation tax on dividends received from the
Company, subject to certain specic anti-avoidance rules.
An individual who is resident in the UK will generally be chargeable to income tax on
dividends received from the Company. The rate of tax due on the dividends received from the
Company will depend upon the level of income of the individual in the relevant tax year and
the percentage interest that the individual holds in the Company.
Where a UK resident individual owns an interest of less than 10 per cent. in the Company that
individual will be entitled to a notional tax credit equal to 1/9
th
of the amount of the dividend
paid. Consequently, a basic rate taxpayer will have no further UK tax to pay on the dividend,
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whilst higher rate and additional rate taxpayers will suffer effective tax rates of 25 per cent. and
30.6 per cent. respectively on the cash dividend received. Where a UK individual holds an
interest of in excess of 10 per cent. of the Company the applicable rates of tax will be higher as
that individual is not entitled to the notional 10 per cent. tax credit.
A disposal of PME Shares by a holder who is (at any time in the relevant UK tax year)
resident in the UK for tax purposes may give rise to a chargeable gain or an allowable loss for
the purposes of UK taxation on chargeable gains, depending on the holders circumstances and
subject to any available exemption or relief.
The attention of individuals resident in the United Kingdom is drawn to the provisions
contained in Chapter 2 of Part 13 of the UK Income Tax Act 2007. These provisions are aimed
at preventing the avoidance of income tax by individuals through transactions resulting in the
transfer of assets or income to persons (including companies) resident or domiciled abroad and
may render them liable to taxation in respect of undistributed income and prots of the
Company on an annual basis.
More generally, the attention of Shareholders is also drawn to the provisions contained in
Chapter 1 of Part 13 of the income Tax Act 2007 (for individual Shareholders) and Part 15 of
the Corporation Tax Act 2010 (for corporate shareholders) which give powers to HM Revenue
& Customs to cancel tax advantages derived from certain transactions in securities.
The following comments are intended as a guide to the general UK Stamp Duty and SDRT
position and do not relate to persons such as market makers, brokers, dealers, intermediaries
and persons connected with depository arrangements or clearance services, to whom special rules
apply.
No UK stamp duty or SDRT will be payable on the issue of PME Shares.
Following changes to be introduced in Finance Act 2014 with effect from 28 April 2014, it is
not expected that stamp duty or stamp duty reserve tax will be payable in connection with a
transfer of PME Shares (provided that PME Shares are not listed on a Recognised Stock
Exchange).
11.2 Isle of Man taxation
The statements set out below are intended only as a general guide to certain current Isle of
Man taxation aspects of ownership of PME Shares. The summary does not purport to be an
exhaustive analysis of all potential Isle of Man tax and does not cover certain categories of
Shareholders such as employees of PME or any of its subsidiaries. If you are in any doubt as to
your tax position or if you may be subject to tax in any other jurisdiction, you are strongly
recommended to consult an appropriate professional adviser.
(a) Tax residence in the Isle of Man
PME is resident for taxation purposes in the Isle of Man by virtue of being incorporated
in the Isle of Man.
(b) Isle of Man taxes
The Isle of Man Government levies income tax, applicable to both individuals and
companies. The Isle of Man does not operate any capital gains tax, stamp duty, stamp
duty land tax or inheritance taxes. A probate fee may be payable in respect of the estate
of a deceased Shareholder, these fees currently range from 25 for an estate with a value
below 10,000 to 7,500 for estates above 1 million.
The standard rate of income tax in the Isle of Man for companies is a zero per cent. with
the exception of certain banking income, income from Isle of Man land and property and
the prots from certain retailing activity which are all taxed at the 10 per cent. rate. Under
this regime, the Company is subject to taxation on its income in the Isle of Man, but the
rate of tax is zero per cent.
Holders of PME Shares resident in the Isle of Man will, depending on their particular
circumstances, be liable to Isle of Man income tax on dividends received from the
Company. Furthermore, in the event of a buyback of shares by the Company, or the
receipt of proceeds on a winding up of the Company, Isle of Man resident shareholders
may, depending upon their circumstances, be liable to income tax in the Isle of Man on
the income element of the proceeds received.
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An Isle of Man company has no requirement to make any deduction or withholding of tax
on dividends paid to shareholders, wherever resident. Shareholders resident outside the Isle
of Man will have no liability to Isle of Man income tax on dividends received from the
Company, or on the proceeds of any share buyback by the Company or on any winding
up of the Company.
12. Working capital
In the Existing Directors and the Proposed Directors opinion, having made due and careful enquiry,
the working capital available to the Enlarged Group will, from Readmission, be sufcient for its
present requirements, that is, for at least the twelve months from Readmission.
13. Related party transactions
The Company
Save as set out below and in note 22 to the Companys audited nancial statements for the year
ended 31 December 2011, note 21 to the Companys audited nancial statements for the year ended
31 December 2012 and note 20 to the Companys audited nancial statements for the year ended
31 December 2013 (each of which is incorporated by reference in this document), the Group did not
enter into any transactions with related parties during the three years ended 31 December 2013. Save
for the documents entered into in connection with the Acquisition, the Restructuring and
Readmission (including the Directors new service contracts and letters of appointment), the Group
has not entered into any transactions with related parties in the period from 1 January 2014 to the
date of this document.
PME is a party to a consultancy agreement dated 15 May 2013 with Thabilo Financial Consulting
Services CC (Thabilo), a company of which Steyn Delport is a director and the sole member, under
which Thabilo provides certain consultancy services relating to the Companys investments in Sheltam
through the services of Steyn Delport. Under the consultancy agreement, Thabilo has received from
the Company a monthly fee of US$10,000, and will receive from the Company a nal fee equal to six
months of the monthly payment on completion of the Acquisition. This consultancy agreement will
be terminated subject to and with effect from completion of the Acquisition pursuant to a deed of
termination executed between PME and Thabilo.
The Company and James Peggie entered into a consultancy services letter agreement on 1 January
2013, under which James Peggie provides certain consultancy services in relation to PME
Locomotives and PME Properties. Under this consultancy agreement, James Peggie receives a
monthly fee of US$2,500 from the Company. This agreement will be terminated subject to and with
effect from completion of the Acquisition pursuant to a deed of termination executed between PME
and James Peggie.
Sheltam
Save as set out below and in note 31 to Sheltams audited nancial statements for the year ended
31 December 2012 and note 32 to Sheltams audited nancial statements for the year ended
31 December 2013 (each of which is set out in Part V of this document), the Sheltam Group did not
enter into any transactions with related parties during the three years ended 31 December 2013. Save
for the documents entered into in connection with the Acquisition, the Restructuring and
Readmission (including the new service contracts to be entered into with Sheltam by certain Proposed
Directors), the Sheltam Group has not entered into any transactions with related parties in the period
from 1 January 2014 to the date of this document.
The following premises are leased by Sheltam Pty from trusts controlled by Roy Puffett, who is
currently the Managing Director of, and a shareholder in, Sheltam:
(a) Ofces at 127 Villiers Road, Walmer, Port Elizabeth. This premises is used as the head ofce of
Sheltam Pty and is leased by Sheltam Pty from Hyde Park Trust, an entity controlled by Roy
Puffett, for an initial monthly rental of ZAR 13,950,000. The rental is subject to an annual
increase at the latest annual Producer Price Index effective on the anniversary date of the lease.
The lease was entered into on 5 March 2007 with an initial term of 12 months from the deemed
commencement date of 1 March 2007 and has continued since that time on a rolling basis. The
lease is terminable on two months notice from either party to the other.
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(b) A property at 11 Auckland Street, Cape Town. The lease of this property was entered into
between Sheltam Pty and 11 Auckland Park Trust (an entity controlled by Roy Puffett) on
5 March 2007 with an initial term of 12 months from the deemed commencement date of
1 March 2007 and has continued since that time on a rolling basis. The lease is terminable on
two months notice from either party to the other. The initial rental was ZAR 13,950.00 per
month, subject to an annual increase at the latest annual Producer Price Index effective on the
anniversary date of the lease.
(c) A property at 25 Auckland Street, Cape Town. The lease of this property was entered into
between Sheltam Pty and 25 Auckland Park Trust (an entity controlled by Roy Puffett) on
5 March 2007 with an initial term of 12 months from the deemed commencement date of
1 March 2007 and has continued since that time on a rolling basis. The lease is terminable on
two months notice from either party to the other. The initial rental was ZAR 29,060.00 per
month, subject to an annual increase at the latest annual Producer Price Index effective on the
(d) Three residential properties at 5 Kerk Street, Waterfall Boven; 7 Alpha Avenue, Waterfall
Boven; and 51 Zasm Avenue, Waterfall Boven, leased from the Sheltam Property Trust (an
entity controlled by Roy Puffett) to Sheltam Pty.
The leases of 5 Kerk Street and 7 Alpha Avenue were entered into on 5 March 2007 with an
initial term of 12 months from the deemed commencement date of 1 March 2007 and have
continued since that time on a rolling basis. These leases are terminable on two months notice
from either party to the other. The initial rental under both of these leases was ZAR 1,745.00
per calendar month and the rental is subject to an annual increase at the latest annual Producer
Price Index effective on the anniversary date of the lease.
The lease of 51 Zasm Avenue was entered into on 5 March 2007 with an initial term of 12
months from the commencement date of 1 December 2007 and has continued since that time on
a rolling basis. The lease is terminable on two months notice from either party to the other.
The initial rental under this lease was ZAR 1,162.00 per calendar month and the rental is
subject to an annual increase at the latest annual Producer Price Index effective on the
Each of 5 Kerk Street, 7 Alpha Avenue and 51 Zasm Avenue is currently sublet to individual
employees of the Sheltam Group. In each case, the sublease between Sheltam Pty and the
individual occupying the premises is on substantially the same terms as the leases with the
Sheltam Property Trust, save for the initial monthly rentals which is ZAR 900.00 for all three
subleases. This amount is subject to an annual increase at the latest annual Producer Price
Index.
14. Litigation
Save as set out below, there are no governmental, legal or arbitration proceedings (and no such
proceedings are pending or threatened of which the Company is aware) during the 12 months prior
to the date of this document which may have, or have had in the recent past, a signicant effect on
the nancial position or protability of the Company, the Group or any member of the Enlarged
Group.
Dovetel Litigation
Dovetel owes PME approximately US$356,000 in respect of outstanding shareholder loans made by
PME and Dovetel is also in arrears on its rental payments in respect its tenancy of part of Peninsula
House. PME accordingly served a winding-up petition on Dovetel in January 2013. However, as a
result of a separate third party application, Dovetel was placed into administration in late April 2013.
On 15 May 2013, PMEs winding up petition was stayed pending appeals against the administration
order. PME is also in the process of applying for leave of the court to evict Dovetel as tenant from
Peninsula House. PME will continue to press for a repayment of its debts through the winding-up
petition alongside the eviction process set out above.
The Directors do not anticipate that there will be any nancial implications for the Company other
than the necessary legal and court costs to protect PMEs interest.
174
15. Executive Share Option Plan
The Company is proposing to establish an Executive Share Option Plan, subject to Shareholder
approval and conditional on Readmission. A summary of the main terms of the ESOP is set out
below.
15.1 Administration
The ESOP will be administered by the Board (or a duly constituted committee of the Board) in
accordance with its rules and, in the case, of executive directors a committee of non-executive
directors of the Company.
15.2 Eligible Employees
Options may be granted to any employees or executive directors of the Group except that no
options may be granted under the ESOP to Roy Puffett.
15.3 Grant of options
Options may be granted:
(a) within the period of three months following:
*
Readmission; or
*
the date of adoption of the ESOP; or
(b) during the period of 42 days following:
* the announcement of the Companys annual results for any nancial period;
* the expiry of restrictions imposed on the Company;
*
the announcement or coming into force of any amendments to legislation affecting
share option plans; or
*
at any other time if the Board resolves that it is appropriate to grant options.
Options will be granted over PME Shares. No option may be granted later than ten years from
the date of adoption of the ESOP. Options granted under the Plan are personal to the
optionholder and may not be transferred. No consideration is payable for the grant of an
option. Benets under the ESOP are not pensionable.
15.4 Exercise price
The exercise price at which options may be exercised will be set by the Board and cannot be
less than the greater of:
(a) the nominal value of a PME Share (if PME Shares are to be subscribed); and
(b) at any time when the PME Shares are listed, the middle-market quotations of a PME
Share as derived from the AIM Appendix to the Ofcial List on the dealing day
immediately preceding the date of grant of an option (or if the Board determines, the
average of the quotations for the three dealing days immediately before the date of grant
of an option).
15.5 Plan Limits
The following limits apply to limit the number of new PME Shares which may be issued under
the ESOP:
(a) no option may be granted under the ESOP if, as a result, the aggregate number of PME
Shares issued and issuable pursuant to options granted under the ESOP, or under any
other employees share plan adopted by the Company in general meeting would in any
period of ten years exceed 10 per cent. of the issued ordinary share capital of the
Company;
(b) no option may be granted under the ESOP if, as a result, the aggregate number of PME
Shares issued and issuable pursuant to options granted under the ESOP or any other
executive share option plan adopted by the Company in general meeting would in any
period of ten years exceed 5 per cent. of the issued share capital of the Company; and
PME Shares issued or issuable on exercise of options granted under the ESOP within the period
of three months from Readmission will not count towards these limits.
175
The ESOP permits options to be granted over newly issued PME Shares.
15.6 Individual Limits
The Board will not, in any nancial year, grant to an eligible employee options under the ESOP
over PME Shares worth more on the date of grant than a maximum of 400 per cent. of the
employees annual remuneration. Normally the Board will not in any nancial year grant
options in excess of 200 per cent. of an eligible employees annual remuneration.
15.7 Exercise of options
An option will normally be exercisable between the third and tenth anniversary of the date of
grant if any performance target imposed by the Board has been satised. If the optionholder
dies, or if the optionholders employment terminates because of injury, disability, ill-health,
redundancy, retirement, his employer ceasing to be a member of the Enlarged Group or because
the business in which he is employed is transferred out of the Enlarged Group his option will be
exercisable for 12 months from the third anniversary of the date of grant if any performance
target is met.
If an optionholder ceases to be employed for any other reason his options will lapse unless the
Board determines otherwise, in which case his option will be exercisable if any performance
target is met. The Board may permit options to become exercisable on cessation of employment
earlier than three years from the date of grant.
Options will lapse ten years from the date of grant. Special provisions will apply in the event of
a takeover or liquidation of the Company. Options will be exercisable for a xed period if any
performance target has been met at the relevant date.
15.8 Performance measures
If it is determined that the exercise of options under the ESOP is to be subject to performance
targets, the most appropriate performance measures will be determined by the Board based on
current market practice, any relevant institutional investor guidelines and the environment within
which the Enlarged Group operates.
15.9 PME Shares
PME Shares issued on the exercise of an option will rank pari passu with existing PME Shares
except for any rights attached to the PME Shares by reference to a record date before the date
of allotment. The Company will use its reasonable endeavours to obtain admission to trading on
AIM (or other relevant stock exchange) for any PME Shares so allotted.
15.10Variation of Share Capital
On any variation of the share capital of the Company by way of capitalisation or rights issue or
by consolidation, sub-division or reduction of capital or otherwise, the Board must consult the
Companys auditors and consider their proposal. The Board may then make adjustments it
considers appropriate to the exercise price and/or the number and/or the denomination of PME
Shares comprised in an option and/or the limits on the number of PME Shares subject to the
ESOP, but so that there is no increase in the exercise price or reduction below nominal value.
15.11Amendments to the ESOP
The Board may amend the ESOP at any time in any respect. The rules of the ESOP relating to
eligibility, limits on the number of PME Shares available under the ESOP, the basis for
determining an eligible employees participation and adjustments for a variation of capital and
to the amendment of the ESOP may not, however, be amended to the advantage of existing or
future optionholders without the prior approval of the Shareholders except that the Board may:
(a) make any amendments necessary to take account of a change in legislation and to obtain
or maintain favourable taxation, exchange control or regulatory treatment of the
Company, any of its subsidiaries or any optionholder; and
(b) make minor amendments to benet the administration of the ESOP.
No amendment may be made to alter to the material disadvantage of any optionholder any
rights already acquired by him without the consent of optionholders holding options over at
least 75 per cent. of the total number of PME Shares under option under the ESOP.
176
Eligible employees to whom options are granted under the ESOP are recommended to seek
independent advice in connection with their participation in the ESOP. In particular, they are
recommended to seek advice on the tax implications and any exchange control issues arising from the
grant, holding or exercise of rights under the ESOP. For optionholders in South Africa, benets
under the ESOP may affect their foreign exchange capital allowance.
16. General
(a) The accounting reference date of the Company is 31 December.
(b) Smith & Williamson has given and not withdrawn its written consent to the inclusion in this
document of its name and the references to it in the form and context in which it appears.
(c) Oriel Securities has given and not withdrawn its written consent to the inclusion in this
document of its name and the references to it in the form and context in which it appears.
(d) The total costs and expenses payable by the Company in connection with the Proposals
(including professional fees, commissions, the costs of printing and the fees payable to the
Registrars) are estimated to amount to approximately 1.9 million (approximately US$3.2
million) (excluding VAT).
(e) The PME Shares will be in registered form and may be held in uncerticated form in CREST.
In the case of PME Shares held in uncerticated form, Share Registrars Limited will be in
charge of keeping the records. CREST accounts are expected to be credited with entitlements to
PME Shares to be held in uncerticated form as soon as practicable after Readmission. For
those Vendors who elect to receive PME Shares to be issued pursuant to the Acquisition in
certicated form, denitive share certicates are expected to be despatched to such persons by
post at their own risk within seven days of Readmission. Temporary documents of title will not
be issued in connection with the Acquisition.
(f) Where information in this document has been sourced from a third party, the Company
conrms that it has been accurately reproduced and, as far as it is aware and is able to
ascertain from the information published by the third party, no facts have been omitted which
would render the reproduced information inaccurate or misleading.
(g) The Companys principal investments in progress and since incorporation are as set out in Part
II of this document together with details of the proposed increase of its investment in Sheltam.
Neither Sheltam nor any member of the Enlarged Group has made any other rm commitment
in respect of any other investments, including in relation to the Enlarged Group.
(h) There has been no material or signicant change in the nancial or trading position of the
Company or any member of the Enlarged Group since the last published audited accounts of
the Company and the audited accounting information on Sheltam set out (or incorporated by
reference) in Part V of this document.
(i) There has been no public takeover bid for the whole or any part of the share capital of any
member of the Enlarged Group prior to the date of this document. There are no mandatory
takeover bids and/or squeeze out and sell out rules in relation to the PME Shares.
(j) Save as otherwise disclosed in this document, no person (excluding professional advisers as
stated in this document and trade suppliers) has received directly or indirectly, from the
Company, within the 12 months preceding the date of the Companys application for
Readmission, and no persons have entered into contractual arrangements to receive, directly or
indirectly from the Company on or after Readmission:
(i) fees totalling 10,000 or more;
(ii) securities in the Company with a value of 10,000 or more calculated by reference to the
middle market price of the PME Shares as at the close of business on 25 June 2014, being
the trading day immediately prior to the Suspension Date; or
(iii) any other benet with a value of 10,000 or more at the date of Readmission.
(k) There are no arrangements contemplated involving any member of the New Shareholder Group
where the payment of interest on, repayment of or security for any liability (contingent or
otherwise) will depend to any signicant extent on the business of the Company.
177
(l) Save as disclosed in paragraph 7 of this Part VI, there is no agreement, arrangement or
understanding (including any compensation arrangement) that exists between the New
Shareholder Group or any person acting in concert with it and any of the Existing Directors,
recent Directors, the Proposed Directors, recent Shareholders or Shareholders which has any
connection with or dependence on the Acquisition.
(m) Save for the Shareholders Agreement and the Stabilisation and Relationship Agreement there is
no agreement, arrangement or understanding that exists for the transfer of any PME Shares
held by the New Shareholder Group following the Acquisition to any other person.
(n) Save as set out in this document, there have not been any signicant trends concerning the
development of the Enlarged Groups business since 31 December 2013, the date of the latest
published accounts of the Group.
(o) Save as disclosed in this document, there are no patents or other intellectual property rights,
licences, particular contracts or new manufacturing processes which are of fundamental
importance to the business of the Group or material to the business or protability of any
member of the Enlarged Group.
(p) There are no arrangements in place under which dividends on the PME Shares are to be waived
or are agreed to be waived.
(q) Save as disclosed in this document, so far as the Company and Directors are aware, there are
no environmental issues that may affect the Groups utilisation of its tangible xed assets.
17. Availability of this document
Copies of this document will be available free of charge to the public during normal business hours
on any day (Saturdays, Sundays and public holidays excepted) at the ofces of Smith & Williamson,
25 Moorgate, London EC2R 6AY (+44 (0)20 141 4000) for a period of not less than one month
from the date of Readmission. This document is also available for download at the Companys
website at www.pmeinfrastructure.com and will be available from the Enlarged Groups website at
www.sheltam.com from Readmission.
18. Documents available for inspection
Copies of the following documents will be available for inspection at the ofces of Hogan Lovells
International LLP 50 Holborn Viaduct London EC1A 2FG during normal business hours on any day
(Saturdays, Sundays and public holidays excepted) until the date of Readmission. The below
documents are also available for download at the Companys website at www.pmeinfrastructure.com:
(a) the memorandum and articles of association of PME;
(b) the audited nancial statements of PME for the three years ended 31 December 2013;
(c) the audited nancial statements of Sheltam for the three years ended 31 December 2013;
(d) the service and other contracts referred to in paragraph 7 above; and
(e) this document.
17 July 2014
178
PME AFRICAN INFRASTRUCTURE OPPORTUNITIES PLC (the Company)
(Incorporated and registered in the Isle of Man under the Isle of Man Companies Acts 1931 to 2004
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the Company will be held
at 10:00 a.m. on 11 August 2014 at its registered ofce at Millennium House, 46 Athol Street,
Douglas, Isle of Man IM1 1JB for the purposes of considering and, if thought t, passing the
following resolutions:
ORDINARY RESOLUTIONS
1. THAT, subject to the satisfaction or waiver by the Company of the conditions specied in the
acquisition agreement entered into on 17 July 2014 by the Company, PME RSACO, Roy
Puffett and the Sheltam Rail Trust, the acquisition by PME RSACO of the issued share capital
of Sheltam Holdings (Proprietary) Limited not already owned by PME RSACO and certain
shareholder loans, in accordance with the terms of such acquisition agreement, be approved,
together with the resulting cessation of the Companys investing policy and fundamental change
in its business and board control, in accordance with Rule 8 and Rule 14 of the AIM Rules for
Companies published by London Stock Exchange plc.
2. THAT, conditional upon the passing of resolution 1 above:
(a) the PME African Infrastructure Opportunities Plc Executive Share Option Plan (the
Plan), the principal features of which are summarised in the admission document issued
by the Company and dated 17 July 2014 and the draft rules of which have been produced
to the meeting and, for the purposes of identication only, initialled by the Chairman, be
adopted; and
(b) the directors of the Company be authorised to do all acts and things necessary to
implement the Plan including making any changes to the rules of the Plan as may be
necessary to obtain any approvals which the directors consider necessary or desirable to
obtain and/or to comply with London Stock Exchange (including AIM) requirements and/
or any institutional investor guidelines or requirements.
SPECIAL RESOLUTIONS
3. THAT, conditional upon the passing of resolution 1 above and upon completion of the
acquisition contemplated by resolution 1 above, the name of the Company be changed to
Sheltam plc.
4. THAT the form of memorandum and articles of association produced to the meeting and, for
the purposes of identication only, initialled by the Chairman be adopted as the memorandum
and articles of association of the Company in substitution for, and the exclusion of, the existing
memorandum and articles of association of the Company.
Registered Ofce: By Order of the Board
Millennium House Ian Dungate
46 Athol Street Assistant Secretary
Douglas
Isle of Man IM1 1JB
British Isles
Dated: 17 July 2014
Notes:
A copy of the Companys existing memorandum and articles of association and the proposed new memorandum and articles of
association marked to show all the changes will be available for inspection during normal business hours (excluding Saturdays,
Sundays and bank holidays) at the Companys registered ofce address. The proposed new memorandum and articles of association
will also be available for inspection at the extraordinary general meeting at least 15 minutes prior to the start of the meeting and up
until the close of the meeting.
179
A member entitled to attend and vote is entitled to appoint a proxy or proxies to attend and, on a poll, to vote instead of him/her; a
proxy need not be a member of the Company. In the case of joint-holders, if more than one of such joint-holder is present, only the
person whose name stands rst in the Register of Members in respect of the relevant joint-holding will be entitled to vote, whether in
person or by proxy.
A form of proxy accompanies this Notice. Completion and return of the form of proxy will not preclude a member from attending and
voting at the Meeting, if he/she so wishes. In the event that a member who has lodged a form of proxy attends the Meeting, his/her
form of proxy will be deemed to have been revoked.
In order to be valid, the instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed,
or a notarially certied copy of such power of attorney or authority, should be deposited at Galileo Fund Services Limited, Millennium
House, 46 Athol Street, Douglas, Isle of Man IM1 1JB, British Isles (Attention: Ian Dungate on Fax: +44 (0)1624 692 601) by no later
than 48 hours before the date appointed for holding the meeting.
Please advise if you are attending the meeting in person by contacting Galileo Fund Services Limited, on the telephone number +44
(0)1624 692 600.
Terms referred to in this Notice have the meaning given to them in the admission document of the Company dated 17 July 2014.
180
imprima C110275

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