CPI PSGPSG/CPI - PSG Group Limited/Capitec - Firm Intention In Accordance With SRPRequirements To Make A Mandatory Offer To Capitec ShareholdersPSG Group Limited(Incorporated in the Republic of South Africa)Registration Number: 1970/008484/06Share Code: PSGISIN Code: ZAE000013017("PSG")Capitec Bank Holdings Limited(Incorporated in the Republic of South Africa)Registration Number: 1999/025903/06Share Code: CPIISIN Code: ZAE000035861("Capitec")FIRM INTENTION IN ACCORDANCE WITH SRP REQUIREMENTS TO MAKE A MANDATORY OFFER TOCAPITEC SHAREHOLDERS1. INTRODUCTIONCapitec shareholders are hereby advised that the Capitec board of directorshas received notice from PSG of a firm intent to make a mandatory offer toall Capitec shareholders to acquire all Capitec ordinary shares not held byPSG, on terms and conditions, the salient features of which are set outbelow ("the Mandatory Offer"). The mandatory offer is in compliance withthe requirements of the Securities Regulation Code on Takeovers and Mergersand the Rules of the Securities Regulation Panel ("SRP"), ("the Code").2. BACKGROUND TO THE MANDATORY OFFEROn 14 May 2007, PSG extended a voluntary offer to all Capitec shareholdersto acquire up to 34.9% of the ordinary issued share capital of Capitec("the Original PSG Offer"). The Original PSG Offer was a share for sharetransaction whereby Capitec shareholders that accepted the Original PSGOffer received 1.4545 PSG shares for every 1 Capitec share disposed of byCapitec shareholders. Pursuant to the Original PSG Offer, PSG increased itsshareholding in Capitec to 34.9%.In terms of the Code, a shareholder (in this case PSG) is required to makea mandatory offer to all remaining shareholders of an offeree company inthe event that the said shareholder, together with any persons acting inconcert with such shareholder, acquires control of the company. Control isdefined as 35% or more of the voting rights of the offeree company ("the35% Threshold"). In addition, the Code stipulates that, unless thecontrary is established, a company shall be deemed to be acting in concertwith any of its directors who hold shares in the offeree company.It has recently come to PSG's attention that, as a result of the non-beneficial shareholding in Capitec held by a director of PSG and as aresult of the aforementioned deeming provision of the Code, PSG is deemedto have crossed the 35% Threshold when it implemented the Original PSGoffer. PSG, after consulting with the SRP on the appropriate action to betaken, has been advised by the SRP that it is required to make a mandatoryoffer to all Capitec shareholders at the same offer consideration as wasapplied to the Original PSG Offer, save for adjusting the aforementionedconsideration to take into account dividends that were paid by both Capitecand PSG to their ordinary shareholders after implementation of the OriginalPSG Offer.Given that the Capitec share price has increased substantially compared tothe PSG share price in the period between the Original PSG Offer and thedate hereof, the PSG and Capitec boards are of the view that the MandatoryOffer is neither fair nor reasonable to Capitec shareholders. Capitec willhowever obtain a fairness opinion prepared by an independent party, thatwill be included in the Mandatory Offer circular.At the time of the Original PSG Offer, the South African Reserve Bankgranted PSG approval to increase its shareholding in Capitec to 49%. Inthis regard PSG will obtain irrevocable undertakings from material Capitecshareholders to ensure that the maximum number of shares that PSG couldobtain in terms of the Mandatory Offer will be limited to 49% of theordinary issued share capital of Capitec.3. TERMS OF THE MANDATORY OFFERPSG owns, directly and indirectly, together with the director concerned, inexcess of 35% of the ordinary issued share capital of Capitec and as suchis required to make the Mandatory Offer to acquire all Capitec shares notheld by PSG from all Capitec shareholders. The salient terms of theMandatory Offer are set out below:3.1 The Offer Consideration3.1.1 Capitec shareholders that accept the Mandatory Offer shallreceive 1.5767 PSG shares for every 1 Capitec share disposed ofin terms of the Mandatory Offer.3.1.2 For the avoidance of doubt, it is recorded that Capitec sharesacquired in terms of the Mandatory Offer will be "ex" dividend.Similarly, any PSG shares issued as offer consideration will beissued "ex" dividend.3.2 The Offer PeriodThe Offer will be open for acceptance from 09:00 on Monday, 21 December2009 and will close at 12:00 on Friday, 15 January 2010 ("the ClosingDate"). The last day to trade Capitec shares in order to participate in theOffer is Friday, 8 January 2010. Shares in Capitec will trade "ex" theright to participate in the Offer from Monday, 11 January 2010. The recorddate for the Offer is Friday, 15 January 2010. The offer consideration willbe credited to the accounts of dematerialised Capitec shareholders thataccept the Offer, at their CSDP or broker (as the case may be) on Monday,18 January 2010. The offer consideration will be posted to certificatedCapitec shareholders that accept the Offer on or about Tuesday, 19 January2010.3.3 Conditions PrecedentIn the event that PSG is required to issue more than 5% of its issued sharecapital as at 28 February 2009 to Capitec shareholders that accept theMandatory Offer, same will become conditional on PSG shareholder approval.3.4 Opinion and recommendationAs set out above, PSG makes the Mandatory Offer in order to comply withthe Code and is required to do so at the same offer consideration as wasapplied to the Original PSG Offer, save for adjusting to take into accountdividends that were paid by both Capitec and PSG to their ordinaryshareholders after implementation of the Original PSG Offer. Given thatthe Capitec share price has increased substantially compared to the PSGshare price in the period between the Original PSG Offer and the datehereof, neither the PSG nor the Capitec board regards the Mandatory Offeras being fair or reasonable to Capitec shareholders.The circular that will be sent to Capitec shareholders shall contain afairness opinion prepared by an independent party to enable Capitecshareholders to make an informed decision regarding the Mandatory Offer.4. CIRCULAR TO CAPITEC SHAREHOLDERSA circular, subject to approval thereof by the SRP, containing full detailsof the Mandatory Offer will be posted to Capitec shareholders on or aboutMonday, 21 December 2009.By order of the Capitec Board By order of the PSG BoardStellenbosch Stellenbosch7 December 2009 7 December 2009SponsorPSG Capital (Pty) LimitedDate: 07/12/2009 16:30:01 Produced by the JSE SENS Department.The SENS service is an information dissemination service administered by theJSE Limited ('JSE'). 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