Project Aloe

Corporate Finance Advisory Services Proposal

9 December 2016
Private and confidential
Contents

1. Preface letter 3

2. Our approach 4

3. Fee structure 7

4. Why Deloitte Capital 8

5. Disclaimer 11

Deloitte Capital (Pty) Ltd 2

 Deloitte Capital
Private Bag x6
Gallo Manor 2052
Tel +27 11 304 5105
www.deloitte.com

The Shareholders Dear Messrs. Khumalo and Bradford

Isizinda Aluminium
4 Harbour Arterial Road PROPOSAL FOR CORPORATE FINANCE ADVISORY SERVICES
Richards Bay
3900 RE: ADVISORY BRIEF: SHAREHOLDING STRUCTURING OF OPERATING ENTITIES ON ISIZINDA
FOOTPRINT
9 December 2016
Thank you for the opportunity to present this proposal. We understand that the shareholders of
Isizinda Aluminium (the Company or Isizinda) wish to explore potential restructuring options in
order to, inter alia, maximise Isizindas business opportunities, ensure that the Company is achieving
its transformation objectives and ensure that the Company continues to play its vital role in the
aluminium supply chain.

To this end we will work with representatives of the Company and its shareholders to better
understand the business of Isizinda, the current structure of the shareholding and objectives that
each party is trying to achieve.

Independence and objectivity are hallmarks of Deloittes participation in the professional services
consulting sector. As Isizindas appointed adviser we will act in the best interest of the Company and
be impartial in our advice on what structure/s best addresses the Companys needs and objectives.

We look forward to hearing from you.

Your sincerely

Joseph Zitha Daniel Bodewig

Director Director
082 464 4486 082 552 1999
jzitha@deloitte.co.za dbodewig@deloitte.co.za
Our approach
To develop restructuring options we need to understand each shareholders
objectives and the existing and potential future states of the business

Phase 1: Understanding the existing and potential future states of the business

During this phase we will engage with the shareholders of Isizinda, individually and collectively, to better understand each shareholders
vision, concerns and constraints.

Through discussion and review of documentation we will seek to understand the following:

How Isizinda came into being and what the original objectives were;

The existing structure including provision of the funding, shareholders and management agreements;

The financial performance and position of the Company (historical and future under existing business plans and budgets);

The market dynamics under which Isizinda operates:

Its role in the South African aluminium supply chain

Its current and potential future products and customers

Product cost and pricing

Its technical capabilities and limitations

The project opportunities that Isizinda may be able to participate in and the implications of such (including capital required, timing and
feasibility);

The business model alternative (excluding projects):

The implications of renegotiating the 35% guaranteed return model currently in use for the business and its shareholders

The extent to which the alternative/s have been developed and modelled

Deloitte Capital (Pty) Ltd 4

Our approach (cont.)
The relative value and risks of Isizinda under different operating models
needs to be considered

Phase 2: Valuation and assessment of alternative business case/s

It is important that the shareholders understand the value and relative risks of Isizinda under various scenarios. The shareholders cannot
make informed decisions about restructuring the shareholding of the business unless the relative risk / reward of the current model and
alternative models is presented.

Detailed valuation work is not envisaged, rather we will model the high-level valuation impact of restructuring the business.

The success of this output is dependent on the extent to which Isizinda has prepared financial models for a future operating state and
agreement between the shareholders on such.

Deloitte Capital (Pty) Ltd 5

Our approach (cont.)
We will present restructuring options for consideration and implementation
by the shareholders

Phase 3: Restructuring options and negotiation

Our work under phase 1 and 2 will allow us to present the shareholders with potential restructuring options. We will explain the pros and
cons and implications (including tax matters if necessary) of such options to each shareholder and obtain their preliminary opinions and
deal parameters. This initial feedback will allow us to further refine the options available. Thereafter, we will make a presentation to a joint
meeting of shareholders to present our recommendations.

Phase 4: Negotiation and Implementation

We will facilitate negotiations between the shareholders and assist Bingelela Capital (Pty) Ltd (Bingelela) and Hulamin to bridge any
gaps that might exist between their positions.

The outcome of this phase will be:

A preferred restructuring option being agreed to;

Signing of a heads of agreement; and

Roadmap for implementation.

To the extent necessary we will assist with the implementation of the heads of agreement. To this end we will:

Brief the legal advisers;

Review and comment on the legal agreements;

Facilitate any final negotiations; and

Monitor the deal to completion.

Deloitte Capital (Pty) Ltd 6

Fee structure
Fees are based on hourly rates at a 20% discount to evidence our
commitment to the project

The project cost will be based on discounted hourly charge Rate card Director Senior Manager
out rates manager
An accurate estimate of the amount of time it will take to 100% Standard rates R6,410 R3,930 R3,500
complete the assignment is difficult to make
In particular it is difficult to estimate the level of analyses Discounted rates R5,128 R3,144 R2,800
and extent of negotiations required

Deloitte Capital (Pty) Ltd 7

Why Deloitte Capital
Primary Delivery Team

Joseph Zitha Lerato Ledwaba

Director, Deloitte Capital Team member, Deloitte Capital
Project Leader Lerato has a number of years M&A experience
10 years M&A experience. Sector experience and has been involved in numerous transactions
includes Manufacturing, Transport & Logistics, including Mergers and Acquisitions, Black
Construction, Health Care, Black Economic Economic Empowerment transactions and
Empowerment, Financial Services, and Capital raising for local and foreign clients
Telecommunications. operating in sectors such as Manufacturing,
Financial Services, and Consumer business.
Joseph has continuous engagements with the
Department of Trade and Industry (DTI) and Roxanne Thorley
has a strong understanding of their
requirements, including those for the Team member, Deloitte Capital
Automotive Production and Development Roxanne has a number of years M&A experience
Programme (APDP), the Black Industrialist and has been involved in numerous
Initiative and BEE transaction structures. transactions. Sector experience includes
Joseph has relevant experience in supporting Manufacturing, Automotive, Transport &
OEMs in their Automotive (components and Logistics, Agribusiness, Telecommunications and
parts) supply side transformation plans. Water Treatment.

Deloitte Capital (Pty) Ltd 8

Why Deloitte Capital
Supporting the Delivery Team

Mike Krzychylkiewicz
Chief Executive Officer, Deloitte Capital
20 years experience including 10 years as the
Head of M&A at a Big 4 profession services firm.
Sector experience includes distressed M&A,
private equity, agriculture, property, B2B
services, BEE, mining services, water and
healthcare.

Daniel Bodewig
Director, Deloitte Capital
10 years M&A experience. Sector experience
includes distressed M&A, BEE, private equity,
construction and building materials, heavy and
light industrial manufacturing, defence,
agriculture and B2B services.

Deloitte Capital (Pty) Ltd 9

Why Deloitte Capital
The senior members of the Deloitte Capital team have a sold track record of
advising clients on complex M&A transactions.
Significant experience in advising on transactions
involving BEE groups, listed companies and multinationals
Advised Afrit (SAs largest manufacturer of truck trailers) on
an equity partnership (sale of 51%) with a BEE consortium led
by Investec Private Equity, DCD (heavy engineering) and
African Revival Investment Holdings
Advised General Electric South Africa on the creation of
GESAT (GE South Africa Transportation), a joint venture with
Mineworkers Investment Company which tendered and
won the Transnet locomotive replacement programme
Advised Sandvik (multinational mining equipment
manufacturer) on its localisation strategy and empowerment
of its SA distribution platform
Advised Howden Limited (JSE listed manufacturer of power
products; majority controlled by US multinational Colfax Corp)
on its BEE ownership strategy
Advised Total on SA commercial wholesale fuel empowerment
strategy. We also advised Total on their initial empowerment
transaction
Advised Grindrod Freight Services on its empowerment
strategy which resulted in the introduction of a 25% partner to
its South African operations
Deloitte Capital (Pty) Ltd
Advised RBT Resources in the merger with Grindrod
Terminals to form RBTGrindrod Terminals Merger between
Dahabshiil Group and MSG Group in Somaliland
Advised Basil Read Limited (listed construction business)
and TWP Limited (listed engineering consulting business) on
their merger
Advised the listed construction group, Basil Read on its
empowerment transaction with SIOC, a broad-based group
Advised Denel SOC (state owned armaments manufacturer)
on strategic equity partnership with MBDA (European missile
leader) on Denels missiles business
Advised BP South Africa on its BEE transaction with a BEE
consortium led by Kapela Investments
Advised Kagiso Tiso Holdings on acquisition of Servest from
private equity owners
Advised Kagiso Tiso Holdings on sale of its stake in the First
Rand Empowerment Trust to Mineworkers Investment
Company
Advised SPX Inc (Fortune 500 industrial manufacturer) on
sale of BEE equity interest to Kapela Investments
Advised the shareholders of Metier Mixed Concrete in their
sale of the business to the listed Sephaku Holdings Ltd
10
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