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PROPOSED UNBUNDLING BY HCI

THE PROPOSED UNBUNDLING BY HCI OF ITS SHAREHOLDINGS IN SOFTLINE LIMITED AND UNIBANK INVESTMENT HOLDINGS LIMITED (INCORPORATING FERREIRA FINANCIAL SERVICES) AND FURTHER CAUTIONARY ANNOUNCEMENT SHAREHOLDERS ARE REFERRED TO THE CAUTIONARY ANNOUNCEMENTS DATED 21 APRIL 1999 AND 28 APRIL 1999, REGARDING THE PROPOSED UNBUNDLING BY HCI OF ITS LISTED INVESTMENTS. METTLE LIMITED IS AUTHORISED TO ANNOUNCE THAT, SUBJECT TO THE FULFILMENT OF THE CONDITIONS PRECEDENT AS SET OUT BELOW, IT IS PROPOSED THAT THE EFFECTIVE EQUITY INTEREST OF HCI IN SOFTLINE LIMITED (“SOFTLINE”) AND UNIBANK INVESTMENT HOLDINGS LIMITED (INCORPORATING FERREIRA FINANCIAL SERVICES) (“UNIFER”) (COLLECTIVELY “THE DISTRIBUTIONS”) BE UNBUNDLED TO HCI SHAREHOLDERS. 1. RATIONALE HCI IS AN INVESTMENT HOLDING COMPANY THAT HAS SIGNIFICANT EQUITY AND CAPITAL PARTICIPATION IN ENTREPRENEURIALLY RUN COMPANIES THAT ARE LISTED, HAVE THE POTENTIAL TO BE LISTED, OR ARE GROWING, CASH GENERATING, UNLISTED COMPANIES. PURSUANT TO THE RESTRUCTURING OF HCI, WHICH COMMENCED WITH THE DISPOSAL OF ITS INVESTMENT IN DATATEC LIMITED (SEE PRESS ANNOUNCEMENT DATED 28 APRIL 1999), THE BOARD OF DIRECTORS OF HCI HAS DECIDED TO PROPOSE THE UNBUNDLING OF THE EFFECTIVE SHAREHOLDING OF HCI IN SOFTLINE AND UNIFER. 2. INFORMATION ON SOFTLINE AND UNIFER SOFTLINE SOFTLINE IS A GLOBAL SOFTWARE AND SERVICES GROUP FOCUSED ON THE DEVELOPMENT AND IMPLEMENTATION OF MISSION CRITICAL FINANCIAL APPLICATIONS WITH OPERATIONS THROUGHOUT SOUTH AFRICA, AUSTRALIA, THE UNITED STATES AND THE UNITED KINGDOM. THE GROUP HAS TWO CORE AREAS OF FOCUS IN THE MIDRANGE ACCOUNTING AND RETAIL ENTERPRISE SOFTWARE MARKETS. UNIFER UNIFER IS A COMPANY THAT CARRIES ON BUSINESS AS A PROVIDER OF BROAD-BASED FINANCIAL SERVICES PRIMARILY AIMED AT THE EMERGING MARKET. THE SUBSIDIARIES OF UNIFER OFFER MICRO LENDING, RETAILING CORE BUILDING MATERIAL ON CREDIT, DEPOSIT TAKING AND GROUP SAVING SCHEMES, THE PROVISION OF STRUCTURED ASSET BASED FINANCE TO CORPORATES, HOUSING FINANCE, THE FINANCE OF OFFICE AUTOMATION EQUIPMENT, THE STRUCTURING AND DISTRIBUTION OF QUALITY EMPLOYEE BENEFITS AND SHORT-TERM INSURANCE TO NICHE MARKETS. 3. DETAILS OF THE DISTRIBUTIONS METHODOLOGY SUBJECT TO THE CONDITIONS PRECEDENT DETAILED BELOW, IT IS PROPOSED THAT HCI WILL EFFECT THE DISTRIBUTIONS THROUGH A DIVIDEND IN SPECIE. THE DIVIDEND IN SPECIE WILL TAKE PLACE THROUGH A DISTRIBUTION OF RESERVES THAT WILL BE CREATED THROUGH A REVALUATION OF THE INVESTMENTS OF HCI. TAXATION CONSIDERATIONS APPLICATION IS IN THE PROCESS OF BEING MADE TO THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE (“COMMISSIONER”) IN TERMS OF SECTION 60 OF THE INCOME TAX ACT, 1993 (ACT 113 OF 1993), AS AMENDED (THE “TAX ACT”) FOR THE DISTRIBUTIONS TO BE CLASSIFIED AS AN UNBUNDLING TRANSACTION, WHICH WILL RESULT IN THE DISTRIBUTIONS BEING FREE OF SECONDARY TAX ON COMPANIES AND STAMP DUTY. SHAREHOLDER ENTITLEMENTS, FINANCIAL EFFECTS AND SALIENT DATES A FURTHER ANNOUNCEMENT PROVIDING HCI SHAREHOLDERS WITH DETAILS REGARDING ENTITLEMENTS, FINANCIAL EFFECTS AND SALIENT DATES WILL BE PUBLISHED IN DUE COURSE. 4. CONDITIONS PRECEDENT THE DISTRIBUTIONS ARE SUBJECT TO THE FULFILMENT OF THE FOLLOWING CONDITIONS PRECEDENT: * APPROVAL BY THE COMMISSIONER IN TERMS OF SECTION 60 OF THE TAX ACT; * PARTIES TO THE HCI AGREEMENT IN TERMS OF WHICH HCI SUBSCRIBED FOR ITS INTEREST IN SOFTLINE, WAIVING THEIR RESPECTIVE PRE-EMPTIVE RIGHTS; * HCI PROVIDING SUCH SECURITY AS IT IS OBLIGED TO FURNISH TO UNIFER AND/OR CERTAIN OF THE UNIFER SHAREHOLDERS IN TERMS OF THE AGREEMENT PURSUANT TO WHICH HCI ACQUIRED ITS INTEREST IN UNIFER; * SHAREHOLDERS PASSING THE NECESSARY RESOLUTIONS TO BOTH APPROVE AND GIVE EFFECT TO THE DISTRIBUTIONS; AND * REQUISITE APPROVAL BEING OBTAINED FROM THE JSE. 5. FURTHER CAUTIONARY ANNOUNCEMENT SHAREHOLDERS ARE ADVISED THAT UNTIL SUCH TIME AS SHAREHOLDER ENTITLEMENTS, FINANCIAL EFFECTS AND SALIENT DATES ARE ANNOUNCED, THEY SHOULD CONTINUE TO EXERCISE CAUTION IN THEIR HCI SHARE DEALINGS.

Source: HCI