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SPECIFIC PRO RATA OFFER TO HCI SHAREHOLDERS AND DISPOSAL OF HCI’S INTEREST IN VODACOM GROUP

Specific pro rata offer to HCI shareholders and disposal of HCI`s interest in Vodacom Group (Proprietary) Limited (“Vodacom”)

1. Introduction
HCI shareholders are referred to the announcement published in the press on 29 August 2002, and further cautionary announcements published in the press on 20 September 2002 and 4 November 2002 respectively, advising that the board of directors of the company (“the Board”) had resolved unanimously to propose that the company make a specific pro rata offer to all its shareholders to purchase 75% of all their respective shares in the company (“the Repurchase Offer”), and further, that the Board had entered into negotiations with VenFin Limited (“VenFin”) regarding the disposal of HCI`s entire interest of five percent in Vodacom (“the disposal”).

2. The repurchase offer
Subject to suspensive conditions referred to in paragraph 2.3 below, HCI intends to implement a specific repurchase of its ordinary shares in issue (“HCI shares”) by way of a pro-rata offer to all its shareholders to purchase 75% of their respective holdings in the company. ‘

2.1 Rationale
The shares in the company have been trading on the JSE Securities Exchange South Africa (“the JSE”) at a discount to the underlying value of the company`s assets. The major institutional shareholders of the company are of the view that the disposal coupled with the Repurchase Offer would afford them the best opportunity to limit the discount and be offered a cash exit in view of this desire. The Board is of the view that the Repurchase Offer will give HCI shareholders an opportunity to unlock some value, should they wish to do so.

2.2 Terms of the Repurchase Offer
In terms of the Listings Requirements of the JSE, HCI shareholders may elect to tender additional shares in excess of the Repurchase Offer (the “excess tender”). Shares so tendered may be acquired from shareholders on an equitable basis, if and to the extent that the directors so resolve.

It is proposed that:
2.2.1 HCI will purchase from HCI shareholders all shares tendered up to a maximum of 75% of the total HCI shares in issue, after adjusting for treasury shares, being 278 382 949 shares, which will then be cancelled, and from the commencement of business on Tuesday 14 January 2003 removed from the JSE list;
2.2.2 the purchase consideration payable by the company for each HCI share purchased by it shall be an amount calculated in accordance with the following formula:

R3.04 – [ ( R1.75 billion – A) v 370 million] + (B v 370 million)
where:
A = the Net Proceeds (as defined in paragraph 2.3.4 below);
B = interest on A calculated at 70% of the call rate applicable to Nedcor Bank Limited`s call rate for overnight deposits reckoned from the date of receipt by the company of the Net Proceeds to the date of payment of the purchase consideration.

The amount of 370 million referred to in the above formula is fixed and was based on the current number of HCI shares in issue.

Accordingly if the Net Proceeds are R1.75 billion, the purchase consideration per HCI share shall be 304 cents and if the Net Proceeds are R1.5 billion, the purchase consideration per HCI share shall be 236.4 cents. Such purchase consideration shall be increased by an appropriate amount as calculated in the last part of the above formula.
Based on the Net Proceeds of the disposal detailed in paragraph 3 below, it is expected that should all the suspensive conditions referred to in paragraph 3.4 below be met, each HCI shareholder will receive 236.4 cents per HCI share.

It is anticipated that the purchase consideration will be payable to HCI shareholders on Monday 13 January 2003.

2.3 Suspensive conditions
The Repurchase Offer is subject to the fulfillment, by not later than 31 March 2003 (other than in respect of the condition recorded in paragraph 2.3.4, in relation to which the date recorded in such paragraph shall apply), of inter alia, the following suspensive conditions:
2.3.1 the approval of the JSE and the Securities Regulation Panel (“SRP”),
2.3.2 the requisite resolutions being passed in general meeting by HCI shareholders, and subsequently registered by the Registrar of Companies;
2.3.3 the SRP granting to the dominant controlling shareholder of the company, namely SACTWU Investments Group of Companies (“SACTWU”) an exemption from any obligation that it may have to make a mandatory offer that may be triggered in terms of the Securities Regulation Code on Takeovers and Mergers in consequence of the implementation of the Repurchase Offer; and
2.3.4 that Descarte Investments No. 8 (Proprietary) Limited (“Descarte”), the entire ordinary share capital of which is held by HCI receives an amount of not less than R1,5 billion (“the Net Proceeds”), on or before 31 December 2002,
either:
2.3.4.1 from the sale by Descarte, of the 500 shares having a par value of R0,01 each in the issued ordinary share capital of Vodacom held by Descarte and all of the claims held by Descarte in and against Vodacom; or
2.3.4.2 from the receipt by it of a loan from Venfin Finance Corporation (Proprietary) Limited (“VFC”).
The SRP has advised that it will grant SACTWU the exemption referred to in paragraph 2.3.3 above, subject to the receipt of independent shareholders` approval.

2.4 Salient dates
The salient dates relating to the implementation of the Repurchase Offer are as
follows:

Repurchase Offer opens from commencement of trade on Monday 2 December 2002
Last day to lodge forms of proxy for the general meeting by 10:00 on Monday 23 December
General meeting held at 10:00 on Tuesday 24 December
Results of general meeting released on SENS on Tuesday 24 December
Results of general meeting published in the press on Friday 27 December
Last day to trade in order to participate in the Repurchase Offer on Friday 3 January 2003
HCI ordinary shares trade ex-Repurchase Offer on Monday 6 January
Last day to lodge forms of surrender to accept the Repurchase Offer on Friday 10 January
Repurchase Offer closes at 16:00 on (See note 3) Friday 10 January
Record date to participate in the Repurchase Offer on Friday 10 January
Results of the Repurchase Offer released on SENS on Monday 13 Janaury
Results of the Repurchase Offer published in the press on Tuesday 14 January
Cheques in respect of Repurchase Offer posted, or cash electronically transferred, to HCI sharehodlers on Monday 13 January
Safe custody accounts held with Central Securities Depositary Participant (“CSDP”) or broker credited and updated in respect of both the Repurchase Offer and any excess tender to HCI dematerialised shareholders on Monday 13 January
Subject to the acceptance of the directors, cheques in respect of the excess tender will be posted or cash electronically transferred, to HCI sharehodlers from Monday 13 January
Cancellation of repurchased shares from the JSE list on Tuesday 14 Janaury 2003

Notes:
1.Share certificates may not be dematerialised or rematerialised between Monday 6 January 2003 and Friday 10 January 2003, both days inclusive.
2 The above dates and times are subject to amendment. Any such amendment will be published in the press and on SENS.
3. Dematerialised shareholders are required to notify their duly appointed CSDP or broker of their acceptances of the Repurchase Offer in the manner and time stipulated in the agreement governing the relationship between a shareholder and his/her CSDP or broker.

2.5 Funding of the Repurchase Offer
The Repurchase Offer will be funded primarily out of the Net Proceeds, should both the suspensive conditions recorded in paragraph 3.4 below be fulfilled, or out of the proceeds of the loan referred to in paragraph 2.3.4.2 above should only the suspensive conditions referred to in paragraph 3.4.1 below be fulfilled.

The Board has satisfied itself as to the liquidity and solvency of the company for the 12 month period immediately following the general meeting date.

2.6 Irrevocable undertakings
The company has received written irrevocable undertakings from HCI shareholders who currently collectively hold in excess of 70% of all the issued shares in the company, to vote in favour of the required resolutions to give effect to the Repurchase Offer, and 45% of all the issued shares in the company, to tender such shares in terms of the Repurchase Offer.

3. The disposal
3.1 The Board has procured that Descarte, has offered (“Offer”) to sell to the VenFin Group (namely VenFin, VFC, Van Rijn Beleggingskorporasie Limited (“Van Rijn”)) and the Vodafone Group (namely, Vodafone Group Plc and Vodafone Holdings SA (Proprietary) Limited) (the “Offerees”):
3.1.1 500 shares having a par value of R0.01 each in the issued ordinary share capital of Vodacom held by Descarte (“Vodacom shares”); and
3.1.2 all of the claims held by Descarte in and against Vodacom (“Vodacom claims”).

3.2 The purchase consideration payable pursuant to any sale of the Vodacom shares and the Vodacom claims which results from the acceptance of the Offer, is an amount of R1 500 040 000,00, which does not accrue interest.

3.3 The Board has further procured an irrevocable undertaking by Van Rijn in favour of Descarte, that on or before 20 December 2002, Van Rijn shall accept the Offer in relation to such number of the Vodacom shares and the corresponding percentage of the Vodacom claims, as the other Offerees have not irrevocably agreed to accept at the time of such acceptance by Van Rijn.
3.4 Any sale which results from an acceptance of the Offer by the Offerees or any of them is subject to the fulfillment of inter alia the following suspensive conditions:

3.4.1 that the requisite majority of the shareholders of HCI in general meeting approve of such sale; and
3.4.2 the grant of any further approvals and authorities which may be lawfully required.

3.5 Rationale
The rationale for the Offer and the sale of the Vodacom shares and the Vodacom claims which will result from an acceptance thereof by the Offerees is to provide the company with funding required by it to discharge debt of the company and to undertake the Repurchase Offer

4 .Financial effects
The table below sets out the cumulative financial effects on the earnings, headline earnings and net asset value per HCI share based on the audited results of the group for the year ended 31 March 2002 of the Repurchase Offer and the disposal :

Before After Change
(cents) (cents) (%)
Loss per share 1 115.9 171.2 (47.63)
Headline loss per share 38.0 35.8 5.79
1
Net asset value per 558 468 (16.13)
share 2
Net tangible asset 558 468 (16.13)
value per share 2
Market value per share 160 236 47.50
3
Shares in issue (`000)2 367530 207 910 (43.43)
Notes:
1. The amount in the “After ” column represents the earnings that would have accrued had the repurchase offer and disposal been effective on 1 April 2001, assuming the Net Proceeds from the disposal are applied to settle existing debt in the company at 1 April 2001, to effect the repurchase and fund other commitments of the company that have otherwise been funded from debt and assuming an after-tax average money market rate of 7% per annum and an after-tax cost of debt of 11,5% per annum.
2. Based on the 367 530 000 HCI shares in issue at 31 March 2002 net of treasury shares (ie before the Repurchase Offer) and 207 910 882 HCI shares in issue net of treasury shares after the Repurchase Offer, after adjusting for the repurchase and cancellation of a minimum of 159 619 118 HCI shares that have been irrevocably offered for repurchase by HCI shareholders.

The net asset value per share in the “Before” column had been reported using a valuation of the Vodacom interest at R2,2 billion. The net asset value per share in the “After” column assumes that the Vodacom interest will be sold for the Net Proceeds of R1,5 billion.
3. The market value per share as reported in the “Before” column is the closing HCI share price the day preceeding the first cautionary announcement made by the company on 31 July 2002. The market value per share in the “After” column is the expected purchase consideration of 236.4 cents per HCI share assuming the
Net Proceeds are R1,5 billion to shareholders accepting the repurchase offer in respect of 75% of their respective holdings in the company.
4. The financial effects have been presented cumulatively as the repurchase offer cannot be implemented without the disposal and to present the financial effects of either transaction independent of the other would be misleading.
5. General meeting and further documentation
A circular to HCI shareholders convening a general meeting to be held on or about Tuesday 24 December 2002 and providing full details of the Repurchase Offer and the disposal, will be posted to HCI shareholders on Monday 2 December 2002.
6. Withdrawal of cautionary announcement
HCI shareholders are advised that as further information has now been made available to them, caution is no longer required when dealing in their HCI shares.