The document provides an overview of opportunities for foreign and local investment in South Africa through acquiring distressed assets in the business rescue process. It discusses South Africa's business rescue regime, the role of post-commencement finance, identifying early distress signals, methodology for acquiring distressed assets at good value, analyzing the current economic landscape and opportunities in distressed mining assets. It also covers the interplay between labor law and business rescue and practicalities of acquiring distressed assets through business rescue.

1. FOREIGN & LOCAL INVESTMENT
OPPORTUNITIES IN SOUTH AFRICA
OFFERED BY THE
BUSINESS RESCUE PROCESS
Anastasia Vatalidis, Director
Chris Stevens, Director
Eric Levenstein, Director
Peter van den Steen, Practitioner
Wanya du Preez, Senior Manager
7 AUGUST 2014

2. General Overview
> Overview of the South African Business Rescue Regime
> Role of Post-Commencement Finance in Business Rescue
> Utilising Early Distress Signals & Business Rescue to Identify
Distressed Assets
> Methodology for Making Acquisitions of Good Value in Business
Rescue
> Analysing the Current Macro & Micro Economic Landscape in SA
> Landscape for the Acquisition of Distressed Assets in the Mining
Sector
> Interplay between Labour Law and Business Rescue
> Practicalities surrounding the Acquisition of Distressed Assets
through Business Rescue
2

3. BUSINESS RESCUE LANDSCAPE

4. Business Rescue – A New Mechanism for
Restructuring Financially Distressed Companies
4
> Judicial Management replaced by business rescue
> Mirrors the mechanism for restructuring found in the USA (Chapter
11) and the UK (Administration)
> Brings South Africa into line with international corporate rescue
regimes
> A new playing field for venture capitalists, hedge funds, private
equity firms and distressed funds
> Opportunity to pick up distressed assets at discounted prices
> China and the UK – private equity see South Africa as an
“unsaturated market” for distressed debt investing

5. Definitions
5
> Definitions relevant to the business rescue provisions of the Act
> Affected Person – shareholder, creditor, registered trade union
representing employees of the company or if any of the
employees of the company are not represented by a registered
trade union, each of those employees or their respective
representatives
> Business Rescue - proceedings to facilitate the rehabilitation of
a company that is financially distressed by providing for –
> temporary supervision of the company, and of the
management of its affairs, business and property;
> temporary moratorium on the rights of claimants against the
company or in respect of property in its possession; and

6. Definitions
6
> development and implementation, if approved, of a plan to
rescue the company by restructuring its affairs, business,
property, debt and other liabilities, and equity in a manner
that –
> maximizes the likelihood of the company continuing in
existence on a solvent basis; or
> results in a better return for the company’s creditors or
shareholders than would result from the immediate
liquidation of the company
> Business Rescue Practitioner – a person appointed or two
or more persons appointed jointly, to oversee a company
during business rescue proceedings –
> two or more persons (could also include a junior and an
experienced or senior practitioner)
> “person” – contemplates appointment of a company

7. Role Players in Business Rescue
7
COMPANY
SHAREHOLDERS
POST
COMMENCEMENT
FINANCIERS
BUSINESS
RESCUE
PRACTITIONER
CREDITORS
SECURITY
HOLDERSTRADE
UNION
ATTORNEY
COURT/CIPC
EMPLOYEES
DIRECTORS

8. Test for Business Rescue
8
> Financially Distressed - 6 month forward looking test –
> it appears to be reasonably unlikely that the company will be
able to pay all of its debts as they fall due and payable within
the immediately ensuing six months (commercial insolvency
test); or
> it appears to be reasonably likely that the company will
become “insolvent within the immediately ensuing six months
(factual/balance sheet insolvency).
> Clear distinction between “insolvent” and “financial distress”
> Business rescue test –
> forward looking test
> contemplates impending insolvency (commercial insolvency or
factual insolvency)

9. When to Begin Business Rescue
9
> Welman v Marcelle Props 193 CC & Another (2012) JOL
28714 (GSJ)
“Business rescue proceedings are not for terminally ill
close corporations. Nor are they for chronically ill. They
are for ailing corporations, which given time will be
rescued and become solvent.”
> First signs of financial distress – company must apply for
business rescue
> If more than just “financially distressed” the company must
consider other options such as a liquidation

10. Duties of Directors Before Business Rescue
10
> Directors have an obligation to consider the financial state of the
company from time to time
> If company is financially distressed, the directors have two choices –
> pass a resolution to commence business rescue; or
> send out what is commonly referred to as a “section 129(7) notice” –
> notify affected persons of the nature of the company’s financial
distress (ie impending commercial or balance sheet insolvency);
and
> reasons for not adopting a resolution to commence business
rescue
> Notice needs to be carefully considered – could constitute an “act of
insolvency”, cause suppliers to stop supplying the company or precipitate
a compulsory business rescue
> Failure to comply may result in personal liability for directors

11. 11
Director’s Responsibility
> Section 129(7)
“If the board of a company has reasonable grounds to
believe that the company is financially distressed, but the
board has not adopted a resolution contemplated in this
section, the board must deliver a written notice to each
affected person, setting out the criteria referred to in
section 128(1)(f) that are applicable to the company, and
its reasons for not adopting a resolution contemplated in
this section.”
> This will focus directors’ minds in any financial distressed
company
> Sending out notice must be carefully considered as it can
have serious consequences

12. Pre-Assessment
12
> Investigation (at instance of company or creditor/s) into the
business, dealings and affairs of the company, while not
regulated by the Act, may be necessary
> Identify the nature of the company’s business – this will be
determinative of the suitability of business rescue (ie retail v
investment property company)
> Prior to the board or an affected person placing a company into
business rescue, consideration should be given to –
> the nature and business of the company;
> extent to which business rescue is the appropriate procedure
for that company; and
> extent to which business rescue would be more beneficial for
the company than a liquidation

13. Entry into Business Rescue
13
Voluntary Business Rescue
Board resolution passed by a simple majority
Practitioner is nominated in the resolution
Company is financially distressed (ie will not be solvent on its balance
sheet or will not be able to pay its debts when they fall due within the
next six months)
Reasonable prospect that the company can be saved.
Cannot adopt a resolution is liquidation proceedings have been initiated
Compulsory Business Rescue
Affected person (shareholder, creditor or employee) makes application to court
Company is financially distressed
Company has failed to pay over any amount in terms of an obligation under
or in terms of public regulation, or contract, with respect to employment
related matters
Just and equitable to do so for financial reasons
There is a reasonable prospect of rescuing the company

14. Snap Shot of Process & Time Periods
14
14
Practitioner Appointed
Delivery up by
Directors of All
Books and
Records
As Soon as
Practicable
5 Days
Directors to
Provide
Statement of
Affairs
First Meeting
of
Creditors/Employees
10 Days from Date of Appointment
Preparation &
Publication of
Plan
25 Days from Date of
Appointment
Section 152
Meeting to Consider
& Vote on Plan
10
days
Approved & Plan
Implemented
If Rejected - Vote on
Revised Plan/Apply to
Court to Set Aside
Inappropriate Vote/Offer to
Purchase Voting Interests
of Dissenting Parties
If Rejected & No Steps
Taken – BRP to File
Termination Notice & Place
Company in Liquidation
Note: Business Rescue Should Generally End Within
3 Months, or an Extended Time as Granted by Court
on Application by Practitioner
(Days = Business Days)
Section
150(5)
Inform
Regulatory
Authorities of
Commencement

15. Important Features of Business Rescue
15
Moratorium Stay on Legal Proceedings & Enforcement Action Against the
Company and in respect of Property Belonging to the
Company or Lawfully in its Possession
Post-
Commencement
Finance
That which becomes due and owing to employees during
business rescue proceedings for rendering services to the
company and funding which is provided to a company, during
the company’s business rescue, by means unrelated to
employment (including the provision of credit or services
during business rescue)
Management of
Company
Business rescue practitioner has full management control of
the company in substitution for the board of directors. The
board maintains its powers and duties but all decisions must
be taken with the approval of the business rescue practitioner
– otherwise all transactions are void!
Contracts Certain provisions/the whole contract may be suspended or
cancelled by the business rescue practitioner. Cancellation
can only be done following an application by the practitioner
to court

16. Important Features of Business Rescue
16
Employees Remain employed unless they are retrenched in accordance with
labour legislation (Section 189 of the Labour Relations Act)
Stakeholders Continuously engaged by the business rescue practitioner in the
process. Creditors get a vote on the plan at the value of their
claim (unless their claim is subordinated by agreement).
Shareholders vote on the plan if their rights are affected by the
plan
Voting on Plan Plan will be approved if more than 75% of the creditors, voting
at value, vote in favour of the plan and 50% of the independent
creditors vote in favour of the plan
Binding Offer A creditor or shareholder may buy the voting interest of another
creditor or shareholder who voted against the adoption of a plan
if such vote results in the plan not being adopted
Cram Down An adopted business rescue plan is binding on all creditors
whether or not they voted in favour of the plan, against the plan,
were present at the meeting or proved a claim
Discharge of
Debt
Unless a business rescue plan provides otherwise, creditors
and/or shareholders whose claims are compromised by the
business rescue plan are prohibited from enforcing the balance
of their claims after the adoption of the plan (even against
sureties) – does not apply to guarantees!

17. Business Rescue Practitioners
17
> Qualifications for business rescue practitioners –
> a member in good standing of a legal, accounting or business
management profession accredited by CIPC; and
> be licensed as such by CIPC.
> Regulation 126 suggests that a person who is a member of an
accredited profession need not be licensed by CIPC
> CIPC advised that they are not accrediting certain professions
for now
> Further, prospective business rescue practitioner –
> must not be subject to an order of probation;
> not be disqualified from acting as a director of a company in
terms of section 69(8) of the Companies Act;

18. Business Rescue Practitioners
18
> must not have any relationship with the company that would
lead a reasonable and informed third party to conclude that the
integrity, impartiality or objectivity of that person is
compromised by such relationship; and
> must not be related to a person who has a relationship as
contemplated above.

19. Remuneration of Practitioner
19
> Charge for remuneration and expenses
> Tariff –
> R1 250 per hour (max of R15 625 per day) (incl VAT) - small
company.
> R1 500 per hour (max of R18 750 per day) (incl VAT) - medium
company; or
> R2 000 per hour (max of R25 000 per day) (incl VAT) - large
company or state owned company.
> Contingency agreement
> additional remuneration based on agreed incentives

20. Remuneration of Practitioner
20
> approved by holders of a majority of the creditors’ voting
interests and holders of a majority of the voting rights attached
to any shares of the company
> Practitioner - reimbursed for actual costs of disbursements
incurred by the practitioner, or expenses incurred by
practitioner, to extent reasonably necessary to carry out the
practitioner’s functions and to facilitate the conduct of the
business rescue

21. POST-COMMENCEMENT
FINANCE

22. Post-Commencement Finance & Security
> Concept called Post-Commencement Finance (“PCF”)
> Distinguishes between two types of PCF –
> that which becomes due and owing to employees during
business rescue proceedings for rendering services to the
company
> funding which is provided to a company, during the company’s
business rescue, by means unrelated to employment
> PCF may be provided in exchange for security over
unencumbered assets of the company
> PCF - financier will generally provide PCF if it will be
guaranteed security from a company in business rescue so
that it’s claim against the company will rank in priority to the
claims of previously unsecured creditors, but behind the
claims of the practitioner and the employees for services
rendered during business rescue
22

23. Ranking of Claims
> Section 135 - sets out the order in which the claims of
creditors rank during business rescue
> Order of preference will remain if the company is placed in
liquidation (section 135(4))
> PCF - preferred in the order of preference created by the Act
> Section 135(3)(b) -
> does not stipulate whether or not the claims of secured PCF will
rank ahead of the claims of unsecured PCF
> merely states that PCF will have preference “in the order in which
they were incurred over all unsecured claims” of the company.
> Point of contention - whether or not where creditors, who are
secured (as understood in insolvency law) prior to the
commencement of business rescue, rank above PCF providers
in the business rescue ranking process
23

24. Ranking of Claims
> Merchant West Working Capital Solutions (Pty) Ltd v
Advanced Technologies & Engineering Company (Pty) Ltd
& Gainsford 2013
> Order of preference during business rescue proceedings –
> fees and expenses (including legal and other professional fees)
of the business rescue practitioner incurred during business
rescue proceedings
> fees of employees which become due and payable after the
commencement of business rescue
> secured lenders or creditors for any loan or supply made after
the commencement of business rescue (ie secured PCF)
> unsecured lenders or creditors for any loan or supply made
after the commencement of business rescue (ie unsecured
PCF)
24

25. Ranking of Claims
> secured lenders or creditors for any loan or supply made before
the commencement of business rescue
> claims of employees (for instance for remuneration) which
became due and owing prior to the commencement of business
rescue
> unsecured lenders or creditors for any loan or supply made
before the commencement of business rescue (ie concurrent
creditors)
> Controversial - it was an obiter decision (remark made in passing
and not an issue before the court)
25

26. EARLY DISTRESS SIGNALS FOR
COMPANIES IN FINANCIAL
DISTRESS

27. Looming Financial Distress
> Dishonesty – fraud at management or employee level;
failure to highlight problem areas
> Ineffectual leadership by the board – inability to make
decisions; irregular or no contact with executive staff;
absence from board meetings; worsening of relationships
between directors and management
> Neglect and incompetence of management – negative
cash flow/insolvent balance sheet; failure to pay creditors
as and when they fall due; lack of financial controls; high
staff turnover & poor staff morale; disagreement among
management on material issues; delays in settling
accounts; failure to independently verify and safeguard the
integrity of financial reporting
27

28. Looming Financial Distress
> Inability to adapt to changing market conditions -
growth rate less than inflation rate; inadequate review
and analysis of mistakes; significant loss of market share;
exchange rate and commodity price fluctuations; risk of
adverse market exposure
> Loss of key personnel – losing critical staff can be the
downfall of the business
> Deterioration in relationship with financiers -
monitor levels of credit and overdraft facilities
> Regulatory and legal compliance - environmental or
corporate governance; contingent liabilities; uncertainty
created by law suits; change in government policy;
opinions of auditors; unforeseen security and national
catastrophes
28

29. Signs of Impending Disaster
> Downward trend in entity’s share price (listed company)
> Dishonored cheques
> Artificial valuation of assets
> An increase in fraud
> Cash on delivery terms with suppliers
> Receipt of letters of demand and summons
> Continued injection by shareholders of working capital
29

30. Signs of Impending Disaster
> Increased need for long term financing for short terms
needs
> Management insisting on the reduced working week
> Forcing employees to take unpaid leave
> Industrial action
> Inability to make important strategic decisions at critical
times
30

31. HOW DOES AN INVESTOR ACQUIRE A
COMPANY OR ITS ASSETS OUT OF
BUSINESS RESCUE

32. 32
Commencement of Trading
Profitable Business Grows
Flat Trading Years
Approval of
Business Rescue
Plan
Trade out
on a
Solvent
Basis
Identify Opportunity
for
Post-Commencement Finance
F
I
N
A
N
C
I
A
L
D
I
S
T
R
E
S
S
YEARS OF TRADING
Financial Distress
Distressed Debt Cycle
Acquisition Transaction
Acquire
Company
Out of
Business
Rescue
Exit With Good Value

33. Method for Acquiring Assets of Good Value
> Investor - needs to develop a strategy and identify
contact points (Werksmans) in order to become aware of
a distressed debt situation
> The recognition by the investor of underlying value (at an
early stage) will be critical in making decisions as to which
companies should be propped up with early loan finance
and/or suggestions in respect of turnaround strategies
> Once an investor is already working with the directors and
creditors and looking at a possible restructuring, such
investor will be placed in a very advantageous position to
engage with the company, if necessary, all the way into a
formal business rescue proceeding and ultimately acquire
the company out of business rescue
33

34. Flow Chart for the Acquisition of a
Distressed Company
34
Identify distressed
company and/or good
value assets
Nominate Business
Rescue Practitioner
Pre-Assessment of the
Company – Test for Value
Offer R1 for shares and
something for creditors,
which would give them a
better dividend than in
liquidation (i.e. an
acquisition at a
significant discount)
Negotiate transaction
with creditors,
employees, shareholders
an the Business Rescue
Practitioner
Directors file resolution
for business rescue
Consummate acquisition
transaction, subject to
conditions precedent and
subject to approval of
plan
Vote on plan (75% &
50%) - approve
Implement plan
Company exits from
business rescue with new
owners (investors)

35. CURRENT MACRO AND MICRO
ECONOMIC LANDSCAPE
Wanya Du Preez, Senior Manager, Deloitte

36. Senior Manager, Restructuring
Services
South Africa
Tel: +27 (11) 209 6126
Mobile: +27 (0) 83 272 0892
Office: Deloitte, Johannesburg
Email: wdupreez@deloitte.co.za
Wanya du Preez
Introduction
36
SA Investment opportunities using Business Rescue
Career summary:
• Wanya completed her articles with Deloitte in Durban where she
qualified as a Chartered Accountant in 2006. She completed a JIT
assignment in the USA as well as a secondment to Deloitte Athens
on an international assignment.
• Thereafter she worked on an 18 month assignment in Deloitte UK
and returned to Johannesburg in 2009.
• Following a period in Deloitte Consulting in 2012, she joined
Corporate Finance in February 2014.
• Wanya recently completed her MBA with a specialisation in
Business Rescue in South Africa. Her dissertation was entitled:
“The status of post-commencement finance for Business Rescue in
South Africa.”
• Her current role involves the following:
– Independent business reviews, including the preparation and
review of short term cash flow forecasts
– Reviews of distressed investments on behalf of debt providers
– Turnaround strategy and implementation
– Preparation and review of short term cash flow forecasts
– Business Rescue focus
• Team of 9 professionals, across all
industries:
o 2 Directors -1 Associate Director
o 2 Senior Managers - 4 Staff
Key service areas
Detailed analysis
and review of
company
business plans
Providing
options advice
Assisting with
turnaround plans
Running a
distressed M&A
process
Providing debt
advisory and
restructuring
services
Reviewing and
assisting with
the preparation
of short term
cash flow
forecasts

37. BRIEF MACRO
ECONOMIC OVERVIEW

38. Global Prospects are Less Gloomy
> The world economy will grow faster in 2014, spurred by recovery in the United
States and most European countries
> In Europe, the debt crisis has been replaced by the risk of deflation, while
events in the Ukraine are more likely to cost Russia dear than result in war or
impact trade
> Slower growth in China was anticipated but fresh investment on railway
construction and social housing could bode well for South Africa.
Not in glowing health, but certainly recovering
Source: Monitor Deloitte analysis; The Economist Intelligence Unit
1.41.1
-0.4
1.51.51.5
2.63.0
1.9
4.5
4.03.6
6.97.37.7
2.8
20152014
2.9
2013
2.0 China
World
Sub-Saharan Africa
US
Japan
Euro area
Real GDP (% change y-o-y)

39. > Gross Domestic Product (GDP) of the
region is expected to grow by 4 - 6%
in next few years, based on the rising
household spending and expansion in
domestic markets.
> Growth is forecasted to vary across
subregions and individual states due
to the political stability variations
across these regions.
Sub-Saharan Africa is Considered an Attractive
Investment Region Fuelled by its Economic Growth
0
2
4
6
8
10
12
14
16
Angola
Cameroon
Ethiopia
Ghana
Kenya
Mozambique
Nigeria
SouthAfrica
Tanzania
Sub-Saharan
Africa
US
World
2010 2011 2012 2013 2018
-2
0
2
4
6
8
10
2010
2011
2012
2013
2014
2015
2016
2017
2018
GDP Private Consumption
Gross Fixed Investment Consumer Prices
Real GDP Growth (%, 2010–2018)
Sub-Saharan Africa key metrics % change
(%, 2010–2018)
Source: Economic Intelligence Unit
%%
Source: Economic Intelligence Unit

40. South Africa and Nigeria Account for More than
64% of the GDP of the Region
Nominal GDP (US$B, 2013)
Source: Economic Intelligence Unit
Angola,
14%
Cameroon,
3%
Ethiopia,
4%
Ghana, 5%
Kenya, 5%
Mozambiqu
e, 2%Nigeria,
29%
South
Africa,
35%
Tanzania,
3%
Nominal GDP % of Total Sub-Saharan Africa (%,
2013)
Source: Economic Intelligence Unit
0
200
400
600
800
1,000
1,200
Angola
Cameroon
Ethiopia
Ghana
Kenya
Mozambique
Nigeria
SouthAfrica
Tanzania
Sub-Saharan
Africa
US$’bn
Tanzania
• Stringent government
regulations, corruption,
and less transparent
policy making are few of
the challenges of the
country
Kenya
• The economy is well
supported by local
financial markets and a
relatively efficient labor
market
Ethiopia
• It requires significant
improvement in the
areas of infrastructure,
higher education, and
technological readiness
Cameroon
• Political stability, robust
and investment-
supportive government
reforms and
infrastructure
development is required
drive the growth
South Africa
• Politically stable
business environment
• Biggest opportunity,
size, growth prospect,
and growing domestic
demand
• Fastest growing
financial market in the
region
• County’s strong ties to
advanced economies
supports the foreign
investment scenario
Mozambique
• Low macroeconomic
stability, and need of
significant change in
reforms and regulations
are needed in the
country
Ghana
• Infrastructure
development is required
to drive growth as
compared to other
countries in region
• Downward trend of
macroeconomic
indicators
Angola
• Economy with the
fastest growing GDP in
past decade within the
region
• Strong macroeconomic
fundamentals
Nigeria
• Delivery of reforms is
required
• Growth prospects in
medium-term depends
on the political stability

41. SA Presents Most Attractive Investment
Destination to Invest in Distressed Companies
-2
-1
0
1
2
3
4
5
6
0
100
200
300
400
500
2009 2011 2013 2015 2017
Nominal GDP Real GDP
Real GDP growth and nominal GDP (US$, 2009–
2018)
Source: Economic Intelligence Unit
Overview
• Real GDP growth is expected to decline to 1.7% in 2014,
driven by modest global recovery.
• Growth will accelerate in 2015-17, spurred by consumption
and investment, before tailing off in 2018 as their might be
global and local interest rates rise. Politically stable
environment is driving the country to a consolidated
economic growth.
• The current-account deficit (CAD)is forecasted to be
narrow in 2014-15, as export earnings growth quickens
although the CAD will widen from 2015 onwards, reaching
6.5% of GDP in 2018, due to rise in imports.
Government policies and recommended
outlook
• A new Infrastructure Development Bill proposes several
initiatives to speed up major infrastructure projects.
• The government will need to make tough choices in the
face of persistent pressure to spend more on
infrastructure, social welfare, and wages.
• South Africa’s ruling African National Congress emerged
victorious from elections in 2014, but uncertainty and non-
clarity about its economic direction may hamper the
sentiments of investor eyeing the country.
Challenges
• The main challenge during the next few years for the policy
makers in the country will be to expedite faster growth by
tackling long-standing structural constraints, such as skills
shortages, inadequate infrastructure, and high
unemployment.
• Sound policies, sluggish consumer demand, and spare
industrial capacity will help to keep tab on inflation,
although their might be upward pressure from expected
rise in electricity tariffs and wages along with currency
depreciation.
• High unemployment, income inequality, and poor service
delivery are likely to pose challenges for the country’s
medium- term growth.
NominalGDP$bn
RealGDP(%)

42. Northern Cape
Western Cape
Eastern Cape
Free State
Kwa-zulu Natal
North West
Gauteng
Mpumalanga
Northern Province
Painting the South African Economic Landscape
Why South Africa?
1. Key investment location, both
for market opportunities in SA
and the rest of Africa, especially
through the special International
Headquarter Company (IHQ)
regime.
2. South Africa was admitted to
the BRIC group of countries of
Brazil, Russia, India and China
(now called BRICS)
in 2011.
3. A wealth of natural resources
(including coal, platinum, coal,
gold, iron ore, manganese nickel,
uranium and chromium).
4. World-class infrastructure,
exciting innovation, research and
development capabilities and an
established manufacturing base.
5. Sophisticated financial, legal
and telecommunications sectors.
6. Has political and macro-
economic stability, an abundant
supply of semiskilled and
unskilled labour.
SA Investment opportunities using Business Rescue42 © 2014 Deloitte Touche Tohmatsu Limited

43. South African Economic Overview
Global Competitiveness
SA Investment opportunities using Business Rescue43

44. South African Economic Overview
Global Competitiveness
44 SA Investment opportunities using Business Rescue
South Africa’s high ranking areas
• Strength of auditing and reporting standards (1st)
• Efficacy of corporate boards (1st)
• Protection of minority shareholders’ interests
(1st)
• Regulation of securities exchanges (1st)
• Legal rights index, 0–10 (best) (1st)
• Availability of financial services (2nd)
• High accountability of its private institutions
(2nd)
• Financial market development (3rd)
• Soundness of banks (3rd)
• Quality of air transport infrastructure (11th)
• Affordability of financial services (13th)
• Extent of staff training (17th)
• Intellectual property protection (18th)
• Property rights (20th)
• Efficient market for goods and services (28th)
• The quality of its institutions (41st)
Gross fixed investment as a % of GDP (%, 2013)
0
5
10
15
20
25
30
35
40
45
50
Angola
Kenya
Nigeria
South
Africa
Sub-
Saharan
Africa
India
China
0
1
2
3
4
5
6
7
8
9
Angola
Kenya
Nigeria
SouthAfrica
UK
Germany
France
Spain
Switzerland
2009-2013
2014-2018
Business environment score (2009-13, 2014-18)

45. Back Home, the News is Not Entirely Good
External factors will have a mixed impact on the South Africa economy in
2014, while domestic drivers will continue to create downward pressure
Source: Monitor Deloitte analysis; IMF World Economic Outlook, April 2014
 Exports to China
 Fed tapering
 Industrial action
 High unemployment
 Election year causes
uncertainty
 Exports to US and
Europe
 A weaker rand
supporting
international
competitiveness?

46. Monetary Variables are Not Helping
The weak rand, slightly higher inflation and marginally higher interest rates may
have been factored in by economists, but possibly not by small businesses
Source: Monitor Deloitte analysis; Business Monitor International
Monetary
variables
are in a
vicious
cycle
Weak
rand
Higher
inflation
Interest rate
increases
0
2
4
6
8
10
12
2008 2010 2012 2014 2016 2018
Lending rates (average, %)
Producer inflation (y-o-y % change, eop)
Consumer inflation (y-o-y % change, average)
%
Outlook for interest rates and inflationInterest rates indirectly driving inflation

47. The Impact of a Weaker Rand
A weaker rand is unlikely to boost competitiveness with respect to exports due to
the pattern of trade and is more likely to drive imported inflation
Source: Monitor Deloitte analysis; International Trade Centre, www.intracen.org, accessed 5th
May 2014; The Economist Intelligence Unit
-7
-27
-15
25
20
7
12
-6
Chin
a
Unite
d
State
s
Wester
n
Europe
Othe
r
SAD
C
2013 imports (% of total)
2013 exports (% of total)
Trade balance with key partners
10.30
13.84
0
2
4
6
8
10
12
14
2008 2010 2012 2014 2016 2018
Prognosis for the rand
R
R :US$
:€

48. The Credit Market is Over-Extended
Proportionately fewer credit-active consumers are in good standing than during the
financial crisis, suggesting little flexibility to cope with higher rates and prices
Source: Monitor Deloitte Analysis; National Credit Regulator, Credit Bureau Monitor – various years
10.710.610.4
9.99.910.3
10.7
5253545455
58
62
0
1
2
3
4
5
6
7
8
9
10
11
0
10
20
30
40
50
60
70
2013201220112010200920082007
# in good standing% in good standing
millions %
Credit standing of consumers at year-end

49. SURVEY RESULTS
RESTRUCTURING OUTLOOK
2014

50. The South African Economy and Restructuring Industry
72% expect a stagnant economy driven by labour and political unrest,
and decreased consumer spending
18.8%
71.9%
9.4%
Outlook for the South African economy over the next
12 months
Recession Stagnant Growth
Recession: Negative growth in the economy for two consecutive quartere
Stagnant: No growth in economy for two consecutive quarters
Growth: Increased business activity for two consecutive quarters
8.5%
1.9%
1.9%
3.8%
3.8%
5.7%
5.7%
14.2%
15.1%
18.9%
20.8%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
Other
The Euro crisis
Commodity prices
Low corporate growth
Growing current account deficit
Reluctance of corporates to reinvest
Availability of corporate funding
Exchange rate –
currency depreciation
Consumer spending and credit
Political uncertainty
Labour unrest
Reasons for outlook for the South African economy over the
next 12 months
“I believe we are entering a 10 year period of real
difficulty in South Africa, a lot of which will depend
on the elections.”
– Commercial Bank
“We are still to face challenges in the labour sector
as there is always unrest in an election year.”
– Commercial Bank
“Interest rate hikes by the Reserve Bank is
indicative of tough trading conditions.”
–Commercial Bank
SA Investment opportunities using Business Rescue50

51. The South African Economy & Restructuring
Industry
Sectors at most risk of distress include manufacturing, retail,
construction and energy and resources
“Manufacturing is struggling due to the
price crunch and low volumes.
Construction has been affected by labour
strikes, delays in government payment
and penalty clauses.”
– Commercial Banker
“We are going to struggle, retailers…are
taking strain…due to exchange rate
depreciation.”
– Business Rescue Practitioner
"In the mining industry, commodity
prices are very low, and mining costs
are escalating.”
– Development Finance Institution
SA Investment opportunities using Business Rescue51 © 2014 Deloitte Touche Tohmatsu Limited

52. M & A
MARKET OVERVIEW

53. Key observations
> The deal volume has been gradually increasing over the years after a dip in 2011 primarily due
to the constant increase in the investments returns, stabilizing economy, and boost in 'Middle
Class' population.
> From a long-term perspective, the total deal value has increased due to the significant rise in
investment from the Asia/Pacific countries as they look to expand into regions with untapped
natural resources.
> Inbound deal activity is driven by mineral wealth, strong demographics, low interest rates, low
regulatory barriers, and opportunities to acquire undervalued companies.
> The positive outlook provided by International Monetary Fund (IMF) indicates that the African
region is forecasted to achieve a GDP growth rate of 6% in 2014, which is likely to boost the deal
activity.
M&A Activity has been Increasing Although
Average Deal Size Declined Marginally in 2013
0
200
400
600
800
1,000
1,200
2009 2010 2011 2012 2013
Disclosed Undisclosed
Number of deals — Total
(In numbers, 2009–2013)
Deal value — Total and average deal size
(In US$M, 2009–2013)
0
10
20
30
40
50
60
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2009 2010 2011 2012 2013
Deal ValueSource: Capital IQ Source: Capital IQ

54. South Africa, with Presence of Cash-Rich
Corporates, Leads the M&A Deal Activity in the
Region
> Key observations
> The deal activity in South Africa is expected to rise further
due to the presence of numerous cash-rich corporates in
the region and investors looking to invest in a market that
is well regulated and provides opportunities to expand
operations.
> However, due to some government regulations, such
as the new hydrocarbons law granting the state oil
company PetroSA a 20% free carry, the deal activity
may deter in the future.
> Nigeria is enjoying an increase in the inbound deal activity
as the investors are looking to take advantage of the low
interest rates in this region.
> The abundance of natural resources in Kenya is driving the
M&A deal activity with new oil discoveries happening in
the region.
> In Mozambique, the deal value in 2013 has boosted
primarily due to three multibillion dollar deals in the oil &
gas sector
Angola
6.4%
Cameroon
1.1%
Ethiopia
0.7%
Ghana
1.7%
Kenya
3.2%
Mozambiqu
e
3.5%
Nigeria
15.1%
South
Africa
66.6%
Tanzania
1.7%
Deal value — By key countries
(In %, 2009–2013)
Source: Capital IQ
0
10,000
20,000
30,000
2009 2010 2011 2012 2013
Angola Cameroon Ethiopia
Ghana Kenya Mozambique
Deal value — By key countries
(In US$M, 2009–2013)
Number of deals — By key countries
(in numbers, 2009–2013)
Source: Capital IQ
Source: Capital IQ
0
200
400
600
800
2009 2010 2011 2012 2013
Angola Cameroon Ethiopia
Ghana Kenya Mozambique

55. Investments from Asia-Pacific Countries have
Increased as they Look to Achieve Energy Security
> Key observations
> Asia Pacific leads the cross-border investments M&A activity
(by deal value) mainly due to the interest from the Chinese
investors, as they look to target the region’s untapped
natural resources.
> Further Chinese companies are investing to set
up new plants and facilities to cater to growing
domestic demand
> Indian investments have also surged in the
recent years to reap the benefits of untapped
natural reserves.
> From Europe, although the total deal value has decreased in
the recent times, the volume of the deals has remained
stable as these acquisitions in Africa provide a way to
generate growth during the sluggish periods
> Inbound deal activity from North America, particularly the
U.S., has decreased due to lack of proper infrastructure.
However, U.S.’ is focusing on improving ties with the African
countries is likely to drive the growth in future investments.
Deal value — By key countries
(In %, 2009–2013)
Source: Capital IQ
Deal value — By investor geography
(In US$M, 2009–2013)
Number of deals — By investor geography
(in numbers, 2009–2013)
Source: Capital IQ
Source: Capital IQ
North
America,
5.4%
South
America,
0.8%
Africa,
49.8%
Asia-
Pacific,
19.7%
Europe,
16.7%
Middle
East, 7.5%
0
200
400
600
800
1,000
1,200
2009 2010 2011 2012 2013
Africa Asia / Pacific Europe
Middle East North America South America
0
10,000
20,000
30,000
40,000
50,000
2009 2010 2011 2012 2013
Africa Asia / Pacific Europe
Middle East North America South America

56. Key observations
> Investment in E&R sector continues to improve significantly, as there are new oil discoveries in
resource-rich countries, such as Kenya, Sierra Leone, and Domestic Republic of Congo.
> Financial services industry proved to be an area of growth because of the lack of such services
for the rising middle-class segment. The rise in investments is set to continue in the future, as
well.
> Private equity investors across the world prefer longer-term investments in sectors, such as
consumer, financial services and pharmaceuticals and medical and biotech over capital intensive
sectors, such as energy and mining, as these areas offer high returns and far less capital and
political risk than the extractive industries.
> The consumer business segment has grown significantly over the years due to the rise in Africa’s
middle-class segment and the increase in household spending in the region.
With New Oil Discoveries in the Region, the Deal
Activity in the E&R Sector has Improved
Significantly
0
200
400
600
800
1,000
1,200
2009 2010 2011 2012 2013
CB E&R FSI LSHC Mfg TMT
Source: Capital IQ
Number of deals — By sector
(In No’s, 2009–2013)
Deal value — By sector
(In US$M, 2009–2013)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2009 2010 2011 2012 2013
CB E&R FSI LSHC Mfg TMT
Source: Capital IQ

57. M & A Challenges
Generally, there is limited
financial disclosure, both
for listed and unlisted
companies operating in the
region, which means that
access to valid, accurate,
complete, and reliable
financial information can
fall short of investor
expectations. This lack of
information makes the due
diligence process difficult.
In Sub-Saharan Africa, it is
important to maintain awareness of
noteworthy events such as
elections and understand their
potential effect on the transaction
timetable. Investors are required to
have an understanding of the
political association of the major
stakeholders involved in the
transaction, both business partners
and regulators that may need to
approve the transaction.
Many countries have
adopted, or are in the
process of adopting
citizen empowerment
laws, which typically
require a minimum
percentage of local
shareholder
ownership. The
challenge though is
that local
shareholders are
often unable to raise
required funds
especially in capital-
intensive projects.
While this is important in most
transactions, it is especially critical
when the local partner is relied
upon to drive local relationships
and is likely to have a longer-term
involvement in the business.
Deficiency of such local partners
may act as a obstacle for the
investors.
It is equally important for investors
to work with advisors they know
and have trust, have local
knowledge and an on-the-ground
presence, which are vital for
implementing transactions.
Financial
Disclosure
and Due
Diligence
Understanding
Political
Environment
and Stability
Local
Ownership
Requirements
Right
Partner

58. IDENTIFYING THE OPPORTUNITIES

59. Moments that Matter
Are companies displaying the following warning signs…
Declining cash flows as a
result of deteriorating trading
performance and uncertain
market conditions
Underperforming division or
subsidiary causing cash
pressure for the group
Incoherence amongst and major
changes in management team and
/ or board and struggling to
achieve a succession plan
Current or expected breach of
banking facilities and / or
covenants and facing a
tightening credit market
Lack of timely and insightful
financial reporting and Limited
visibility of cash requirements in
the business
Deteriorating working capital
trends, particularly stretching of
creditor terms
Significant underperformance
against budget and performing
below stakeholder expectations
Overleveraged balance sheet and
major upcoming debt repayments
Company
in distress
Deloitte Restructuring Survey59 © 2014 Deloitte Touche Tohmatsu Limited

60. Deloitte – Financial Support
> Investor will work closely with the accountants who understand the
financial aspects of a restructuring and of the business rescue process
and who can assist with –
> identifying that the company is in financial distress
> introducing Chinese investors to the company and its management
> appointing a competent and professional business rescue
practitioner
> identifying the need for, and amount of, PCF
> reviewing and commenting on the business rescue plan that is
voted on by the creditors and shareholders (in some instances)
> ensuring the company comes out of business rescue with the
investor having acquired the company at heavily discounted prices
– a cheap but valuable acquisition
SA Investment opportunities using Business Rescue60 © 2014 Deloitte Touche Tohmatsu Limited

61. Deloitte – Financial Support
SA Investment opportunities using Business Rescue61 © 2014 Deloitte Touche Tohmatsu Limited
Detailed analysis
and review of
company business
plans
Reviewing and
assisting with the
preparation of short
term cash flow
forecasts
Providing options
advice
Assisting with
turnaround plans
Running a
distressed M&A
process &
negotiation with
creditors
Providing debt
advisory services
and sourcing
alternative funding

62. LANDSCAPE FOR THE ACQUISITION
OF DISTRESSED ASSETS IN THE
MINING SECTOR

63. Introduction
> Studies have shown the level of increased direct foreign
investment into the South African Mining Industry of an extra
USD $2 billion in 2013 as opposed to 2012 and South Africa
is ranked 8th in the world in 2013 for foreign direct
investment into the mining industry.
> Considering the current global economic position and the
history of strike action over the last couple years in South
Africa opportunities have arisen to acquire assets in distress
through the business rescue process.
> A good example of this is the acquisition by Wits Gold of
Southgold Exploration Proprietary Limited which will be dealt
with in more detail by Peter van der Steen.
63

64. No Restrictions on Foreign Ownership
in the Mining Industry
> There are no legislative restrictions against foreign
companies holding direct or indirect interests in mining
companies holding prospecting rights or mining rights in
South Africa.
> The Mineral and Petroleum Resources Development Act 28 of
2002 (“MPRDA”) contains no restriction in respect of foreign
ownership and up to 74% of the equity in a mining project
could be held by a foreign entity.
64

65. Section 11 of MPRDA
> If the acquisition by a foreign company constitutes a disposal
of a controlling interest whether directly or indirectly of a
company holding a prospecting right or mining right the
consent of the Minister will be required in terms of Section
11 of the MPRDA.
> Minister does not have the discretion to refuse if the criteria
are complied with.
> Proposed amendments to the MPRDA will require changes of
any shareholding in a company holding a prospecting right or
mining right to require the prior written consent of the
Minister unless it is a listed entity in which case the
restriction is only in respect of a change of control.
65

66. Liquidation of a Mining Company
> It is important for the potential acquirer of an asset in
distress to acquire the asset prior to liquidation either in the
business rescue process or prior thereto because of the
implications of Section 56 of the MPRDA.
> A mining right lapses upon the liquidation of a holder of a
mining right which could be regarded as being retrospective
back to the date of provisional liquidation and thus the
liquidator will not have an asset to dispose of if the company
is placed into liquidation.
66

67. BEE Requirements
> It must be noted that there are onerous BEE requirements
set out in the MPRDA and the Mining Charter 2010 requiring
participation of at least 26% of the equity in the hands of
historically disadvantaged South Africans.
> There is no exception for foreign owned or controlled mining
companies. Often the acquirer could take over the current
HDSA ownership profile.
67

68. Beneficiation
> Any acquirer of mining assets in South Africa will have to
take into account the amendments to the MPRDA dealing
with beneficiation.
> The MPRDA Amendment Bill contemplates the Minister
declaring strategic minerals and in respect of such minerals
a percentage of the production must be offered to local
beneficiators at an agreed price or mine gate price and only
once that obligation has been complied with can a producer
then export minerals mined.
68

69. Exchange Control
> Any investor into South Africa in the mining industry will
have to comply with the general exchange control provisions
depending on how the project is funded whether through
capital or loan account and thin capitalisation rules would
apply.
> An investor would have its share certificates endorsed non-
resident to enable it to be able to repatriate dividends out of
South Africa.
69

70. Other Regulatory Requirements
> Any investor into mining industry assets would also have to
consider the Competition Act and any approvals that may be
necessary from the Competition Commission.
> Any investor would have to comply with the other aspects of
the Mining Charter other than HDSA ownership such as
procurement, housing and living conditions, socio-economic
development and employment targets.
> In order to procure the Section 11 consent the applicant
would need to demonstrate technical and financial ability as
well as financial ability to honour the work programme and
the social and labour plan. Furthermore an acquirer would
have to put up sufficient funds to procure the guarantee for
ultimate closure.
70

71. INTERPLAY BETWEEN LABOUR LAW
AND BUSINESS RESCUE

72. Effect of Business Rescue on Employees
72
> Employees continue to be employed on same
terms and conditions except –
> changes in the ordinary course of attrition
> where employees and company jointly agree to
change terms
> Any retrenchment must be in accordance with
applicable employment legislation -
> section 189 in the case of small scale
retrenchments
> Section 189A in the case of large scale
retrenchments

73. Effect of Business Rescue on Employees
73
> Retrenchments can only be effected based on the –
> economic
> technological
> structural
> similar requirements of the employer
> During a retrenchment exercise the employer must –
> consult with affected employees/trade unions
> disclose relevant and prescribed information
> endeavour to reach consensus
> select employees based on objective and fair criteria
> pay severance packages to retrenched employees

74. Effect of Business Rescue on Employees
74
> Large Scale Retrenchments – additional provisions -
> facilitation through the CCMA
> right to strike
> right to approach the Labour Court without recourse to the
CCMA

75. Effect of Business Rescue on Employees
75
> Should the business rescue practitioner elect to sell the
“business” section 197 of the LRA will apply.
> In terms of section 197 if the whole or part of any business,
trade, undertaking or service is transferred then, unless
otherwise agreed –
> the new employer is automatically substituted in the place of
the old employer in respect of all contracts of employment
> all the rights and obligations between the old employer and an
employee continue with the new employer
> anything done before the transfer by the old employer
(dismissals, unfair labour practices or acts of unfair
discrimination) is considered to have been done by the new
employer

76. Effect of Business Rescue on Employees
76
> Employees are entitled to -
> notice of each court proceeding, decision, meeting or other
relevant event
> participate in the business rescue and related matters
> form a committee
> be consulted by practitioner (first meeting of employees 10
business days after the practitioner is appointed)
> be present and make submission at the meeting of creditors
when the plan is voted on
> vote with creditors to approve the plan, if a creditor
> if the plan is rejected, propose the development of an
alternate plan or present an offer to acquire the interests of
one or more affected persons

77. Effect of Business Rescue on Employees
77
> Disclosure of information concerning insolvency -
> in terms of the LRA an employer facing financial difficulties
that may reasonably result in winding up or sequestration
must advise trade unions and employees;
> LRA does not impose adverse consequences on employers
failing to disclose their financial difficulties;
> trade unions are however entitled to have access to the
company’s financial statements.
> Despite the rights afforded to trade unions, trade unions are
not as yet active in business rescue proceedings.

78. PRACTICALITIES SURROUNDING THE
ACQUISITION OF A DISTRESSED
Peter van den Steen, Practitioner

79. Opportunities
> Different types of distressed assets
> Pre-business rescue, during business rescue and after business
rescue – focus today is on during business rescue
> Many successful business rescues have resulted from some form
of investment
> Business rescue is a creditor driven process
> Distressed investment environment in South Africa is young and
undeveloped
> Business rescue legal framework offers protection and “space to
put together a deal”
> Practitioner (neutral and independent) takes the deal to
stakeholders – avoids, or at least mitigates, the dangers of the
over or under selling to stakeholders by management or board.
79

80. Challenges
> Its not ordinary M&A - very technical from a legal
perspective
> Can be litigious - militant creditors
> Regulatory environment in South Africa is a deterrent
> Within business rescue it is emphasised --> clock speed (the
potential discount for an 'intact asset' makes up for the pain)
> All stakeholders’ interests need to be balanced to avoid
failure due to litigation and/or unnecessary delays and/or
'no' votes
80

81. Southgold Exploration Pty Ltd
> PCF providers -
> Standard Chartered
> Credit Suisse
> Combined Exposure R2.6b - secured
> Why business rescue?
> Care and Maintenance costs - approximately R200m for
South Africa only
> Other creditors –
> Noteholders - R1.0 billion
> Trade creditors - R0.3 billion
> Inter-company / shareholders loans - R7.0 billion
> Total - R11b
81

82. Southgold Exploration Pty Ltd
> Business rescue practitioner appointed –
> BRP legal team – business rescue legal, M&A legal
> JP Morgan - Transaction advisory
> KPMG - financial modelling, creditor verification, advisory
> Terra consulting - valuations
82

83. Southgold Exploration Pty Ltd
> Regulators and government –
> DMR (6 to 7 months)
> Competition com (2 weeks for the Witsgold deal, 3.5
weeks for Sibanye/Witsgold deal)
> DWAF
> NNR
> SARS (more than a year to settle)
> SARB
> Local municipal and community structures
83

84. Southgold Exploration Pty Ltd
> Witsgold offer –
> R75m on deal closure
> Fixed repayment schedule to lenders for R600m over
current LOM
> R1.2b flex payment schedule to lenders based on FCF
> Further R680m to lenders based on 10% FCF participation
over any additional LOM (if any)
> Option to settle without penalty
> 36 month interest moratorium
84

85. Southgold Exploration Pty Ltd
> Witsgold bought an asset which swallowed an initial investment of
R11 billion before it went into rescue for approx R1.9 billion (PV)
(up from R1 billion)
> Discount - 83%
> Duration - 21 months
> Level of complexity - extremely complex
> Various jurisdictions - Switzerland, English, Canada, United States
of America
> Canadian CCMA and Receivership
> USA Chapter 11 proceedings
> Time zones - conference calls with callers on various time zones -
(worst was Vancouver, NYC, Toronto, London, JHB, Zurich,
Singapore, Beijing) - it’s a killer 85

86. On Digital Media t/a Top Tv
86
> PCF providers –
> shareholders stopped funding - had nothing
> approached creditors
> secured creditor - DBSA consent (DBSA R200mil exposure)
> monthly subscription fees
> business 'as usual' - trading entity
> Other creditors –
> IDC -approx R900 million total exposure
> NEF - R100 million
> trade creditors - R400 million
> Total - approx R1.4 billion

87. On Digital Media t/a Top Tv
> Business rescue practitioner appointed advisors –
> business rescue legal team – business rescue legal, M&A legal
> KPMG – valuation
> ODM CEO - domain expertise
> ODM CFO – finance and modelling
> Regulators and government –
> ICASA
> DOC
> Competition commission (deal did not require approval,
investigations into anti-comp behaviour by Multichoice)
> SARB (claims bought by ST)
> Electronic Communications Act (ECA) - limitation on foreign
ownership of a broadcast license
> New BEE consortium (still confidential)
87

88. On Digital Media t/a Top Tv
88
> StarTimes offer –
> R45 million to trade creditors (15c/R)
> R30 million to DBSA
> existing shareholders kept in but severely diluted
> new BEE
> split into 2 companies - broadcast company, services company
> further investment of R1 billion in business plan

89. On Digital Media t/a Top Tv
89
> StarTimes have invested in an asset which swallowed an initial
investment of R1.4bil before it went into rescue for approx R106
million
> Discount - 92%
> Duration - 20 months and counting
> Level of complexity – extremely complex (but for other reasons)
> politics and agendas
> rogue offer (MSG Africa backed by Multichoice)
> litigation
> regulatory - DOC, ICASA, SARB
> cross-border and cross-cultural issues
> virtually every major supply contract has been re-negotiated
> almost all technical platforms have been migrated (uplink stations, fibre links, play-
out facilities, redundancy systems)

90. Summary
90
> Business rescue can keep an asset whole as opposed to non-
business rescue solutions
> Big becomes, complex and becomes expensive - underlying
value is essential
> Time consuming and resource hungry
> Deep discounts are made possible
> Ultimately builds goodwill with stakeholders
> Young law - experienced advisors and business rescue
practitioners are essential and also scarce
> Every business rescue presents its idiosyncrasies - there is no
'cookie cutter' approach
> Regulatory environment and other laws do not speak to BR 
need to know how to navigate the 'waters‘
> PCF remains a challenge and will do so until distressed
investment (debt and equity) market develops

91. THE ROLE OF WERKSMANS
AS LEGAL ADVISOR

92. Werksmans – Legal Support
> Investor will work closely with the lawyers who understand
the business rescue process and who can assist with –
> identifying that the company is in financial distress
> introducing investors to the company and its management
> appointing a competent and professional business rescue
practitioner
> negotiating the terms for the acquisition of the company in
distress with the business rescue practitioner and the
company’s stakeholders (creditors, employees and
shareholders)
> identifying the need for, and amount of, PCF
> drafting and finalising the relevant agreements (ie PCF
agreement and sale agreement)
92

93. Werksmans – Legal Support
> reviewing and commenting on the business rescue plan that
is voted on by the creditors and shareholders (in some
instances)
> attending meetings of stakeholders and the meeting where
a vote is taken on the business rescue plan
> ensuring that the business rescue plan is approved and
thereafter implemented in accordance with its terms
> ensuring the company comes out of business rescue with
the investor having acquired the company at heavily
discounted prices – a cheap but valuable acquisition
93

94. WERKSMANS AND
LEX AFRICA

95. Werksmans and the Lex Africa Network
95

96. Werksmans and the Lex Africa Network
96

97. Werksmans and the Lex Africa Network
97
> Africa’s first legal network established 1993 – oldest legal
African network
> 19 countries – Angola, Botswana, Egypt, Ghana, Kenya,
Lesotho, Malawi, Mozambique, Mauritius, Namibia, Nigeria,
Senegal, South Africa, Swaziland, Tanzania, Tunisia, Uganda,
Zimbabwe and Zambia
> Administered by Werksmans Johannesburg, South Africa
> Independent corporate law firms
> One stop shop for African legal and other advice
> “Living network” – annual general meetings and management
committees
> Code of conduct, exchange programmes and practice groups
> www.lexafrica.com and www.lawyersforafricablog.com

98. TAKE-AWAYS

99. Take-Aways
> Business rescue has become a new mechanism for the
acquisition of distressed companies
> Fundamental starting point is for the investor to identify the
opportunity at an early stage and before it is too late (i.e.
when the company is on the verge of insolvency) – need to
have a distressed debt strategy
> Need to identify key people who are the “players” in the
distressed debt market and who can introduce the
opportunity at an early stage in the distressed debt cycle
> Key – identify the warning signals of looming financial
distress and act on them immediately
> Identify and work with business rescue practitioners who
have a proven track record in the business recue industry
99

100. Take-Aways
> PCF is the life blood of a business rescue process
> Business rescue provides the opportunity to unlock value
and to allow a company to continue to trade on a solvent
basis
> Key – preservation of value and the economic viability of
the company
> Must develop a skill set to identify the right opportunities
and know how to take advantage of these opportunities
(need legal support)
> Understand the business rescue process and how it can be
used to unlock value and the “upside” – remember the Top
Tv example!
100

101. THANK YOU
Legal notice: Nothing in this presentation should be
construed as formal legal advice from any lawyer or this firm.
Readers are advised to consult professional legal advisors for
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