SENS

07-12-2006

Tongaat-Hulett – Acquisition of a 50,35% interest in Hippo Valley Estates


Tongaat-Hulett Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1892/000610/06)
Share Code: TNT
Issuer Code: THGL
ISIN: ZAE 000007449
(“Tongaat-Hulett” or the “Company”)

ACQUISITION OF A 50,35% INTEREST IN HIPPO VALLEY ESTATES LIMITED (“HIPPO VALLEY”) (“THE TRANSACTION”)

1. Introduction

Shareholders are advised that Triangle Sugar Corporation Limited (“Triangle”), a wholly-owned subsidiary of Tongaat-Hulett, has entered into binding agreements with Anglo American Corporation Zimbabwe Limited (“AmZim”) to acquire AmZim’s 50,35% stake (“the Hippo Shares”) in Hippo Valley. The Transaction will result in the disposal by AmZim of its sugar interests in Zimbabwe.

The terms of the transaction are set out below.
2. Details of the Transaction
2.1 Rationale for the Transaction

Hippo Valley owns and operates the second largest sugar producing and refining business in Zimbabwe and is listed on the Zimbabwe Stock Exchange (“ZSE”). Hippo Valley and Triangle have complementary operations in Zimbabwe, adjacent to each other. The Transaction provides Tongaat-Hulett with an opportunity to benefit from the synergies between Hippo Valley and Triangle.
2.2 Transaction consideration

As consideration for the acquisition of the Hippo shares, Triangle will issue shares representing a 25,3% interest in the enlarged Triangle (“the Consideration Shares”) to AmZim. Tongaat-Hulett will, through a wholly-owned foreign subsidiary Bassieres Holding S.A., after the allotment and issue of the Consideration Shares to Amzim, acquire the Consideration Shares for a purchase price of US$36 million. This will be funded from Tongaat-Hulett’s existing offshore cash resources.
2.3 Financial effects

The pro forma financial effects of the Transaction on Tongaat-Hulett’s net asset value per share, net tangible asset value per share, historical earnings per share and historical headline earnings per share are not significant.
3. Conditions precedent

The implementation of the Transaction is subject to the fulfillment of the following condition precedent:

The Transaction being unconditionally approved, or alternatively approved subject to conditions acceptable to Tongaat-Hulett, by the Zimbabwe Reserve Bank.
4. Related party transaction

As 50,6% of Tongaat-Hulett’s share capital is held by Anglo South Africa Capital (Pty) Limited (of which AmZim is a wholly-owned subsidiary), the Transaction is classified as a ‘small related party transaction’ in terms of s.10.7 of the JSE Listings Requirements and as such requires written confirmation from an independent professional expert, confirming that the Transaction is fair and reasonable to Tongaat-Hulett shareholders. Java Capital was appointed to undertake this review and in their professional opinion the terms of the Transaction are fair and reasonable to the shareholders of Tongaat-Hulett. The fair and reasonable opinion statement will be available for inspection at the Tongaat-Hulett registered office for a period of 28 days from the date of this announcement.

It should also be noted that, as a reorganisation of Anglo American plc’s sugar interests in Zimbabwe, the Transaction will not trigger an offer to Hippo minorities and confirmation of this has been obtained from the Zimbabwe Stock Exchange.

7 December 2006
Tongaat

Merchant bank and advisor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)

Sponsor
INVESTEC BANK LIMITED

Independent financial advisor
JAVA CAPITAL