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HOSKEN CONSOLIDATED INVESTMENTS LIMITED - INCREASE OF HCI`S INTEREST IN THE TSOGO GROUP AND CONTINUED CAUTIONARY ANNOUNCEMENT HOSKEN CONSOLIDATED INVESTMENTS LIMITED(Registration number 1973/07111/06) (Incorporated in the Republic of South Africa) ISIN Number: ZAE000003257 Share Code: HCI (`HCI` or the `Company`)INCREASE OF HCI`S INTEREST IN THE TSOGO GROUP AND CONTINUED CAUTIONARY ANNOUNCEMENT 1. Introduction HCI shareholders are advised that HCI has entered into an agreementwith the Trustees for the time being of the Fabcos Trust (`the Fabcos Trust`) (`the agreement`) for the acquisition by HCI from a company (`Newco`) that is to become owned by the Fabcos Trust and all the other current shareholders of Fabvest (Pty) Ltd (`Fabvest`),of all the issued shares in the capital of Fabvest. Fabvest owns 75% of all the issued shares in the capital of Fabcos Investment Holding Company Limited (`FIH`), which in turn owns 38% of all the issued shares in Tsogo Investment Holding Company (Pty)Ltd (`TIH`), the company that owns 51% of all the issued shares in the capital of and effectively controls Tsogo Sun Holdings (Pty) Ltd (`Tsogo Sun`). Fabvest has sold 25% of all the issued shares in the capital of FIHto Johnnic Holdings Limited (`Johnnic`) (`the Johnnic transaction`) subject to certain conditions precedent that have not yet been fulfilled. Should such conditions be fulfilled then Fabvest`s shareholding in FIH will reduce to 50%. Should such conditions notbe fulfilled then Fabvest`s shareholding in FIH will remain at 75%. The agreement will become effective upon fulfilment of the conditions precedent referred to in paragraph 3 below. Nature of business of Tsogo SunTsogo Sun is actively involved in the hotel and gaming industries. It is the foremost casino and hotel operator in South Africa. It is the largest hotel and entertainment group in Southern Africa, comprising of Southern Sun Hotels and Tsogo Sun Gaming whichcurrently holds five gaming licences in South Africa. Rationale HCI currently has an effective interest of approximately 32% in TIH. By entering into this transaction and in line with HCI`s strategy,HCI will increase its effective holding in TIH by 19%, giving it a combined effective 51% holding in TIH. HCI will thereby obtain an increased exposure to Tsogo Sun and the industries in which it operates.Furthermore, given that the consideration for the acquisition is proposed to be discharged in part by the issue and delivery to Newco of a significant number of HCI shares, HCI`s already significant black empowerment credentials will be further enhanced. The proposalallows the Fabcos Trust to retain its exposure to Tsogo Sun via HCI which will be the single largest shareholder in TIH. The Fabcos Trust will also be diversifying its position by gaining an exposure to HCI`s other assets.It is envisaged that Newco will nominate a director to HCI`s board of directors. 2. Consideration The consideration payable by HCI for the acquisition of all theissued shares in Fabvest will be discharged by HCI: * delivering to Newco 15 500 000 ordinary issued shares in its capital (`the Consideration Shares`) which at the 30 trading day weighted average price prior to the date of signature of theagreement per HCI share of R20.19, implies a total value of R312 945 000; and * making payment to Newco of a cash amount of R147 500 000 less the amount of the capital gains tax liability that Fabvest hasincurred as a result of the implementation of the Johnnic transaction. The Consideration Shares are to be delivered and the cash amount paid on the later of the effective date or the date that theconditions precedent under the Johnnic transaction are either fulfilled or no longer capable of fulfilment. Shareholders are reminded that Fabvest`s shareholding in FIH will be 50% if the conditions precedent in the Johnnic transaction arefulfilled and Johnnic has paid R147 500 000 to Fabvest. If the conditions in the Johnnic transaction are not fulfilled, then Fabvest`s shareholding in FIH will remain at 75%. 3. Conditions precedentThe agreement is subject to the obtaining of: * consent from the holders of certain securities furnished by Fabvest, to the cancellation of such securities; * all regulatory approvals, including, inter alia approval from:* the Competition authorities; * the Gaming authorities; * the JSE Securities Exchange South Africa (`the JSE`) and the Securities Regulation Panel (`SRP`); to the extent required.The SRP will be consulted on an urgent basis with regard to the transactions as set out in paragraph 1 above. 4. Financial effects Based on the published consolidated unaudited results of HCI for the6 months ended 30 September 2004 the pro forma financial effects of the transaction on HCI`s earnings, headline earnings and net asset value (`NAV`) are set out below. The pro forma financial information has been prepared for illustrative purposes only and because of itsnature may not give a true picture of HCI`s financial position and results of operations. Per HCI ordinary Before the After the Percentage share agreement agreement (2) Change (1) Earnings (cents) 346.03 323.88 (6.40%) Headline earnings 94.28 94.72 0.47% (cents)NAV (cents) 980 1 115 13.78% Shares in issue 104 336 119 836 14.86% (net of treasury shares) `000Notes: 1. Based on the published consolidated results of HCI for the six months ended 30 September 2004 2. Based on the assumption that the agreement was effected on 1April 2004 for income statement purposes and on 30 September 2004 for balance sheet purposes and assuming that Fabvest`s interest in FIH will reduce to 50% upon implementation of the Johnnic transaction.3. Based on the assumption that HCI issues 15,5 million shares at an issue price of R20.19 per share, being the 30 trading day weighted average price per share prior to the date of signature of the agreement.5. Continued cautionary announcement HCI shareholders are referred to the cautionary announcement dated 14 December 2004 which was issued with regard to the agreement. Notwithstanding the details of the agreement included in thisannouncement, HCI shareholders are advised to continue exercising caution when dealing in HCI shares until the SRP has been consulted as referred in paragraph 3 and a further announcement is made. Durban17 December 2004 Sponsor Nedbank Capital Corporate Advisor to HCIHJS Advisory Services (Pty) LtdDate: 17/12/2004 05:18:43 PM Produced by the JSE SENS Department
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