Circ re Group Reorganisation

Marshall Monteagle Holdings Société Anonyme                  

           (Incorporated in Luxembourg R.C.S. Luxembourg No. B19600)           

                        ("Monteagle" or "the Company")                         

                       JSE CODE: MTE ISIN: LU0035797272                        

26 January 2011

 

                           CIRCULAR TO SHAREHOLDERS                            

Introduction

A circular (the "Circular") will be posted to all shareholders of Monteagle
today containing proposals for a reorganisation of the group and notice of an
Extraordinary General Meeting ("EGM") of Marshall Monteagle shareholders to
approve the proposed resolutions to implement the reorganisation of the group.
In brief the proposals are:

  * the cancellation of the listing of the Company's shares on the Luxembourg
    Stock Exchange and the London Stock Exchange;
   
  * the liquidation of the Company and the reorganisation of the Group under a
    new holding company, Marshall Monteagle PLC ("Newco"); and
   
  * the application for the Monteagle listing on the JSE to be transferred to
    Newco, a wholly owned subsidiary of Marshall Monteagle, as a mirror
    company.
   
Reorganisation

For some time the Board has been concerned about the costs arising in the
Company due to it being registered in Luxembourg. Also, as shareholders may be
aware, the Company benefits under the Luxembourg 1929 Holding Company regime,
which terminated on 31 December 2010. The Board therefore proposes that the
Company exits from Luxembourg. The Company cannot migrate from Luxembourg to a
new jurisdiction as the migration would, under Luxembourg Law, require the
approval by all shareholders on the Company's register, which will not be
possible as some of them are untraceable.

On 1 October 2010, the Company sold all of its investments in subsidiaries to
Newco, resulting in an intercompany balance of US$33,200,000 due from Newco to
the Company. On 15 November 2010 the Company waived US$2,000,000 of the
intercompany balance due from Newco in order to create distributable profits in
Newco. The Company has entered into an agreement with Newco (the "Contribution
Agreement") under which Newco has undertaken to meet all of the Company's
liabilities including the costs of liquidation and the Company will sell all of
its remaining assets to Newco. The Contribution Agreement also provides for
Newco to settle all amounts due from Newco to the Company by an issue of Newco
shares. Following the implementation of the Contribution Agreement, Marshall
Monteagle's only asset will be its shareholding in Newco. Shareholders will be
requested at an EGM to be held on Friday 18 February 2011 to approve the
re-organisation and authorise the Liquidator to arrange for these Newco shares
to be distributed to the shareholders who will receive two Newco shares for
each Monteagle share held.

The Board has decided on Jersey as the location for the new holding company as
the Board is of the opinion that it is a convenient and cost efficient
jurisdiction with a favourable company law regime, and the Company can be
managed effectively from there.

As far as is practicable, the rights of shareholders in Newco and the
governance arrangements for Newco mirror those that apply to the Company under
its articles. A copy of Newco's articles will be available for inspection as
set out in the Circular.

Subject to approval of the relevant resolutions being passed at the EGM, the
Board of Newco has applied to the JSE for the Company's listing on the JSE to
be transferred to Newco. As the JSE listing will be the only listing, it will
be considered Newco's primary listing. The abbreviated name will be "Marshall",
JSE code "MMP" and the ISIN Code will be JE00B5N88T08 with effect from the
commencement of business on Monday, 21 February 2011.

If the proposals are not approved by shareholders, the Company and its listings
on the Luxembourg Stock Exchange and JSE will remain as they are currently.
However, as mentioned above, the Luxembourg 1929 Financial Holding Company
regime ended on 31 December 2010 and the Company's status was automatically
converted to a société de participations financières, better known as a
"Soparfi". Conversion to a Soparfi makes the Company taxable in Luxembourg with
effect from 1 January 2011.

New certificates

Certificated shareholders will be required to complete a form of surrender and
submit that and their Monteagle share certificate(s) in order to receive their
new share certificate(s) in Newco. Any new shares not issued will be held on
the register of Newco in a separate account pending any claims from those who
do not surrender their certificates. Owners of Monteagle shares dematerialised
on the South African sub register will automatically be issued shares in Newco
in dematerialised form. Further details regarding this are set out in the
Circular.

Cancellation of Luxembourg and London Listings

Trading of the Company's shares on the Luxembourg and London stock exchanges
over the last few years has been negligible, and so the Company will not be
seeking as part of the re-organisation to transfer Monteagle's listings on
these exchanges to Newco.

Almost all of the trades in Monteagle shares in the last few years have been on
the JSE, so the Board will be seeking as part of the re-organisation to
transfer the JSE listing from Monteagle to Newco, which transfer has received
the approval of the JSE.

Under current rules, once Newco has been listed on the JSE for 18 months it
will become eligible for fast-track admission to AIM (the AIM market operated
by London Stock Exchange plc). The Board intend to seek admission of Newco
shares to trading on AIM at that time, as they believe that this market will
provide better liquidity and be a cost effective way for European shareholders
to buy and sell Newco shares. Admission to trading on AIM is subject to
approval by the London Stock Exchange ("LSE"), which approval the LSE is not
obliged to give.

Shareholders will be asked at the First EGM to approve the cancellation of the
Luxembourg Stock Exchange listing, and ratify the cancellation of the London
Stock Exchange listings. The Second EGM will be held to approve the
liquidator's action.

Subject to the passing of the resolutions as proposed at the first EGM, Newco
will apply to remain in the "Support Services" subsector of the "Industrial
Goods & Services" sector of the JSE. The abbreviated name will be "Marshall",
JSE code "MMP" and the ISIN Code will be JE00B5N88T08 with effect from the
commencement of business on Monday 21 February 2011.

Yours faithfully

J.M. Robotham

Chairman

 

 

IMPORTANT DATES AND TIMES

The definitions and interpretations commencing on page 4 of this Circular have
been used below.

                                                                           2011
                                                                               
Circular and notice of extraordinary general meetings      Wednesday 26 January
posted to shareholders on                                                      
                                                                               
Form of proxy for the First Extraordinary General Meeting Wednesday 16 February
to be lodged by no later than 10.00 a.m. (CET) on                              
                                                                               
First Extraordinary General Meeting to be held at 10.00      Friday 18 February
a.m. (CET) on                                                                  
                                                                               
Results of the First Extraordinary General Meeting to be     Friday 18 February
released on SENS, on the LuxSE website and to the LSE                          
                                                                               
Last day to trade in the shares of the Company               Friday 18 February
                                                                               
Cancellation of listing of shares on the LuxSE and LSE       Monday 21 February
                                                                               
Results of the First Extraordinary General Meeting to be     Monday 21 February
published in the press in South Africa                                         
                                                                               
Form of proxy for the Second Extraordinary General            Monday 21February
Meeting to be lodged by no later than 10.00 a.m. (CET)on                       
                                                                               
Suspension of listing of Monteagle shares on JSE at          Monday 21 February
commencement of trade; and Listing of Newco shares on JSE                      
under the abbreviated name of Marshall, JSE Code MMP and                       
ISIN JE00B5N88T08                                                              
                                                                               
Second Extraordinary General Meeting to be held at 10.00  Wednesday 23 February
a.m. (CET) on                                                                  
                                                                               
Results of the Second Extraordinary General Meeting to be Wednesday 23 February
released on SENS, on the LuxSE website and to the LSE                          
                                                                               
Results of the Second Extraordinary General Meeting to be  Thursday 24 February
published in the press in South Africa                                         
                                                                               
Cancellation of listing of Monteagle shares on the JSE at    Friday 25 February
commencement of trading;                                                       
                                                                               
Record date for shareholders to be on the register in        Friday 25 February
order to receive certificates in Newco                                         
                                                                               
Issue of Newco share certificates to all shareholders who    Monday 28 February
have submitted forms of surrender by 12:00 on 18 February                      
2011. Dematerialised shareholders will also have their                         
accounts updated and credited.                                                 

Notes:

1. The above dates and times are subject to change. Any change will be released
on SENS and published in the press.

2. Share certificates in the name of Monteagle may not be dematerialised on or
after Friday 18 February 2011