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AFP - Alexander Forbes Preference Share Investments - Cautionary Announcement

PUBLISHED BY: JSE SENS: 22nd May 2009

ALEXANDER FORBES PREFERENCE SHARE INVESTMENTS LIMITED (Incorporated in the Republic of South Africa) Registration number: 2006/031561/06 Share code: AFP ISIN code: ZAE000098067 ("AF Pref" or "the company")

CAUTIONARY ANNOUNCEMENT

Linked unitholders of the company are referred to the funding structure, as detailed in the pre-listing statement dated 7 July 2007, and are advised that, given the current state of the international and local debt markets, a consortium of investors, including funds managed by Actis LLP, funds affiliated with Ethos Private Equity Limited and Ontario Teachers' Pension Plan Board ("Consortium"), identified an opportunity to negotiate with the holders of the EURO 159 million High Yield Term Loan ("Term Loan"), which was issued by Alexander Forbes Funding (Proprietary) Limited ("HYCo"), with a view to acquire the Term Loan at a discount to par value.

The Consortium has today signed a sale and purchase agreement with the current holders of the Term Loan (the "Sellers"), to acquire: - the outstanding Term Loan, following a prepayment by HYCo of a portion of the Term Loan at par from part of the proceeds received by HYCo under the cross-currency hedge entered into by HYCo on or about 23 July 2007 ("the Remaining Term Loan"); - the rights of the Sellers under the Put and Call Option Agreement concluded amongst the Sellers and Alexander Forbes PIK Funding (Proprietary) Limited ("PIKCo") and relating to preference shares in the share capital of HYCo ("HYCo Preference Shares") (the "Put and Call Option Rights"); and -the HYCo Preference Shares which are beneficially owned by the Sellers (together, the "Acquisition"). In addition, the Consortium will subscribe for non-redeemable preference sharesin the share capital of PIKCo ("PIKCo Preference Shares"), which preference shares will be entitled to a preference dividend equal to 5% of any distributions made to Alexander Forbes Holdco (Proprietary) Limited (the Remaining Term Loan, Put and Call Option Rights, HYCo Preference Shares andPIKCo Preference Shares are collectively referred to as, the "Relevant Assets").

The Acquisition has been approved by the South African Reserve Bank. It is further intended that certain of the terms and conditions of the Remaining Term Loan be amended to provide flexibility in the funding structure thereby enabling Alexander Forbes Limited to execute on its strategic initiatives. The Consortium intends to offer AF Pref, the Black Economic Empowerment shareholders and the Management shareholders the opportunity to purchase a portion of the Relevant Assets from it, in proportion to their current shareholdings in Alexander Forbes Equity Holdings (Proprietary) Limited. In order for AF Pref to acquire its proportionate share of the Relevant Assets (the "Transaction"), it is proposed that AF Pref will undertake a rights offer of new linked units ("Rights Offer") and request certain approvals at a general meeting to enable the Transaction and Rights Offer to take place. A further announcement, containing additional details of the Transaction and the Rights Offer will be published on SENS and in the press in due course. As such, the Transaction and Rights Offer may have a material effect on the price of the linked units. Accordingly, linked unitholders are advised to exercise caution when dealing in their linked units, until a further announcement is made.

22 May 2009 Sandton Merchant bank and sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Date: 22/05/2009 14:32:01

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