Rec. Unconditional Cash Offer

AAF INDUSTRIES PLC 23 September 1999 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN RECOMMENDED UNCONDITIONAL CASH OFFER BY KPMG CORPORATE FINANCE ON BEHALF OF WACO INTERNATIONAL LIMITED FOR THE ISSUED SHARE CAPITAL OF AAF INDUSTRIES PLC NOT ALREADY OWNED BY WACO INTERNATIONAL LIMITED AND ITS SUBSIDIARIES Summary Waco International Ltd ('Waco') and AAF Industries plc ('AAF'), announce that agreement has been reached on the terms of a recommended unconditional cash offer ('Offer'), to be made by KPMG Corporate Finance on behalf of Waco, for the 40.98 per cent. of the issued share capital of AAF not already owned by Waco and its subsidiaries. The Independent Directors of AAF, being those directors who are not executive directors of Arthur or who are not also directors of Waco, have taken responsibility for considering the Offer and for reaching conclusions on the appropriate recommendations to be made to AAF Shareholders. The Offer The Offer, which will be detailed in the Offer Document to be sent to AAF Shareholders and is subject to the further terms set out in Appendix I of the Offer Document and the Form of Acceptance, is being made on the following basis: for each AAF Share - 120 pence in cash The Offer values the whole of the issued share capital of AAF at £27.7 million, and represents a premium of 31 per cent. over the middle market quotation for AAF Shares at the close of business on 22 September 1999, the last dealing day before the announcement of the Offer. There are no conditions attached to the Offer. Cheques for the consideration payable under the Offer will be despatched within 14 days of valid acceptances being received. The Offer will close on 15 October 1999, and may be extended beyond that date but will not be extended beyond 5 November 1999. The Offer is not subject to the City Code on Takeovers and Mergers. Information on AAF AAF is an industrial services group specialising in the manufacture and hire of modular buildings. AAF's other activities are the provision of scaffolding services and the manufacture and installation of laboratory furniture. In the year ended 30 June 1999, AAF achieved sales of £32.6 million and profit before taxation of £3.2 million. At 30 June 1999 total shareholders' funds were £14.9 million. Information on Waco Waco is the holding company for a group of industrial and consumer businesses operating in South Africa and internationally ('Waco Group'). Its activities range from scaffolding to the retail trade in textiles including clothes and footwear. It is listed on the Johannesburg Stock Exchange. The market capitalisation of Waco as at 21 September 1999 was South African R1.13 billion, equivalent to approximately £114 million. The Waco Group's profit before taxation for the year ended 30 June 1999 was South African R288 million, equivalent to approximately £29 million. Waco has advised that it is presently engaged in preliminary discussions which may or may not involve AAF. At this stage it is not known whether these discussions will or will not result in a future transaction. Background to and reasons for the Offer Waco believes that AAF can continue to achieve organic growth from internal cash generation and is reluctant for AAF to pursue a growth strategy through acquisitions which would involve the issue of new AAF Shares and dilute Waco's shareholding. Waco has indicated that it does not intend providing additional equity finance to AAF. The board of Waco believes that acceptance of the Offer will enable AAF Shareholders to realise their investment in AAF, without incurring dealing charges, at a price per AAF Share which represents a premium of 31 per cent. to the Closing Price as at 22 September 1999 (being the last dealing day prior to this announcement). If sufficient acceptances are received and/or sufficient AAF Shares are otherwise acquired, Waco intends to apply the provisions of sections 428 to 430F of the Companies Act 1985 to acquire compulsorily any outstanding AAF Shares. AAF will apply for cancellation of AAF's listing on the Official List with effect from the later of 22 October 1999 and the date of the close of the Offer. Such application will be made irrespective of the outcome of the Offer. AAF Restricted Share Plan Appropriate proposals will be made, in due course, to persons with entitlements under the AAF 1996 Restricted Share Plan. Offer document KPMG Corporate Finance, which is acting as financial adviser to Waco International Limited, will despatch the Offer Document to AAF Shareholders in due course. Irrevocable undertakings Waco has received irrevocable undertakings to accept the Offer from each of the Directors (in respect of their own beneficial holdings) of AAF, amounting, in aggregate, to 165,700 AAF Shares. Recommendation The Independent Directors consider the terms of the Offer to be fair and reasonable and unanimously recommend AAF shareholders to accept the Offer. Enquiries: Waco International Limited 00 27 11 883 4119 Mike Smithyman Mark Towler KPMG Corporate Finance 0171 311 1000 David Simpson Marc Cramsie AAF Industries plc 01964 542 131 Andrew Walker KPMG Corporate Finance, a division of KPMG which is authorised by the Institute of Chartered Accountants in England and Wales to carry on investment business, is acting for William, and no one else in connection with the Offer and will not be responsible to anyone other than William, for providing the protections afforded to clients of KPMG Corporate Finance nor for giving advice in relation to the Offer. KPMG Corporate Finance has approved the contents of this announcement solely for the purpose of Section 57 of the Financial Services Act 1986.