SAC.L Regulatory News (SAC)

SACOIL HOLDINGS LIMITED

(Incorporated in the Republic of South Africa)

(Registration number 1993/000460/06)

JSE share code: SCL AIM share code: SAC

ISIN: ZAE000127460

("SacOil" or the "Company")

Conversion of Gairloch loans to equity

1. Background

Shareholders are referred to the Circular issued on 8 May 2013 and the announcement made on the same date. Capitalised terms in this announcement shall have the same meaning given to them in the Circular unless the context requires otherwise. This further announcement to Shareholders is in response to a number of comments and questions which have been received by the Board in relation to the matters contained in the Circular.

The Circular calls a General Meeting of the Shareholders to consider and, if deemed fit, approve the Resolution authorising the conversion of US$17.6m of debt and accrued interest held by Gairloch to equity in SacOil at a price of R0.32037 per Share (the "Specific Issue").

2. Consequences of a "No" vote

SacOil was introduced to Rencap Securities (Pty) Limited ("Rencap") some years ago, and entered into a number of loan agreements with the financier. The loan raised from Rencap, and subsequently novated to Gairloch, was on broadly comparable terms with previous Rencap loans taken on by the Company.

Over the past few years private equity and capital markets have proved extremely difficult for small resources companies to raise substantial funding due to a lack of investor appetite. With no operating income to cover interest expense, and a high risk profile due to the nature of the company, financiers, who have been prepared to lend monies, have been able to demand onerous funding returns through high interest rates, raising fees, rollover fees and equity structured upside.

The Gairloch loan and related terms emanated from the previous Rencap loan. The details of the novation of the Rencap loan to Gairloch were announced to Shareholders on 31 December 2012. The funds raised by the Rencap loan are still held as part of a US$10m cash deposit with Ecobank and utilised as collateral for the US$25m performance bond posted.

Shareholders should be aware that failure to vote in favour of the Resolution to approve the Specific Issue and the resultant conversion of the Gairloch loans into Shares will (in the Board's view) have a detrimental effect on the Company as in the absence of this approval the Company may have a material uncertainty regarding going concern due to the inability to settle the abovementioned loans and to secure the funding required for the future development of the Company and its projects. On the basis of advice from the Company's auditors it is the board's clear view that this may consequently result in a modification of the audit report on the going concern of the Company in the annual financial statements for the year ended 28 February 2013, if the Company is unable to secure sufficient alternative funding. The Company does continue to consider alternatives. It is also the Board's view that any future issue of Shares to raise funds to enable the repayment of the Gairloch loans, may result in a greater dilution to Shareholders than what is proposed in terms of the Specific Issue.

3. Benefits of a "Yes" vote

The Specific Issue, if approved by Shareholders, would make SacOil debt free with the accompanying improved ability to raise significant further funds for investment in its projects. Following the Specific Issue, Gairloch would hold a 33.89% interest (pre the sell-down detailed in the paragraph below) in the total issued Shares of SacOil. Gairloch is a private company with material interests in infrastructure and manufacturing in Nigeria. Gairloch, also holds a 25% interest in EER and thus the introduction of Gairloch into the Company as a substantial shareholder will provide the Company with greater alignment with its Nigerian joint venture partner and also position the Company to better grow its Nigerian business.

4. Proposed sell-down by Gairloch

Gairloch have notified the Company that they will, subject to the Specific Issue being approved by Shareholders at the General Meeting, procure that their nominees offer to the market (by way of sale order within one week of the Shares being admitted to trade on the Johannesburg Stock Exchange), 200,375,423 Shares (representing 13.89% of SacOil's enlarged issued share capital, post the Specific Issue) for cash at the same Share price as the Specific Issue, primarily in order to enable existing Shareholders to clawback a portion of the Shares being issued to Gairloch as a result of the Specific Issue. The sale order will be for a period of atleast 2 trading days beginning at the time the offer is made.

5. Board's recommendation

Accordingly, the majority of the Board of SacOil believes that the Specific Issue is in the best interests of the Company and its Shareholders. The Board therefore recommends that Shareholders vote in favour of Special Resolution Number 1 to approve the Specific Issue.

Board of Directors

SacOil Holdings Limited

29 May 2013

ENDS

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