Project Castle

1
Project Castle
A Black Empowerment Initiative of Caltex in
South Africa
2
Black Economic Empowerment Background

• The South African Government has been pursuing
  equitable participation by historically
  disadvantaged South Africans (HDSAs) in all
  aspects of society and the economy
• goals have been incorporated in the Constitution
  and economic plans (e.g. Energy White Paper 1998)
• some general legislation has been passed (e.g.
  Employment Equity Act, Preferential Procurement
  Act, Minerals Act)
• current drive is for agreed charters by industry
  sector
• Oil Industry BEE Charter signed by companies and
  government in November 2000
• confirms goal of 25 equity ownership within 10
  years
• not mandated by law, but a voluntary framework
• expected that government will evaluate companies
  for compliance

3
COSAs Business Case for Empowerment

• Macro
• Socio-political stability
• Economic growth
• Micro
• Preserving share of market (government and
  parastatal)
• Increasing share of market in other areas (retail
  commercial)
• Enhancing brand affinity
• Supportive regulatory environment resulting from
  aligned Industry (e.g. imports, margins, pricing,
  licenses, etc.)

4
COSAs Commitment - Integrated BEE Strategy
5
Features of COSAs BEE Equity Transaction

• Deal effective from 1 January 2002
• 25 of the equity of Caltex Oil (SA) (Pty)
  Limited - includes supply, refining, marketing,
  lubricants, aviation, business support, etc.
• The BEE shareholders will immediately have
• 25 equity interest in COSA to be paid from their
  share of COSA dividends, over a targeted 10 years
• proportional representation on the Board of
  Directors
• minority rights equivalent to 25 1 ordinary
  shareholder
• full 25 dividend rights

6
Features of COSAs BEE Equity Transaction

• Acquisition facilitated directly by ChevronTexaco
  on attractive terms
• Active participation and involvement in the
  business by new shareholders
• Board of Directors
• Board Sub-Committees (Audit, Strategy and
  Business Planning, Human Resources)
• Shareholder Consultative Committees (Marketing
  and New Business Development, Corporate and
  Government Affairs)
• Shareholder participation includes a dedicated
  full-time shareholder representative
• Commercial opportunities with partner related
  entities will be considered
• Full vesting is related to COSAs successful
  operating performance

7
ITIKENI
8
Organisation Effects

• COSA will continue to adhere to ChevronTexaco
  policies, standards and procedures and will
  remain integrated in the global business model
• COSA will no longer be a wholly owned subsidiary
  of ChevronTexaco
• The Board will be accountable to multiple
  shareholders
• The Management Team will be directly accountable
  to the COSA Board while remaining aligned and
  integrated with the global functional
  organisations
• More information on specific guidelines and
  adaptations will be advised shortly
• The new partnership will add a new dimension to
  the business, providing COSA with new
  opportunities to create value and grow

9
Summary

• We are convinced of the value to be added by the
  transaction
• We are confident that the ownership objective
  will be achieved on a sustainable basis
• We believe that our partnership agreement fully
  meets the requirements of the Charter
• Together we will contribute to achieving the
  ChevronTexaco vision to be The global energy
  company most admired for its people, partnership
  and performance