News release from Standard and Poor�s 4th October 2011 Standard & Poors raises Eqstra�s long-term ratings
Standard & Poors Ratings Services raised the long-term South Africa national scale ratings on Eqstra Holdings Ltd.

(Eqstra) to zaA- from zaBBB+ while affirming the company�s short-term rating at zaA-2. The upgrade �reflects our view of Eqstras stronger financial performance from lower funding costs and improved revenues through the distributorship and industrial equipment divisions� said Matthew Pirnie, Standard & Poors Financial Institutions analyst for South Africa and Sub-Saharan Africa.

This complements the improved funding structure and capitalization achieved in the past two years. Eqstra is a South Africa-based nonoperational capital and equipment holding company, overseeing four separate business divisions: contact mining and plant rental, construction and mining equipment distributorships, passenger and commercial vehicles, and industrial equipment. Standard & Poors improved ratings are supported by good levels of capitalization, a strong local market position and customer franchise, and a relatively diversified business profile for an operating leasing company.

The ratings are constrained by the vulnerability of earnings and cash flow to domestic economic and commodity cycles, high counterparty concentrations, and a reliance on wholesale funding with domestic bank concentration.

Furthermore, due to its nonbank status, Eqstra would not benefit from access to central bank liquidity, if required.

The ratings factor in our assessment of the companys stand-alone credit profile and do not include any uplift for extraordinary external support. The major improvement in EBITDA stemmed mainly from the ongoing restructuring of Eqstras distributorship unit, which recorded a net income of South African rand (ZAR) 36 million (equal to 12% of total income) in financial year 2011, compared to a ZAR310 million loss in 2010.

Revenue across the other divisions has been relatively stable, although sales of industrial equipment notably increased by 32% in financial year 2011. Standard & Poors anticipate stronger sustainable revenues in fiscal-2012, driven by new contracts and the contact mining and plant rental division, as well as sustained growth in the industrial equipment division.

�Our expectations also factor in a moderate increase in debt levels to fulfil this revenue growth, as most leasing assets are already on the balance sheet� said Pirnie.

The distributorship division could lose some business position and revenue in 2012 if Eqstra sold or lost distribution rights to Bucyrus in South Africa.

However, the financial result of this potential change is expected to be neutral. Further positive ratings momentum, although unlikely in the medium term, could occur in the event of an improvement in the sustainable long-term growth of revenues and associated cash flow generation from leased assets and inventories, alongside a moderate increase in absolute debt levels and the maintenance of current capital adequacy levels. �If Eqstra pursues its growth strategy out of free cash flow, rather than by leveraging existing capital and increasing debt, we would see that as positive for the ratings� added Pirnie.

Standard & Poors would also consider further meaningful diversification of Eqstra�s funding structure as necessary before any further positive rating action were to occur. Negative ratings momentum could follow if the company �increases its debt leverage without the benefit of sustainable and reliable revenues and cash flows that we consider well defined� said Pirne.

The ratings could also come under pressure if Eqstra returns to a less-diversified or shorter-term funding profile, which would raise refinancing and liquidity risks. Ends ISSUED BY: FTIConsulting Stuart Meyer (011) 214 2408 / 083 618 7260/ ON BEHALF OF: Standard & Poor�s For further information please contact: Matthew Pirnie Standard & Poor�s Managing Director for South Africa & Sub- Saharan Africa (011) 214 1993
About Standard & Poor�s Standard & Poors, a division of The McGraw-Hill Companies (NYSE:MHP), is the worlds foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data.

With approximately 8,500 employees, including wholly owned affiliates, located in 21 countries, Standard & Poors is an essential part of the worlds financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com. Stuart Meyer Account Manager Strategic Communications F T I Consulting +27 (0)11 214 2408 direct +27 (0)83 6187260 mobile 1st Floor, Lumley House, 177 Jan Smuts Avenue Johannesburg, 2193 www.fticonsulting.com [FD]
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