RFG enters into acquisition agreements

RHODES FOOD GROUP HOLDINGS LIMITED
(Previously Rhodes Food Group Holdings Proprietary Limited)
(Incorporated in the Republic of South Africa)
Registration number 2012/074392/06
JSE share code: RFG
ISIN: ZAE000191979
(“RFG” or “the Company”)

ACQUISITION OF THE BUSINESS ASSETS OF BOLAND PULP PROPRIETARY LIMITED
(“BOLAND PULP”), THE IMMOVABLE PROPERTY OWNED BY BOLAND PULP PROPERTIES
PROPRIETARY LIMITED (“BOLAND PROPERTIES”) AND THE BUSINESS ASSETS OF
DEEMSTER PROPRIETARY LIMITED (“DEEMSTER”)

Introduction and overview

RFG Shareholders are advised that the Company’s wholly owned subsidiary Rhodes Food Group
Proprietary Limited (“Rhodes Food”) has entered into three agreements (collectively the
“Agreements”) with sellers who are related parties to one another, namely:

    (a)   the agreement (“Boland Pulp Agreement”) relating to the acquisition by Rhodes Food of
          the business assets of Boland Pulp from Boland Pulp (“Boland Pulp Acquisition”);
    (b)   the agreement (“Boland Properties Agreement”) relating to the acquisition by Rhodes
          Food of immovable properties owned by Boland Properties from Boland Properties (“Boland
          Properties Acquisition”); and
    (c)   the agreement (“Deemster Agreement”) relating to the acquisition by Rhodes Food of the
          business assets of Deemster from Deemster (“Deemster Acquisition”),

collectively referred to as the “Acquisitions”.

The three transactions in respect of the Acquisitions have been aggregated in accordance with the
provisions of section 9.3 of the JSE Limited (“JSE”) Listings Requirements.

The Agreements are inter-dependant and if one fails or is terminated, all three will fail or terminate, as
the case may be.

Rationale for the Acquisitions

The board of RFG is of the opinion that the Acquisitions present an attractive investment opportunity
which is aligned with RFG’s strategy of expanding its business by means of vertical integration and
lateral extension into product categories complementary to its current product ranges.

The acquisition of the immovable properties owned by Boland Properties is strategic, as the business
of Boland Pulp is conducted from these properties.

Classification of the Acquisitions

The aggregation of the Acquisitions results in a category 2 transaction in terms of the JSE Listings
Requirements.


A) Boland Pulp Acquisition

   Description of the business carried on by Boland Pulp

   Boland Pulp conducts its business from Wellington in the Western Cape. It produces and
   distributes fruit and vegetable concentrates and purees in the South African, African and
   international markets. The products include bulk fruit juices and purees, which are packed in both
   aseptic and preserved formats. Boland Pulp also has a highly innovative value-added division
   which packs purees, sauces and baby foods into re-sealable pouches. Its brands include Puré
   Chef’ Ease, Puré Squish Baby and Puré Organic Mini Meals.


   Purchase consideration

   Rhodes Food will acquire the business assets of Boland Pulp for an aggregate cash consideration
   of R101,580,000 (one hundred and one million five hundred and eighty thousand rand) plus the
   value of the trading stock, capped at R50,000,000 (fifty million rand) as at the effective date. The
   seller, Boland Pulp, will retain all liabilities. The effective date is the 1st (first) business day after the
   last day of the month during which the last of the conditions precedent is fulfilled or waived, as the
   case may be, provided that if the last condition precedent is fulfilled or waived, as the case may
   be, after the 25th (twenty fifth) day of the relevant month, the effective date will be the 1st (first)
   business day of the 2nd (second) month following the month during which the last of the conditions
   precedent is fulfilled or waived, as the case may be. The purchase consideration will be paid on
   the effective date.

   Conditions precedent

   The Boland Pulp Acquisition is subject to the following conditions precedent:

   (a) Boland Pulp obtaining an unconditional written undertaking from Gerber Goldschmidt (SA)
       Proprietary Limited (“Gerber”) that Gerber will release its pledge over the shares which it has
       sold to Trifecta Trading 240 Proprietary Limited (“Pledged Shares”) on or before 31 July
       2015;
   (b) Boland Pulp obtaining an unconditional written undertaking from the Land and Agricultural
       Bank of South Africa (“Land Bank”) that the Land Bank will cancel all notarial bonds that it
       has registered over the assets owned by Boland Pulp and will release Gerber of all
       suretyships in favour of the Land Bank on or before 31 July 2015;
   (c) Boland Pulp furnishing Rhodes Food with a copy of a special resolution passed by the
       shareholders of Boland Pulp approving the disposal of the business to Rhodes Food on or
       before 31 July 2015;
   (d) an agreement between Boland Pulp and Rhodes Food being concluded regarding the
       utilisation of 4 (four) Volvo heavy duty vehicles and trailers on or before 30 April 2015;
   (e) the Takeover Regulations Panel issuing a compliance certificate or an exemption in respect
       of the Boland Pulp Acquisition on or before 31 July 2015, to the extent necessary;
   (f) the Competition Authorities approving the Boland Pulp Acquisition on or before 31 July 2015,
       to the extent necessary;
   (g) the Deemster Agreement being concluded and same becoming unconditional on or before
       31 July 2015;
   (h) the Boland Property Agreement being concluded and same becoming unconditional on or
       before 30 June 2015;
   (i) a due diligence investigation (excluding competition-sensitive information) being completed by
       Rhodes Food on or before 30 April 2015 and Rhodes Food being satisfied with the result of
       such investigation;
   (j) a further due diligence investigation being completed, which investigation will commence on
       the first business day following the date after which the Competition Authorities approve the
       Boland Pulp Acquisition, if such approval is required, on or before 31 July 2015, and Rhodes
       Food being satisfied with the result of such investigation;
   (k) the board of RFG approving the Boland Pulp Acquisition on or before 31 July 2015; and
   (l) the conclusion of a consultancy agreement between Rhodes Food and Mr F.M.D.R Lage
       (current chief executive officer of Boland Pulp) on or before 30 April 2015.

   The value of, and profits attributable to, Boland Pulp

   The book value of the assets (excluding trading stock) acquired through the Boland Pulp
   Acquisition at the end of its last financial year (31 October 2014) was R54,500,000 (fifty four million
   five hundred thousand rand). Total EBITDA for the financial year ended 31 October 2014
   amounted to R30,400,000 (thirty million four hundred thousand rand), on revenue of R313,000,000
   (three hundred and thirteen million rand).

B) Boland Properties Acquisition

   Description of the immovable property owned by Boland Properties

   Rhodes Food will acquire the following properties from Boland Properties

   (a) Erf 6494 Wellington In the Drakenstein Municipality, Paarl Division, Western Cape Province,
       measuring 5318 (five thousand three hundred and eighteen) square metres and held by deed
       of transfer no. T362/1984, together with all buildings, erections, appurtenances, fixtures and
       fittings erected thereon;
   (b) Erf 10561 Wellington, In the Drakenstein Municipality, Paarl Division, Western Cape Province,
       measuring 606 (six hundred and six) square metres and held by deed of transfer no.
       T36371/2014, together with all buildings, erections, appurtenances, fixtures and fittings
       erected thereon; and
   (c) Erf 2950 Wellington, In the Drakenstein Municipality, Paarl Division, Western Cape Province,
       measuring 2690 (two thousand six hundred and ninety) square metres and held by deed of
       transfer no. T7657/2009, together with all buildings, erections, appurtenances, fixtures and
       fittings erected thereon,

   (collectively referred to as the “Properties”).

   Purchase consideration

   Rhodes Food will acquire the Properties from Boland Properties for an aggregate cash
   consideration of R7,920,000 (seven million nine hundred and twenty thousand rand) exclusive of
   value-added tax. The seller, Boland Properties, will retain all liabilities. Rhodes Food shall, against
   registration of transfer of the Properties into its name, pay the purchase price to Boland Properties.
   The effective date of the Boland Properties Acquisition is the transfer date, which is the date of
   registration of transfer of the Properties in the name of Rhodes Food, which will be as soon as
   practicable after the conditions precedent are fulfilled or waived, as the case may be.

   Conditions precedent

   The acquisition of the Properties owned by Boland Properties is subject to the following conditions
   precedent:

     (a) the shareholders of Boland Properties approving the disposal of the Properties to Rhodes
         Food by special resolution on or before 31 July 2015; and
     (b) the Boland Pulp Agreement being concluded and same becoming unconditional on or
         before 31 July 2015.

   The value of, and profits attributable to Boland Properties

   The book value of the assets acquired through the Boland Properties Acquisition at the end of its
   last financial year (31 October 2014) was R9,400,000 (nine million four hundred thousand rand).
   Total EBITDA for the financial year ended 31 October 2014 amounted to R538,000 (five hundred
   and thirty eight thousand rand), on revenue of R640,000 (six hundred and forty thousand rand).

C)  Deemster Acquisition

    Description of the business carried on by Deemster

    Deemster conducts a canning and bottling business in Bethlehem in the Free State. Its products
    include canned vegetables and bottled salads and pickles such as beetroot and gherkins and as
    such offers the opportunity for Rhodes to enter into these new categories. It primarily co-packs
    products for third party brands and produces private label products for most South African retail
    groups, including Pick ‘n Pay, Spar and Woolworths.
  
    Purchase consideration

    Rhodes Food will acquire the business assets of Deemster from Deemster for an aggregate cash
    consideration of R10,000,000 (ten million rand) plus the value of the trading stock, capped at
    R15,000,000 (fifteen million rand) as at the effective date. The effective date is the 1st (first)
    business day after the last day of the month during which the last of the conditions precedent is
    fulfilled or waived, as the case may be, provided that if the last condition precedent is fulfilled or
    waived, as the case may be, after the 25th (twenty fifth) day of the relevant month, the effective
    date will be the 1st (first) business day of the 2nd (second) month following the month during which
    the last of the conditions precedent is fulfilled or waived, as the case may be. The purchase
    consideration will be paid on the effective date.
 
    Conditions precedent

    The Deemster Acquisition is subject to the following conditions precedent:

      (a)  Deemster furnishing Rhodes Food with a copy of a special resolution passed by the
           shareholders of Deemster approving the disposal of the business to Rhodes Food on or
           before 31 July 2015;
      (b)  the Takeover Regulations Panel issuing a compliance certificate or an exemption in
           respect of the Deemster Acquisition on or before 31 July 2015, to the extent necessary;
      (c)  the Competition Authorities approving the Deemster Acquisition on or before 31 July 2015,
           to the extent necessary;
      (d)  the Boland Pulp Agreement being concluded and same becoming unconditional on or
           before 31 July 2015;
      (e)  a due diligence investigation being completed by Rhodes Food on or before 30 April 2015,
           and Rhodes Food being satisfied with the result of such investigation;
      (f)  the board of RFG approving the Deemster Acquisition on or before 31 July 2015; and
      (g)  a lease agreement being concluded between Deemster and Rhodes Food in respect of the
           factory premises and such agreement becoming unconditional on or before 31 March
           2015.

    The value of, and profits attributable to, Deemster

    The book value of the assets (excluding trading stock) acquired through the Deemster Acquisition
    at the end of its last financial year (30 June 2014) was R1,000,000 (one million rand). Total
    EBITDA for the financial year ended 30 June2014 amounted to R235,000 (two hundred and thirty
    five thousand rand), on revenue of R50,900,000 (fifty million nine hundred thousand rand).

Groot Drakenstein

20 February 2015

JSE Sponsor: RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Legal Advisor: Edward Nathan Sonnenbergs Incorporated

Date: 20/02/2015 09:38:00 
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