Acquisition of the share equity and claims of Pakco Proprietary Limited ("Pakco") RHODES FOOD GROUP HOLDINGS 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 SHARE EQUITY AND CLAIMS OF PAKCO PROPRIETARY LIMITED ("PAKCO") Introduction and overview Shareholders are advised that the Company and the Company's wholly owned subsidiary, Rhodes Food Group Proprietary Limited ("Rhodes Food"), Pakco and the shareholder of Pakco have entered into an agreement ("Agreement") dated 30 September 2016 in terms of which Rhodes Food will acquire 100% of the issued share capital of Pakco from its shareholder ("Seller") as well as all of the shareholder’s loan claims against Pakco (the "Acquisition"). Description of the Pakco business Pakco, based in Durban, is a manufacturer of spices, condiments, instant meals and complementary products. Pakco manufactures, packs and distributes dry packed, bottled and canned foods under its own brands and private label. Pakco has several strong, well-established brands including: - Bisto, Southern Coating and Buffalo in the dry packed meal solutions category; - Trotters and Hinds in the dry packed dessert category; - Gold Dish in the canned meal category; and - Pakco spices and pickles. The products are stocked by major retailers, wholesalers and independent stores in South Africa and exported to eight neighbouring African states. Rationale for the Acquisition The board of directors of RFG believes the Acquisition presents an attractive investment opportunity which is aligned with Rhodes Food’s strategy of expanding its business operations through value accretive acquisitions. This Acquisition will enhance Rhodes Food’s position in the canned foods as well as the salads and pickles categories, while the dry-packed products offer the opportunity to enter into a new category in keeping with its strategy of lateral extensions into adjacent categories. The board of directors of RFG believes that Pakco owns valuable brands which are well known and used by consumers. Rhodes Food is well positioned to improve Pakco’s volumes and profitability in the medium term. Purchase consideration and effective date The purchase consideration payable by Rhodes Food to the Seller is R200 000 000 (two hundred million rand). The purchase consideration will be settled by way of the issue and allotment to the Seller of ordinary shares in the share capital of RFG (“Consideration Shares”), or in certain circumstances to be settled partly in cash. The effective date of the Acquisition is 1 January 2017. Conditions precedent The Acquisition is subject to the following conditions precedent: (1) by no later than 5 December 2016, delivery by Rhodes Food to the Seller of a certified copy of a resolution of the board of directors of Rhodes Food authorising the Acquisition and the conclusion of the Agreement; (2) by no later than 5 December 2016, delivery by RFG to the Seller of a certified copy of a resolution of the board of directors of RFG authorising: (a) the conclusion of the Agreement by RFG; and (b) the issue of the Consideration Shares to the Seller on the terms set out in the Agreement, including confirmation of the adequacy of the purchase consideration as consideration for the Consideration Shares in accordance with the provisions of section 40 of the Companies Act, No. 71 of 2008; (3) by no later than 5 December 2016, delivery by the Seller to Rhodes Food of a certified copy of a resolution of the board of directors of the Seller authorising the Acquisition and the conclusion of the Agreement; (4) by no later than 5 December 2016, delivery by the Seller to Rhodes Food of a certified copy of a special resolution of the shareholders of the Seller authorising the Acquisition and the conclusion of the Agreement in compliance with the provisions of section 112 of the Companies Act, No. 71 of 2008; (5) by no later than 30 November 2016, a lease agreement between Pakco and Javel Trading Proprietary Limited, in terms of which Pakco will lease the premises from which it conducts its business, shall have been duly concluded by the parties thereto, and shall have become unconditional in accordance with its terms, save for any condition relating to the coming into force and effect of the Agreement; (6) by no later than 5 December 2016, Rhodes Food notifies the Seller in writing that it is satisfied with the result of a due diligence investigation, in its sole and absolute discretion; (7) by no later than 31 March 2017, the Acquisition is approved in terms of the Competition Act, No.89 of 1998 without any condition, or on terms and conditions acceptable to the Seller and Rhodes Food; (8) by no later than 31 December 2016, insofar as it may be necessary for Rhodes Food or RFG to obtain approval in terms of the listings requirements of the JSE Limited (“JSE Listings Requirements”) for the Acquisition and/or the implementation thereof, the approval of the JSE Limited is obtained; (9) by no later than 30 November 2016, to the extent that the subject matter of the Acquisition or the assets of Pakco are encumbered in favour of the funder, the Seller obtaining and delivering to Rhodes Food an irrevocable written undertaking from a funder that the funder will upon settlement of the purchase consideration in accordance with the provisions of the Agreement: (a) immediately cancel all and any notarial bonds that the funder currently has registered over any of the assets owned by Pakco; and (b) immediately release the subject matter of the Acquisition of all and any encumbrances in favour of the funder. The value of and profits attributable to the business of Pakco Pakco’s net asset value at the end of its last financial year (31 December 2015) was R83 million. EBITDA for the financial year ended 31 December 2015 amounted to R9.5 million on revenue of R221.5 million. Schedule 10 of the JSE Listings Requirements To the extent necessary, the board of RFG shall, as soon as possible after the effective date, procure that the memorandum of incorporation of Pakco and its subsidiaries are amended to ensure RFG’s continued compliance with its obligations in terms of the JSE Listings Requirements. Categorisation of the Acquisition The Acquisition does not constitute a categorised transaction in terms of the JSE Listings Requirements and this announcement is therefore made on a voluntary basis. Groot Drakenstein 4 October 2016 Sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited) Legal Advisor Edward Nathan Sonnenbergs Incorporated Date: 04/10/2016 07:08:00 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.