AFGRI LIMITED - Acquisition of the Grain Management Business of MGK

Acquisition of the Grain Management Business of MGK

AFGRI Limited
Registration Number: 1995/004030/06
(Incorporated in the Republic of South Africa)
ISIN: ZAE000040549
JSE share code: AFR
("AFGRI" or "the Company")

VOLUNTARY ANNOUNCEMENT REGARDING THE ACQUISITION OF THE GRAIN
MANAGEMENT BUSINESS OF MGK BEDRYFSMAATSKAPPY EIENDOMS BEPERK

INTRODUCTION

AFGRI Operations Limited, a wholly owned subsidiary of the Company ("AFGRI
Operations”) and MGK Bedryfsmaatskappy Eiendoms Beperk (“MGK”), have entered into
binding sale of business and lease agreements ("the Agreements") in terms of which
AFGRI Operations will, upon fulfilment of the suspensive conditions referred to in
paragraph 2 below ("the Conditions"), acquire the Grain Management business of MGK
conducted at the silos in Pretoria West, Brits, Northam as well as Battery (“the Silo
Complexes”) as a going concern (“the Business”), and will lease the Silo Complexes from
MGK ("the Transaction").

1.      THE TRANSACTION

1.1        Rationale

           The Business has been identified as a valuable strategic asset which falls within
           AFGRI’s growth strategy to expand its core Grain Management capacity. The
           Transaction will increase AFGRI’s grain storage capacity by 165,000 metric
           tonnes to 4 471 000 metric tonnes.

1.2        Terms of the Transaction

           In terms of the Transaction:

  1.2.1    MGK will sell the Business, including its assets, as a going concern to
           AFGRI Operations;

  1.2.2    MGK will lease the Silo Complexes to AFGRI Operations for a period of 9
           years and 11 months with an option by AFGRI Operations to extend the
           lease period for a further 9 years and 11 months; and

  1.2.3    MGK will grant AFGRI Operations a right of first refusal to acquire the Silo
           Complexes should MGK wish to sell,

           with effect from the effective date of the Transaction, which will occur once the
           last of the Conditions has been satisfied.

1.3        Purchase price

  1.3.1    The purchase price payable by AFGRI Operations to MGK for the Business
           is R12 million.

  1.3.2    The monthly lease payment for the Silo Complexes is R1.1 million, which will
           escalate annually in line with the Consumer Price Index.




2.      SUSPENSIVE CONDITIONS

          The Transaction is subject to the fulfilment or waiver of, inter alia, the following
          conditions:

2.1       the unconditional approval of the Transaction by the South African Competition
          Authorities, or if such approval is conditional, subject to conditions acceptable to
          AFGRI Operations insofar as such conditions affect AFGRI Operations and to
          MGK insofar as such conditions affect MGK; and

2.2       AFGRI Operations confirming its approval of the results of the financial, legal and
          technical due diligence conducted by AFGRI Operations in respect of the
          Business.




Centurion

27 May 2013
Sponsor of the Company
Investec Bank Limited

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