QUANTUM FOODS HOLDINGS LIMITED - Voluntary Announcement: Acquisition of the Galovos Business

Voluntary Announcement: Acquisition of the Galovos Business

QUANTUM FOODS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration Number: 2013/208598/06
Share Code: QFH
ISIN Code: ZAE000193686
(“Quantum Foods” or “the Company”)


VOLUNTARY ANNOUNCEMENT: ACQUISITION OF THE GALOVOS BUSINESS


1.   THE ACQUISITION

     The Company is pleased to advise that Quantum Foods Mozambique,
     S.A. (“the Purchaser”), a wholly-owned subsidiary of the
     Company, has entered into a sale of business agreement with
     Galovos Limitada (“the Seller”) (collectively referred to as
     “the Parties”) dated 25 April 2016 (“the Agreement”). In terms
     of the Agreement, the Purchaser will purchase the Galovos
     business from the Seller, which business is conducted as a
     going concern in Mozambique (“the Business”).

     In terms of the Agreement, the Purchaser will be acquiring the
     assets owned and used by the Seller in connection with the
     Business, the goodwill, the intellectual property and the stock
     associated with the Business (“the Assets”). In addition, the
     Purchaser will be taking over all employees and certain select
     contracts. The Seller will remain liable for all the
     liabilities in respect of the Business (hereafter referred to
     as “the Acquisition”).


2.   OVERVIEW OF THE GALOVOS BUSINESS

     The Business produces and sells commercial eggs in the
     Mozambican market.


3.   EFFECTIVE DATE

     The effective date of the Acquisition shall be 10 (ten)
     business days following the date upon which the last of the
     conditions precedent to the Agreement have been fulfilled or
     waived (“the Effective Date”).


4.   RATIONALE FOR THE ACQUISITION

     The Acquisition supports the strategic objective of Quantum
     Foods to expand into selected new markets in Africa.


5.   PURCHASE CONSIDERATION

     5.1.   The purchase consideration for the Business and the
            Assets, excluding the value of the stock, is R26 600 000
            (“Asset Consideration”). The value of the stock will be
            determined on the close of business on the day before
            the Effective Date, but is estimated to be R4 500 000
            (“Stock Consideration”).

     5.2.   The Asset Consideration shall be paid by the Purchaser
            as follows:

      5.2.1. R25 100 000 less the Seller’s liability in respect of
             the following amounts as determined on the Effective
             Date:

       5.2.1.1.   leave pay accrued to employees;

       5.2.1.2.   severance pay that would have been payable to
                  employees in the event of a dismissal by reason
                  of the Seller’s operational requirements; and

       5.2.1.3.   all other payments that have or will have accrued
                  to employees, but are still outstanding by the
                  Seller;
                  to be paid on the Effective Date; and

      5.2.2. R1 500 000, 6 (six) months from the Effective Date
             (“Retention Amount”).

     5.3.   The Stock Consideration shall be payable by no later than
            5 (five) days after the Effective Date.

     5.4.   The total purchase consideration shall be paid to the
            Seller in Cash.

     5.5.   Any claim made against the Seller in terms of the
            Agreement will be deducted from the outstanding Retention
            Amount.


6.   CONDITIONS PRECEDENT

     The Acquisition is subject to the fulfilment of the following
     material conditions precedent by no later than 31 May 2016,
     namely:

     6.1.   all regulatory consents and other approvals from the
            responsible authorities in terms of Mozambican and South
            African laws be obtained in an unconditional and
            unqualified form;

     6.2.   the Purchaser completing a due diligence investigation
            to its satisfaction;

     6.3.   receipt of a clearance certificate from Mozambique’s
            Social Security Institute confirming that all amounts
            due to it by the Seller have been paid;

     6.4.   receipt of an updated tax clearance certificate from the
            Mozambican tax authorities confirming that all taxes,
            including tax relating to the social security, due to it
            by the Seller have been paid;

     6.5.   the Seller having received all relevant licenses from
            the relevant authorities in order to conduct its business
            activities, including the license for the production and
            marketing of eggs and the license for the wholesale trade
            with import and export; and

     6.6.   the Purchaser obtaining all necessary registrations and
            approvals to conduct the Business in its name, including
            Central Bank approval for the foreign investment.


7. OTHER RELEVANT INFORMATION

   The Parties have provided warranties to each other that are
   standard to a transaction of this nature.


8. CATEGORISATION

   The Acquisition is below the threshold for a category 2
   transaction, accordingly this announcement is voluntary.


Wellington
26 April 2016

Sponsor
PSG Capital Proprietary Limited

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