PIONEER FOOD GROUP LIMITED - Announcement Relating to the Proposed Unbundling by Pioneer Foods of Quantum Foods Holdings

Announcement Relating to the Proposed Unbundling by Pioneer Foods of Quantum Foods Holdings

Pioneer Food Group Limited
Incorporated in the Republic of South Africa
Registration number: 1996/017676/06
Share code: PFG
ISIN code: ZAE000118279
(“Pioneer Foods” or “the Company” or “the Group”)

DECLARATION AND FINALISATION ANNOUNCEMENT RELATING TO THE
PROPOSED UNBUNDLING BY PIONEER FOODS OF A MAXIMUM OF
233 284 332 SHARES IN QUANTUM FOODS HOLDINGS LIMITED (“Quantum
Foods”) TO ITS SHAREHOLDERS

1.   Introduction

     Shareholders are referred to the SENS announcements of 5
     September 2013 and 5 September 2014, wherein shareholders
     were advised of the intention of Pioneer Foods to unbundle
     its interest in Quantum Foods to its shareholders and to
     list Quantum Foods as a separate entity on the JSE
     (“Unbundling”).

     Shareholders are advised that the board of directors of Pioneer
     Foods has resolved to proceed with the Unbundling and to
     unbundle a maximum of 233 284 332 shares in Quantum Foods, which
     equates to 100% of the issued share capital of Quantum Foods
     (“Quantum Foods Shares”) to its ordinary shareholders and to its
     Class A ordinary shareholders, in terms of section 46 of the
     Companies Act No 71 of 2008 and section 46 of the Income
     Tax Act No 58 of 1962 (“Income Tax Act”).

2.   Rationale for the Unbundling

     Pioneer Foods has taken a strategic decision to be a
     focussed branded consumer products business. The new focus
     of Pioneer Foods does not include primary agriculture or
     related businesses and accordingly the board of directors
     of Pioneer Foods took the decision to proceed with the
     Unbundling.

     The Unbundling of Quantum Foods will have the following
     positive outcomes:

     -   It will enable Quantum Foods to develop a shareholder
         base  that   has  an  appetite  for   a  protein/food
         production business with an expansion drive on the
         African continent;
     -   Quantum Foods’ management will be allowed to pursue a
         focused strategy without having to consider the impact
         on Pioneer Foods;
     -   It will enable Quantum Foods to develop its own
         management style and culture;
     -   It will enable Quantum Foods to enter into strategic
         relationships without having to consider the broader
         impact on Pioneer Foods;
     -   It will provide Quantum Foods with direct access to
         debt capital and equity markets; and
     -   The management of Quantum Foods may be appropriately
         incentivised   given   the   characteristics  of   the
         industry.

3.   Details of the Unbundling ratio

     Pioneer Foods will unbundle the Quantum Foods Shares to
     its ordinary shareholders by way of a dividend-in-specie
     in the ratio of 1 Quantum Foods Share for every 1 ordinary
     share   held   in   Pioneer   Foods   on   10 October 2014
     (“Unbundling Record Date”) and to its Class A ordinary
     shareholders in the ratio of 0.3 Quantum Foods Shares for
     every 1 Class A ordinary share held in Pioneer Foods on
     the Unbundling Record Date, rounded to the nearest whole
     number.

4.   Tax consequences

     The summary below represents general comments and is not
     intended to constitute a complete analysis of the taxation
     consequences of the unbundling provisions for the
     shareholders in terms of South African taxation law. It is
     not intended to be, nor should be considered as legal or
     taxation advice. PSG Capital Proprietary Limited, its
     advisors or Pioneer Foods, its directors, employees or
     advisors cannot be held responsible for the taxation
     consequences of the Unbundling and therefore shareholders
     are advised to consult their own tax advisors in this
     regard.

     The Unbundling will be implemented in terms of section 46
     of the Income Tax Act and will have the following tax
     consequences for the shareholders of Pioneer Foods:

     The distribution of the Quantum Foods Shares to ordinary
     shareholders and Class A ordinary shareholders of Pioneer
     Foods in terms of the Unbundling must be disregarded in
     determining any liability for dividends tax and will
     qualify for an exemption from Securities Transfer Tax.

     Pioneer Foods shares held as trading stock:
     Any Pioneer Foods shareholder holding Pioneer Foods shares
     as trading stock will be deemed to acquire the unbundled
     Quantum Foods shares as trading stock. The combined
     expenditure of such Pioneer Foods and Quantum Foods shares
     will be the amount taken into account by the shareholder
     in respect of those Pioneer Foods shares, as contemplated
     in section 11(a), section 22(1), or section 22(2) of the
     Income Tax Act. The portion of the above combined
     expenditure to be allocated to the unbundled Quantum Foods
     shares, will be determined by applying the ratio that the
     market value of the Quantum Foods shares bears to the sum
     of the market value of Pioneer Foods and Quantum Foods
     shares at the end of the date of Unbundling, being 6
     October 2014. The expenditure allocated to the unbundled
     Quantum Foods shares will reduce the expenditure of the
     Pioneer Foods shares held. Pioneer Foods will advise
     shareholders of the specified ratio by way of announcement
     to be released on SENS once the Unbundling has been
     finalised.

     Pioneer Foods shares held as capital assets:
     Any Pioneer Foods shareholder holding Pioneer Foods shares
     as capital assets will be deemed to acquire the unbundled
     Quantum Foods shares as capital assets. The combined
     expenditure of such Pioneer Foods and Quantum Foods shares
     will be the original expenditure incurred in respect of
     the Pioneer Foods shares, in terms of paragraph 20 of the
     Eighth Schedule to the Income Tax Act, and where the
     Pioneer Foods shares were acquired before 1 October 2001, 
     the market value adopted or determined as contemplated in
     paragraph 29 of the Eighth Schedule to the Income Tax Act.
     The portion of the above combined expenditure to be
     allocated to the unbundled Quantum Foods shares will be
     determined by applying the ratio that the market value of
     Quantum Foods shares bears to the sum of the market value
     of Pioneer Foods and Quantum Foods shares at the end of
     the date of Unbundling, being 6 October 2014. The
     expenditure and market value allocated to the unbundled
     Quantum Foods shares will reduce the expenditure and
     market value of the Pioneer Foods shares held. Pioneer
     Foods will advise shareholders of the specified ratio by
     way of announcement to be released on SENS once the
     Unbundling has been finalised.

     Pioneer Foods shareholders will be deemed to have acquired
     the unbundled Quantum Foods shares on the date on which
     the Pioneer Foods shares were originally acquired.

     Non-resident Pioneer Foods shareholders:
     Pioneer Foods shareholders who are non-resident for tax
     purposes in South Africa are advised to consult their own
     professional tax advisors regarding the tax treatment of
     the Unbundling in their respective jurisdictions, having
     regards to the laws in their jurisdiction and any
     applicable tax treaties between South Africa and their
     country of residence.

5.   Salient Dates and Times

     The salient dates and times of the Unbundling are as set
     out below:

     Publication of Unbundling declaration    18 September 2014
     and finalisation announcement on SENS

     Abridged pre-listing statement           18 September 2014
     published on SENS on

     Pre-listing statement posted to          18 September 2014
     shareholders on

     Abridged pre-listing statement           19 September 2014
     published in the press on

     Last day to trade for Pioneer Foods         3 October 2014
     shareholders to be entitled to
     participate in the Unbundling

     Listing of Quantum Foods Shares on the      6 October 2014
     JSE expected at commencement of trade
     on

     Commencement of trading of Quantum          6 October 2014
     Foods shares

     Pioneer Foods shares commence trading       6 October 2014
     “ex” their entitlement to Quantum
     Foods Shares

     Record Date for Unbundling of Quantum      10 October 2014
     Foods

     Accounts at CSDPs/brokers updated in       13 October 2014
     respect of dematerialised shareholders
     on

     Share certificates posted to               13 October 2014
     certificated shareholders by
     registered post on or about

     Notes
     These dates are subject to change. Any material change
     will be released on SENS and published in the press.

6.   Posting and availability of Pre-Listing Statement

     The pre-listing statement in respect of Quantum Foods will
     be posted to shareholders today and is available on the
     Quantum Foods website on www.quantumfoods.co.za and the
     Pioneer Foods website on www.pioneerfoods.co.za.

Bellville
18 September 2014

Transaction Adviser and Sponsor
PSG Capital Proprietary Limited

Date: 18/09/2014 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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