LABAT AFRICA LIMITED - Detailed cautionary announcement relating to the potential acquisition of Elf Trans

Detailed cautionary announcement relating to the potential acquisition of Elf Trans

LABAT AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1986/001616/06)
(“Labat” or “the Company”)
ISIN Code: ZAE 000018354 Share code: LAB

DETAILED CAUTIONARY ANNOUNCEMENT RELATING TO THE POTENTIAL ACQUISITION OF ELF TRANS


1.   Background
     Shareholders are advised that Labat has agreed high level terms with the shareholder of Senna
     Motors Proprietary Limited, trading as Elf Trans (“Elf Trans”), in terms of which Labat will acquire the
     business and assets or the issued shares of Elf Trans, as the case may be (“the Acquisition”) in return
     for a cash payment of R40 million and the issue of 15 million Labat shares at R1.00 per share (“the
     Purchase Consideration”). The shareholder of Elf Trans is The Elf Group Trust owning 100% of the issued
     shares of Elf Trans and represented by Mr Matthys Johannes Adrian Diedericks.

2.   Description of Elf Transportation
     Elf Trans is a dry bulk carrier offering services to major clients in South Africa. The business’s head
     office is based in Benoni in Gauteng.

3.   Rationale for the Acquisition
     The Acquisition will expand on the existing logistics business of Labat and assist Labat in its quest to
     become a major player in the logistics and distribution business.

4.   Suspensive conditions
     -    The parties executing a sale agreement/s in respect of Elf Trans and the agreement/s
          becoming unconditional. The sale agreement/s will contain the normal warranties and
          indemnities associated with a transaction of this nature;
     -    Labat advising Elf Trans that it is satisfied with the outcome of the required limited due diligence
          investigation;
     -    Mr Diedericks continue to operate Elf Trans and continue to be actively involved in its expansion
          strategy and the retainment of Elf Trans key management on similar or better terms and
          conditions of employment as is the case at present;
     -    If material third party, material supply or other service provider contracts contain change of
          control provisions, consent such change being obtained from the third parties;
     -    Direct transfer of guarantees and suretyships provided by Elf Trans in connection with the
          running of its business be transferred and ceded to Labat; and
     -    The Board providing a certified extract of the Board resolution approving the Acquisition;
     -    Any regulatory approvals to the extent required, including approval by Competition
          Commission and JSE to the extent necessary.

5.   Classification of the transaction
     The Acquisition is classified as a Category 2 transaction in terms of the JSE Listings Requirements. Elf
     Transportation and its associates are not related parties to Labat. Accordingly, shareholder approval
     is not required.
     Furthermore, pursuant to the Transaction, there will be no change in control of Labat, no change in
     control of the board of Labat and no change in the nature of the business of Labat and therefore it
     is considered that the acquisition does not meet the definition of a Reverse Takeover as defined in
     the JSE Listings Requirements.

6.   Financial Information
     As per the formally prepared but unaudited management reports of Elf Trans for the year ended
     28 February 2018, the salient financial information was as follows:

     -   Net asset value of R31 975 270;
     -   Turnover of R134 429 612; and
     -   Profit after taxation of R9 597 682.

     Post the implementation of the Transaction, Labat will participate in 100% of the earnings and net
     asset value of Elf Trans.

     The management report information was prepared in accordance with South African Statements of
     Generally Accepted Accounting Practice.

7.   Renewal of cautionary announcement
     Due to the suspensive conditions, which include the execution of formal legal agreements and a
     due diligence, shareholders are advised to continue to exercise caution until a further
     announcement is made. In addition, Labat remains in discussions relating to other acquisitions,
     which, if successfully concluded, may have a material effect on the price of the Company’s
     securities.

     Accordingly, shareholders are reminded to exercise caution when dealing in the securities of the
     Company until further announcements are made.

Johannesburg
12 June 2018

Sponsor
Arbor Capital Sponsors Proprietary Limited

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