AFROCENTRIC INVESTMENT CORPORATION LIMITED - ACQUISITION OF REMAINING INTEREST IN AFROCENTRIC DISTRIBUTION SERVICES

ACQUISITION OF REMAINING INTEREST IN AFROCENTRIC DISTRIBUTION SERVICES

AfroCentric Investment Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1988/000570/06)
JSE Code: ACT ISIN: ZAE000078416
(“AfroCentric”)



ACQUISITION OF REMAINING INTEREST IN AFROCENTRIC DISTRIBUTION SERVICES



1.   Introduction and rationale

     AfroCentric shareholders (“Shareholders”) are advised that AfroCentric Health
     Proprietary Limited (“AHL”), a 71.3% subsidiary of AfroCentric, has entered into a sale
     of shares agreement dated 7 June 2022 (the “Agreement”) with WAD Holdings
     Proprietary Limited (“WAD”) in terms of which AHL acquires the remaining 49%
     shareholding (“Sale Shares”) in AfroCentric Distribution Services Proprietary Limited
     (“ADS”) for an aggregate purchase consideration of R75 million (the “Acquisition”).

     ADS is a specialised marketing and sales company and the Acquisition constitutes a small
     related party transaction in terms paragraph 10.7 of the Listings Requirements of the JSE
     Limited (“Listings Requirements”) for AfroCentric.

     ADS performs a critical role in the AfroCentric group’s (“Group”) growth strategy through
     the marketing and support services it performs for medical schemes. As the Group
     prepares for its future growth strategy by marketing integrated products it has become
     imperative to own the full distribution capability to market the new generation products of
     the Group and its other partners.

2.   Terms of the Acquisition

     The total purchase consideration for the Acquisition of R75 000 000 will be paid in cash
     within 10 business days of the date of signature of the Agreement. The effective date for
     the Acquisition is 1 July 2022.

     The sale of shares are sold ex-dividend as from 1 July 2022 and any excess or shortfall
     in working capital will be proportionately distributed to or recovered from WAD.

     AHL holds a 51% interest in the Company and plays an active role in the management of
     the Company. Accordingly, the warranties and indemnities provided by WAD to
     AfroCentric are limited to WAD’s capacity and authority to enter into the Agreement and
     WAD’s title and ownership of the Sale Shares.
3.   The net assets and profits attributable to the Acquisition


     Based on AfroCentric’s unaudited interim results for the six months ended 31 December
     2021 (prepared in terms of IFRS), the value of the net assets and net profit before tax that
     are the subject of the Acquisition were R17 534 000 and R11 636 438 respectively.

     Based on AfroCentric’s audited annual financial statements for the year ended 30 June
     2021 (prepared in terms of IFRS) the value of the net assets and net profit before tax were
     R9 151 942 and R8 860 054 respectively.


4.   Categorisation of the Acquisition and fairness opinion

     As WAD was a material shareholder of AfroCentric, and is an associate of Willem Britz, a
     director of AfroCentric, the Acquisition constitutes a small related party transaction in
     terms of the Listings Requirements. Accordingly, the opinion of an independent
     professional expert (“Independent Expert”) on the fairness of the Acquisition to
     Shareholders is required in terms of the Listings Requirements. The Acquisition is not
     subject to Shareholder approval.

     The independent directors of AfroCentric have appointed Mazars Corporate Finance
     Proprietary Limited as the Independent Expert to provide written confirmation that the
     terms of the Acquisition are fair as far as Shareholders are concerned (“the Opinion”).

     A further announcement will be released following the finalisation of the Opinion.

Johannesburg
8 June 2022


JSE Sponsor to AfroCentric




Questco Corporate Advisory Proprietary Limited

Date: 08-06-2022 04:15:00
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