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Announcement Relating to the 80% Acquisition of SAHRPRA Approved Aquaponics Cultivation Operation in South Africa
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
LEI 9845000R73DF5EE41J88
ANNOUNCEMENT RELATING TO THE 80% ACQUISITION OF A SAHRPRA APPROVED AQUAPONICS
CULTIVATION OPERATION IN SOUTH AFRICA
Shareholders are advised that Labat has concluded an agreement for the acquisition of 80% of shares
and claims in Lima Romeo Air Proprietary Limited, known as Sweetwater, which is a fully operational
SAHPRA approved medicinal cannabis cultivation facility in Kenton-on-Sea in the Eastern Cape of South
Africa (“the Acquisition”). The Vendors are Mr A de Jager (75%), Mr S Booth (12%) and Ms P Gillies (3%),
who are not related parties to Labat. The remaining 20% will be retained by two shareholders, namely
Mr Booth (10%) and Dr Gallow (10%), who runs BioData Proprietary Limited, in which Labat owns 70%.
The effective date of the acquisition is 1 March 2022.
1) Rationale for the Acquisition
As previously announced, Labat has a secured offtake agreement with buyers in Europe,
particularly Switzerland and Germany for the supply of cannabis products. Since the dual listing of
Labat in Frankfurt, Labat has been regularly approached by international buyers of cannabis
flower, for the supply of high quality THC flower from South Africa.
The Eastern Cape based operation will be supported by a team of highly skilled breeders, growers
and researchers. This Operation currently has an offtake agreement in place with an Australian
pharmaceutical client and has also recently facilitated a number of transactions for the supply of
Cannabis to Europe. Labat will use its funding lines and in-house expertise to make significant
capital investments into the current facility and upgrade the existing infrastructure in order to
increase the current production capacity from 500kg per year to 1.8 tons per year. The capital
investment will also be used to set up a European Union Good Manufacturing Processes (EU-GMP)
processing facility on the site with the assistance of a German Pharmaceutical company.
Following the recent acquisition of Miami-based CBD lifestyle brand Echo Life, Labat is pleased to
have concluded this second acquisition following the securing of a R300m funding facility from the
United States based GR Global last year as well as the successful listing on the Frankfurt Stock
Exchange in December 2021. This Acquisition further enhances Labat’s position in the Cannabis
industry as the company continues to work towards its goal of propelling South Africa’s proposition
to its rightful place on the world stage in the field of cannabis cultivation and medicinal cannabis
supply.
The acquisition of the Eastern Cape based facility provides Labat with additional medical and
pharmaceutical infrastructure in support of its Healthcare Strategy and enables Labat to
accelerate the delivery on the off-take agreement with a Swiss pharmaceutical group.
The assets acquired through the Acquisition of Sweetwater include all operating assets of the
cultivation facility, including 1.5ha of land, a 1100sqm Aquaponic Grow Facility, 5 Grow Tunnels
and 216.27 kilograms of dried stock, 10 kilograms of which has been presold to Australia and does
not form part of the Acquisition.
In line with the Labat Healthcare Roadmap, it is envisaged to establish the Ace Genetics Nursery
for the African Genome and Landrace Project at the same location, towards the
commercialisation of the Ace Genetics Seedbank in Quarter 3.
Labat is also pleased to announce that following the successful listing on the Frankfurt Stock
Exchange, investors are now able to trade in Labat Frankfurt listed shares on interactive brokers an
international brokerage platform. Labat continues to engage various trading platforms to allow
local investors to trade on the Frankfurt Stock exchange.
2) Funding
The consideration of R10 million for the acquisition will be funded through the Company’s cash
resources. A deposit of 50% of the purchase consideration has been paid into trust pending the
conclusion of the suspensive conditions below.
3) Suspensive and closing conditions
The Acquisition is subject to the fulfilment of the following suspensive and closing conditions:
- The parties meeting all closing conditions of the sale of share agreement by 15 March 2022
and the agreement/s becoming unconditional, which include, inter alia, proof of transfer of
the land to Sweetwater from the Deeds Office, provision of the latest financial information
and employment agreements being entered into with key management;
- The board providing a certified extract of the board resolution approving the Acquisition;
and
- Any regulatory approvals to the extent required.
4) Warranties
The sale and purchase agreement/s contains the normal warranties and indemnities associated
with a transaction of this nature.
5) Classification of the transaction
The acquisition is classified as a “Category 2 Transaction” in terms of the JSE listings requirements.
None of the various groupings and or parties and its associates are related parties to Labat and
accordingly, shareholder approval is not required.
6) Financial Information
The Company has received the latest financial information from Sweetwater for the nine month
period ending 30 November 2021. These unaudited financial statements were prepared in
accordance with IFRS for SMEs and was compiled by Charteris and Barnes.
The net asset value as at 30 November 2021 was R6 722 021and the net profit before taxation was
R2 459 287.
The Board of Labat is satisfied with the quality of the underlying financial information provided.
7) Other Matters
The Acquisition results in Sweetwater becoming a subsidiary of Labat and nothing in its
Memorandum of Incorporation will bypass the JSE Listings Requirements.
Johannesburg
2 March 2022
Sponsor
Acaciacap Advisors Proprietary Limited
Date: 02-03-2022 02:50:00
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