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Disposal Of Muscle Science Brand And Further Cautionary Announcement
BioScience Brands Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1987/001222/06)
(JSE code: BIO ISIN: ZAE000115036)
(BioScience or the company)
ANNOUNCEMENT RE DISPOSAL OF MUSCLE SCIENCE BRAND AND FURTHER CAUTIONARY ANNOUNCEMENT
Introduction and background
Shareholders are referred to the further cautionary announcement released on SENS on
26 March 2013 in respect of negotiations to dispose of the Muscle Science business and
related assets.
Aldabri 53 (Pty) Limited (Aldabri) is a subsidiary of BioScience, which subsidiary holds
and trades the Muscle Science Brand and related sub-brands and trade-marks (the Brands).
Bioscience and its subsidiaries owe Akacia Health (Pty) Limited (Akacia) and Herbal and
Homeopathic (Pty) Ltd (H&H) collectively an amount of R9 million. The Brands are held as
security jointly by Akacia and H&H.
Akacia has made an offer to BioScience for the purchase of the Brands and the stock of
Aldabri, and the assets BioScience holds to the Herbology Brand, which offer has been
accepted subject to shareholder and regulatory approval. The contents hereof will be
formalised in an agreement between the parties.
Terms of the disposal
The disposal will be effected in one of two ways:
1. Option 1: Akacia or its nominee will purchase all of the shares in and all Biosciences
claims on loan account against Aldabri on the following basis:
a. The Brands are held by Aldabri or will be transferred to Aldabri on or before the
effective date;
b. BioScience will, on or before the effective date, transfer those rights and assets
that it holds to the Herbology brand to Aldabri or Akacia, at Akacias choice;
c. BioScience will procure the irrevocable approval from more than 50% of BioSciences
shareholders eligible to vote on the disposal before 5 May 2013;
d. The approval of shareholders will be obtained at a Meeting of Shareholders by not
later than 28 July 2013;
e. Aldabri will procure that a Scheme of Arrangement (the Arrangement) will be
concluded with the creditors of Aldabri, excluding Akacia, by no later than 31 May 2013;
f. To the extent that it may be necessary, Aldabri will procure that the creditors of
BioScience will approve the Arrangement by 31 May 2013;
g. The disposal is subject to the approval of the relevant regulatory authorities,
including the JSE and Takeover Regulation Panel in terms of the Companies Act;
h. The Arrangement will be quantified as follows:
(i). The value of the stock in Aldabri will be agreed by no later than 5 May. This will
form the basis of the disposal.
(ii) Payment will be in cash per the terms of the Arrangement;
(iii) The value of the stock will be converted to a proportion of gross creditor value
to arrive at the cents in the rand payment;
(iv) For the purposes of the calculation referred to in 1.h.iii, moneys owing by Aldabri
to Akacia and the South African Revenue Services (SARS) will be excluded;
(v) Subject to legal constraints, Aldabri will pay the costs associated with the Arrangement;
i. Moneys owing to H&H for trade and arrear payments, secured by the Brands, will be
for Akacias account but excluded from the Arrangement;
j. Aldabri will remain responsible for settling moneys which Aldabri owes to SARS;
k. Aldabri will remain responsible for settling the outstanding loan to H&H as described
under loan agreement, but excluding the arrear payments, subject to H&Hs approval;
l. The transaction will include the full and final settlement of all moneys owing to
Akacia by BioScience or its subsidiaries, excluding Aldabri;
m. The purchase consideration for the shares and loan accounts will be R1.00, plus
the amounts noted under 1.k and 1.l above;
n. The license agreement described under 3 below has to be concluded.
2. Option 2: Should the suspensive conditions pertaining to Option 1 not be met, then
Akacia will purchase the Muscle Science Brands and stock and the assets BioScience holds
to the Herbology Brand (the Business) on the following terms and conditions:
a. The purchase price of the Business will be R8 000 000 (eight million rand) plus the
value of stock;
b. Akacia will acquire the Muscle Science usable stock on hand at cost, and the
determination and value of saleable stock will be mutually agreed between the parties.
The purchase consideration for the stock will be settled in cash by Akacia and be free
from deductions;
c. It is a suspensive condition that BioScience has to obtain irrevocable undertakings
from more than 50% of BioScience shareholders eligible to vote on the sale before 5
May 2013;
d. BioScience shareholder approval has to be obtained by 28 July 2013;
e. Approval by the relevant regulatory authorities, including the JSE and the Takeover
Regulation Panel in terms of the Companies Act have to be obtained before 28 July 2013;
f. The necessary notice of sale of the Business in terms of section 34 of the Insolvency
Act has to be published before 28 July 2013;
g. The license agreement described under 3 below has to be concluded;
h. In the event that Bioscience receives another offer to purchase the Business, prior
to the special Meeting of Shareholders, BioScience shall only be entitled to accept the
offer if the offer is 15% more than the Akacia offer, but only after first giving
Akacia the option to match the subsequent offer;
i. Payment will be made on the date at which the BioScience shareholder approval is
obtained and the Akacia loan will first be set-off against the amount due and then H&H
will be paid. The balance of the purchase price will be paid in cash to BioScience;
j. H&H would be required to release the security it holds over the Brands;
k. Akacia may revise the purchase price if any product listing is cancelled with any
major retailer on or before the acceptance date.
3. License agreement
a. Regardless of which alternative is effected, BioScience will enter into a license
agreement with Akacia in terms of which Akacia will assume full operational responsibility
for the Muscle Science Brand with effect from 1 May 2013.
b. The license agreement shall terminate on the date of the Special Meeting at
which BioScience shareholder approval is obtained, or 30 days thereafter if shareholder
approval is not obtained at such meeting.
Related party fundamental transaction
The disposal of either Aldabri or the Business is a disposal of the greater part of the
remaining assets or undertaking of BioScience which requires shareholder approval by
special resolution in terms of section 115 of the Companies Act.
Akacia owns 28% of the shares of BioScience and is a related party to BioScience. The
disposal therefore requires approval by the holders of 50% of the shares, excluding the
shares held by Akacia.
Categorisation of transaction
The proposed disposal is a Category 2 transaction in terms of the rules of the JSEs
Listings Requirements for AltX listed companies. However, a circular to shareholders
will be required by virtue of the resolutions that have to be passed in terms of the
previous paragraph.
Financial effects
The unaudited pro forma financial effects of the disposal on BioScience shareholders
are being calculated and will be announced in due course.
Renewal of cautionary announcement
Shareholders are advised to continue exercising caution when dealing in the companys
shares until the financial effects had been announced.
29 April 2013
Johannesburg
Designated Adviser
Exchange Sponsors
Date: 30/04/2013 08:27:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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