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'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. 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