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QUANTUM FOODS HOLDINGS LIMITED - Category 2 Transaction: Disposal of Tydstroom Abbatoir Business in Hartebeespoort

Release Date: 11/05/2015 08:30
Code(s): QFH     PDF:  
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Category 2 Transaction: Disposal of Tydstroom Abbatoir Business in Hartebeespoort

QUANTUM FOODS HOLDINGS LIMITED
(previously Business Venture Investments No 1792 Proprietary
Limited)
(Incorporated in the Republic of South Africa)
Registration Number: 2013/208598/06
Share Code: QFH
ISIN Code: ZAE000193686
(“Quantum Foods” or “the Company”)


CATEGORY 2 TRANSACTION: DISPOSAL OF TYDSTROOM ABBATOIR BUSINESS IN
HARTEBEESPOORT


1.   THE TRANSACTION


     Shareholders of the Company are hereby advised that the Company
     and Quantum Foods Proprietary Limited, being a wholly-owned
     subsidiary of the Company (“the Sellers”), have entered into an
     agreement (“the Agreement”) with Sovereign Food Investments
     Limited (“Sovereign”) and Crown Chickens Proprietary Limited
     (“the Purchaser”), dated 7 May 2015, in terms of which the
     Sellers will dispose of the Tydstroom abbatoir business in
     Hartebeespoort, Gauteng (“the Business”), as a going concern,
     which Business relates to the slaughtering and processing of
     broilers for human consumption (“the Transaction”).


     The Sellers, the Purchaser and Sovereign are hereinafter
     collectively referred to as “the Parties”.


     The effective date of the Transaction shall be the date being 5
     business days after all the conditions precedent to the
     Transaction, as set out in paragraph 4.1 to 4.6 below, have been
     fulfilled (“the Effective Date”).
     The Business comprises of the following:


      1.1     portion 81 of the Farm No.488, Schurveberg, registration
              division JQ, Gauteng, measuring 23.0723 hectares in extent
              and held under deed of transfer T17648/2012(“the Farm”);
      1.2     fixed assets, equipment and vehicles used in the Business;
      1.3     stock-in-trade of the Business as at the close of business
              on the day preceding the Effective Date;
      1.4     the abattoir and processing facility known as Tydstroom
              Abattoir, including all equipment; and
      1.5     the contracts concluded by the Sellers in relation to the
              Business as at the Effective Date, as agreed between the
              Parties.


2.    RATIONALE FOR THE DISPOSAL


     The disposal will result in the Sellers exiting the broiler meat
     market served from the Hartebeespoort abattoir in Gauteng. It
     will furthermore result in an aligned broiler business model for
     Quantum Foods in both the Western Cape and Gauteng, with Quantum
     Foods being a contract producer of live broilers and not
     participating directly in the broiler meat market.



3.    PURCHASE CONSIDERATION


      The purchase consideration for the Business is R120,000,000 (one
      hundred and twenty million Rand) (“Purchase Consideration”),
      which includes VAT at the rate of 0%, payable on the date of
      registration of the transfer of the Farm into the name of the
      Purchaser.


      The Purchase Consideration shall be secured by a guarantee
      issued in favour of the Sellers by a reputable financial
      institution.


     The Purchase Consideration shall be used by Quantum to increase
     cash reserves available for investment in line with the
     strategic priorities of the Quantum Foods group.


4.   CONDITIONS PRECEDENT


     The Transaction is subject to the following conditions
     precedent, namely:


     4.1.   by no later than 31 December 2015, the unconditional
            approval, in writing, of the applicable competition
            authorities in terms of the Competition Act, No. 89 of
            1998 in respect of the Transaction (or if such approval is
            conditional, each of the Parties having approved such
            condition in writing and delivered such written approval
            to the other Parties) be obtained;


     4.2.   by no later than 31 December 2015, to the extent
            necessary, all regulatory consents and other approvals,
            including but not limited to the approval of the
            Johannesburg Stock Exchange, be obtained;


     4.3.   by no later than 30 days from the date of signature of the
            Agreement (“Date of Signature”), the Purchaser completing
            a due diligence investigation to its satisfaction;


     4.4    by no later than 45 days from the Date of Signature, the
            Parties concluding a sale of business agreement in respect
            of the Transaction, containing all the usual provisions
            required for a transaction of this nature;
     4.5    by no later than 45 days from the Date of Signature the
            Sellers delivering to the Purchaser a copy of any special
            resolutions required in terms of the Companies Act, No. 71
            of 2008 (as amended); and


     4.6    by no later than 45 days from the Date of Signature the
            Parties concluding a broiler supply agreement, the
            material terms of which have been agreed to between the
            Parties.


     The Parties may, by agreement in writing and by no later than
     the dates stipulated for fulfilment thereof, waive or extend the
     date for fulfilment or waiver of all or any of the conditions
     precedent contained in paragraphs 4.1 to 4.6 above (unless any
     such condition is in law incapable of waiver).


5.   EXCLUSIVITY


     The Sellers have granted exclusivity to the Purchaser and
     Sovereign from the Date of Signature until the earlier of: (i)
     the Effective Date; or (ii) the date on which the Agreement
     fails as a result of the non-fulfilment of any of the conditions
     precedent, as set out in paragraphs 4.1 to 4.6 above, or is
     terminated.

6.   FINANCIAL EFFECTS


     The value of the net assets attributable to the Business is R90
     million and the attributable loss of the Business, excluding an
     impairment of the Business assets for the year ended 30
     September 2014 was R26 million.


     The financial information contained in this announcement has not
     been reviewed or reported on by the Company’s auditors.
7.   CATEGORISATION


     The Transaction is a Category 2 transaction for the Company as
     contemplated in the Listings Requirements of the JSE Limited.




Wellington
11 May 2015


Sponsor
PSG Capital Proprietary Limited

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