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Small Related Party Transaction: Acquisition By GPI Of 65% Of The Issued Ordinary Share Capital Of EMBP
GRAND PARADE INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1997/003548/06)
Share code: GPL
ISIN: ZAE000119814
(“GPI” or “the Company”)
SMALL RELATED PARTY TRANSACTION: ACQUISITION BY GPI OF 65.00%
OF THE ISSUED ORDINARY SHARE CAPITAL OF EXCELLENT MEAT BURGER
PLANT (PROPRIETARY) LIMITED (“EMBP”)
1. THE ACQUISITION
Shareholders are hereby advised that Grand Foods
(Proprietary) Limited (“Grand Foods” or “the Purchaser”), a
wholly-owned subsidiary of GPI, has entered into a sale of
shares agreement, dated 7 September 2015 (“the Agreement”),
with Excellent Holdings (Proprietary) Limited (“Excellent”)
and Nadesons Investments (Proprietary) Limited (“Nadesons”)
(collectively referred to as “the Sellers”), in terms of
which the Sellers have agreed to sell 65.00% of the total
issued ordinary share capital of EMBP (“the Sale Shares”) to
the Company (“the Acquisition”).
In addition, Grand Properties (Proprietary) Limited (“Grand
Properties”), a wholly-owned subsidiary of GPI, has entered
into a sale agreement for the acquisition of two properties,
relating to the EMBP operations, from Excellent Meat Packers
Cape (Proprietary) Limited (“Meat Packers”) (“Property
Acquisition”).
Following the successful implementation of the Acquisition,
EMBP will become a 96.88% subsidiary of GPI.
2. DETAILS OF THE BUSINESS OF EMBP
EMBP was established in 2013 and first began producing meat
patties in 2014 exclusively to the Burger King market in
South Africa; currently supplying 110 tons to 47 BURGER
KING® stores monthly. This equates to just over 15% of the
plant’s capacity of 700 tons.
The plant is fitted with state-of-the-art equipment that
will allow it to keep pace with the aggressive rollout of
BURGER KING® restaurants in South Africa in the forthcoming
year and beyond. This setup also allows the plant the
opportunity to explore export prospects within other BURGER
KING® networks worldwide. In addition to the potential
expansion to export markets, the burger plant will consider
and has the capacity to add further BURGER KING® beef
products to its range of products in the coming year with
the aim of further growing revenue.
The plant has a full management team, sufficient expertise
and experience to run the plant.
3. RATIONALE FOR THE ACQUISITION
EMBP is an established and professional business that has
proved its operational capabilities. EMBP plays a crucial
role in the supply chain of BURGER KING® South Africa
(“BKSA), assisting with the localisation of its content, as
well as providing valuable control over the food margins.
Control of EMBP would provide a stronger strategic position
for GPI at a holding company level, as it would supply BKSA
with its meat supply throughout its roll out and could
expand its supply with the utilisation of the GPI network.
The plant is also exploring export prospects beyond Africa
in various other BURGER KING® markets and to this end, has
already had its production facility approved and accredited
by the Russian State Veterinarian as a suitable meat patty
supplier.
4. SMALL RELATED PARTY TRANSACTION
4.1 Due to one of the Sellers, namely Nadesons, being an
associate of Mr Hassen Adams and Mr Alan Keet, both
directors of GPI, the Acquisition is deemed to be a
“related party transaction” in terms of section 10 of the
Listings Requirements of the JSE Limited (“JSE”).
4.2 However, as the Acquisition amounts to less than 5% of the
market capitalisation of GPI as at 7 September 2015, the
Acquisition is classified as a “small related party
transaction” in terms of section 10.7 of the JSE Listings
Requirements. Accordingly, written confirmation is
required from an independent expert confirming the
fairness of the terms of the Acquisition in relation to
GPI shareholders.
4.3 GPI has appointed Mazars Corporate Finance (Proprietary)
Limited (“Mazars”) as the independent expert to provide
written confirmation of the fairness of the Acquisition to
GPI shareholders and to the JSE. Shareholders will be
advised in due course regarding Mazars’ independent expert
opinion, once same is finalised.
4.4 Shareholders are advised that this announcement is made
for information purposes only and no action is required by
GPI shareholders with regard to the Acquisition, subject
to the approval of the independent expert opinion by the
JSE and the opinion confirming that the Acquisition is
fair to GPI shareholders.
4.5 Shareholders are further advised that in terms of the
Property Acquisition, Meat Packers is independent to GPI
and as the Property Acquisition is below the Category 2
transaction threshold in terms of the Listing Requirements
of the JSE Limited, the relevant transaction details are
disclosed voluntarily.
5. PURCHASE CONSIDERATION
The total consideration payable by the Company to the
Sellers in terms of the Acquisition is R35 800 000 in
aggregate (“Purchase Consideration”), which is to be paid to
the Sellers in cash on closing date of the Acquisition,
being 2 days subsequent to the fulfillment all the
conditions precedent set out in paragraph 6 below.
The payment of the Purchase Consideration will be settled as
set out below:
i) Excellent – an amount of R32 900 000, of which
R30 000 000 is payable in respect of sale shares and
R2 900 000 is payable for sale claims; and
ii) Nadesons – an amount of R2 900 000, of which
R2 500 000 is payable in respect of sale shares and
R400 000 is payable for each sale claims.
6. CONDITIONS PRECEDENT
The Acquisition is subject to the fulfillment of the
following outstanding conditions precedents:
6.1. a list of all material contracts have been supplied to the
Purchaser on or before 18 September 2015;
6.2. K2013142133 (Proprietary) Limited (“K2013”), a wholly
owned subsidiary of BKSA, and its shareholders waive any
and all pre-emptive rights it may have in terms of its
memorandum of incorporation and shareholders agreements
with GPI on or before 18 September 2015;
6.3. the Purchaser furnish the Sellers confirmation that it is
satisfied as to the outcome of the due diligence on or
before 20 September 2015;
6.4. Grand Foods notifies the sellers that they are satisfied
as to all aspects of the DTI grant awarded to EMBP in
terms of the EIP: Management Investment programme on or
before 21 September 2015;
6.5. Grand Foods notifies the Sellers as to its satisfaction of
the current Standard Bank loan in EMBP on or before 30
September 2015;
6.6. the Sellers furnish the Purchaser with confirmation that
Standard Bank has agreed to release both Excellent and
Meat Packers as surety on or before 30 September 2015;
6.7. the parties comply, to the extent necessary by law, with
the JSE Listings Requirements, the Competition Commission
and the Takeover Regulation requirements on or before 26
October 2015; and
6.8. the Property Acquisition is unconditional on or before 26
October 2015.
7. OTHER DETAILS OF THE ACQUISITION
The Agreement provides for warranties and indemnities that
are normal for a transaction of this nature.
GPI will ensure that the provisions of the memorandum of
incorporation of EMBP will not frustrate GPI in any way from
its compliance with the obligations in terms of the Listings
Requirements of the JSE or relieve GPI from compliance with
the Listings Requirements of the JSE.
8. EMBP FINANCIAL INFORMATION
The total current value of the property, plant and equipment
assets of EMBP, which is the subject of the Acquisition,
were R37 491 440 as at 30 June 2015.
The losses attributable to the net assets subject to the
Acquisition were R 3 472 672 for the year ended 30 June
2015.
9. EFFECTIVE DATE OF THE ACQUISITION
In terms of the Agreement, the effective date of the
Acquisition will be the 26 October 2015, subject to
fulfillment or waiver of the conditions precedent set out in
paragraph 6 above.
Cape Town
8 September 2015
Sponsor and corporate advisor:
PSG Capital
Legal advisor:
Bernadt Vukic Potash & Getz
Independent expert:
Mazars Corporate Finance (Proprietary) Limited
Date: 08/09/2015 10:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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