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Category 2 Transaction: Acquisition of Olifantskop Feeds Business
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: ACQUISITION OF OLIFANTSKOP FEEDS BUSINESS
1. THE ACQUISITION
The Company is pleased to advise that Quantum Foods Proprietary
Limited (“the Purchaser”), a wholly-owned subsidiary of the
Company, has entered into an offer to purchase the Olifantskop
feed mill (“the Offer”), located in Paterson, Eastern Cape
Province, as a going concern (hereinafter referred to as the
“Business”), from Olifantskop Feeds Proprietary Limited (“the
Seller”) (“Acquisition”).
In terms of the Acquisition, the Purchaser will be acquiring the
fixed assets, goodwill and property associated with the
Business, including stock (excluding stock that is damaged,
redundant or unsaleable), but not any other working capital. In
addition, the Purchaser will be taking over certain finance
leases, all permanent employees and select contracts. The
Purchaser will not be taking over any other liabilities or any
brands.
2. OVERVIEW OF THE BUSINESS
The Business produces animal feed supplying livestock farmers in
the Eastern Cape.
3. EFFECTIVE DATE
The effective date of the Acquisition shall be the first day of
the month following the month in which the last of the
suspensive conditions to the Acquisition, as set out in
paragraph 7.1 to 7.4 below, have been fulfilled (“the Effective
Date”).
4. RATIONALE FOR THE ACQUISITION
The Acquisition supports the strategic objective of Quantum
Foods to grow external feed sales volumes. In addition, it
allows Quantum Foods to enter the Eastern Cape animal feed
market which cannot be supplied from its feed mill in George.
Sales post the implementation of the Acquisition will be made
under the Nova brand.
5. PURCHASE CONSIDERATION
5.1. The purchase consideration for the fixed assets, property
and goodwill is R41 million (“Asset Consideration”). The
value of stock will be determined at the Effective Date
and will be acquired at cost, but is estimated to be R6
million (“Stock Consideration”).
5.2. The Asset Consideration shall (i) be payable on the date
of registration of transfer of the Property into the name
of the Purchaser; and (ii) be secured, at the election of
the Purchaser, by payment of the aforesaid consideration
into trust with the Seller’s attorneys or by a bank
guarantee issued in favour of the Seller, on the Effective
Date.
5.3. The Stock Consideration attributable to the stock-in-trade
shall (i) be the cost price thereof; and (ii) be payable
no later than 5 (five) days after the Effective Date.
5.4. Quantum Foods will be financing the Acquisition from cash
resources.
6. PROFITS ATTRIBUTABLE TO THE BUSINESS
The operating profit of the Business in the financial year ended
February 2015 was R7 million.
7. SUSPENSIVE CONDITIONS
The Acquisition is subject to the following suspensive
conditions, namely:
7.1. on or before 23 October 2015, the Parties conclude a sale
of business agreement in respect of the Acquisition,
containing all the usual provisions required for a
transaction of this nature;
7.2. on or before 9 October 2015, the Purchaser completes a
comprehensive due diligence investigation in respect of
the Business and delivers to the Seller a written notice
stating that it is satisfied with the results of its due
diligence investigation and wishes to proceed with the
Acquisition;
7.3. on or before 23 October 2015, the Acquisition has been
approved by a special resolution of the shareholders of
the Seller in accordance with section 112 read with
section 115 of the Companies Act, No. 71 of 2008 (as
amended); and
7.4. on or before 31 January 2016, to the extent required, the
written approval of the applicable competition authorities
in terms of the Competition Act, No. 89 of 1998 is
obtained in respect of the Acquisition.
The Parties may, by agreement in writing and by no later than
the dates stipulated for fulfilment thereof, extend the date for
fulfilment of all or any of the suspensive conditions contained
in paragraphs 7.1 to 7.4 above.
8. FURTHER TERMS
8.1. The Seller shall procure the publication of the statutory
notices of the Acquisition in terms of Section 34 of the
Insolvency Act, No. 24 of 1936.
8.2. With effect from the Effective Date until the date of
registration of transfer of the Property into the name of
the Purchaser, the Purchaser shall occupy the Property and
shall pay to the Seller occupational rental in the amount
of R275,000 per month (excluding VAT).
9. CATEGORISATION
The Acquisition is a Category 2 transaction for the Company as
contemplated in the Listings Requirements of the JSE Limited.
Stellenbosch
16 September 2015
Sponsor
PSG Capital Proprietary Limited
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