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Announcement regarding an offer by Sea Harvest to acquire up to 59.6% of the equity of Mareterram
Brimstone Investment Corporation Limited
(Incorporated in the Republic of South Africa)
Registration number 1995/010442/06
Share Code: BRT ISIN: ZAE000015277
Share Code: BRN ISIN: ZAE000015285
("Brimstone" or “the Company”)
ANNOUNCEMENT REGARDING AN OFFER BY SEA HARVEST TO ACQUIRE UP TO 59.6% OF
THE EQUITY OF MARETERRAM
1. Introduction
Shareholders are advised that Brimstone’s subsidiary, Sea Harvest Holdings Proprietary Limited
(“Sea Harvest”), has entered into a bid implementation agreement (“BIA”) with Mareterram Limited
(“Mareterram”) dated 07 April 2016, pursuant to which Sea Harvest will make a conditional
proportional cash offer to acquire 1 out of every 2 shares held by Mareterram shareholders, other
than Sea Harvest and its related entities (“the Offer”). Mareterram is a vertically integrated agri-
business listed on the Australian Stock Exchange (“ASX”) trading under the share code MTM.
Sea Harvest, through a wholly-owned subsidiary, is currently the largest shareholder in
Mareterram, with a total shareholding of 19.9%. If all Mareterram shareholders accept the Offer,
Sea Harvest’s shareholding in Mareterram will increase from 19.9% to approximately 59.6%. Sea
Harvest’s offer is conditional upon (amongst other things) achieving a 50.1% shareholding in
Mareterram.
The effective date of the Offer will be 5 business days after the date on which the Offer is declared
wholly unconditional.
Shareholders are referred to the announcements released today by Mareterram and Sea Harvest
setting out the details of the Offer. These announcements can be accessed on:
- The ASX website, www.asx.com.au;
- The Mareterram website, www.mareterram.com.au;
- The Sea Harvest website, www.seaharvest.co.za.
Shareholders are further referred to a separate announcement released today by Brimstone
regarding the increase of Brimstone’s shareholding in Sea Harvest from 58.44% to 85%.
2. Details of the Offer
2.1 Sea Harvest proposes to make the Offer to all existing Mareterram shareholders (other
than Sea Harvest) for 50% of their shares in Mareterram at a cash price of AU$0.35 per
share (“the Offer Price”), being an equivalent of approximately ZAR4.00 per Mareterram
share at the current exchange rate of ZAR11.44 to AU$1.00 (“current exchange rate”);
2.2 The Offer Price is at a premium of 19.7% to the 30 day volume weighted average price of
Mareterram shares up to and including 4 April 2016, being the last trading day prior to
Mareterram entering into a “trading halt”, as defined in the requirements of the ASX, ahead
of this announcement;
2.3 Mareterram has appointed an independent expert to consider if the Offer is fair and
reasonable to Mareterram shareholders. All the directors comprising the independent
board of Mareterram unanimously recommend that Mareterram shareholders accept the
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Offer in the absence of a superior proposal and subject to the independent expert
confirming that the Offer is fair and reasonable to Mareterram shareholders;
2.4 As noted in Mareterram’s announcement of 8 April 2016, the four largest shareholders of
Mareterram, other than Sea Harvest, who collectively hold approximately 29.7% of
Mareterram’s issued share capital, have indicated that they intend to support the Offer in
the absence of a superior proposal; and
2.5 All the directors of Mareterram have indicated that they intend to accept the Offer in
relation to any Mareterram shares owned or controlled by them, in the absence of a
superior proposal.
3. Mareterram’s nature of business
Mareterram is a vertically integrated agri-business listed on the ASX. It is the single largest license
holder in the Shark Bay Prawn Fishery in the Gascoyne region of Western Australia (10 of 18
licenses), and primarily catches king, tiger and endeavor prawns, as well as scallops. Their fleet
of boats is supported by significant infrastructure in Carnarvon, Western Australia.
Mareterram Trading, the food service division of Mareterram, manages the sales of the product
from Shark Bay alongside other premium, sustainably caught seafood and other food service
products sourced from its worldwide network of key suppliers, including Sea Harvest. The food
services division has been Sea Harvest’s distribution agent in Australia for the last 52 years.
Further details on Mareterram can be found on the company’s website www.mareterram.com.au.
Shareholders are also referred to the Mareterram prospectus released in November 2015, a copy
of which can be found on the company’s website www.mareterram.com.au.
4. Rationale for the Offer
The rationale for Sea Harvest seeking to increase its shareholding in Mareterram to at least 50.1%
includes:
4.1 Gaining access to sustainable wild caught prawns. The Shark Bay Prawn Fishery, in which
Mareterram is the single largest license holder, holds the gold standard Marine
Stewardship Council (MSC) certification.
4.2 Product diversification – Sea Harvest is primarily a hake business and the acquisition of
Mareterram allows Sea Harvest to diversify its sustainably wild caught product range into
prawns, scallops and crabs.
4.3 Geographic diversification – The acquisition of Mareterram allows Sea Harvest to
geographically diversify its current operations in South Africa to the waters of Western
Australia. The acquisition further strengthens Sea Harvest’s hard currency earnings
potential.
4.4 Access to Mareterram’s directors and management team –
4.4.1 Mareterram is chaired by Peter Hutchinson, a leading Western Australian
businessman who has managed at the most senior levels a diverse portfolio of
industrial investments in manufacturing, engineering, construction and property
over a 30 year period.
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4.4.2 David Lock, the CEO of Mareterram, is a leading agri businessman from Western
Australia. David headed Craig Mostyn Group, one of the oldest and largest agri-
businesses in Australia for 11 years before moving to Mareterram.
4.4.3 Peter and David’s vision is to use the Mareterram platform to build a diversified
agri-business across Australia and New Zealand.
4.5 Global supply chain – With a 52 year history in global markets, Sea Harvest sells its
products to the US, Europe and Asia and has long term relationships with established
customers and access to international supply chain logistics. Sea Harvest will assist
Mareterram in accessing these relationships providing Mareterram with new markets and
sources of supply.
4.6 Product improvement and distribution diversity – Mareterram distributes Sea Harvest hake
products in Australia under an existing supply arrangement. Closer alignment between
Sea Harvest and Mareterram provides Sea Harvest the opportunity to increase the volume
and range of Sea Harvest products sold and distributed in Australia.
4.7 Expertise and operational synergies – Sea Harvest and Mareterram will collaborate in
areas of people, systems and expertise thereby achieving synergies in a number of areas,
including purchasing power, maintenance and support of vessels, engineering, sales and
marketing, IT, risk management, fishing practices, operational health and safety and
quality control.
5. Consideration for the Offer
Sea Harvest will pay a cash consideration to Mareterram shareholders up to a maximum of
AU$19.7 million, being an equivalent of approximately ZAR225.4 million at the current exchange
rate (“the Consideration”). The Consideration will be settled by Sea Harvest by way of shareholder
funding from Brimstone.
6. Conditions precedent
The Offer is conditional, inter alia, on the following conditions precedent:
6.1 Sea Harvest obtaining approval from the Financial Surveillance Department within The
South African Reserve Bank for remittance of foreign currency out of South Africa for the
purpose of satisfying any consideration payable to shareholders who accept the Offer
pursuant to section B.2(B)(ii) of the Rulings of the Exchange Control Regulations;
6.2 50.1% minimum acceptance;
6.3 Mareterram does not make any material acquisitions, disposals or new commitments;
6.4 no prescribed occurrence occurs in relation to Mareterram;
6.5 there being no material adverse change in respect of Mareterram;
6.6 there being no regulatory action;
6.7 all material approvals and licences required to conduct the Mareterram Group business
and the Carnarvon Boat Harbour leases remain in force;
6.8 supply arrangements with key suppliers remain in force; and
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6.9 the independent expert concluding that the Offer is fair and reasonable to shareholders.
7. Value and profits attributable to the net assets of Mareterram
The value of the net assets of Mareterram as at 31 December 2015, being Mareterram’s most
recent reporting date, is AU$22.3 million and the loss attributable to the net assets after tax for
the six months then ended are AU$2 million, being an equivalent of R255.1 million and R22.9
million, respectively (calculated at the current exchange rate). Shareholders are advised that
Mareterram relisted on the ASX on 6 January 2016 and therefore these historical results largely
disclose performance for the effective six month period prior to relisting. Shareholders are referred
to the Mareterram prospectus released in November 2015, a copy of which can be found on the
company’s website www.mareterram.com.au, for a full explanation of the historical and pro forma
performance of Mareterram.
8. Categorisation of the Offer
The Offer is categorised as a Category 2 transaction for Brimstone in terms of the JSE Listings
Requirements.
8 April 2016
Cape Town
Investment Bank and Sponsor
Nedbank Corporate and Investment Banking
Investment Bank to Sea Harvest
The Standard Bank of South Africa Limited
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