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Announcement regarding an increase in Brimstone's shareholding in Sea Harvest Holdings Proprietary Limited to 85%
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 INCREASE IN BRIMSTONE’S SHAREHOLDING IN SEA HARVEST
HOLDINGS PROPRIETARY LIMITED (“SEA HARVEST”) TO 85%
1. Introduction
Shareholders are advised that Brimstone’s wholly-owned subsidiary, Brimco Proprietary Limited
(“Brimco”), has entered into a share sale agreement with Kagiso Strategic Investments III
Proprietary Limited (“Kagiso”) dated 8 April 2016 (“the Agreement”) to acquire Kagiso’s interest
in Sea Harvest such that Brimstone’s effective shareholding in Sea Harvest will increase from
58.44% to 85% (“the Transaction”).
The effective date of the Transaction will be the day on which the last of the conditions
precedent set out in paragraph 6 have been fulfilled or waived and is anticipated to be on or
about 30 April 2016 (“the Effective Date”).
2. Details of the Transaction
The Transaction will result in Brimstone acquiring:
2.1 258 825 620 ordinary shares in the share capital of Sea Harvest, representing an interest
in the ordinary share capital of Sea Harvest of 26.56%;
2.2 526 279 class B cumulative redeemable preference shares in the share capital of Sea
Harvest with a capital value of R52.6 million (“B Preference Shares”) and accrued
dividends in respect of the B Preference Shares up to the Effective Date; and
2.3 all amounts of any nature whatsoever owing by Sea Harvest to Kagiso on the Effective
Date, including an ordinary loan in an aggregate amount of R17.1 million advanced by
Kagiso to Sea Harvest,
(collectively “the Sale Equity”).
3. Rationale for the Transaction
Having been shareholders in Sea Harvest since 1998, Brimstone has a high level of familiarity
with the Sea Harvest business and the South African fishing industry. Brimstone is excited by the
long term prospects of Sea Harvest and has faith in the current management team’s ability to
create value for Sea Harvest shareholders. Sea Harvest also provides a Rand hedge to
Brimstone’s earnings given that approximately 60% of Sea Harvest’s profits are earned offshore.
This will be further supplemented by Sea Harvest’s proposed acquisition of a controlling stake in
Mareterram Limited (“Mareterram”), an Australian Stock Exchange (“ASX”) listed fishing and
food service business. Shareholders are referred to a separate announcement released today by
Brimstone regarding an offer by Sea Harvest to acquire up to 59.6% of the equity of Mareterram.
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4. Description of Sea Harvest
Sea Harvest is one of the largest vertically integrated fishing companies in South Africa.
Established in 1964 and employing over 2,400 people, it owns 12 deep-sea fishing trawlers,
processes approximately 40,000 tonnes of fish on the Atlantic West Coast in Saldanha as well as
on the Indian Ocean coast in Mossel Bay and has considerable expertise in the fishing industry.
It is an efficient and cost effective operation with ongoing development of new technology and
processes. The shore-based plants incorporate state-of-the-art equipment and techniques and
produce a range of natural and coated products for both retail and foodservice markets locally
and internationally.
In December 2015, Sea Harvest acquired a 19.9% shareholding in Mareterram, which is a
vertically integrated agri-business listed on the ASX. It is the single largest licence holder in the
Shark Bay Prawn Fishery in the Gascoyne region of Western Australia, and primarily catches king,
tiger and endeavor prawns, as well as scallops. 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. Mareterram has been Sea Harvest’s distribution agent in
Australia for the last 52 year.
Further information on Sea Harvest can be accessed on www.seaharvest.co.za.
5. Consideration for the Transaction
The total consideration for the Transaction is R270.0 million plus an amount equal to the
dividends in respect of the B Preference Shares which have accrued from 1 January 2016 up to
the Effective Date (“the Purchase Consideration”). On the assumption that the Effective Date
will be 30 April 2016, the dividends accrued from 1 January 2016 will be approximately R3.1
million. The Purchase Consideration will be settled by Brimstone by way of available bank
funding.
6. Conditions precedent
The Transaction is subject to the following conditions precedent:
6.1 By no later than 17:00 on 15 April 2016:
6.1.1 the board of directors of Kagiso approving/ratifying the entering into of the
Agreement;
6.1.2 the board of directors of Brimstone approving/ratifying the entering into of the
Agreement;
6.1.3 the trustees of New Sea Harvest Management Investment Trust, Sea Harvest
Management Investment Trust 2 and Sea Harvest Employee Share Trust
(collectively “the Trusts”) in writing:
6.1.3.1 waiving any pre-emptive rights the Trusts may have in respect of the
Sale Equity; and
6.1.3.2 consenting to the transfer of the Sale Equity to Brimstone without
the provisions of clause 13.2 of the memorandum of incorporation
of Sea Harvest, which deal with the process to be followed in the
case of pre-emptive rights being exercised, having to be observed;
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6.1.4 the shareholder of Kagiso, by way of a written resolution, approving the
Transaction.
6.2 By no later than 17:00 on 30 April 2016:
6.2.1 written consent from The Standard Bank of South Africa Limited (“SBSA”) for Sea
Harvest to enter into the Agreement to the extent that this is required in terms
of the term loan facility agreement entered into between SBSA and Sea Harvest
Corporation Proprietary Limited; and
6.2.2 the conclusion of exit agreements by Kagiso and its related companies to
terminate any agreements entered into by Kagiso and its related companies in
relation to Sea Harvest.
7. Value and profits attributable to the net assets of Sea Harvest
The value of the net assets of Sea Harvest as at 31 December 2015, being Sea Harvest’s most
recent reporting date, is R130.2 million and the profits attributable for the period then ended
are R37.7 million.
8. Categorisation of the Transaction
The Transaction is categorised as a Category 2 transaction in terms of the JSE Listings
Requirements.
8 April 2016
Cape Town
Investment Bank and Sponsor
Nedbank Corporate and Investment Banking
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