NIVEUS INVESTMENTS LIMITED - Proposed Conditional Disposal Of The Operational Assets Of KWV Holdings Limited

Proposed Conditional Disposal Of The Operational Assets Of KWV Holdings Limited

NIVEUS INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1996/005744/06)
 Share code: NIV
 ISIN: ZAE000169553
  (“Niveus”)

PROPOSED CONDITIONAL DISPOSAL OF THE OPERATIONAL ASSETS OF KWV HOLDINGS LIMITED (“KWV”)

   1. INTRODUCTION
      Shareholders are hereby advised that KWV and its wholly-owned subsidiary, KWV South Africa
      Proprietary Limited (“KWV SA”) have concluded conditional agreements, dated 10 May 2016, in
      terms of which, inter alia, KWV SA shall dispose of all its operational assets, and KWV shall dispose
      of all of its shares in and loan accounts against its wholly-owned subsidiary, KWV Intellectual
      Properties Proprietary Limited (“the Disposal”). Niveus holds an interest of 57,13% of the ordinary
      shares of KWV.

   2. THE BUSINESS OF KWV
      KWV is one of the leading wine and spirits producers in South Africa. The company sources wines
      and grapes from the best and most sought after viticultural regions in South Africa. In addition,
      KWV owns several internally renowned brands such as Roodeberg, KWV Wines, Laborie, Golden
      Kaan, Cathedral Cellar, Cafe Culture, jimmijagga, Wild Africa Cream and the KWV 3, 5, 10, 15 and
      20-year old brandies.

   3. RATIONALE FOR THE DISPOSAL
      Niveus is an investment company and the offer represents a return on investment that warrants
      acceptance thereof.

   4. CLASSIFICATION OF THE DISPOSAL
      The Disposal is classified as a category 2 transaction in terms of the Listings Requirements of the
      JSE Limited for Niveus.

   5. DETAILS OF THE DISPOSAL

5.1. THE PURCHASER
     The operational assets of KWV will be acquired by New Rose 7 Proprietary Limited and
     Warshay Investments Proprietary Limited, associated with the Vasari group. The Vasari group
     has significant experience in operating multinational spirits and beverage companies and
     controlled by Mr Vivian Imerman (“The Purchaser”).

5.2. OPERATIONAL ASSETS
     In terms of the Disposal, the conditional agreements provide for the disposal of KWV’s
     operational assets which include all property, plant and equipment used in the production of
     wine, brandies and other alcoholic beverages, as well as the shares in and claims against KWV
     SA’s local and foreign subsidiaries and associate companies. It also encompasses all
     inventories, all brands and all contractual arrangements with regard to purchasing, producing,
     distributing, marketing and selling of branded liquor products.

     The assets exclude certain non-operational assets, including the Laborie Estate, KWV’s art
     collection, the KWV head office building (La Concorde) and other non-operational land.

     In the Niveus financial results, the consolidated book value of the operational assets of KWV,
     which is the subject of the Disposal, is approximately R1,7 billion as at 31 March 2016. The
     book value includes IFRS fair value adjustments of approximately R410 million raised by
     Niveus on consolidation.

     The net profit attributable to the operational assets, which is the subject of the Disposal, was
     R24 million for the year ended 31 March 2016 before non-controlling interest.

5.3. DISPOSAL CONSIDERATION
     The Disposal consideration is in the amount of approximately R1,15 billion (“Consideration”).
     The Consideration will be settled as follows:

    i) R575 million (being 50% of the Consideration) will be paid in cash on the effective date of
        the Disposal; and
    ii) the remainder of the Consideration will be deferred and settled in three equal cash
        instalments on each of the first, second and third anniversaries of the effective date.

    The Consideration will increase by 6% per annum from 1 May 2016 onwards. This increase
    will be added to the value of the three deferred instalments. These deferred instalments will
    be secured by way of bank guaranteed promissory notes, carrying interest at 8,5%,
    compounded annually.

5.4. EFFECTIVE DATE
     The effective date of the Disposal will be on the first month-end after all the conditions
     precedent have been fulfilled.

5.5. CONDITIONS PRECEDENT
     The relevant conditions precedent to the Disposal are as follows:
     - approval of the Disposal by way of a special resolution of the shareholders of KWV;
     - successful completion of a due diligence investigation by the Purchaser; and
     - approval of the Disposal by the Competition Authorities.

5.6. APPLICATION OF THE PROCEEDS FROM THE DISPOSAL
     There are no immediate plans exist for the application of the proceeds and the cash will be
     retained by the group.

5.7. OTHER DETAILS
            The Disposal agreements provide for warranties and indemnities that are normal for a
            transaction of this nature.

Cape Town
11 May 2016

Sponsor: PSG Capital Proprietary Limited

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