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Acquisition Of Controlling Interest In The Talhado Group
PREMIER FISHING AND BRANDS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/018598/06)
Share Code: PFF, ISIN ZAE000238309
(“Premier” or “the Company”)
ACQUISITION OF CONTROLLING INTEREST IN THE TALHADO GROUP
1. INTRODUCTION
1.1. Shareholders are hereby advised that the Company, through its
subsidiary, Premier Fishing SA Proprietary Limited (“Premier”),
has entered into a binding heads of agreement (the “Heads of
Agreement”) with Talhado Fishing Enterprises Proprietary
Limited (“TFE”), Scofish Proprietary Limited (“Scofish”), the
trustees for the time being of The Dino Moodaley Family Trust
(“The DM Family Trust”), the trustees for the time being of The
Sanbourne Trust (“The Sanbourne Trust”) and the trustees for
the time being of The Patrick Mbiko Family Trust (“The PM Family
Trust”) on 17 October 2017, in terms of which Premier will
subscribe for a 50.01% controlling interest in TFE (“TFE
Subscription”).
1.2. In addition to the TFE Subscription, Premier intends to increase
its exposure to the Talhado Group of companies through the
acquisition of various minority interests in Rupestris Fishing
Proprietary Limited, Sagittarius Fisheries Proprietary Limited,
Robberg Sea Freeze Proprietary Limited, MB Fishing Ventures
Proprietary Limited, Dazelle Traders Proprietary Limited and
Manicwa Fishing Proprietary Limited (“Talhado Group Minority
Sale”). The aforementioned companies, together with TFE form
the “Talhado Group”.
1.3. To the extent that the Talhado Group Minority Sale is
implemented, Premier will own an effective 53.35% controlling
interest in the Talhado Group.
2. TALHADO GROUP BUSINESS
2.1. Talhado Group is a fishing group that undertakes the catching,
processing and marketing of squid, with both sea and land based
freezing facilities. Talhado Group operates from the east coast
and is situated in the Port Elizabeth harbour. The group obtains
product from its own vessels, its associated company vessels
and through the purchase of product from independent boat owners
who do not have export infrastructure and logistics
capabilities. The Talhado Group and its associated companies
employ 407 fishers and own 17 vessels. The group’s land based
staff consist of 14 monthly staff, 21 land based weekly staff,
and 16 to 20 part time staff as required over the peak fishing
period. The group owns a cold room facility, which can store
up to 800 ton of squid.
2.2. The Talhado Group is considered one of the pioneer companies
in the squid industry and has been involved in the initiation
of industry bodies such as Siyaloba Training Academy and SASMIA
the industrial association body.
3. RATIONALE FOR THE TRANSACTION
Premier’s strategy is to grow organically and through acquisitive
growth. TFE, the asset being acquired, is the largest squid
player in the South African fishing market which compliments
Premier’s diversification strategy and extends its product
basket. TFE has a solid asset base in the squid sector and the
synergies between Premier and TFE are expected to be realised in
the short to medium term which will lead to further efficiencies
within the existing operations and the overall group.
4. PURCHASE CONSIDERATION
4.1. The subscription price for the TFE Subscription is R87 345 465
(“Subscription Price”). The Subscription Price will accrue
interest at the prime interest rate less 2% with effect from
the Effective Date (as defined below) until the date of payment
in full of the Subscription Price.
4.2. The Subscription Price shall be settled either in cash or on a
financed basis.
4.3. It is envisaged that the purchase price for the Talhado Group
Minorities Acquisition will be R19 326 330 (“Talhado Group
Minorities Sale Price”) and will accrue interest at the prime
interest rate less 2% with effect from the Effective Date (as
defined below) until the date of payment in full of the Talhado
Group Minorities Sale Price.
5. CONDITIONS PRECEDENT TO THE SUBSCRIPTION
The TFE Subscription is subject to the fulfilment of the following
conditions precedent:
5.1. formal agreements being entered into and becoming unconditional
in accordance with their terms;
5.2. Premier notifying TFE that it is satisfied with the results of
a due diligence investigation and that it wishes to proceed
with the TFE Subscription;
5.3. certain TFE senior management entering into new service
contracts with TFE;
5.4. approval of the TFE Subscription by the board of directors of
Premier and TFE, as may be applicable;
5.5. the shareholders and board of directors of TFE authorising the
amendment to the memorandum of incorporation of TFE;
5.6. the passing by TFE of the necessary resolutions in accordance
with the Companies Act authorising the TFE Subscription;
5.7. the shareholders of TFE, to the extent applicable, waiving in
writing any pre-emptive rights in respect of the shares
subscribed for by Premier pursuant to the TFE Subscription;
5.8. TFE declaring a dividend distribution;
5.9. the approval by the Minister of Agriculture, Forestry and
Fisheries or his delegated authority for the TFE Subscription
in terms of section 21 of the Marine Living Resources Act 18
of 1998 (“the section 21 applications”);
5.10. any necessary approval by the Competition Authorities in terms
of the Competition Act No 89 of 1998; and
5.11. any other approval required in respect of the TFE Subscription
from any other regulatory authorities in terms of any applicable
legislation;
6. EFFECTIVE DATE
The Effective Date of the TFE Subscription is 30 November 2017
(“Effective Date”).
7. OTHER MATERIAL TERMS
7.1. The Talhado Group Minorities Acquisition is subject to the
Talhado Group Minorities and Premier entering into formal
agreements.
7.2. In the event that the shareholders of the Talhado Group
Companies agree to sell the balance of the equity in the Talhado
Group Companies, Premier shall have a right of first refusal
to purchase the balance of the equity at a purchase price based
on 6 times an earnings multiple to be agreed between the parties
to the Heads of Agreement.
8. FINANCIAL INFORMATION
8.1. The consolidated value of the net assets of the TFE as at 31
August 2017 was R59 499 173, the date of its last unaudited
annual financial statements.
8.2. The consolidated profit after tax attributable to the TFE for
its unaudited financial year ending 31 August 2017 was
R50 676 132.
8.3. The consolidated unaudited annual financial statements of TFE
were prepared in terms of IFRS.
8.4. Premier is satisfied with the quality of the unaudited annual
financial statements of TFE.
9. CATEGORISATION
The Acquisition constitutes a Category 2 transaction in terms of
the JSE Listings Requirements.
Cape Town
18 October 2017
Sponsor: PSG Capital
Attorneys: Cliffe Dekker Hofmeyer
Corporate Advisory: AEEI Corporate Finance
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