To view the PDF file, sign up for a MySharenet subscription.

GOLD BRANDS INVESTMENTS LIMITED - Disposal of the Chesanyama Franchise Business and Withdrawal of Cautionary

Release Date: 05/02/2019 17:03
Code(s): GBI     PDF:  
Wrap Text
Disposal of the Chesanyama Franchise Business and Withdrawal of Cautionary

GOLD BRANDS INVESTMENTS LIMITED
Incorporated in the Republic of South Africa
(Registration number 2015/168426/06)
Share code: GBI     ISIN: ZAE000212791
(“Gold Brands” or “the Company”)

 DISPOSAL OF THE CHESANYAMA FRANCHISE BUSINESS AND WITHDRAWAL OF CAUTIONARY

1. INTRODUCTION

The board of directors of Gold Brands (“the Board”) wishes to advise shareholders that Gold Brands has
entered into a Sale of Business Agreement (“Agreement”) with Future Equity Brands Proprietary Limited
(“the Purchaser”), in terms of which Gold Brands, through its wholly-owned subsidiary, Franchising to
Africa Proprietary Limited (“FTA”), will dispose of the ChesaNyama food franchising business
(“ChesaNyama”) (“the Disposal”), which Disposal constitutes a proposal to dispose of the greater part
of Gold Brand’s assets in terms of section 112 of the Companies Act, 2008 (Act 71 of 2008), as amended
(“Companies Act”).

In terms of the Agreement, the Disposal will comprise all of the Franchise agreements and Intellectual
property used or in connection with ChesaNyama Africa and South Africa but specifically excludes all
liabilities in respect thereof.

The Disposal will be implemented on the "Closing Date", being 08:00 on 1 March 2019 or such later date
and time as occasioned by the section 34 notice in terms of the Insolvency Act or as agreed to by the
parties in writing.

2. THE DISPOSAL

2.1   Nature of the business of Chesanyama

ChesaNyama is a franchise enterprise catering to the LSM 1 to 6 market, which brings the local
butcher to the customer’s doorstep. Serving the best-matured A-grade meats flame-grilled in their
open-plan kitchen, enhanced by its secret traditional pap and sauce or freshly cut chips. The brand
consists of a minimum of 84 stores.

2.2   Rationale for the Disposal

The Board has decided to dispose of the franchise business of ChesaNyama Africa and South Africa
only in order to expand the Chesanyama brand outside Africa. The Company will expand locally on
new brand development and move its focus and performance into the restaurant and casual dining
upmarket segment with the North Sea restaurants and North Sea “worlds best fish and chips diner”
brands due to the highly competitive fast food / take away market. In conjunction with Gold Brands
restructuring and outsourcing production and logistic activities entirely with the view of simplifying
the business activities in order to reduce cost and focus on new brand development activities.

2.3   Purchasers

Gold Brands has entered into the Agreement with the Purchaser, the ultimate major and material
shareholders of which are:

? Christopher Leonard van Zyl (41%); and
? Thys Marcel van Zyl (41%).

2.4   Purchase consideration and application of sale proceeds

The purchase consideration payable by the Purchaser in respect of the Disposal is an amount of
R14 million in cash and will be settled as follows:
2.4.1. an initial amount of R250 000 which was paid to the Seller in December 2018;
2.4.2. R1 000 000 on the date of signature of the Agreement;
2.4.3. R6 250 000 on the Closing Date;
2.4.4. R2 500 000 thirty calendar days after the Closing Date;
2.4.5. R2 000 000 sixty calendar days after the Closing Date; and
2.4.6. R2 000 000 ninety calendar days after the Closing Date.
The sale proceeds will be used to increase cash flow into the Company, settle debt and assist in the
rolling out of new and existing brands as per the rationale above.

2.5   Conditions precedent and effective date

The Disposal is subject to the fulfilment of, inter alia, the following suspensive conditions:

2.5.1 the board of directors of FTA approving the Disposal in accordance with terms of the
Agreement and confirming that all approvals required under the Companies Act and in terms
of FTA’s memorandum of incorporation, shareholders agreement (if any) and any other
agreement that may otherwise prevent the lawful sale of ChesaNyama, have been obtained;
2.5.2 the shareholder of FTA (being Gold Brands) approving the Disposal, by means of a special
resolution (or such other approval that may be required under the Companies Act and in terms
of FTA’s memorandum of incorporation and shareholders agreement (if any);
2.5.3 conclusion and signature of written cession agreements between FTA and each of the other
parties to certain contracts between FTA and third parties relating to ChesaNyama as elected
by the Purchaser (“Contracts”), prior to the Closing Date, in terms whereof all rights and
obligations of FTA are under the Contacts are ceded, assigned, transferred and made over
from FTA to the Purchaser;
2.5.5 signature of a cession agreement by FTA and Gold Brands ChesaNyama Proprietary Limited
(“Gold Brands ChesaNyama”) within five business days from the date of signature of each
written franchise agreement between FTA and any subsidiary of FTA, and a franchisee in
respect of ChesaNyama, in the name of Gold Brands ChesaNyama, to ensure that same is
ceded to FTA so that same can then be ceded to the Purchase as per the Agreement;
2.5.6 the Purchaser not, by the expiry of a period not later than three business days after completion
of the due diligence investigation to be conducted into the underlying business and affairs of
ChesaNyama, delivering to FTA a written notice stating that it is dissatisfied, in its sole and
absolute discretion, with the results of the due diligence investigation; and
The Agreement contains warranties which are usual for transactions of this nature.
The effective date of the Disposal will be the Closing Date.

3. FINANCIAL INFORMATION

The value of the net assets that are the subject of the Disposal as at 28 February 2018 was R4 310 112
The loss that is attributable to the net assets that are subject to the Disposal for the year ended 28 February
2018 was R16 022 903.

The aforementioned unaudited financial information has been carved out from the unaudited annual
financial statements for the year ended 28 February 2018.
The financial information was prepared in accordance with International Financial Reporting
Standards and the Companies Act, 2008 (Act 71 of 2008), as amended.

4. CLASSIFICATION OF THE DISPOSAL AND FURTHER DOCUMENTATION

The Disposal constitutes a Category 1 transaction in terms of section 9.5(b) of the JSE Listings
Requirements and a proposal to dispose of the greater part of the assets of Gold Brands in terms of section
112 of the Companies Act. Save to the extent that dispensation is not obtained from the regulators, a
circular containing full details of the Disposal (“Circular”), including, inter alia, a notice to convene a
general meeting of shareholders of Gold Brands in order to consider and, if deemed fit to pass, with or
without modification, the resolutions necessary to approve and implement the Disposal, will be distributed
to shareholders of Gold Brands in due course.

5. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

Following the release of this announcement, shareholders are advised that caution is no longer required
when dealing in the Company’s securities.

Johannesburg
5 February 2019

Designated Adviser
Merchantec Capital

Date: 05/02/2019 05:03:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story