IMPERIAL LOGISTICS LIMITED - Acquisition of 100% of the issued share capital of Deep Catch Namibia Holdings (Proprietary) Limited

Acquisition of 100% of the issued share capital of Deep Catch Namibia Holdings (Proprietary) Limited

Imperial Logistics Limited
(Incorporated in the Republic of South Africa)
Registration number 1946/021048/06
ISIN: ZAE000067211
JSE share code: IPL
(“Imperial” or “Company” or “Group”)

ACQUISITION OF 100% OF THE ISSUED SHARE CAPITAL OF DEEP CATCH NAMIBIA HOLDINGS
(PROPRIETARY) LIMITED

1.     INTRODUCTION

       Imperial is pleased to advise that on 16 June 2021 it has, through its wholly-owned subsidiary,
       Imperial Capital Limited (“the Purchaser”), entered into an agreement ("Agreement") to acquire
       100% of the issued share capital of Deep Catch Namibia Holdings (Proprietary) Limited ("Deep
       Catch") (“the Sale Shares”) from its shareholders, Salt Capital Ventures Limited (“Salt Capital”) and
       DEG - Deutsche Investitions - und Entwicklungsgesellschaft mbH (those shareholders hereinafter
       referred to as the “Investor Shareholders”) and Christoph Kubirske, Jared-Dwight Geyser and
       Lewton Geyser (those shareholders hereinafter referred to as the “Management Shareholders”)
       (collectively, “the Sellers") (“the Transaction”).

2.     DESCRIPTION OF DEEP CATCH

       Deep Catch is a diversified and vertically integrated business engaged in the wholesale,
       distribution and cold storage of perishable foods (mainly poultry, fish and dairy products) in
       Namibia and the SADC region. Headquartered in Namibia and with subsidiaries in Namibia, South
       Africa, Zimbabwe and Zambia, Deep Catch employs over 480 people and serves customers in the
       wholesale, hospitality and retail sectors – including exporting Namibian and South African food
       products to other SADC markets.

       Deep Catch has three commercial cold storage warehouses located in Namibia and South Africa.
       Its distribution business has physical presence in SADC countries with over 50 multi-temperature
       delivery vehicles. The business also owns a majority stake in one of the largest freight forwarding
       businesses in Namibia.

3.     RATIONALE FOR THE TRANSACTION

       The Transaction is in line with Imperial’s ‘Gateway to Africa’ strategy and provides Imperial with
       the opportunity to increase its reach into the consumer market and expand its footprint with new
       capabilities on the African continent.

       Through the expansive cold chain capability and extensive network acquired through Deep Catch,
       Imperial’s Market Access business will be positioned to enter and build onto its cold chain
       capability and product category expansion in its existing markets of operation in Sub-Saharan
       Africa (mainly South Africa, Mozambique, Ghana and Nigeria), where there is substantial demand
       for affordable protein products. This acquisition will provide access to defensive, value-added
       capabilities in FMCG, such as re-packaging.

       In addition, and in line with Imperial’s strategy to leverage cross-selling opportunities across its
       businesses in Africa, the acquisition of Deep Catch, through expansion into the cold chain
       capability, will also provide opportunity to expand Imperial’s reach to new customers and
       principals in other markets of operation.

4.     PURCHASE CONSIDERATION

4.1.   Assuming that Deep Catch achieves its earnings before interest, taxes, depreciation, and
       amortisation (“EBITDA”) targets in respect of FY2021 through FY2024, the agreed purchase
       consideration (calculated on the basis of a "locked box" structure) is N$633 million (ZAR633
       million) (increased by an interest factor equal to the Bank of Namibia’s repo rate plus 50
       basis points reckoned from 1 July 2020 to the date of payment) (“the Purchase
       Consideration”) plus, if applicable, the amount referred to in paragraph 4.2 below. The
       Purchase Consideration is payable as follows:

4.1.1. on the Completion Date (which is the second business day following the date on which
       the last of the conditions precedent as set out in paragraph 5 below is fulfilled), N$341,7
       million shall be paid to the Sellers;

4.1.2. on the finalisation of the audited annual financial statements of Deep Catch in respect of
       FY2021, a maximum amount of N$128,4 million shall be paid to the Sellers, subject to a
       downward adjustment if Deep Catch does not achieve its target EBITDA of N$129 million;
       and

4.1.3. an amount of N$162,9 million shall be paid to the Management Shareholders in three
       equal tranches on the finalisation of the audited annual financial statements of Deep
       Catch in respect of FY2022, FY2023 and FY2024 respectively (“the Management Deferred
       Consideration”), based on Deep Catch’s performance during the relevant year concerned
       save that:

       •     if the target EBITDA for the year concerned is not met but the actual EBITDA is equal
             to or greater than 90% of the target EBITDA, the Management Shareholders shall
             receive 80% of the payment due for that year; and

       •     if the actual EBITDA for the year concerned is less than 90% of the target EBITDA, the
             Management Shareholders shall receive 50% of the payment for that year.

 4.2.  The final determination of the Management Deferred Consideration shall be based on the
       average EBITDA achieved over FY2022, FY2023 and FY2024 providing the Management
       Shareholders an opportunity, at the end of FY2024, to recoup any amount not earned by
       them in any of the target years FY2022, FY2023 and/or FY2024.

 4.3.  In addition to the Purchase Consideration referred to in paragraph 4.1 above, the
       Management Shareholders shall be entitled to an earn-out payment equal to a maximum of
       N$40,7 million, to the extent that the actual cumulative EBITDA for FY2022, FY2023 and
       FY2024 achieved by Deep Catch, exceeds the target cumulative EBITDA for that period.

5.     CONDITIONS PRECEDENT

       The Transaction is subject to the fulfilment of the following suspensive conditions ("Conditions
       Precedent"):

5.1.   the submission of merger filings to the South African, Namibian and COMESA Competition
       Authorities and approval by the South African and Namibian Authorities of the Transaction;

5.2.   the consent of the existing funders of Deep Catch to the Transaction and the counterparties
       to certain material contracts;

5.3.   the consent and waivers of pre-emptive rights from the shareholders of Camel Thorn Freight
       Forwarding Proprietary Limited and Seapride Zimbabwe Proprietary Limited pursuant to the
       Transaction;

5.4.   the conclusion of 3-year service agreements including restraints between the Management
       Shareholders, key managers and Deep Catch; and

5.5.   Imperial confirming that no material adverse event has occurred within ten business days of
       the fulfilment of all the other Conditions Precedent.

6.     COMPLETION DATE OF THE TRANSACTION

       The Transaction will be implemented on the Completion Date, whereupon ownership of the Sale
       Shares shall pass to the Purchaser.

7.     FINANCIAL INFORMATION

       The value of the net assets of Deep Catch as at 30 June 2020, being the date of the last audited
       annual financial statements, was N$287,6 million.

       The revenue, EBITDA and profit after tax attributable to the net assets for the year ended 30 June
       2020, were N$1 035,8 million, N$100,8 million, and N$21,9 million respectively, based on the
       audited annual financial statements of Deep Catch for the year ended 30 June 2020, which were
       prepared in terms of International Financial Reporting Standards for Small and Medium-sized
       Entities.

8.     WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT

       The Agreement contains representations and warranties by the Sellers in favour of the Company
       which are standard for a transaction of this nature.

9.     CLASSIFICATION OF THE TRANSACTION AND EXCHANGE RATE

       The Transaction constitutes a category 2 transaction in terms of the JSE Limited Listings
       Requirements. The exchange rate of N$1/ZAR1 was utilised in respect of the Transaction and
       accordingly all Namibian Dollar amounts herein are reflective of the corresponding Rand (ZAR)
       amount.

10.    OTHER

       The Company confirms, for purposes of paragraph 9.16 of the JSE Limited Listings Requirements,
       that nothing in the constitutional documents of Deep Catch and/or Imperial Capital Limited will,
       in any way, frustrate or relieve the Company from compliance with the JSE Limited Listings
       Requirements.

Enquiries
Imperial Investor Relations
Email: esha.mansingh@imperiallogistics.com

Bedfordview
17 June 2021

Sponsor to Imperial
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Legal Adviser to Imperial
TWB – Tugendhaft Wapnick Banchetti & Partners

Legal Adviser to Deep Catch
Webber Wentzel

Financial Adviser to Deep Catch
Investec Bank Limited

Date: 17-06-2021 07:05:00
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