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Extension Of Supply Agreement With Seavuna Fishing Company And Vuna Fishing Company
SEA HARVEST GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration Number: 2008/001066/06
Share Code: SHG
ISIN: ZAE000240198
("Sea Harvest Group" or the "Company")
EXTENSION OF SUPPLY AGREEMENT WITH SEAVUNA FISHING COMPANY PROPRIETARY
LIMITED AND VUNA FISHING COMPANY PROPRIETARY LIMITED
1. INTRODUCTION
1.1 Sea Harvest Corporation Proprietary Limited ("Sea Harvest"), a subsidiary of the
Company, is party to a long-term supply agreement for hake and related fish products (the
"Supply Agreement") with two related parties, Vuna Fishing Company Proprietary Limited
and SeaVuna Fishing Company (collectively, the "Vuna Companies"). Details of the
Supply Agreement were included in the pre-listing statement published by the Company at
the time of its listing on the securities exchange operated by JSE Limited Listing (the
"JSE").
1.2 The Supply Agreement provides, in summary, that Sea Harvest has the exclusive right to
purchase from the Vuna Companies the hake and related fish products that they produce,
at a price determined in accordance with the provisions of the Supply Agreement.
1.3 The Supply Agreement has been in place for c.6 years, since 1 January 2017, and was
scheduled to terminate on 31 December 2022.
1.4 Sea Harvest Group shareholders ("Shareholders") are hereby advised that Sea Harvest
and the Vuna Companies have concluded an addendum to the Supply Agreement, in terms
of which the duration of the Supply Agreement will be extended and Sea Harvest will
continue to purchase hake and related fish products from the Vuna Companies
("Extension Agreement").
2. THE EXTENSION
2.1 Pursuant to the Extension Agreement, the duration of the Supply Agreement has been
extended and Sea Harvest will continue to purchase, from the Vuna Companies, the hake
and related fish products that they produce, for a further period of 3 years from 1 January
2023. In addition, Sea Harvest has the option to extend the Supply Agreement for a further
period of 3 years, commencing on 1 January 2026.
2.2 The aggregate value of product purchased under the extended Supply Agreement
(including any further extension thereof by Sea Harvest) is limited to R954 million (which
amount is less than 30% of the current market capitalisation of the Company). Apart from
this limitation, all of the existing terms and conditions of the Supply Agreement will continue
to apply.
2.3 The Supply Agreement is an important source of product for Sea Harvest, and accordingly,
the rationale for concluding the Extension Agreement is to provide continuity to Sea Harvest
and to ensure security of supply.
3. COMPLIANCE WITH THE JSE LISTINGS REQUIREMENTS
3.1 The Vuna Companies are, for purposes of the JSE Listings Requirements ("Listings
Requirements"), regarded as related parties to the Company by virtue of the fact that
Brimstone Investment Corporation Limited ("Brimstone"), which is the ultimate controlling
shareholder of the Company, also has an indirect shareholding in the Vuna Companies.
Although Brimstone does not have a controlling shareholding in the Vuna Companies, the
Vuna Companies are, for purposes of the Listings Requirements, "associates" of Brimstone
by virtue of the fact that Brimstone's 85% subsidiary, Vuna Fishing Group Proprietary
Limited, holds a c.49% shareholding in the Vuna Companies.
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3.2 Therefore, having regard to the definition of a related party transaction in the Listings
Requirements, any amendment or extension of the Supply Agreement would be deemed
to be a related party transaction and must be dealt with accordingly, unless doing so is in
the ordinary course of business of the issuer as contemplated in paragraphs 9.1(d) and
9.1(e) of the Listings Requirements and the value attributable to the transaction does not
exceed a value equal to 30% of the market capitalisation of the Company.
3.3 The Company considers the conclusion of the Extension Agreement to be a transaction
which falls within its ordinary course of business, and the JSE has confirmed to the
Company that it has no objection to the classification of the Extension Agreement as such.
In the circumstances and given that the value attributable to the transaction is less than
30% of the market capitalisation of the Company, the conclusion of the
Extension Agreement is not treated as a related party transaction for purposes of the
Listings Requirements.
4. GOVERNANCE BOARD AND INDEPENDENT EXPERT OPINION
4.1 Notwithstanding the fact that the Extension Agreement is not treated as a related party
transaction for purposes of the Listings Requirements, the Company has, given the related
party nature of the arrangement and in the interest of good corporate governance, taken
the following measures:
4.1.1 The Board has constituted a sub-committee of the Board consisting only of the
independent directors of the Company ("Independent Committee") for purposes of
assessing the extension of the Supply Agreement, as well as advising Shareholders
thereon.
4.1.2 Although this is not a requirement under the Listings Requirements, the Board has
appointed Valeo Capital Proprietary Limited, as an independent expert ("Independent
Expert"), to issue an opinion on whether the extension of the Supply Agreement is fair
to Shareholders ("Independent Expert’s Report").
4.2 The Independent Expert has considered the proposed extension and the terms and
conditions of the Extension Agreement and is of the opinion that the Extension Agreement
is fair insofar as Shareholders are concerned.
4.3 The Independent Committee is likewise of the opinion that the Extension Agreement is fair
insofar as Shareholders are concerned.
4.4 Given the classification of the extension of the Supply Agreement as being in the ordinary
course of business of the Company, no approval from Shareholders is required.
Cape Town
14 December 2022
Sponsor
The Standard Bank of South Africa Limited
Legal Advisor
Cliffe Dekker Hofmeyr Inc
Independent Expert
Valeo Capital
Date: 14-12-2022 03:00:00
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