Wrap Text
Sea Harvest To Acquire Terrasan's Pelagic Business And A Portion Of Its Abalone Business
SEA HARVEST GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration Number: 2008/001066/06
Share code: SHG ISIN: ZAE000240198
("Sea Harvest")
TERRASAN GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration Number: 1963/005230/06
("Terrasan")
JOINT ANNOUNCEMENT OF THE FIRM INTENTION BY –
SEA HARVEST TO ACQUIRE (THROUGH ITS SUBSIDIARIES) TERRASAN'S PELAGIC BUSINESS AND A PORTION OF
ITS ABALONE BUSINESS; AND
TERRASAN TO REPURCHASE ITS OWN SHARES PURSUANT TO AN INTERNAL REORGANISATION
1. INTRODUCTION AND BACKGROUND
This announcement ("Joint Firm Intention Announcement") is issued by Terrasan in compliance with Regulation 101 of
the Companies Regulations, 2011 ("Companies Regulations"), and by Sea Harvest in compliance with section 9 of the
JSE Listings Requirements.
1.1 Terrasan Internal Reorganisation
1.1.1 Shareholders of Terrasan ("Terrasan Shareholders") are hereby advised that Terrasan shall implement an internal
reorganisation of the Terrasan group of companies ("Terrasan Group") in anticipation of the implementation of the
transactions as contemplated in this Joint Firm Intention Announcement, aimed at reorganising the Terrasan Group
structure in the manner set out in paragraph 1.1.3 (the "Terrasan Internal Reorganisation"). As part of the
Terrasan Internal Reorganisation, Terrasan has inter alia communicated (with the board of directors of Terrasan)
its firm intention to repurchase 23.06% of the issued shares in Terrasan from Terrasan Beleggings Proprietary
Limited ("Terrasan Beleggings"), in terms of section 48(8)(b) read with sections 114 and 115 of the Companies
Act, No. 71 of 2008 ("Companies Act") ("Terrasan Share Repurchase"). In order to implement the Terrasan Share
Repurchase, Terrasan, Terrasan Beleggings and Agri-Vie Fund II Proprietary Limited and Agri-Vie II Investments
Proprietary Limited (collectively "Agri-Vie") have entered into a transaction agreement dated 15 January 2024
("Agri-Vie Transaction Agreement"), in terms of which:
1.1.1.1 Agri-Vie will dispose of their shareholding in Terrasan (constituting 23.06% of the issued shares therein, which
will be disposed of through a series of transactions whereby no more than 10% of the total issued shares in
Terrasan will be acquired each time) to Terrasan Beleggings on loan account ("Agri-Vie Transaction"), which
shares Terrasan will subsequently repurchase from Terrasan Beleggings; and
1.1.1.2 Terrasan Beleggings will settle the aforementioned loan claim by transferring to Agri-Vie shares constituting
36.93% of the issued shares in Aqunion Proprietary Limited ("Aqunion"), claims constituting 36.93% of all of
the claims which Terrasan Beleggings has against Aqunion, and making a cash payment to Agri-Vie being an
initial guaranteed payment of R32,267,685 (thirty two million two hundred and sixty seven thousand six hundred
and eighty five Rand) with the remaining amount, to an aggregate maximum of R3,414,143, to be paid on an
earn-out basis.
1.1.2 The shareholding structure of the Target Entities (defined in paragraph 2.1.3.1) prior to implementation of the
Terrasan Internal Reorganisation is as set out in the announcement available at www.seaharvestgroup.co.za.
1.1.3 The Terrasan Internal Reorganisation (prior to implementing the Agri-Vie Transaction) will entail the following steps:
1.1.3.1 Aqunion Group Proprietary Limited ("Aqunion Group") will transfer its 51.01% shareholding in Marifeed
Proprietary Limited ("Marifeed"), its 51% shareholding in Diamond Coast Abalone Proprietary Limited ("DCA")
and a loan claim against DCA, to Aqunion, in exchange for the issue of further shares in Aqunion;
1.1.3.2 Aqunion will declare a dividend to its sole shareholder (Aqunion Group) with the dividend being settled through
the creation of loan accounts in favour of Aqunion Group;
1.1.3.3 Aqunion Group will distribute the shares it holds in Aqunion and the loan claims it holds against Aqunion
(obtained in terms of the step set out in paragraph 1.1.3.2) to its sole shareholder (being Terrasan Beleggings);
1.1.3.4 Terrasan Finansiering Proprietary Limited ("Terrasan Finansiering") will dispose of a loan claim against
Aqunion and a loan claim against DCA, to Terrasan Beleggings and the purchase consideration will remain
outstanding on loan account;
1.1.3.5 Terrasan Finansiering will transfer the Romansbaai land situated at Portion 2 of the Klipfontein Farm No 711
Gansbaai, held under Title Deed No T6678/2004 ("Romansbaai") to a new subsidiary of Terrasan Finansiering
("TF Newco") in exchange for the issue of further shares in TF Newco to Terrrasan Finansiering;
1.1.3.6 TF Newco will declare a dividend equal to its full value to its sole shareholder (being Terrasan Finansiering),
which is to remain outstanding on loan account;
1.1.3.7 Terrasan Finansiering will distribute the shares it holds in TF Newco and the loan claim it holds against TF
Newco (obtained in terms of the step set out in paragraph 1.1.3.6) to its sole shareholder (being Terrasan
Beleggings);
1.1.3.8 Terrasan Beleggings will dispose the 100% shareholding in TF Newco and the loan claim it holds against TF
Newco (obtained in terms of the step set out in paragraph 1.1.3.7) to Aqunion, and the purchase consideration
will remain outstanding on loan account;
1.1.3.9 the Trustees for the Time Being of the Saldanha Foods Employee Trust ("SFET") will transfer its 40%
shareholding in Saldanha Foods Proprietary Limited ("Saldanha Foods") to Saldanha Employees Investment
Company Proprietary Limited ("SFET Newco") (all the shares in which are held by SFET) in exchange for the
issue of further shares in SFET Newco to SFET;
1.1.3.10 West Point Processors Proprietary Limited ("West Point Processors") will repurchase 22% of its issued shares
from La Vie Seafood Products Proprietary Limited ("La Vie") and similarly Saldanha Foods will repurchase 40%
of its issued shares from SFET Newco;
1.1.3.11 Saldanha Foods will make a distribution of its assets to Saldanha Protein Proprietary Limited ("Saldanha
Protein") in anticipation of its liquidation;
1.1.3.12 West Point Fishing Corporation Proprietary Limited ("WP Fishing") will declare a dividend equal to its full value
to its sole shareholder (being Saldanha Protein) with a portion of R9,073,767 (nine million seventy three
thousand seven hundred and sixty seven Rand) being paid in cash and the balance being settled through the
creation of loan accounts in favour of Saldanha Protein up to a maximum amount of R189,464,797 (one hundred
and eighty nine million four hundred sixty four thousand seven hundred and ninety four Rand);
1.1.3.13 Saldanha Protein will distribute the shares it holds in WP Fishing and the loan claims that it holds against WP
Fishing (obtained in terms of the step set out in paragraph 1.1.3.12) to its sole shareholder (being Terrasan
Beleggings);
1.1.3.14 Terrasan Finansiering will transfer the Terrasan Head Office Building situated at 2 Kiepsersol Close, Plattekloof,
Parow, 7500 ("Terrasan Head Office Building") to Saldanha Sales and Marketing Proprietary Limited ("SSM")
for a purchase consideration of R20,000,000 (twenty million), with the purchase consideration being settled by
the reduction of Terrasan Finansiering's loan account with SSM;
1.1.3.15 SSM will dispose of its remaining loan claims against Terrasan Finansiering (after implementation of the step
set out in paragraph 1.1.3.14) to a subsidiary of Terrasan Beleggings and the purchase consideration will remain
outstanding on loan account; and
1.1.3.16 SSM will declare a dividend to its sole shareholder (being Terrasan Beleggings) equal to 15% of its value, and
which will remain outstanding on loan account.
1.1.4 The shareholding structure of the Target Entities immediately after implementation of the Terrasan Internal
Reorganisation, but prior to implementation of the Agri-Vie Transaction and the Sea Harvest Transaction (as defined
below) is as set out in the announcement available at www.seaharvestgroup.co.za.
1.2 Sea Harvest Transaction
1.2.1 Further, Terrasan Shareholders and shareholders of Sea Harvest ("Sea Harvest Shareholders") are hereby
advised that Sea Harvest has, in terms of an implementation agreement concluded between Sea Harvest, Sea
Harvest Aquaculture Proprietary Limited ("Sea Harvest Aquaculture"), Sea Harvest Pelagic Fishing Proprietary
Limited ("Sea Harvest Pelagic"), Terrasan, Terrasan Beleggings and Agri-Vie on 15 January 2024
("Implementation Agreement"), and a share purchase agreement concluded between the aforementioned parties,
other than Agri-Vie, on 12 January 2024 ("Share Purchase Agreement"), communicated (to the board of Terrasan)
its firm intention to acquire, through certain of Sea Harvest's subsidiaries, certain subsidiaries in the Terrasan Group,
which subsidiaries constitute the greater part of the assets and undertaking of Terrasan (having regard to the
consolidated financial statements of Terrasan) in terms of section 115(2)(b) read with section 112 of the Companies
Act, ("Sea Harvest Transaction" or the "Acquisition").
1.2.2 In terms of the Sea Harvest Transaction -
1.2.2.1 Sea Harvest Pelagic, an indirect wholly-owned subsidiary of Sea Harvest, will acquire from Terrasan
Beleggings:
1.2.2.1.1 88,300 ordinary no par value shares in the issued share capital of WP Fishing, held by Terrasan Beleggings,
constituting 100% of all the issued ordinary no par value shares in WP Fishing (the "WP Fishing Shares");
1.2.2.1.2 all of the claims of whatsoever nature and however arising which any company within the Terrasan Group,
including Terrasan Beleggings has against WP Fishing as at 31 December 2023, and 100% of any claims
that any Terrasan Group company has against WP Fishing as a result of the Terrasan Internal
Reorganisation as at the closing date of the Sea Harvest Transaction (the "WP Fishing Claims");
1.2.2.1.3 101 ordinary no par value shares in the issued share capital of SSM, held by Terrasan Beleggings,
constituting 100% of all the issued ordinary no par value shares in SSM (the "SSM Shares"); and
1.2.2.1.4 all of the claims of whatsoever nature and however arising which any company within the Terrasan Group,
including Terrasan Beleggings, has against SSM as at 31 December 2023, and 100% of any claims that any
Terrasan Group company has against any SSM group company as a result of the Terrasan Internal
Reorganisation as at the closing date of the Sea Harvest Transaction (the "SSM Claims");
1.2.2.2 Sea Harvest Aquaculture, a wholly-owned subsidiary of Sea Harvest, will acquire from Terrasan Beleggings:
1.2.2.2.1 6,307 ordinary no par value shares in the issued share capital of Aqunion, constituting 63.07% of all the
issued ordinary no par value shares in Aqunion (the "Aqunion Shares"); and
1.2.2.2.2 63.07% of all of the claims of whatsoever nature and however arising which any company within the Terrasan
Group, including Terrasan Beleggings, has against Aqunion as at 31 December 2023, and 63.07% of any
claims that any Terrasan Group company has against any Aqunion group company as a result of the
Terrasan Internal Reorganisation as at the closing date of the Sea Harvest Transaction (the "Aqunion
Claims").
1.2.3 The shareholding structure of the Target Entities after implementation of the Agri-Vie Transaction and the Sea
Harvest Transaction is as set out in the announcement available at www.seaharvestgroup.co.za.
2. RATIONALE
2.1 Sea Harvest Transaction
2.1.1 Description of the business of Sea Harvest
The Sea Harvest group of companies ("Sea Harvest Group") is a leading seafood and aquaculture business.
Following its listing on the exchange operated by JSE Limited ("JSE") in 2017, Sea Harvest has actively sought to
grow organically and via acquisitions in the fishing and aquaculture sectors in line with its strategy and vision of
becoming one of the largest black-owned diversified global seafood businesses. Sea Harvest was established in
1964 in Saldanha Bay on the West Coast of South Africa, and since then has developed into the diversified and
transformed business of today. The principal seafood business of Sea Harvest is the fishing of Cape hake in South
Africa as well as Shark Bay and Exmouth prawns in Australia, the processing of the catch into value-added frozen
and non-frozen seafood for marketing and sale, the sustainable farming of abalone and the marketing of abalone.
In line with its vision and strategy Sea Harvest has also, relatively recently, acquired Ladismith Cheese and
BM Foods. Further information on Sea Harvest is available online at https://seaharvestgroup.co.za.
2.1.2 Description of the business of Terrasan Beleggings
Terrasan Beleggings is a wholly-owned subsidiary of Terrasan, an investment holding company established in
South Africa in 1963 which currently holds investments in the pelagic fishing and aquaculture industries (including
the abalone industry), and the property sector.
2.1.3 Description of the businesses of the Target Entities
2.1.3.1 SSM, WP Fishing, West Point Processors, Aqunion, , Marifeed and DCA (the "Target Entities") comprise of
two separate businesses – (i) a fishing business comprising of SSM and WP Fishing (which will hold all the
shares in West Point Processors following implementation of the Terrasan Internal Reorganisation), that is
engaged in the catching, processing and sale of pelagic fish (the "Pelagic Business"), and (ii) an aquaculture
business comprising of Aqunion (which will hold 51.01% of the shares in Marifeed, and 51% of the shares in
DCA following implementation of the Terrasan Internal Reorganisation), that is engaged in the farming,
processing and sale of abalone (the "Abalone Business").
2.1.3.2 The Pelagic Business is a well-established vertically integrated pelagic fishing business based in St. Helena
Bay on the West Coast of South Africa, engaged in the catching, processing and sale of pelagic fish. The Pelagic
Business comprises of SSM and WP Fishing (and will collectively immediately after implementation of the
Internal Reorganisation hold 100% of the shares in West Point Processors). Founded in 1905 and employing
606 people, WP Fishing operates a fishing fleet that catches sardines and anchovies (under its 15-year fishing
rights recently renewed in the 2020 Fishing Rights Application Process). From this catch (and those of third-
parties and imported raw materials) SSM (through its subsidiary WPP) produces fish oil and fish meal (both
largely for export), and canned fish (largely for the South African market and sold under the 118-year-old
"Saldanha" brand). WP Fishing holds 11.51% of the anchovy quota and 5.05% of the pilchard quota.
2.1.3.3 Founded in 1994, the Abalone Business is one of South Africa's leading vertically integrated abalone businesses
selling approximately 540 tons of abalone per annum. Abalone are produced at two farms located in Hermanus
and Gansbaai, while Aqunion's processing facility – also located in Hermanus – produces dried and canned
abalone (under the "Aqunion" brand), which along with live abalone, are sold across the Far East. Employing
430 people, the Abalone Business has a mature and stable abalone biomass spread across its facilities,
complemented by a strong and diversified customer base.
2.1.4 Rationale for the Sea Harvest Transaction
2.1.4.1 The Sea Harvest Transaction (or "Acquisition") represents material progress in Sea Harvest's ambition of
becoming a leading black-owned, responsible and diversified food and fishing business. Following the
Acquisition, Sea Harvest will be in a position to offer a more complete suite of products, including fishmeal, fish-
oil, and canned fish. Sea Harvest will add an in-demand local affordable branded protein product to its stable
2.1.4.2 Sea Harvest is confident that the Acquisition will create value by diversifying into (wild-caught) pelagic species
and their processed products and will enable Sea Harvest to add value to its small pilchards and anchovy pelagic
quota through forward integration into canning and fishmeal and fish oil production. Increased beneficiation of
Sea Harvest's catch opens opportunities for increased local employment in its facilities.
2.1.4.3 Global demand for fishing products continues to grow as a result of continued growth in aquaculture and
consumer demand for healthier products.
2.1.4.4 The purchase of the Pelagic Business will enhance the earning stability of Sea Harvest's fishing operations
since the performance of the pelagic business is counter-cyclical to hake.
2.1.4.5 Sea Harvest's export earnings will increase post the Acquisition as fishmeal, fish oil and abalone are exported
products.
2.1.4.6 Integration with the Pelagic Business would allow the combined businesses the flexibility to land catch on both
the West and East Coasts of South Africa, thereby utilising the business' assets more efficiently. This effective
use of assets contributes to Sea Harvest's mission of providing sustainable employment and positively impacting
the communities in which it operates, as it is expected to assist in preserving jobs, including in rural areas.
2.1.4.7 The Abalone Business is mature, high margin and cash-generative and will facilitate the acquisition of a
diversified international customer base and market that Sea Harvest's existing abalone operations will benefit
from. Sea Harvest's current abalone business experienced significant difficulties in accessing international
markets during the COVID-19 pandemic. The Abalone Business has the required diversified biomass necessary
to compete in the global market for dried and canned abalone sales.
2.1.4.8 Sea Harvest believes that a consolidated local South African abalone business will benefit from scale and
synergies created through consolidating Terrasan and Sea Harvest's respective abalone businesses and that it
will be well-positioned to exploit international opportunities and successfully compete in international markets.
2.1.4.9 Sea Harvest is well-placed to enter into the Sea Harvest Transaction since it (i) is an established entity within
the fishing and aquaculture industries; (ii) has an understanding of the regulatory environment and the current
position of the South African Fishing Rights Allocation Process; (iii) has the black economic empowerment
credentials to successfully implement the Acquisition and (iv) has the ability to fund the Acquisition through a
combination of shares and cash.
2.1.4.10 As alluded to above, a portion of the purchase consideration in respect of the Acquisition will be discharged by
way of the issue of shares in Sea Harvest to Terrasan Beleggings. This will yield several positive outcomes for
Terrasan, including that it will retain its exposure to the fishing and aquaculture industries by way of the larger
combined post-transaction business of Sea Harvest, and will be entitled to participate in Sea Harvest's dividend
flow.
2.1.4.11 The Acquisition will further facilitate broader market access to a larger more diversified business in the fishing
industry since Sea Harvest is a listed entity.
2.2 Rationale for the Terrasan Share Repurchase
Agri-Vie has been invested in Terrasan for more than 4 years. Agri-Vie is constantly looking for organic and acquisitive
investment opportunities, both locally and abroad. The opportunity to acquire a larger portion of Terrasan's abalone
business is well aligned with Agri-Vie's ambitions and strategic intent to grow its exposure to this important and growing
sector.
3. APPOINTMENT OF INDEPENDENT BOARD AND AN INDEPENDENT EXPERT
3.1 The Terrasan Share Repurchase and the Sea Harvest Transaction each constitutes an "affected transaction" for
purposes of sections 117(1)(c)(i) and 117(1)(c)(iii) of the Companies Act and is accordingly regulated by the Companies
Act and the Companies Regulations. In order to implement the Terrasan Share Repurchase and the Sea Harvest
Transaction, Terrasan will, inter alia, require a compliance certificate from the Takeover Regulation Panel ("Takeover
Panel").
3.2 In accordance with Regulation 108 of the Companies Regulations, the board of directors of Terrasan ("Terrasan
Board") has constituted an independent board comprising Shiluba Mawela, Tshililo Ramabulana and Emelda Mosime
("Independent Board").
3.3 The Independent Board has appointed Valeo Capital Proprietary Limited ("Independent Expert") to act as independent
expert in accordance with the requirements of the Companies Regulations, to advise the Independent Board and report
to the Independent Board on the Terrasan Share Repurchase and the Sea Harvest Transaction by way of a fair and
reasonable opinion. The Independent Expert's full report and the Independent Board's opinion on the Terrasan Share
Repurchase and the Sea Harvest Transaction will be included in the Combined Offer Circular (as defined in paragraph
17) to be issued to Terrasan Shareholders.
4. SALIENT TERMS OF THE PROPOSED TRANSACTIONS
4.1 Sea Harvest Transaction
4.1.1 Purchase consideration and payment
4.1.1.1 Sea Harvest, through its subsidiaries Sea Harvest Pelagic and Sea Harvest Aquaculture, will acquire the SSM
Shares, SSM Claims, WP Fishing Shares, WP Fishing Claims, Aqunion Shares, and Aqunion Claims in terms
of the Share Purchase Agreement for an initial purchase consideration, and two deferred consideration
payments (as detailed in 4.1.1.10 and 4.1.1.11).
4.1.1.2 The initial purchase consideration in respect of the Sea Harvest Transaction is R964,837,829 (nine hundred
and sixty four million eight hundred and thirty seven thousand eight hundred and twenty nine Rand) (the "Base
Amount") (subject to the Adjustment Amounts as contemplated below), and will be settled through:
4.1.1.2.1 the issue by Sea Harvest of 60,000,000 (sixty million) Sea Harvest shares to Terrasan Beleggings (the "Sea
Harvest Consideration Shares") (constituting approximately 16.8% of all the issued Sea Harvest shares
following the issue thereof), at an issue price of R10.00 (ten Rand) per share based on the 60-day volume
weighted average price (VWAP) of the shares in Sea Harvest for the 60 trading days before 13 December
2023 (being the first announcement date of the Sea Harvest Transaction) but which is subject to a minimum
issue price of R10.00 (ten Rand) per share; and
4.1.1.2.2 a cash payment equal to R364,837,829 (three hundred and sixty four million eight hundred and thirty seven
thousand eight hundred and twenty nine Rand), subject to the Adjustment Amounts as contemplated below
(the "Sea Harvest Cash Consideration").
4.1.1.3 The details of the two deferred consideration payments are set out in paragraphs 4.1.1.10 and 4.1.1.11 below.
4.1.1.4 Adjustment Amounts
4.1.1.4.1 The Base Amount may be adjusted subject to the Target Entities:
4.1.1.4.1.1 retaining an agreed sustainable level of net working capital (as contemplated below); and
4.1.1.4.1.2 being acquired on a cash free and debt free basis.
4.1.1.5 The Base Amount may further be adjusted in the event that Terrasan Group (pursuant to the Terrasan Internal
Reorganisation) repays any Existing Shareholder Loan Assets (see definition below at paragraph 4.1.1.8.2.4)
that have not been settled in the manner contemplated at paragraph 4.1.1.8.2.4 below, any such repaid
amounts will increase the Base Amount by the amount repaid..
4.1.1.6 The agreed sustainable level of net working capital is an aggregate (i.e. on the basis of 100% of the Pelagic
Business and 63.07% of the Abalone Business) amount of R310,124,271 (three hundred and ten million one
hundred and twenty-four thousand two hundred and seventy-one Rand) comprising of an amount of (i)
R68,100,791 (sixty-eight million one hundred thousand seven hundred and ninety-one Rand) in respect of the
63.7% stake in Aqunion, DCA and Marifeed, and (ii) R242,023,480 (two hundred forty-two million twenty three
thousand four hundred and eighty Rand) in respect of SSM, WP Fishing and West Point Processors
respectively. The agreed sustainable level of net working capital in respect of the Target Entities on a 100%
basis is R350,000, 000 (three hundred and fifty million Rand).
4.1.1.7 To the extent that any Leakage (as defined in paragraph 4.1.1.8.1 below) is identified in respect of the Target
Entities in the period between 1 January 2024 (the "Locked Box Date") and the closing date of the Sea Harvest
Transaction, Sea Harvest Pelagic and Sea Harvest Aquaculture may elect to:
4.1.1.7.1 set off the amount of the Leakage against any liability owing by Sea Harvest Pelagic and Sea Harvest
Aquaculture to Terrasan Beleggings (including any liability arising pursuant to an obligation to pay any
performance linked earnouts as discussed below); or
4.1.1.7.2 require that Terrasan Beleggings pay to Sea Harvest Pelagic and Sea Harvest Aquaculture the amount of
the Leakage.
4.1.1.8 For purposes of the above:
4.1.1.8.1 "Leakage" is defined in the Share Purchase Agreement as follows: in respect of the period between the
Locked Box Date and the closing date of the Sea Harvest Transaction, unless as agreed otherwise by the
parties to the Share Purchase Agreement, or if it is in the ordinary course of business of the Target Entities,
and excluding any Permitted Leakage (defined below at paragraph 4.1.1.8.2):
4.1.1.8.1.1 any dividend or other distribution of capital or income declared, paid or made (whether in cash or in
specie) to Terrasan Group or any Associate (defined as meaning, in relation to any person, any person
which directly or indirectly controls, is controlled by, or is under common control with, that person) thereof
after 1 January 2024;
4.1.1.8.1.2 any payment made to Terrasan Group or any Associate thereof, including in relation to a repurchase,
redemption, repayment or return of share or loan capital (or any other relevant securities) including any
interest payment(s) on any outstanding amounts by a Target Entity to Terrasan Group or any Associate
thereof;
4.1.1.8.1.3 any transfer of assets, rights or other benefits by any Target Entity;
4.1.1.8.1.4 any payment made by any Target Entity other than in the ordinary course of business and/or payments
that are inconsistent with past practices of the applicable Target Entity; and
4.1.1.8.2 "Permitted Leakage" is defined in the Share Purchase Agreement as follows: in respect of the period
between the Locked Box Date and the closing date of the Sea Harvest Transaction:
4.1.1.8.2.1 any amounts contemplated by the Terrasan Internal Reorganisation that would otherwise constitute
Leakage;
4.1.1.8.2.2 any amounts contemplated by the Transaction Documents (defined below at paragraph 5.3.2) that would
otherwise constitute Leakage;
4.1.1.8.2.3 any management fees payable in the ordinary course and in accordance with past practice to Terrasan
Finansiering in respect of the management of the Target Entities from 1 January 2024 to
31 December 2024;
4.1.1.8.2.4 any dividend declared, paid or made to Terrasan Group or any Associate thereof, provided that such
dividend is pre-funded in full by an immediate repayment of any "Existing Shareholder Loan Assets",
which constitute: (i) 63.07% of any loan that Aqunion, DCA or Marifeed and (ii) 100% of any loan that
WP Fishing, SSM or West Point Processors, has made to any company in the Terrasan Group (excluding
any Target Entity), in each case, as at 31 December 2023.
4.1.1.9 An appropriate closing accounts mechanism has been developed to account for the above requirements, and
to account for any potential leakage identified.
4.1.1.10 The first performance linked earnout of up to R98,452,840:
4.1.1.10.1 The first performance linked earnout is an amount of up to R98,452,840 (ninety eight million four hundred
and fifty two thousand eight hundred and forty Rand).
4.1.1.10.2 No part of the first performance linked earn out shall be payable unless the Target Entities achieve a
combined minimum attributable net profit after tax of at least R160,000,000 (one hundred and sixty million
Rand) for the financial year ended 31 December 2023.
4.1.1.10.3 For every R1.00 (one Rand) of attributable net profit after tax greater than R160,000,000 (one hundred and
sixty million Rand) earned in the financial year ended 31 December 2023, Sea Harvest will pay R4.92 (four
Rand and ninety two cents), subject to a maximum of R98,452,840 (ninety eight million four hundred and
fifty two thousand eight hundred and forty Rand) (which equates to R180,000,000 (one hundred and eighty
million Rand) attributable net profit after tax).
4.1.1.10.4 The parties to the Share Purchase Agreement record therein that the first performance linked earnout has
been settled by way of cash generated by the Target Entities from the effective date of the Sea Harvest
Transaction up to and including the Locked Box Date.
4.1.1.11 The second performance linked earnout of up to R157,524,543:
4.1.1.11.1 The second performance linked earnout is an amount of up to R157,524,543 (one hundred and fifty seven
million five hundred twenty four thousand five hundred and forty three Rand) payable in cash.
4.1.1.11.2 No part of the second performance linked earn out shall be payable unless the Target Entities achieve a
combined minimum attributable net profit after tax of at least R180,000,000 (one hundred and eighty million
Rand) for the financial year ending 31 December 2024.
4.1.1.11.3 For every R1.00 (one Rand) of attributable net profit after tax greater than R180,000,000 (one hundred and
eighty million Rand) earned in the financial year ended 31 December 2024, Sea Harvest will pay R5.25 (five
Rand and twenty five cents), subject to a maximum of R157,524,543 (one hundred and fifty seven million
five hundred twenty four thousand five hundred and forty three Rand) (which equates to R210,000,000 (two
hundred and ten million Rand) attributable net profit after tax).
4.1.1.11.4 The second performance linked earnout shall be settled in cash by electronic funds transfer by 30 June
2025, or, if the audited annual financial statements of the Target Entities are not finalised before then, within
30 business days after the audited annual financial statements for the 2024 financial year having been
finalised.
4.1.2 Further details of the salient terms of the Share Purchase Agreement shall be set out in the Combined Offer Circular
and the Sea Harvest Category 1 Circular (as defined in paragraphs 17.1 and 17.2 below) (the "Circulars"), and the
Share Purchase Agreement shall be made available for inspection in terms of the Circulars.
4.1.3 The Share Purchase Agreement in relation to the Sea Harvest Transaction contains and is subject to, inter alia, the
suspensive conditions referred to in paragraphs 5.3 and 5.4.
4.2 Terrasan Share Repurchase
4.2.1 Repurchase consideration and payment
4.2.1.1 In terms of the Terrasan Share Repurchase, Agri-Vie will dispose of all of their shares in Terrasan to Terrasan
Beleggings for an aggregate amount of –
4.2.1.1.1 R275,919,824 (two hundred and seventy five million nine hundred and nineteen thousand eight hundred and
twenty four Rand);
4.2.1.1.2 A deferred amount of R0.5209 (zero point five two zero nine Rand) for each R1.00 (one Rand) of net profit
after tax, in the financial year ending 31 December 2023, in excess of R160,000,000 (one hundred and sixty
million Rand) that is produced by the Target Entities, up to a maximum deferred amount of R10,418,116 (ten
million four hundred and eighteen thousand one hundred and sixteen Rand), which shall be earned on a
combined net profit after tax of R180,000,000 (one hundred and eighteen million Rand) ("Agri-Vie Deferred
Payment FY2023");
4.2.1.1.3 23.06% of the amount by which the free cash flow of the Target Entities in the financial year ending 31
December 2023 exceeds R122,695,598 (one hundred and twenty two million six hundred and ninety five
thousand five hundred and ninety eight Rand) ("Agri-Vie Excess Payment FY2023"); and
4.2.1.1.4 a deferred amount of R0.5556 (zero point five five five six Rand) for each R1.00 (one Rand) of net profit after
tax, in the financial year ending 31 December 2024, in excess of R180,000,000 (one hundred and eighty
million Rand) that is produced by the Target Entities, up to a maximum deferred amount of R16,668,985
(sixteen million six hundred and sixty eight thousand nine hundred and eighty five Rand), which shall be
earned on a combined net profit after tax of R210,000,000 (two hundred and ten million Rand) ("Agri-Vie
Deferred Payment FY2024").
4.2.1.2 The aforementioned purchase consideration will be settled by Terrasan Beleggings crediting a loan account in
its books in favour of Agri-Vie, in an amount equal to the purchase consideration ("Agri-Vie Loan Account").
4.2.1.3 Terrasan will repurchase the shares Terrasan Beleggings acquired from Agri-Vie.
4.2.1.4 The Agri-Vie Loan Account will be settled by Terrasan Beleggings as follows, -
4.2.1.4.1 at the close of business on the closing date of the Terrasan Share Repurchase -
4.2.1.4.1.1 by transferring to Agri-Vie, 36.93% of the shareholding in and shareholder loan claims against Aqunion;
and
4.2.1.4.1.2 paying an amount of R32,267,685 (thirty two million two hundred and sixty seven thousand six hundred
and eighty five Rand) to Agri-Vie in cash;
4.2.1.4.2 by payment to Agri-Vie of –
4.2.1.4.2.1 the Agri-Vie Deferred Payment FY2023 within 30 business days after the audited annual financial
statements of the Target Entities for the 2023 financial year have been finalised;
4.2.1.4.2.2 the Agri-Vie Excess Payment FY2023, by the date set out in paragraph 4.2.1.4.2.1; and
4.2.1.4.2.3 the Agri-Vie Deferred Payment FY2024, by 30 June of the following year, or if the audited annual financial
statements of the Target Entities for the 2024 financial year are not finalised before then, within 30
business days after the audited annual financial statements of the Target Entities for the 2024 financial
year have been finalized.
4.2.1.5 In addition:
4.2.1.5.1 for the financial year ending 31 December 2023, Agri-Vie shall be required to make payment to Terrasan
Beleggings of a deferred cash payment of R0.4552 (zero point four five five two Rand) for each R1.00 (one
Rand) of net profit after tax in excess of R160,000,000 (one hundred and sixty million Rand) that is produced
by the Target Entities (on a consolidated basis), up to a maximum deferred payment of R9,104,984 (nine
million one hundred and four thousand nine hundred and eighty four Rand), which shall be payable on a net
profit after tax of R180,000,000 (one hundred and eighty million Rand), concurrently with the payment
stipulated in paragraph 4.2.1.4.2.1; and
4.2.1.5.2 for the financial year ending 31 December 2024, Agri-Vie shall be required to make payment to Terrasan
Beleggings of a deferred cash payment of R0.4856 (zero point four eight five six Rand) for each R1.00 (one
Rand) of net profit after tax in excess of R180,000,000 (one hundred and eighty million Rand) that is
produced by the Target Entities (on a consolidated basis), up to a maximum deferred payment of
R14,567,974 (fourteen million five hundred and sixty seven thousand nine hundred and seventy four Rand),
which shall be payable on a net profit after tax of R210,000,000 (two hundred and ten million Rand),
concurrently with the payment stipulated in paragraph 4.2.1.4.2.3,
and the amounts in paragraphs 4.2.1.4.2.1, 4.2.1.4.2.2, 4.2.1.4.2.3, 4.2.1.5.1 and 4.2.1.5.2 shall be set off
against each other.
4.2.1.6 The purchase consideration payable to Agri-Vie in terms of the Terrasan Share Repurchase shall be subject to
further upward and/or downward adjustments. The purchase consideration shall be increased with an amount
equal to R237,579,029 (two hundred and thirty seven million five hundred and seventy nine thousand and twenty
nine Rand) multiplied by the percentage by which the Base Amount payable by Sea Harvest in terms of the
Share Purchase Agreement attributable to Aqunion (i.e. R405,743,552 (four hundred and five million seven
hundred and forty three thousand five hundred and fifty two Rand)) may be decreased in terms of the Share
Purchase Agreement. The purchase consideration shall be decreased with amounts equal to (i) 23.06% of any
amount paid by Terrasan Beleggings to Sea Harvest in settlement of any claims which Sea Harvest may have
against Terrasan Beleggings in respect of any breaches of any warranties or undertakings or in respect of any
indemnities given by Terrasan Beleggings to Sea Harvest in terms of the Share Purchase Agreement only to
the extent that the claims are attributable to the Target Entities other than Aqunion and its subsidiaries; (ii)
23.06% of the amount by which the Base Amount payable by Sea Harvest in terms of the Share Purchase
Agreement attributable to the Target Entities other than Aqunion and its subsidiaries is decreased in terms of
the Share Purchase Agreement, and (iii) R237,579,029 (two hundred and thirty seven million five hundred and
seventy nine thousand and twenty nine Rand) multiplied by the percentage by which the Base Amount payable
by Sea Harvest in terms of the Share Purchase Agreement attributable to Aqunion (i.e. R405,743,552 (four
hundred and five million seven hundred and forty three thousand five hundred and fifty two Rand) may be
increased in terms of the Share Purchase Agreement.
4.2.1.7 Agri-Vie will be entitled to 36.93% of all profits (and equivalent cash amounts) earned by Aqunion from 1 January
2024 to the closing date of the Terrasan Share Repurchase and the Sea Harvest Transaction ("Earnings"). The
Earnings (and equivalent cash amounts) will remain in the business of Aqunion.
4.2.1.8 The Agri-Vie Transaction Agreement contains and is subject to inter alia the suspensive conditions referred to
in paragraph 5.2.
4.2.2 Further details of the salient terms of the Terrasan Share Repurchase and Agri-Vie Transaction shall be set out in
the Combined Offer Circular (as defined in paragraph 17.1 below), and the agreements regulating the Terrasan
Share Repurchase and Agri-Vie Transaction shall be made available for inspection in terms of the Combined Offer
Circular.
5. CONDITIONS TO THE PROPOSED TRANSACTION
All of the outstanding conditions precedent to the Terrasan Internal Reorganisation, Terrasan Share Repurchase, Agri-Vie
Transaction, and Sea Harvest Transaction are set out below.
Terrasan Internal Reorganisation
5.1 The Terrasan Internal Reorganisation is subject to the fulfilment or waiver of the following outstanding condition
precedent by no later than 30 June 2024 or such later date notified or agreed to in terms thereof: Terrasan procuring
the unconditional written agreement in respect of the Terrasan Internal Reorganisation from La Vie and SFET.
Terrasan Share Repurchase (and Agri-Vie Transaction Agreement)
5.2 The Terrasan Share Repurchase (and the Agri-Vie Transaction Agreement) is subject to the fulfilment or waiver of the
following outstanding conditions precedent by no later than 30 June 2024 or such later date notified or agreed to in
terms thereof:
5.2.1 the relevant shareholder approvals being obtained in respect of the entry into and implementation of the Terrasan
Share Repurchase from the Terrasan Shareholders;
5.2.2 the Terrasan Internal Reorganisation becoming unconditional in accordance with its terms (save for any provision
thereof requiring the Agri-Vie Transaction Agreement to be unconditional); and
5.2.3 the Share Purchase Agreement becoming unconditional in accordance with its terms (i.e. the terms set out below
in paragraph 5.3) (save for any provision thereof requiring the Agri-Vie Transaction Agreement to be unconditional).
Share Purchase Agreement
5.3 The Share Purchase Agreement is subject to the fulfilment or waiver of the following outstanding conditions precedent
by no later than 30 June 2024 or such later date notified or agreed to in terms of the Share Purchase Agreement:
5.3.1 the relevant shareholder approvals being obtained in respect of the entry into and implementation of the Sea
Harvest Transaction by the shareholders of Sea Harvest, Brimstone Investment Corporation Limited ("Brimstone")
Terrasan Beleggings and Terrasan;
5.3.2 the Share Purchase Agreement, shareholders agreement in respect of Aqunion and the Implementation Agreement
("Transaction Documents") becoming unconditional in accordance with their terms (save for any provision thereof
requiring the Share Purchase Agreement to be unconditional);
5.3.3 HIK Abalone Farm Proprietary Limited consenting to the Sea Harvest Transaction and Terrasan Internal
Reorganisation and waiving in writing any and all of its rights which it may have in terms of Marifeed's memorandum
of incorporation, or otherwise, to exercise any of its rights in relation to the forced sale provisions contemplated in
Marifeed's memorandum of incorporation;
5.3.4 Terrasan Beleggings procuring the unconditional written approval in respect of the Sea Harvest Transaction from
each of the counterparties to certain contracts that are material to the businesses of the Target Entities, including
commercial agreements and lease agreements. Details of these commercial agreements are contained in the Share
Purchase Agreement, which will lie open for inspection in terms of the Circulars;
5.3.5 Terrasan Beleggings delivering written confirmation in a form acceptable to Sea Harvest that certain commercial
agreements and lease agreements that are material to the businesses of the Target Entities that have expired, or
are due to expire during the course of 2024, have been renewed. Details of these commercial agreements are
contained in the Share Purchase Agreement, which will lie open for inspection in terms of the Circulars;
5.3.6 Absa Bank approving the terms of the Transaction Documents and transactions contemplated therein (ie the Sea
Harvest Transaction and Terrasan Internal Reorganisation) to the extent required in terms of the funding and
security documentation entered into in respect of the Target Entities and consenting to the release of any security
to the extent necessary.
Implementation Agreement
5.4 The Implementation Agreement (and thus the Internal Restructure and the Sea Harvest Transaction) is subject to the
fulfilment or waiver of the following outstanding conditions precedent by no later than 30 June 2024 or such later agreed
in terms of the Implementation Agreement:
5.4.1 all requisite regulatory approvals required to implement the Sea Harvest Transaction are obtained, including from
the competition authorities, the Minister or his/her delegated authority at the Department of Forestry, Fisheries and
the Environment (including in respect of the Sea Harvest Transaction and the Terrasan Internal Reorganisation),
the Takeover Regulation Panel to the extent an exemption is required in terms of section 119(6) read with
section 123 of the Companies Act (pertaining to Sea Harvest Aquaculture's acquisition of shares in Aqunion), and
the JSE;
5.4.2 all approvals (whether regulatory or otherwise but excluding corporate approvals) required to implement the Sea
Harvest Transaction are obtained either unconditionally (or if such approval is conditional, each of the parties on
whom such conditions are imposed having approved such condition(s) in writing (acting reasonably) and delivered
such approval to the other party);
5.4.3 each of the requisite shareholder resolutions of Terrasan in relation to the Sea Harvest Transaction and the
Terrasan Share Repurchase (including in terms of section 115(2)(b) read with section 112 of the Companies Act in
respect of the Sea Harvest Transaction, and section 48(8)(b) read with sections 114 and 115 of the Companies Act
in respect of the Terrasan Share Repurchase) (the "Terrasan Group Resolutions") being approved by the requisite
majority of votes of the Terrasan Shareholders;
5.4.4 either:
5.4.4.1 no Terrasan Shareholders (i) gives notice objecting to all or any of the relevant Terrasan Group Resolutions, as
contemplated in section 164(3) of the Companies Act nor (ii) votes against all or any of the relevant Terrasan
Group Resolutions at the Terrasan general meeting ("Terrasan General Meeting"); or
5.4.4.2 if any Terrasan Shareholder gives notice objecting to all or any of the relevant Terrasan Group Resolutions, as
contemplated in section 164(3) of the Companies Act and then votes against all or any of the relevant Terrasan
Group Resolutions at the Terrasan General Meeting, Terrasan Shareholders holding no more than 2.5% of all
of the issued shares in Terrasan gives such notice and vote against all or any of the relevant Terrasan Group
Resolutions at the Terrasan General Meeting; or
5.4.4.3 if any Terrasan Shareholder gives notice objecting to all or any of the relevant Terrasan Group Resolutions, as
contemplated in section 164(3) of the Companies Act and then votes against all or any of the relevant Terrasan
Group Resolutions at the Terrasan General Meeting in respect of more than 2.5% of all of the issued shares in
Terrasan, such shareholders exercise their appraisal rights, by giving valid demands in terms of sections 164(5)
to 164(8) of the Companies Act, in respect of no more than 2.5% of all the issued shares in Terrasan within the
maximum period permitted by the Companies Act;
5.4.5 if any person who voted against the relevant Terrasan Group Resolutions applies to court for a review of all or any
of those resolutions in terms of section 115(3)(b) and section 115(6) of the Companies Act, either:
5.4.5.1 leave to apply to Court for any such review is refused; or
5.4.5.2 if leave is so granted, the Court refuses to set aside the relevant Terrasan Group Resolutions;
5.4.6 to the extent Court approval is required by the Companies Act, the High Court of South Africa approves the
implementation of the relevant Terrasan Group Resolutions pursuant to section 115 of the Companies Act;
5.4.7 each of the requisite shareholder resolutions of Sea Harvest in relation to the Sea Harvest Transaction is approved
by the requisite majority of votes of the Sea Harvest Shareholders (including the ordinary resolution required on the
basis that the Sea Harvest Transaction constitute a Category 1 transaction as contemplated by section 9 of the JSE
Listings Requirements);
5.4.8 to the extent necessary, Agri-Vie waiving their rights to a mandatory offer by Sea Harvest in terms of section 123
of the Companies Act pursuant to the Sea Harvest Transaction; and
5.4.9 the restructure agreement in respect of the Terrasan Internal Reorganisation, the Agri-Vie Transaction Agreement,
and the Transaction Documents becoming unconditional in accordance with their terms (save for any provision
thereof requiring the Implementation Agreement to be unconditional).
5.5 In terms of the Internal Terrasan Reorganisation, the suspensive condition in paragraph 5.1 may be waived by Terrasan
(either in whole or in part), or Terrasan may extend the date for its fulfilment at any time on or before the date stipulated
for its fulfilment.
5.6 In terms of the Terrasan Share Repurchase (and the Agri-Vie Transaction Agreement):
5.6.1 the suspensive condition in paragraph 5.2.1 is not capable of waiver, but the parties to the Agri-Vie Transaction
Agreement may extend the date for its fulfilment by written agreement between them at any time on or before the
date stipulated for their fulfilment;
5.6.2 the suspensive conditions in paragraphs 5.2.2 and 5.2.3 may be waived by the parties to the Agri-Vie Transaction
Agreement (either in whole or in part), or the parties may extend the date for their fulfilment by written agreement
between them at any time on or before the date stipulated for their fulfilment.
5.7 In terms of the Share Purchase Agreement:
5.7.1 the suspensive conditions in paragraphs 5.3.4, 5.3.5 and 5.3.6 may be waived by Sea Harvest Aquaculture and
Sea Harvest Pelagic (either in whole or in part), or Sea Harvest Aquaculture and Sea Harvest Pelagic may extend
the date for their fulfilment by written notice given to Terrasan Beleggings at any time on or before the date stipulated
for their fulfilment;
5.7.2 the suspensive conditions in paragraphs 5.3.1 and 5.3.3 are not capable of waiver, but the parties to the Share
Purchase Agreement may extend the date for their fulfilment by written agreement between them at any time on or
before the date stipulated for their fulfilment;
5.7.3 the suspensive condition in paragraph 5.3.2 may be waived by the parties to the Share Purchase Agreement (either
in whole or in part), or the parties may extend the date for its fulfilment by written agreement between them at any
time on or before the date stipulated for its fulfilment.
5.8 In terms of the Implementation Agreement:
5.8.1 the suspensive conditions in paragraphs 5.4.1 to 5.4.3, 5.4.5 to 5.4.7 and 5.4.8 are not capable of waiver, but the
parties to the Implementation Agreement may extend the date for their fulfilment by written agreement between
them at any time on or before the longstop date (as defined in the Implementation Agreement);
5.8.2 the suspensive conditions in paragraphs 5.4.4, and 5.4.9 may be waived by the parties to the Implementation
Agreement (either in whole or in part), or extend the date for their fulfilment by written agreement between them at
any time on or before the longstop date.
5.9 In order to comply with Regulation 102(13) of the Companies Regulations, notwithstanding the fulfilment or waiver of
the applicable suspensive conditions, the Terrasan Share Repurchase and the Sea Harvest Transaction shall not be
implemented unless and until the Takeover Panel has issued a compliance certificate in relation to the Terrasan Share
Repurchase and the Sea Harvest Transaction as required by section 115(1)(b), read with section 119(4)(b) and section
121(b), of the Companies Act.
6. EFFECTIVE DATE AND CLOSING DATE OF THE TERRASAN INTERNAL REORGANISATION AND THE TERRASAN
SHARE REPURCHASE
The effective and closing date of the Terrasan Internal Reorganisation and the Terrasan Share Repurchase is 3 business
days prior to the closing date of the Share Purchase Agreement in respect of the Sea Harvest Transaction.
7. EFFECTIVE DATE AND CLOSING DATE OF THE SEA HARVEST TRANSACTION
The effective date of the Sea Harvest Transaction is 1 January 2023, and the closing date of the Sea Harvest Transaction
will be the start of business on the first business day of the month following the month in which all of the suspensive
conditions to the Share Purchase Agreement are fulfilled or waived (or such other date as may be agreed on in writing by
the parties thereto), anticipated to be 1 June 2024.
8. SOLVENCY AND LIQUIDITY
It is recorded, in respect of the Terrasan Share Repurchase, that –
8.1 in terms of section 46(1)(a)(ii) of the Companies Act, the Terrasan Board has authorised the Terrasan Share
Repurchase, by way of a resolution;
8.2 in terms of section 46(1)(b) of the Companies Act, the Terrasan Board is satisfied that it reasonably appears that
Terrasan will satisfy the solvency and liquidity test as set out in section 4 of the Companies Act, immediately after
completing the Terrasan Share Repurchase;
8.3 in terms of section 46(1)(c) of the Companies Act, the Terrasan Board has, by resolution, acknowledged that it has
applied the solvency and liquidity test, as set out in section 4 of the Companies Act, and reasonably concluded that
Terrasan will satisfy the solvency and liquidity test immediately after completing the Terrasan Share Repurchase; and
8.4 since the solvency and liquidity test was performed, there have been no material changes to the financial position of
Terrasan.
9. FINANCIAL INFORMATION
9.1 pro forma earnings and asset value
9.1.1 In terms of Regulation 101(7)(b)(iv) of the Companies Regulations, a firm intention announcement must contain,
inter alia, the pro forma earnings and asset value per offeree regulated company security if the offer consideration
consists wholly or partly of offeror securities.
9.1.2 The table below sets out the pro forma financial effects of the Terrasan Share Repurchase and the Sea Harvest
Transaction on Terrasan's financial results on the assumption that the Terrasan Share Repurchase and the Sea
Harvest Transaction were effective on 1 January 2022 for the statement of profit or loss and comprehensive income
and 31 December 2022 in respect of the statement of financial position.
9.1.3 The pro forma financial information has been prepared for illustrative purposes only and because of its pro forma
nature, may not fairly present Terrasan's financial performance, financial position, nor the effect and impact of the
Terrasan Share Repurchase and the Sea Harvest Transaction going forward.
9.1.4 The pro forma financial effects have been prepared in compliance with the recognition and measurement principles
of the International Financial Reporting Standards and in accordance with the accounting policies of Terrasan that
were used in the preparation of the audited financial statements for the financial year ended 31 December 2022.
Effect of the Terrasan Share Repurchase and the Sea Harvest Transaction
Before (R) After (R)
Earnings/(loss) per share 9.00 (0.49)
Net asset value per share 49.01 59.65
Notes and assumptions:
1. The financial information before the Terrasan Share Repurchase and the Sea Harvest Transaction are extracted from the audited consolidated
annual financial statements of Terrasan for the financial year ended 31 December 2022.
2. The number of shares used in the calculation is the weighted average number of issued shares of Terrasan of 16,023,058. Weighted average
number of shares relate to issued share capital less any treasury shares held.
9.2 value of net assets of the Target Entities
The net assets of the Target Entities as at 31 December 2022 (as reflected in the audited consolidated annual financial
statements of Terrasan for the financial year ended 31 December 2022 and prepared in terms of IFRS) was
R624,774,068 (six hundred and twenty four million seven hundred and seventy four thousand and sixty eight Rand).
9.3 profits attributable to the net assets of the Target Entities
The profits attributable to the net assets of the Target Entities as at 31 December 2022 (as reflected in the audited
consolidated annual financial statements of Terrasan for the financial year ended 31 December 2022 and prepared in
terms of IFRS) was R202,549,394 (two hundred and two million five hundred and forty nine thousand three hundred
and ninety four Rand)
10. CATEGORISATION OF THE SEA HARVEST TRANSACTION IN TERMS OF THE JSE LISTINGS REQUIREMENTS
10.1 As the purchase consideration in respect of the Sea Harvest Transaction exceeds 30% of Sea Harvest's market
capitalisation as at the date of the signature of the Implementation Agreement, the Sea Harvest Transaction meets the
definition of a Category 1 transaction as contemplated in section 9 of the JSE Listings Requirements. As a result, the
Sea Harvest Transaction is required to be approved by way of an ordinary resolution of the Sea Harvest Shareholders
which will require the support of more than 50% of the votes exercised on it.
10.2 The Sea Harvest Transaction is not between related parties and there are accordingly no related party transaction
implications in terms of the JSE Listings Requirements.
10.3 Sea Harvest confirms that the memoranda of incorporation of the Target Entities will not frustrate Sea Harvest in any
way from compliance with its obligations in terms of the JSE Listings Requirements.
11. FUNDING OF CONSIDERATION AND CONFIRMATION OF SUFFICIENT SECURITIES
11.1 Funding of the Sea Harvest Cash Consideration
Sea Harvest confirms that it has provided a cash guarantee to the Takeover Panel for the Sea Harvest Cash
Consideration.
11.2 Sufficient Sea Harvest securities for issue of Sea Harvest Consideration Shares
The board of directors of Sea Harvest ("Sea Harvest Board") confirms that Sea Harvest will have sufficient securities
available to transfer the maximum number of Sea Harvest shares which may be required to implement the Sea Harvest
Transaction.
11.3 Funding of the Terrasan Share Repurchase
The Terrasan Board confirms that Terrasan Beleggings has the authority to provide the financial assistance to Terrasan
to fund the Terrasan Share Repurchase.
12. STATEMENT OF BENEFICIAL INTERESTS
As at the date of this Joint Firm Intention Announcement, none of Sea Harvest, any director of Sea Harvest, any person
acting in concert with Sea Harvest, any person in respect of which Sea Harvest has received an irrevocable commitment
to accept or vote in favour of the Sea Harvest Transaction, any person in respect of which Sea Harvest holds an option to
purchase, and any person in respect of which a person acting in concert with Sea Harvest holds an option to purchase,
held direct or indirect beneficial interests in the issued share capital of Terrasan.
13. CONCERT PARTIES
13.1 Agri-Vie may be deemed to be a concert party with Terrasan and Sea Harvest for purposes of the Terrasan Share
Repurchase and the Sea Harvest Transaction, as Agri-Vie will dispose of its Terrasan shares and acquire a
shareholding in Aqunion pursuant to the Terrasan Share Repurchase.
13.2 Agri-Vie hold, in aggregate, 6,071,852 Terrasan shares, representing 23.06% of the total number of issued Terrasan
Shares, but holds no options to purchase any Terrasan shares.
13.3 Agri-Vie will be excluded from voting on the Terrasan Group Resolutions.
14. IRREVOCABLE UNDERTAKINGS BY TERRASAN SHAREHOLDERS
Irrevocable undertakings have been given to vote in favour of the Terrasan Share Repurchase and the Sea Harvest
Transaction by the following Terrasan Shareholders, who collectively holds 30.584% of the Terrasan Shares in issue:
Terrasan Shareholder Number of Terrasan Aggregate of
shares voting % of all
Terrasan shares in
issue
Clusten 30 Proprietary Limited 4,316,672 16.39%
Business Venture Investments No 2066 Proprietary Limited 3,732,157 14.17%
15. IRREVOCABLE UNDERTAKINGS BY SEA HARVEST SHAREHOLDERS
Irrevocable undertakings have been given to vote in favour of or procure the voting in favour of the Sea Harvest
Transaction by the following Sea Harvest shareholder:
Sea Harvest Shareholder Number of Sea Harvest Aggregate of
shares voting % of all Sea
Harvest shares in
issue
Brimstone 159,558,884 53.37%
The aforementioned undertakings by Brimstone are subject to Brimstone obtaining requisite approval from Brimstone's
shareholders.
16. RESPONSIBILITY STATEMENTS
16.1 The Independent Board accepts responsibility for the information contained in this Joint Firm Intention Announcement
insofar as it relates to Terrasan, and accepts responsibility for the accuracy of such information and certifies that, to
the best of its knowledge and belief, the information contained in this Joint Firm Intention Announcement is true and
nothing has been omitted which is likely to affect the importance of the information.
16.2 The Sea Harvest Board accepts responsibility for the information contained in this Joint Firm Intention Announcement
insofar as it relates to Sea Harvest and the Sea Harvest Transaction, and accepts responsibility for the accuracy of
such information and certifies that, to the best of its knowledge and belief, the information contained in this Joint Firm
Intention Announcement is true and nothing has been omitted which is likely to affect the importance of the information.
17. DISTRIBUTION OF THE CIRCULARS
17.1 Combined Offer Circular to Terrasan Shareholders
Terrasan and Sea Harvest intend distributing a combined offer circular to Terrasan Shareholders relating to the
Terrasan Share Repurchase and the Sea Harvest Transaction ("Combined Offer Circular") on 8 February 2024, and
in any event within 20 business days from the date of this Joint Firm Intention Announcement. It is expected that the
Terrasan General Meeting to be convened by the Terrasan Shareholders to consider, and if deemed fit, to pass, with
or without modification, the relevant resolutions necessary to approve the Terrasan Share Repurchase and the Sea
Harvest Transaction will be held on 29 February 2024. The Combined Offer Circular will confirm the date of the Terrasan
General Meeting and provide details of all other pertinent dates.
17.2 Sea Harvest Category 1 Circular to Sea Harvest Shareholders
Sea Harvest intends distributing a circular to Sea Harvest Shareholders relating to the Sea Harvest Transaction ("Sea
Harvest Category 1 Circular") on 26 January 2024. It is expected that the general meeting of Sea Harvest
Shareholders to consider, and if deemed fit, to pass, with or without modification, the relevant resolutions necessary to
approve the Sea Harvest Transaction will be held on 26 February 2024 ("Sea Harvest General Meeting").
An announcement setting out the salient dates and times of the Sea Harvest General Meeting will be published in due
course.
18. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
As the terms of the Terrasan Share Repurchase and the Sea Harvest Transaction have now been announced, the
cautionary announcement of Terrasan published on 13 December 2023 and the cautionary announcement of Sea Harvest
published on 13 December 2023 is hereby withdrawn and accordingly caution is no longer required to be exercised by
Terrasan Shareholders and Sea Harvest Shareholders when dealing with their securities.
TERRASAN GROUP LIMITED SEA HARVEST GROUP LIMITED
2 Kiepersol Close 1st Floor, Block C
Plattekloof The Boulevard
Parow Searle Street
7500 Woodstock
7925
22 January 2024
Financial Advisor and Transaction Sponsor
The Standard Bank of South Africa Limited
Legal Advisor to Sea Harvest
Webber Wentzel
Legal Advisor to Terrasan
Cliffe Dekker Hofmeyr Inc
Independent Reporting Accountants
Ernst & Young
Date: 22-01-2024 02:05:00
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