NUTRITIONAL HOLDINGS LIMITED - Acquisition of Ukusekela and Further Cautionary Announcement

Acquisition of Ukusekela and Further Cautionary Announcement

Nutritional Holdings Limited
(Registration number: 2004/002282/06)
(Incorporated in the Republic of South Africa)
(Share Code: NUT ISIN Code: ZAE000156485)
(“Nutritional Holdings” or “the Company”)


ACQUISITION OF UKUSEKELA AND FURTHER CAUTIONARY ANNOUNCEMENT


1.    INTRODUCTION
      Shareholders are referred to the announcements dated 17 December 2019, 31 January 2020
      and 13 March 2020 and are advised that Nutritional Holdings has entered into an agreement
      dated 23 March 2020 with The Wellness Trust 29 (“the Trust”) to acquire a 100% shareholding
      in Ukusekela Holdings (Pty) Ltd (“Ukusekela”) for a total consideration of R140 million payable
      by a combination of cash and the issue of Nutritional Holdings shares at 4.5 cents per share (“the
      Transaction”).

2.    BACKGROUND AND RATIONALE FOR THE TRANSACTION
      The Trust currently holds 100% of Ukusekela’s shareholding.

      Ukusekela holds various licenses in Lesotho, Zimbabwe and Swaziland for the cultivation,
      harvesting, manufacturing, distribution, importing and exporting of cannabis as well as a research
      laboratory in South Africa.

      Ukusekela holds a take-off agreement with Europharma Medical Corporation, a cannabis
      pharmaceutical company based in Europe which has a license to distribute CBD Oils and infused
      products in more than 15 countries.

3.    TRANSACTION CONSIDERATION
      The purchase consideration will be R140 million payable by a combination of cash and the issue
      of Nutritional Holdings shares at 4.5 cents per share payable as follows:
        •    2 (two) billion shares will be issued to Ukusekela at 4.5 cents per share which equates to
             R90 million; and
        •    R50 million in cash.

4.    CONDITIONS PRECEDENT
      The Transaction will be subject to the fulfilment of the following conditions within 150 days of the
      signature of the agreement (“Conditions Precedent”):

      •     any regulatory approvals as may be required, including the JSE Limited, Takeover
            Regulation Panel and the Competition Act; and
      •     the approval by Nutritional Holdings shareholders.

5.    EFFECTIVE DATE
      The effective date of the Transaction is 17 December 2019, or any other date agreed to by the
      parties.

6.    WARRANTIES AND OTHER MATERIAL TERMS
      Ukusekela has provided a profit warranty to Nutritional Holdings of a minimum profit after tax of
      R30 million per annum for a two-year period. R25 million per annum for the balance of the R50
      million cash consideration, will be paid to Ukusekela with one payment end of March 2021 and
      the last payment at end of March 2022. There will be no interest payable by Nutritional Holdings
      to Ukusekela for the balance outstanding.

7.    FINANCIAL INFORMATION OF THE TRANSACTION
      The financial information relating to the Transaction will be available in due course.

8.   CATEGORISATION
     In terms of the JSE Listings Requirements, the Transaction constitutes a Category 1 transaction
     and therefore Nutritional Holdings’ shareholder approval is required. The Company will consult
     with the JSE to determine if the Transaction is considered a reverse take-over and Revised
     Listing Particulars are required. A circular convening a general meeting and providing further
     information on the Transaction will be sent to the Company’s shareholders in due course.

9.   FURTHER CAUTIONARY ANNOUNCEMENT
     Due to the unavailability of the financial information as mentioned above, Shareholders are
     advised to continue exercising caution when dealing in the Company’s shares until the financial
     information is released.



27 March 2020



Designated Advisor to Nutritional Holdings
Exchange Sponsors

Date: 27-03-2020 10:35:00
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