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Related Party Acquisition of a Viable Asset and Withdrawal of Cautionary Announcement
Cilo Cybin Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 2022/320351/06)
Share code: CCC ISIN: ZAE000310397
("Cilo Cybin" or "the Company")
RELATED PARTY ACQUISITION OF A VIABLE ASSET, AMENDMENTS TO THE MEMORANDUM OF
INCORPORATION, WAIVER OF MANDATORY OFFER AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
1.1 Shareholders of Cilo Cybin ("Shareholders") are referred to the recent cautionary and renewal of
cautionary announcements ("Cautionary Announcements") released on the Stock Exchange News
Service ("SENS"), the last of which is dated 6 November 2024 regarding the potential acquisition by the
Company of a viable asset pursuant to the Special Purpose Acquisition Company ("SPAC") requirements
of the Listings Requirements of the JSE Limited ("JSE").
1.2 The board of directors of Cilo Cybin ("Board") is pleased to inform Shareholders that on 23 December 2024
("Signature Date"), the Company entered into a share purchase agreement ("Agreement") with the
shareholders of Cilo Cybin Pharmaceutical Proprietary Limited ("CC Pharmaceutical" or "CCP")
("Sellers").
1.3 In terms of the Agreement, and subject to the fulfilment of the conditions precedent set out in paragraph
2.4 below ("Conditions Precedent"), the Company will acquire all the issued shares in CC Pharmaceutical
("Sale Shares") from the Sellers for an aggregate purchase consideration of R845 million ("Purchase
Consideration"), to be settled through the issue of Cilo Cybin shares as detailed in paragraph 2.5 below
("Consideration Shares") ("the Acquisition").
1.4 The Acquisition, which constitutes a related party transaction and a reverse take-over for the Company in
terms of the JSE Listings Requirements, requires a circular to Shareholders ("Circular") containing, inter
alia, revised listing particulars, a fairness opinion on the Acquisition prepared by an independent expert
("Independent Expert Opinion") and a notice convening a general meeting of Shareholders ("Notice")
("General Meeting").
1.5 Following the implementation of the proposed Acquisition, the Company will hold 100% of the shares in CC
Pharmaceutical, making it a subsidiary of Cilo Cybin. In accordance with paragraph 10.21 to Schedule 10
of the JSE Listings Requirements, Cilo Cybin will ensure that no provisions contained in the memorandum
of incorporation of CC Pharmaceutical will in any way frustrate or relieve the Company from compliance
with its obligations in terms of the JSE Listings Requirements.
2. THE ACQUISITION
2.1 Nature of the business of CC Pharmaceutical
CC Pharmaceutical, established in August 2018 by Gabriel Theron, Chief Executive Officer of Cilo Cybin,
commenced operations with a strategic focus on the medicinal cannabis industry. By 2019, the company
initiated the development of a state-of-the-art facility located in Gauteng, South Africa. This integrated
facility incorporates cultivation, manufacturing, and packaging operations within a single location, reflecting
CC Pharmaceutical's commitment to operational efficiency and excellence.
In response to global market trends and the anticipated decline in bulk cannabis pricing, CC Pharmaceutical
strategically pivoted toward large-scale drug development and manufacturing, emphasising value-added
services and the production of high-quality cannabis-based products. This approach not only strengthened
the company's market position but also aligned with its long-term strategic objectives.
In May 2020, CC Pharmaceutical was awarded a Good Agricultural and Collection Practices ("GACP")
license by the South African Health Products Regulatory Authority ("SAHPRA"), certifying its cultivation
processes. In 2021, CC Pharmaceutical achieved a further milestone by securing a Good Manufacturing
Practices ("GMP") license for its manufacturing operations, thereby becoming one of South Africa's first
entities to obtain both GACP and GMP certifications. These licenses enable CC Pharmaceutical to adhere
to the highest global compliance standards in cultivating and manufacturing medicinal cannabis products.
CC Pharmaceutical specialises in large-scale contract manufacturing services for the medicinal cannabis
industry, with a strong presence in both local and international markets. Its comprehensive service offerings
include:
• cultivation of premium-grade medicinal cannabis;
• extraction and manufacturing of high-quality cannabis-based products; and
• the formulation and packaging services which is tailored to meet the needs of global brands.
Additionally, CC Pharmaceutical has established expertise in the production and processing of Active
Pharmaceutical Ingredients ("APIs") for medicinal cannabis products. These capabilities solidify the
company's role as a preferred partner for businesses seeking GMP-compliant manufacturing solutions. As
part of its forward-thinking approach, CC Pharmaceutical is also exploring opportunities in the psychedelics
industry, reflecting its commitment to innovation and diversification. This strategic initiative aligns with the
CC Pharmaceutical's broader mission to deliver transformative healthcare solutions that address evolving
global therapeutic needs.
2.2 Rationale
Cilo Cybin listed as a Special Purpose Acquisition Company ("SPAC") on the Alternative Exchange of the
JSE ("AltX") on 25 June 2024. As stipulated by paragraph 4.35 of the JSE Listings Requirements, the
Company is required to acquire Viable Assets within 36 months of listing.
The acquisition of CC Pharmaceutical satisfies this requirement and represents a pivotal step in Cilo Cybin's
strategic growth trajectory. This transaction is consistent with the Company's vision of becoming a fully
vertically integrated leader in the medicinal cannabis industry, capable of meeting the highest global
compliance standards.
CC Pharmaceutical's capabilities in cultivation, manufacturing, and drug development provide a strong
complement to Cilo Cybin's objectives. The acquisition secures access to:
• a state-of-the-art, integrated facility, enhancing operational efficiency and scalability;
• advanced manufacturing capacity, enabling the Company to meet the growing global demand for GMP-
compliant medicinal cannabis products; and
• industry-leading expertise in cannabis-based product development and APIs.
Additionally, CC Pharmaceutical has reached profitability, underscoring the strength of its business model
and operational capabilities. This acquisition provides Cilo Cybin with an immediate revenue-generating
asset, enhancing the Company's financial position and enabling further investment into its strategic
objectives.
As South Africa's legal frameworks for cannabis continue to evolve, CC Pharmaceutical will be strategically
positioned to expand its offerings to the domestic market, ensuring access to high-quality medicinal
cannabis products for local consumers. This forward-looking capability aligns with the Company's
commitment to being a key player in both global and emerging local markets.
This acquisition not only positions Cilo Cybin to capitalise on the expanding global medicinal cannabis
market but also aligns with its broader vision of delivering personalised and innovative therapeutic solutions.
Furthermore, the transaction provides a platform for future growth in adjacent markets, including the
psychedelics industry, which represents a natural progression in addressing emerging healthcare needs.
The Board of Directors firmly believes that the acquisition of CC Pharmaceutical is a transformative
opportunity for Cilo Cybin, enabling the Company to achieve its strategic objectives while delivering long-
term value to stakeholders. This transaction underscores the Company's commitment to maintaining its
position at the forefront of the medicinal cannabis and broader therapeutic industries.
2.3 Details of the Sellers and related parties
Set out in the table below are the details of the Sellers, together with each of their beneficial holding in CC
Pharmaceutical.
Class of Number of Percentage
Sales Sales shareholding Related
Seller Shares Shares in CCP (%) Party
Dreamcatcher Trust Ordinary 1 905 620 29.87 Yes1
Mikeco Consulting Proprietary Limited Ordinary 1 185 026 18.57 No
Waska Consulting Proprietary Limited Ordinary 296 359 4.65 No
Jessica Moodley Theron Ordinary 177 816 2.79 Yes3
Southern Point Holdings Proprietary Limited Ordinary 100 000 1.57 No
Marvel Investment Trust Ordinary 100 000 1.57 No
AJ Booysen Real Estate Investments Proprietary Limited Ordinary 59 271 0.93 No
Gabriel Christiaan Theron4 Ordinary 40 000 0.63 Yes4
TJ Trust Ordinary 29 636 0.46 Yes1
Jacqueline Theron5 Ordinary 29 636 0.46 Yes5
Maria E van Huyssteen6 Ordinary 29 636 0.46 Yes6
Quin 4 Future Proprietary Limited Ordinary 29 000 0.45 No
Dustin Deon Erasmus Ordinary 10 000 0.16 No
Justin Reighlin Ordinary 10 000 0.16 No
4 002 000 62.73
Dreamcatcher Trust A class 1 740 000 27.27 Yes1
Dr Seng Kong Tham ("Dr Tham") A class 638 000 10.00 Yes2
2 378 000 37.27
Total 6 380 000 100.00
1
A trust of which the CEO is a beneficiary.
2
Non-executive director of Cilo Cybin.
3
Non-executive director of Cilo Cybin and spouse of the CEO.
4
CEO.
5
Parent of the CEO.
6
Sibling of the CEO.
2.4 Conditions Precedent and Effective Date
2.4.1 The Acquisition is subject to the fulfilment or waiver, as the case may be, of the following conditions
on or before 31 March 2025, or such earlier or later date as the parties to the Agreement ("Parties")
may agree in writing ("Longstop Date"):
2.4.1.1 the JSE having approved the publication of the Circular;
2.4.1.2 Shareholders having:
2.4.1.2.1 in accordance with section 16 of the Companies Act, 2008 (Act 71 of 2008), as
amended ("Companies Act"), authorised the amendment of the current
memorandum of incorporation ("MOI") of the Company ("Existing MOI") by its
replacement with a new MOI ("New MOI") by way of a special resolution;
2.4.1.2.2 authorised the specific issue of the Consideration Shares in accordance with
sections 41(1) and 41(3) (as applicable) of the Companies Act by way of a
special resolution;
2.4.1.2.3 authorised the implementation of the Acquisition by ordinary resolution in
accordance with the JSE Listings Requirements, given that the Company will,
as a result thereof, be regarded as having undertaken a reverse takeover in
accordance with the JSE Listings Requirements; and
2.4.1.2.4 approved the waiver of a mandatory offer as contemplated in regulation 86(4)
of the Companies Regulations ("Waiver of Mandatory Offer"), given that as a
result of the transactions contemplated in the Agreement, Dreamcatcher Trust
will be able to exercise more than 35% of all of the voting rights attached to the
Cilo Cybin ordinary shares;
2.4.1.3 the Board having: (i) approved and/or ratified the entering into and implementation of the
Agreement and the transactions contemplated therein, and all other agreements and
documents necessary to implement the provisions of the Agreement and the transactions
therein; and (ii) approved that the Sale Shares constitute "adequate consideration" for the
Consideration Shares in terms of section 40 of the Companies Act;
2.4.1.4 a notice of amendment regarding the replacement of the Existing MOI with the New MOI
as contemplated in clause 2.4.1.2.1 is filed and registered with the Companies and
Intellectual Property Commission;
2.4.1.5 to the extent applicable, the shareholders of Southern Point Holdings Proprietary Limited,
AJ Booysen Real Estate Investments Proprietary Limited ("AJ Booysen"), Quin 4 Future
Proprietary Limited ("Quin"), Mikeco Consulting Proprietary Limited ("Mikeco") and Waska
Consulting Proprietary Limited ("Waska") having approved entry into, and implementation
of the transactions contemplated under, the Agreement, in accordance with sections 112
and 115 of the Companies Act;
2.4.1.6 the Waiver of Mandatory Offer has been unconditionally approved by the Takeover
Regulation Panel ("TRP"), or has been conditionally approved on terms and conditions
which each of the parties confirms, in writing to the other parties, to be acceptable to it;
and
2.4.1.7 the conclusion of a restated and amended employment contract between the Company
and Gabriel Theron, in his capacity as CEO, reflecting revised remuneration terms,
including financial incentives and applicable criteria.
2.4.2 Each Party shall, where it is within its power to do so, use reasonable endeavours (and co-operate
with each other) to bring about the fulfilment of the Conditions Precedent on or before the Longstop
Date, and the Parties may, to the extent permitted by applicable law, waive, in whole or in part, any
Condition Precedent that it is required to satisfy.
2.4.3 If the Conditions Precedent are not fulfilled or waived, as the case may be, by the Longstop Date,
or such later date as may be agreed by the Parties in writing, then the Parties shall be restored as
closely as possible to the positions in which they would have been had the Agreement not been
entered into.
2.4.4 The effective date of the Acquisition will be midnight on the last day of the month in which the last
of the Conditions Precedent is fulfilled or waived in writing ("Effective Date").
2.5 Purchase Consideration
2.5.1 The purchase consideration for the acquisition of the Sales Shares, which will be settled by the
issue of the Consideration Shares, is a total of R845 million ("Purchase Consideration").
2.5.2 The Sales Shares, which constitute 100% of the issued share capital of CC Pharmaceutical,
comprise ordinary shares of no par value ("Ordinary Sales Shares") and class A ordinary shares
of no par value ("Class A Sales Shares").
2.5.3 Two of the Sellers, namely Dreamcatcher Trust and Dr Tham, hold Class A Sales Shares, the rights
of which are identical to those of the Ordinary Sales Shares, save that the Class A Sales Shares
have no economic rights and carry voting rights of ten times those of the Ordinary Sales Shares.
2.5.4 The issued share capital of Cilo Cybin is currently comprised solely of ordinary shares of no par
value ("Cilo Cybin Ordinary Shares"). Each Cilo Cybin Ordinary Share carries one vote.
2.5.5 As settlement of the Purchase Consideration, Cilo Cybin will:
2.5.5.1 issue an aggregate of 132 511 364 Cilo Cybin Ordinary Shares to the Sellers who hold
Ordinary Sales Shares ("Consideration Ordinary Shares"); and
2.5.5.2 issue 21 125 000 Consideration Ordinary Shares to Dr Tham and 57 613 636 Cilo Cybin
Class A Shares ("Consideration Class A Shares") to Dreamcatcher Trust for their Class
A Sales Shares.
2.5.6 In order to issue the Consideration Class A Shares, it will be necessary for the Company to first
create a new class of shares, being Cilo Cybin Class A Shares, which will inter alia carry ten votes
each.
2.5.7 The 153 636 364 of Consideration Ordinary Shares and 57 613 636 Consideration Class A Shares
to be issued as settlement of the Ordinary Sales Shares, and the Class A Sales Shares, will be
issued as soon as the Conditions Precedent to the Acquisition have been fulfilled and the Company
has completed its transfer to the Main Board as part of the Acquisition approval process.
2.6 Amendments to the MOI
2.6.1 In order to facilitate the settlement of the Purchase Consideration, the Company will seek the
approval of its Shareholders to amend the Existing MOI by its replacement with the New MOI which
will, inter alia, incorporate the rights and terms of the Cilo Cybin Class A Shares.
2.6.2 The Cilo Cybin Class A Shares will, inter alia: (i) entitle the holder thereof to ten votes at any
meeting of the Shareholders (save in respect of the matters that are limited to one vote pursuant
to the enhanced voting process set out in the Listings Requirements); (ii) may not be listed or traded
on the JSE; and (iii) on the expiry of a period of ten years from the issue of the shares, be
automatically converted on a one to one basis into Cilo Cybin ordinary shares. From that date, the
Company will no longer have the authority to issue this class of shares.
2.7 Settlement of loan accounts
2.7.1 As at 1 September 2024, existing debt with an aggregate value of R19.5 million, is owing to holders
of loan accounts in CC Pharmaceutical ("Loan Account Holders").
2.7.2 Based on the value of the existing debt at 31 January 2025, and as full and final settlement of the
loan accounts, the Company will, as set out in the Agreement, issue 5 820 866 Cilo Cybin Ordinary
Shares ("Settlement Shares") to the Loan Account Holders on the Effective Date, subject to the
approval thereof by Shareholders (excluding the Loan Account Holders and their associates) in
General Meeting.
2.7.3 Each Loan Account Holder will receive one Settlement Share for every R4.00 owing on the Loan
Accounts, as detailed in the table below.
Value of Loan Account Number of
Loan Account Holder as at 31 January 2025 Settlement Shares
Waska R 8 683 908.72 2 170 977.18
Gabriel Theron R 3 996 627.38 999 156.84
AJ Booysen R 3 392 489.41 848 122.35
Jacqueline Theron R 1 696 244.71 424 061.18
TJ Trust R 1 696 244.71 424 061.18
Quin 4 Future R1 664 123.83 416 030.96
Blue Moonlight 2 Trust R 836 494.83 209 123.71
Marvel Investment Trust R 741 392.99 185 348.25
Mikeco R 575 936.46 143 984.12
Total R23 283 463.04 5 820 865.76
2.7.4 Where the number of Settlement Shares to be issued to the Loan Account Holder results in a
fraction of 0.5 or less, the Settlement Shares will be rounded down to the nearest number, and
any fraction above 0.5 will be rounded up.
2.7.5 In terms of paragraph 5.51(g) of the JSE Listings Requirements, Shareholders will be required to
approve, by way of an ordinary resolution achieving at least a 75% majority, excluding participants
and their associates, the issue of the Settlement Shares to settle the loan accounts.
2.8 Financial information
The audited net asset value of CC Pharmaceutical for the year ended 31 March 2024 was -R18.7 million.
The audited loss after tax attributable to CC Pharmaceutical for the year ended 31 March 2024 was R5.9
million.
The financial statements have been prepared in accordance with International Financial Reporting
Standards and the Companies Act.
The unaudited net asset value of CC Pharmaceutical for the six months ended 30 September 2024 was
R1.3 million.
The unaudited profit after tax attributable to CC Pharmaceutical for the six months ended 30 September
2024 was R13.6 million.
The unaudited results for the six months have been extracted from management accounts which have been
prepared in accordance with the policies and standards as at the year ended 31 March 2024.
2.9 Warranties
The Agreement contains warranties that are customary for a transaction of this nature.
2.10 Other significant details
The approval of the Acquisition will result in Cilo Cybin no longer being classified as a SPAC. In terms of
paragraph 4.35(c) of the JSE Listings Requirements, Shareholders will be required to approve, by way of
an ordinary resolution, the use of the residual capital, being the R57.4 million raised pursuant to the
Company's listing as a SPAC, plus interest accrued, less the capital not allocated for the Acquisition.
2.11 Classification of the Acquisition
As set out in paragraph 1 above, in terms of the JSE Listings Requirements the Acquisition constitutes a
related party transaction, and a reverse take-over for the Company.
Accordingly, the Acquisition is subject to approval by Shareholders present or represented in General
Meeting and voting (excluding the related parties and their associates).
3. CIRCULAR
The Circular and Notice referred to in paragraph 1.4 above will be distributed to Shareholders once the Company
has obtained the approval thereof from the JSE and the TRP.
Shareholders will be advised by way of an announcement published on SENS of the salient dates and times of
the Acquisition and the General Meeting.
4. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the Cautionary Announcements and are advised that, as terms of the Acquisition
have now been disclosed, caution is no longer required to be exercised by Shareholders when dealing in the
Company's shares.
5. DIRECTORS' RESPONSIBILITY STATEMENT
The Board (to the extent that the information relates to Cilo Cybin) collectively and individually accept responsibility
for the information contained in this announcement and certify that, to the best of their knowledge and belief, the
information contained in this announcement relating to Cilo Cybin is true and this announcement does not omit
anything that is likely to affect the importance of such information.
23 December 2024
Corporate Advisor and Designated Advisor
Merchantec Capital
Legal Advisor
Advaya Consulting Proprietary Limited
Date: 23-12-2024 02:32:00
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The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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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.
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