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Proposed Specific Repurchase Of Shares
QUANTUM FOODS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2013/208598/06)
Share code: QFH
ISIN: ZAE000193686
(“Quantum Foods” or “the Company”)
PROPOSED SPECIFIC REPURCHASE OF SHARES
1. INTRODUCTION
1.1. In 2012, Quantum Foods’ holding company at the time, Pioneer Food Group Limited
(“Pioneer Foods”), implemented its Phase II Broad-Based Black Economic Empowerment
Transaction, involving the issue of Pioneer Foods shares to vehicles held by various
participating black parties (“BEE Parties”) and a broad-based BEE trust, with the BEE Parties
receiving preference share funding from Pioneer Foods and FirstRand Bank Limited (acting
through its Rand Merchant Bank division) (“RMB”) (“Preference Share Funding”).
1.2. In 2014, Pioneer Foods unbundled its entire shareholding in the Company to its shareholders,
in conjunction with the listing of Quantum Foods on the JSE Main Board. This resulted in the
BEE Parties receiving shares in Quantum Foods. These Quantum Foods shares are subject
to a lock-in and serve as security to Pioneer Foods and RMB in connection with the Preference
Share Funding, with such lock-in period coming to an end in March 2019.
2. PROPOSED REPURCHASE
2.1. Quantum Foods believes that, given market conditions, the above presents the Company with
an opportunity to repurchase the Quantum Foods shares held by the BEE Parties.
2.2. The Company has, accordingly, approached the BEE Parties with a non-binding offer to
repurchase (either itself and/or through a nominated subsidiary) all 18 091 661 Quantum
Foods ordinary shares (“Repurchase Shares”) held by them at R3.30 per share
(“Repurchase Price”), resulting in an aggregate repurchase amount of R59 702 481 (“Non-
binding Offer”). The Repurchase Price represents a discount of 4.3% to the volume weighted
average price at which the Company’s shares traded on the JSE over the 5 trading days up
to and including 4 March 2019.
2.3. The Non-binding Offer has been accepted by all BEE Parties, it being intended that the
Repurchase Shares be acquired from the following special purpose vehicles indirectly
controlled by the relevant BEE Parties:
2.3.1. K2011115194 (RF) Proprietary Limited, controlled by Dipeo Capital (RF) Proprietary
Limited (previously controlled by Thembeka Capital (RF) Limited);
2.3.2. Business Venture Investments No 1577 (RF) Proprietary Limited, controlled by Identity
Capital Partners Proprietary Limited;
2.3.3. Ripa Issuer Subco Investments (RF) Proprietary Limited, controlled by Riparian
Investments Consortium 1 Proprietary Limited;
2.3.4. Business Venture Investments No 1581 (RF) Proprietary Limited, controlled by African
Equity Empowerment Investments Limited (previously known as Sekunjalo Investments
Limited);
2.3.5. Business Venture Investments No 1583 (RF) Proprietary Limited, controlled by Mr. ZL
Combi;
2.3.6. K2011130441 (RF) Proprietary Limited, controlled by the Kwa-Zulu Natal Agribusiness
Women's Trust;
2.3.7. Shanike Investments No 175 (RF) Proprietary Limited, controlled by Mr. AH Sangqu;
2.3.8. Triple Advanced Investments No 107 (RF) Proprietary Limited, controlled by Prof. ASM
Karaan, an independent non-executive director of Quantum Foods and therefore a related
party to the Company. Prof. Karaan has recused himself and did not participate in any
discussions by the Company’s board of directors or vote on any resolutions relating to the
making of the Non-binding Offer or the repurchase;
2.3.9. Triple Advanced Investments No 108 (RF) Proprietary Limited, controlled by Ms. NS Mjoli-
Mncube;
2.3.10. Triple Advanced Investments No 110 (RF) Proprietary Limited, controlled by Dr. MI Surve;
and
2.3.11. Shanike Investments No 177 (RF) Proprietary Limited, controlled by Dr. FA Sonn.
2.4. The Non-binding Offer is subject to the fulfilment of certain conditions precedent, including:
2.4.1. the conclusion of a formal sale agreement between Quantum Foods (and/or its nominated
subsidiary) and such BEE Party, setting out the terms of the proposed repurchase of the
Repurchase Shares held by that BEE Party (“Proposed Repurchase”) and containing
terms and conditions normal for a transaction of this nature (“Sale Agreement”);
2.4.2. the Proposed Repurchase being approved by Pioneer Foods and RMB, being the
providers of the Preference Share Funding and holders of security over the Repurchase
Shares;
2.4.3. the Proposed Repurchase being approved by Quantum Foods’ board of directors; and
2.4.4. the requisite approval of Quantum Foods' shareholders to the Proposed Repurchase being
obtained.
2.5. As a specific repurchase of shares, the Proposed Repurchase will, in terms of the JSE Listings
Requirements, require the approval of the Company’s shareholders by way of a special
resolution. To the extent required, shareholder approval will also be sought in terms of the
Companies Act, No. 71 of 2008. Accordingly, should formal Sale Agreements be concluded
with the BEE Parties, the Company will dispatch a circular to shareholders, providing detailed
information regarding the Proposed Repurchase and convening a general meeting, at which
the required shareholder approval will be sought. It is currently anticipated that the Proposed
Repurchase, if concluded by the parties and approved by Quantum Foods shareholders,
would be implemented during May 2019.
3. FINANCIAL INFORMATION
3.1. The Proposed Repurchase will be funded through the use of cash to the extent available at
the time of the Proposed Repurchase and existing bank facilities. As such, it is anticipated
that the impact of the Proposed Repurchase on the financial information of Quantum Foods
will be as follows:
3.1.1. on the basis that cash resources will be used to settle the total Proposed Repurchase
consideration and associated costs, a decrease in the available cash resources of
approximately R61.7 million;
3.1.2. a decrease in the net interest income before taxation of approximately R4.3 million per
annum, assuming a weighted average interest rate of 7% per annum;
3.1.3. a decrease in Quantum Foods issued ordinary shares of 10 505 000; and
3.1.4. an increase of 7 586 661 in the treasury shares held by Quantum Foods subsidiaries (as
at 28 February 2019, 39 361 shares were held in treasury).
Wellington
6 March 2019
Transaction Advisor and Sponsor
PSG Capital
Attorneys to Quantum Foods
Cliffe Dekker Hofmeyr
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