| Mon 29 Dec 2008, 7:05 | | BCH - Best Cut Limited - Cancellation of sale agreement between best cut limited |
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BCH
BCH
BCH - Best Cut Limited - Cancellation of sale agreement between best cut limited
and certain of the best cut vendor companies and change of sponsor
BEST CUT LIMITED
Registration number:1989/001319/06
Share Code: BCH
ISIN Number: ZAE000105391
("Best Cut Limited" or "the company")
CANCELLATION OF SALE AGREEMENT BETWEEN BEST CUT LIMITED AND CERTAIN OF THE BEST
CUT VENDOR COMPANIES AND CHANGE OF SPONSOR
1. INTRODUCTION
1.1 Shareholders are hereby advised that Best Cut Limited has entered into an
agreement on 3 December 2008 ("the agreement"), with Best Cut Factory (Pty)
Limited, Ranch Master (Pty) Limited, Umhlathuze Butcheries (Pty) Limited,
Best Cut Butcheries (Pty) Limited, Best Cut Tanner (Pty) Limited, Beef
Eaters (Pty) Limited and Ranch Biltong (Pty) Limited (hereinafter
collectively referred to as "the Best Cut vendor companies".
1.2 Going forward, Best Cut Limited will trade through its subsidiary Best Cut
Foods (Pty) Limited and strengthen its focus on the supply of processed
meat through the retail and catering industries while further looking to
strengthen its strategic relationships in these areas.
1.3 In terms of the agreement, Best Cut Limited and the Best Cut vendor
companies (hereinafter collectively referred to as "the parties") have
agreed to cancel the agreement of sale entered into on 13 June 2007,
further details of which are included in the revised listing particulars
issued to shareholders on 4 October 2007("the sale agreement"), so as to
allow the Best Cut vendor companies, excluding Best Cut Factory (Pty)
Limited, to be further developed and capitalized.
1.4 The cancellation of the sale agreement constitutes a disposal and is deemed
to be a related party transaction ("the transaction") in terms of the
Listings Requirements of the JSE Limited ("JSE") as further set out in
paragraph 4 below.
2. DETAILS OF THE BUSINESS OF THE BEST CUT VENDOR COMPANIES
The Best Cut vendor companies incorporate meat retail outlets, a meat
processing factory, a wholesale operation supplying meat to the catering
industry, a biltong factory and an abattoir operation.
3. RATIONALE FOR THE TRANSACTION
3.1 The parties have agreed that some of the Best Cut vendor companies included
in the sale agreement are at an early stage of development and have thus
required (and still require) constant capital investment which has placed
strain on the cash resources of Best Cut Limited. As such, the directors
are of the opinion that the Best Cut vendor companies, excluding Best Cut
Factory (Pty) Limited, are not currently suitable for the investment
purposes of a listed entity such as Best Cut Limited.
3.2 Furthermore, Best Cut Limited has been unable to place the shares issued to
the vendor (as defined in paragraph 5.2 below) in terms of the sale
agreement with other investors, thereby precluding the vendor from
realizing the purchase consideration for cash, in terms of the sale
agreement.
4. RELATED PARTY TRANSACTION
4.1 The original vendor of the Best Cut vendor companies in terms of the sale
agreement, and the effective purchaser in terms of this transaction, Mr
Alexis Henry Steenkamp, was a director of Best Cut Limited within the 12
months preceding the date of the agreement. He had resigned as a director
of Best Cut Limited effective 13 August 2008.
4.2 In terms of the Listings Requirements of the JSE, the transaction is
therefore regarded as a related party transaction, requiring written
confirmation from an independent professional expert confirming the
fairness of the terms of the transaction to Best Cut Limited shareholders.
Best Cut Limited shareholders, excluding the votes of related parties, are
required to approve the transaction in a general meeting.
4.3 Best Cut Limited has appointed an independent professional expert in
accordance with paragraph 10.7(b) of the JSE Listings Requirements. Written
confirmation by the independent professional expert as to the fairness of
the transaction will be included in a circular to be distributed to
shareholders.
5. PARTICULARS OF THE TRANSACTION
5.1 Subject matter of the transaction
The subject matter of the transaction is the Best Cut vendor companies,
excluding the business of Best Cut Factory (Pty) Limited.
5.2 The vendor/purchaser
The vendor in terms of the original sale agreement, and the effective
purchaser in terms of the transaction, is Mr Alexis Henry Steenkamp, a
former director of Best Cut Limited.
5.3 The effective date
The effective date of the transaction is 1 July 2008.
5.4 Consideration and other terms
5.4.1 Best Cut Limited has made payments totalling R19,5 million to the
vendor in terms of the sale agreement. The parties have agreed that
such payment is in respect of the business of Best Cut Factory (Pty)
Limited, which business will remain within Best Cut Limited group.
5.4.2 In terms of the agreement, an outstanding balance of R 3 533 930 is
still payable to the vendor, but is subject to negotiation between the
parties to determine the amounts payable after considering the
adjustment accounts reflecting the net asset value of the Best Cut
vendor companies, as further set out in the agreement.
5.4.3 The parties have further agreed that Best Cut Limited will be granted
a first right of refusal to purchase the businesses of the Best Cut
vendor companies returned to the vendor in terms of the agreement,
which will allow Best Cut Limited to re-integrate the businesses into
the business portfolio of Best Cut Limited once they have reached
maturity, and only if the vendor at that stage so agrees.
5.5 Conditions precedent
No conditions precedent has been addressed in the agreement signed by the
parties. If required, a further announcement will be made to shareholders
setting out any additional material terms regarding the transaction as soon
as such terms have been finalised.
6. FINANCIAL EFFECTS OF THE TRANSACTION
The financial effects of the transaction have not to date been finalised by
the parties. A further announcement will be made to shareholders setting
out the financial effects of the transaction as soon as details of the
transaction are finalised.
7. CIRCULAR TO BEST CUT LIMITED SHAREHOLDERS
A circular to Best Cut Limited shareholders containing full details of the
transaction and a notice of a general meeting, at which meeting Best Cut
Limited shareholders shall be asked to consider and, if deemed fit, approve
the transaction, will be mailed to shareholders in due course.
8. RENEWAL OF CAUTIONARY ANNOUNCEMENT
Best Cut Limited shareholders are further referred to the cautionary
announcement of 25 November 2008, and are advised that full details of the
transaction will be announced as soon as such details have been finalised.
The company`s shareholders are accordingly advised to continue to exercise
caution when dealing in their securities until a further announcement is
made.
9. CHANGE IN SPONSOR
Best Cut Limited shareholders are advised that Best Cut Limited has
appointed PSG Capital (Pty) Limited as sponsor to the company effective 1
January 2009.
Johannesburg
29 December 2008
Transaction Sponsor
PSG Capital (Pty) Limited
Date: 29/12/2008 07:05:23 Produced by the JSE SENS Department.
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