RCL FOODS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1966/004972/06)
ISIN: ZAE000179438
Share code: RCL
(“RCL FOODS” or “the Company”)


DISPOSAL OF RCL FOODS’ SHAREHOLDING IN VECTOR LOGISTICS


1.   INTRODUCTION

     1.1. Shareholders of the Company (“Shareholders”) are advised that on 29 March 2023, the Company entered
          into a binding agreement with EMIF II Investment (Pty) Ltd (“Purchaser”) in terms of which the Purchaser will
          acquire all of the ordinary shares of Vector Logistics Proprietary Limited (“Vector Logistics”), (“Disposal”) for
          a total cash consideration of R1 250 000 000 (“Purchase Consideration”).

     1.2. The Purchaser is a South African investment vehicle, fully owned by A.P. Møller Capital EMIF II Coöperatief
          W.A, a Dutch entity, which itself is fully owned by A.P. Møller Capital – Emerging Markets Infrastructure Fund
          II K/S, a Danish infrastructure fund managed by A.P. Møller Capital P/S.

2.   RATIONALE FOR THE DISPOSAL

     2.1. In 2020, the board of directors of RCL FOODS initiated a strategic review of the operations of the RCL
          FOODS group, and of the composition and shape of its portfolio of businesses.

     2.2. As announced on the Stock Exchange News Service on 6 September 2021, 5 September 2022, and 6 March
          2023, RCL FOODS resolved to separate its value-added branded businesses from its poultry and logistics
          operations in order to better position them for optimal growth as independent entities. In addition, RCL
          FOODS revised its strategic focus towards unlocking growth in the value-added consumer brands component
          of its business through sharper strategic focus and active investment.

     2.3. The Disposal is in accordance with the Company’s revised strategy as communicated and a further step in
          the broader reshaping of RCL FOODS’ underlying portfolio of businesses.

3.   DESCRIPTION OF THE BUSINESS OF VECTOR LOGISTICS

     3.1. Vector Logistics is South Africa’s leading frozen food logistics operator, providing RCL FOODS and numerous
          third parties with multi-temperature warehousing and distribution, supply chain intelligence, and sales and
          merchandising solutions.

     3.2. In addition to facilitating RCL FOODS’ own integrated supply chain, Vector Logistics has partnered with
          several leading food manufacturers, foodservice customers, and retailers to distribute food products (with a
          focus on frozen and chilled food products) on their behalf across Southern Africa.

4.   PURCHASE CONSIDERATION

     4.1. As set out above, the Purchase Consideration for the Disposal is R1 250 000 000.

     4.2. As part of the Disposal, RCL FOODS will convert the existing shareholder loan advanced to Vector Logistics
          to newly issued ordinary shares of Vector Logistics (“Shareholder Loan Conversion”). The Purchase
          Consideration is payable in relation to all ordinary shares of Vector Logistics in issue, subsequent to the
          Shareholder Loan Conversion.

     4.3. The Purchase Consideration will be subject to a downward adjustment (“SAR Adjustment”) in order to cater
          for Vector Logistics’ obligation to settle existing share appreciation rights (which were issued to employees
          of Vector Logistics in terms of the 2009 RCL FOODS share appreciation rights scheme) during the 12-month
          period after the date on which the Disposal is implemented as envisaged in paragraph 7.2 below (“Closing
          Date”). The final determination of the SAR Adjustment and final settlement thereof shall take place at the end
          of the 12-month period following the Closing Date.

     4.4. The Purchase Consideration (subject to paragraph 4.3 above) will be escalated at the prime rate from 1
          March 2023 up to and excluding the date on which the Disposal is implemented as envisaged in paragraph
          7.2 below.

     4.5. In addition, the Purchase Consideration will be subject to a maximum upward or downward adjustment
          (“Purchase Consideration Adjustment”) of R100 000 000 by reference to the financial performance of the
          Vector Logistics group for the 2023 and 2024 financial years as follows:

                   To the extent the average earnings before interest, tax, depreciation, and amortisation (“EBITDA”) of
                   the Vector Logistics group for the financial years referenced above as reflected in Vector Logistics’
                   audited consolidated annual financial statements, and adjusted in accordance with specific
                   normalisation adjustments as agreed between the parties (“Actual Average EBITDA”) is in excess of
                   an agreed-upon target (“Target EBITDA”), the Company shall be entitled to receive an additional
                   consideration amount equal to the amount by which the Actual Average EBITDA exceeds Target
                   EBITDA.

                   Should Actual Average EBITDA be less than Target EBITDA, the Company shall repay an amount
                   equal to the amount by which the Actual EBITDA falls below Target EBITDA.

5.   APPLICATION OF THE DISPOSAL PROCEEDS

     Subsequent to the review and consideration of the Company’s operational cash requirements and a review of
     RCL FOODS’ remaining known obligations, liquidity position, and pipeline of strategic initiatives, the net proceeds
     of the Disposal will be retained by the Company for purposes of pursuing select organic and acquisitive growth
     opportunities and / or other corporate activities.

6.   CONDITIONS PRECEDENT

     The implementation of the Disposal is subject to the fulfilment or waiver (to the extent legally permissible) of
     conditions precedent ("Conditions Precedent") including, but not limited to:

     6.1. RCL FOODS obtaining consent to the Disposal by lenders to RCL FOODS, to the extent required;

     6.2. RCL FOODS obtaining consent to the Disposal by certain customers of Vector, to the extent required;

     6.3. RCL FOODS obtaining consent to the Disposal by shareholders of an investment in which Vector Logistics
          owns a minority shareholding;

     6.4. implementation of an agreement between Vector Logistics and a suitable third-party lending institution in
          relation to the provision of a short-term funding / working capital facility to Vector Logistics;

     6.5. the Competition Authorities in South Africa and other applicable jurisdictions granting such approvals as are
          required in terms of the Competition Act, No. 89 of 1998 and other applicable laws to implement the Disposal,
          either unconditionally, or subject to conditions reasonably acceptable to the parties; and

     6.6. the Purchaser not notifying RCL FOODS, and RCL FOODS not notifying the Purchaser, that a material
          adverse event has occurred in relation to the Vector Logistics group.

7.     EFFECTIVE DATE AND IMPLEMENTATION OF THE DISPOSAL

     7.1. The effective date of the Disposal (i.e. the date of effective financial transfer) is 3 July 2022.

     7.2. Upon fulfilment or waiver of the Conditions Precedent, implementation of the Disposal (i.e. delivery and
          payment of the Purchase Consideration) will either take place on the last trading day of the retail month for
          Vector Logistics ("Accounting Month") or the last trading day of the subsequent Accounting Month, depending
           on the number of days between fulfillment or waiver of the Conditions Precedent and the last trading day of
           the Accounting Month.

8.      OTHER TERMS

        The Disposal is subject to other terms and conditions which are customary for a transaction of this nature.

9.      FINANCIAL INFORMATION

      9.1. As at 1 January 2023, being the date of the last reviewed interim financial results of RCL FOODS which were
           prepared in terms of International Financial Reporting Standards, Vector Logistics had:

                   net assets of R381 225 414 (before the Shareholder Loan Conversion); and

                   profits after tax of R34 742 840.

10.     CLASSIFICATION OF THE DISPOSAL

        The Disposal constitutes a category 2 transaction in terms of the JSE Limited Listings Requirements, and no
        related parties are involved in the Disposal.


Durban
29 March 2023

Financial adviser and Transaction Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)

Attorneys
Webber Wentzel and Baker McKenzie