REPURCHASE OF SHARES

1.1. In 2012, following the approval thereof by Pioneer Foods’ shareholders on 17 February 2012, the Company implemented the Phase II Broad-Based Black Economic Empowerment (“BEE”) Transaction (“BEE Transaction”), involving the issue of Pioneer Foods shares to vehicles held by various participating black investors and by current and previous black directors of the Company (collectively, “BEE Parties”), as well as a broad-based BEE trust which through its beneficiary, the Pioneer Foods Education and Community Trust, provides scholarships, bursaries, school infrastructure and study loans in communities where the Pioneer Foods group operates. Both these trusts will continue to operate and assist the aforementioned people and initiatives. The terms of the BEE Transaction are detailed in the Company’s circular to its shareholders, dated 19 January 2012, a copy of which is available on the Company’s website at http://www.pioneerfoods.co.za//content/uploads/Circular_to_Shareholders_January_2012.pdf (“Circular”).

1.2. In order to allow the BEE Parties to participate in the BEE Transaction, Pioneer Foods (via a wholly-owned subsidiary) and FirstRand Bank Limited (acting through its Rand Merchant Bank division) (“RMB”) provided preference share funding to the BEE Parties, on the terms detailed in the Circular, (“Preference Share Funding”) with such funding due to be repaid to RMB and Pioneer Foods on the day before the 7th anniversary of the BEE Transaction being implemented (“Repayment Date”). The Pioneer Foods shares issued to the BEE Parties, are subject to a lock-in period until such time as the Preference Share Funding is repaid.

2. EXERCISE OF PRE-EMPTIVE RIGHT

2.1. In anticipation of the Repayment Date, the Company and RMB have consented to the disposal of Pioneer Foods shares held by the BEE Parties, so that the proceeds may be utilised towards settling the outstanding Preference Share Funding. In terms of the BEE Transaction agreements, the Company enjoys a pre-emptive right to purchase such Pioneer Foods shares (“Pre-emptive Right”) and the BEE Parties have, accordingly, offered to sell 11 563 013 Pioneer Foods shares to the Company for a repurchase consideration of R78.19 per share, reflecting a 3% discount to the volume weighted average price of Pioneer Foods shares on the JSE for the 30 trading days up to and including 20 February 2019.

2.2. The Company has today, 6 March 2019 accepted the above offer and will repurchase all 11 563 013 Pioneer Foods shares offered (“Repurchase Shares”) at the abovementioned repurchase price of R78.19 per share (“Repurchase Price”), reflecting an aggregate value of R904 111 986 and representing 4.96% of the Company’s issued ordinary share capital (“Repurchase”). The salient terms of the Repurchase are detailed in this announcement.

2.3. The Repurchase shall be funded by the Company through available cash resources.

2.4. The proceeds of the Repurchase are to be utilised towards settling the outstanding Preference Share Funding due to both Pioneer Foods and RMB.

2.5. There are no outstanding conditions precedent to the Repurchase, which will be implemented on Monday, 11 March 2019 (“Repurchase Date”). The Repurchase Shares will be automatically cancelled on the Repurchase Date, and it is anticipated that these shares will be delisted on or about Monday, 18 March 2019.

2.6. The Repurchase is to occur under the existing specific repurchase authority obtained from Pioneer Foods shareholders at the Company’s general meeting on 17 February 2012 (“General Meeting”) and, accordingly, no further shareholder approval of the Repurchase is required.

2.7. Under the BEE Transaction terms and the JSE Listings Requirements, the Repayment Date cannot be easily extended and not without additional IFRS 2 and other costs to the Company.

3. RATIONALE FOR THE REPURCHASE

Pioneer Foods has opted, given market conditions, to exercise its Pre-emptive Right to acquire the Repurchase Shares, in accordance with the existing specific approval received from shareholders at the General Meeting and in terms of the BEE Transaction agreements. The discount at which the Repurchase Shares will be acquired, is in line with recent discounts on placements in the market by comparable JSE Main Board listed companies.

4. FURTHER DETAILS REGARDING THE REPURCHASE

4.1. The Repurchase Shares are to be repurchased from special purpose vehicles indirectly controlled by the relevant BEE Parties, being the “BEE SPV Issuer Subco” vehicles referred to in the Circular. Specifically, shares are to be repurchased from the following BEE SPV Issuer Subcos –

4.1.1. K2011115194 (RF) Proprietary Limited, controlled by Dipeo Capital (RF) Proprietary Limited (previously controlled by Thembeka Capital (RF) Limited);

4.1.2. Business Venture Investments No 1577 (RF) Proprietary Limited, controlled by Identity Capital Partners Proprietary Limited;

4.1.3. Ripa Issuer Subco Investments (RF) Proprietary Limited, controlled by Riparian Investments Consortium 1 Proprietary Limited;

4.1.4. Business Venture Investments No 1581 (RF) Proprietary Limited, controlled by African Equity Empowerment Investments Limited (previously known as Sekunjalo Investments Limited);

4.1.5. Business Venture Investments No 1583 (RF) Proprietary Limited, controlled by Mr. ZL Combi, an independent non-executive director and chairperson of the board of directors of Pioneer Foods ("Board");

4.1.6. K2011130441 (RF) Proprietary Limited, controlled by the Kwa-Zulu Natal Agribusiness Women's Trust;

4.1.7. Shanike Investments No 175 (RF) Proprietary Limited, controlled by Mr. AH Sangqu, an independent non-executive director of Pioneer Foods;

4.1.8. Triple Advanced Investments No 107 (RF) Proprietary Limited, controlled by Prof ASM Karaan, a non-executive director of Pioneer Foods;

4.1.9. Triple Advanced Investments No 108 (RF) Proprietary Limited, controlled by Ms. NS Mjoli- Mncube, an independent non-executive director of Pioneer Foods;

4.1.10. Triple Advanced Investments No 110 (RF) Proprietary Limited, controlled by Dr MI Surve; and

4.1.11. Shanike Investments No 177 (RF) Proprietary Limited, controlled by Dr FA Sonn.

4.2. Where any BEE SPV Issuer Subco is controlled by a current director of Pioneer Foods, such director recused himself or herself and did not participate in any discussions by the Board or vote on any resolutions relating to the Repurchase.

5. SHAREHOLDER APPROVAL PREVIOUSLY OBTAINED

5.1. At the Company’s General Meeting on 17 February 2012, shareholders approved, by way of a special resolution, the specific repurchase of Pioneer Foods shares by the Company and any subsidiary of the Company from any BEE SPV Issuer Subco, inter alia should the Company exercise its Pre-Emptive Right. The terms of the Repurchase, as detailed in this announcement, comply with the requirements specified in the special resolution, and in this regard it is confirmed that –

5.1.1. the Board has adopted resolutions acknowledging that it has applied the solvency and liquidity test, as set out in section 4 of the Companies Act, No. 71 of 2008 (as amended), and has reasonably concluded that the solvency and liquidity test will be satisfied immediately after completing the Repurchase; and

5.1.2. the Board has provided a statement to the JSE and acknowledges that, after considering the effect of the Repurchase by the Company, the Company and its subsidiaries comply with the requirements set out in paragraphs 5.69(c) and 11.23(g) of the JSE Listings
Requirements.

As the Repurchase is to occur under the existing specific repurchase authority, no further shareholder approval is required in respect of the Repurchase.

Tyger Valley
6 March 2019

Sponsor and Transaction Advisor
PSG Capital

Cliffe Dekker Hofmeyr
Attorneys to Pioneer Foods

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