LIBSTAR HOLDINGS LIMITED – Disposal of a 70% stake in Libstar’s household and personal care business – SENS

                            
Disposal Of A 70% Interest In Libstar’s Household And Personal Care Business
Libstar Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2014/032444/06)
(JSE share code: LBR)
(ISIN: ZAE000250239)
(“Libstar” or the “Group”)
DISPOSAL OF A 70% INTEREST IN LIBSTAR’S HOUSEHOLD AND PERSONAL CARE
BUSINESS COMPRISING THE CONTACTIM AND CHET CHEMICALS DIVISIONS
1. INTRODUCTION
   Shareholders are advised that Libstar has received an offer from PAPE Fund Managers
Proprietary Limited (acting on behalf of PAPE Fund 3 General Partner Proprietary Limited
in its capacity as General Partner of both PAPE Fund 3 ZAR Partnership and PAPE Fund
3 USD Partnership) (“PAPE”) and Kanaka Chemicals Proprietary Limited (“Kanaka”) (“the
Purchasers”) to acquire a 70% equity interest in the household and personal care
businesses of Libstar comprising the Contactim and Chet Chemicals divisions (“the HPC
businesses”) for a total purchase consideration of R174.6 million (“the Transaction”).
   A put and call option, exercisable by Libstar and the Purchasers, respectively, between 31
December 2023 and 30 June 2024, will be entered into in relation to Libstar’s remaining
30% interest in the HPC businesses (the “Option”). The price at which the Option may be
exercised is based on the same valuation that was used to calculate the purchase
consideration for the initial 70% equity interest to be acquired by the Purchasers, less a
discount of 20%, being an amount of R42.72m. The total purchase consideration
(including the price payable in terms of the Option) is therefore R217.32 million.
   The Transaction envisages a new company (‘Newco”) being established to acquire the
entirety of the HPC businesses as going concerns from Libstar.
2. OVERVIEW OF THE PURCHASERS
   PAPE Fund Managers
PAPE is a boutique private equity fund manager with a 13-year track record across multiple
fund mandates investing in sub-Saharan Africa, namely:
   •   Evolution One Fund, the first cleantech fund on the continent, capitalised at USD94m,
and which had predominately international investors such as the IFC, European
Investment Bank, African Development Bank and other international DFIs.
•   PAPE Fund 1 and 2, capitalised collectively at R500 million.
•   PAPE Fund 3, which had total capital commitments of R1.03bn as at final close on 29
January 2020 and is a 100% black-owned, Level 1 BEE entity with investors namely:
PIC, Eskom Pension and Provident Fund, SASME Fund, FMO, 27four Investment
Managers, Alexander Forbes Investments, Transport Sector Retirement Fund, Impala
Workers Provident Fund and the Rosebank Wealth Group.
   Kanaka Chemicals
   The directors of Kanaka are Kuben and Shireen Naidoo. Prior to joining Kanaka, Shireen
was a partner at KPMG in South Africa, where she led the Climate Change and
Sustainability Services team for 21 years. Prior to KPMG, Shireen was the Health, Safety
and Environmental Manager for an international chemical company for 10 years.
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Shireen’s aim is to integrate climate change and sustainability into Kanaka’s business and
drive environmental and social impact in a way that makes good business sense. Kuben
is the Director of Cdet Chemicals Proprietary Limited, an associate company of Kanaka.
Kuben has worked in the international chemical industry for almost 20 years. Post the
corporate world, Kuben established his own chemical business, and supplied products to
the food and beverage industries such as for SAB and ABI. Kuben then ventured into the
retail sector by manufacturing detergent products such as dishwashing liquids, all-purpose
cleaners, window cleaners, tile cleaners, and bleach disinfectants.
3. RATIONALE FOR THE TRANSACTION
  Libstar is a producer and distributor of quality products and brands for the Consumer
Packaged Goods Industry in South Africa and internationally. Its extensive product
portfolio consists of more than 9 000 products and features many well-loved household
staples. Over 90% of group revenue is generated from food, which includes dairy and
value-added meat products, fresh produce, convenience food, groceries, baking and
baking aids, snacks and confectionery.
  The Transaction serves to amplify Libstar’s strategic intent to focus and grow its existing
food categories whilst transitioning its non-food division to a sustainable, transformed
standalone business in partnership with the Purchasers.
4. PURCHASE CONSIDERATION
  Newco intends to fund a portion of the purchase consideration by raising new bank debt
of indicatively R50 million. The purchase consideration payable by the Purchasers for
70% of the equity in Newco will be R124.6 million. Libstar will therefore receive the
proceeds of the Purchaser’s equity investment into Newco together with the full proceeds
of the third party debt raised, which amounts to R174.6 million.
  As indicated in paragraph 1 above, the price at which the Option may be exercised is
R42.72 million.
5. CONDITIONS PRECEDENT TO THE TRANSACTION
  Implementation of the Transaction is subject to the fulfilment or waiver, as the case may
be, by no later than 30 June 2022 (or such later date as the parties may agree), of such
conditions precedent as are usual for a transaction of this nature.
6. FINANCIAL EFFECTS OF THE TRANSACTION
  The value of the net assets being disposed of is R312 million and the loss before taxation
attributable to those net assets is R64 million.
  The information set out in this paragraph has been extracted from the unaudited financial
information of Libstar for the financial year ended 31 December 2021, prepared in terms
of IFRS.
7. EFFECTIVE DATE
  The effective date of the Transaction will be the 10th business day after the date of
fulfilment or waiver, as the case may be, of the conditions precedent.
8. JSE CATEGORISATION
   Based on the collective consideration payable in respect of the Transaction and the
Option, the Transaction is categorised as a Category 2 transaction in terms of the Listings
Requirements of the JSE Limited.
Johannesburg
21 February 2022
Sponsor
The Standard Bank of South Africa Limited
Legal Advisor
Cliffe Dekker Hofmeyr Incorporated
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Date: 21-02-2022 09:00:00
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