BSD.L Regulatory News (BSD)

B.S.D. CROWN LTD - Company Update

PR Newswire

London, March 20

BSD Crown Ltd. (LSE: BSD)

(the “Company”)

Company Update

Ramat Gan, 20 March 2017

Following the publication by Yossi Willi Management and Investments Ltd. (the "Requisitionist") of certain statements on March 13th 2017 (the “Requisitionist’s Announcement”), the Company hereby wishes to clarify certain material inaccuracies alluded to therein.

The Company believes that the Requisitionist’s Announcement is an inappropriate attempt to mislead shareholders in order to influence their vote in the upcoming general meeting of the Company to be held on 29 March (the “GM”), as part of an ongoing effort by the Requisitionist and parties related to it, such as Mr. Zwi Williger, to try and gain control over the Company.

Unlike the Company’s board of directors (the “Board”), which continues to act in the best interest of the Company and its shareholders as a whole, the Requisitionist has shown no regard to the detrimental effect its acts are having on the Company and its shareholders. For example, the Requisitionist has just recently purchased a significant number of Company shares although it was fully aware of the risk this poses to the continued listing of the Company’s shares to trading on the London Stock Exchange. Further, and as noted below, the Requisitionist has taken legal steps to prevent the Board from remedying such situation. At the same time, the Requisitionist has been using the situation in order to encourage other shareholders to sell Company shares to it and parties related to it, such as Mr. Zwi Williger, at a low price. The Requisitionist has also publicly questioned the use of dividends received from the Company’s subsidiaries, in full knowledge that large sums were transferred to the Requisitionist's controlling shareholder and his brother in order to exercise the Company’s call options over shares in Willi-Food Investments Ltd.

Despite the actions of the Requisitionist and other parties related to it, the Board continues to take action in order to protect the best interest of the Company and its shareholders as a whole.

Below is a brief response by the Company to certain of the allegations made in the Requisitionist’s Announcement.

All current members of the Board (other than its external director, Mrs. Iris-Even Tov) have been proposed for election at the GM, and both the Company and the Requisitionist (in its capacity as such) have noted the reasons in the notice of GM as to why they believe such directors and those proposed by the Requisitionist should or should not be elected. Most of the Requisitionist's nominees have previously been proposed to election, and rejected by the Company shareholders. Further, another director previously nominated by the Requisitionist and elected to the Board, has resigned of her own volition and without explanation. It should also be noted that the Board agreed, in good faith and without any legal obligation to do so, to recommend the election of an external director proposed by the Requisitionist.

The Board is comprised of professional and experienced persons, each appointed to serve on the Board in accordance with Israeli Law and the Company’s Articles of Association. All Board members have an in-depth knowledge relating to public companies and they are diligently working to secure the Company’s future and to enforce all its rights.

The Board is extremely active in promoting the best interests of the Company, meeting very frequently in addition to regularly considering and promoting matters of importance to the Company. Some of such matters have been regularly announced by the Company in recent months. Whilst the Board is not in a position to provide the basis for any resignation by previous members of the Board, including, as mentioned above, the member of the Board nominated by the Requisitionist, there is no basis known to the Board for the Requisitionist’s allegation that such resignations indicate a “red flag as to the lack of direction of the Company the poor confidence that these members had in the Company”.

As has been previously announced to shareholders of the Company, the members of the Board’s independent committee (all of whom, like all other current Board members, were not in office at the time of the alleged misappropriations) have received the approval of the Israeli Securities Authority (the "ISA") to investigate certain financial transactions involving the Company’s assets and have been diligently working to investigate the alleged misappropriations, which are the subject matter of an ongoing investigation by the ISA. The Company has and continues to take all action legally available to it (within the limits of restrictions imposed by the ISA), in order to retrieve such funds. Among other actions, the independent committee, together with the Company’s legal advisers, has already commenced legal proceedings relating to such alleged misappropriations, against both Israel 18 B.V., a private company controlled by the Chairman of the Company's Board, and the International Bank of Azerbaijan, in each case in order to secure Company assets. The Company is positive that the Requisitionist, having followed the Company's announcements, is aware of such fact and therefore is surprised by such additional obscure and unfounded allegations.

It should be noted that any newly elected directors or management personnel would require ISA authorisation in order to investigate and act upon any findings in relation to such transactions and may be subject to the same or similar limitations.

The Requisitionist’s claims regarding the distribution of dividends from Company subsidiaries are clearly lacking good faith, given that the Requisitionist is fully aware that the dividends received by the Company from its subsidiaries were paid to the Requisitionist's controlling shareholder and his brother in order to exercise the Company’s call options over shares in Willi-Food Investments Ltd., meaning the aforementioned funds were paid to the Requisitionist’s related parties almost immediately after being distributed to the Company, on December 31st, 2015. To the extent necessary, any other dividends received by the Company from its subsidiaries have been used to support the continuing operations of the Company, including the significant costs incurred in satisfying the Requisitionist’s frequent queries and demands from time to time, including costs incurred in convening two general meetings at the request of the Requisitionist in less than a year.

The Board continues to take active steps to ensure the trading of the Company’s shares can resume at the earliest opportunity and the Board has been in regular correspondence with the UK Financial Conduct Authority as well as the ISA in order to ensure that the Company may relist to trading as soon as possible.

The appointment of PWC Israel (Kesselman & Kesselman CPAs), as proposed on the agenda of the GM, is crucial in enabling the expedited release of the Company’s financial statements for 2015 and 2016 and such proposal has been made following in-depth consideration by the Board in coordination with the ISA. If the Company’s shareholders do not agree to the appointment of PWC Israel, the Company would be without appointed external auditors and this would put the Company at risk of additional and unnecessary delay in publishing its financial statements.

In addition and as noted in previous announcements of the Company, the Company believes that one of the reasons that the Company currently does not satisfy the ”shares in public hands” test for the purposes of Chapter 14 of the listing rules made under section 74 of the Financial Services and Markets Act 2000 (as amended) is due to the recent share acquisitions undertaken by Mr. Yossi Williger and the Requisitionist, such that the Company has approximately 12.6% of its shares in “public hands”, which is significantly below the 25% threshold required (subject to certain exceptions) under Chapter 14 of the Listing Rules. The Requisitionist and Mr. Yossi Williger were well aware of such results when making and completing its recent share acquisitions. Further, as noted in the notice of GM, the Requisitionist, by its controlling shareholder Mr. Yossi Williger, filed a request for a temporary injunction against the Company preventing the Company from taking any action which may remedy such situation.

Although the Board is taking active steps to try and remedy this matter, shareholders should be aware that the readmission to trading of the Company’s shares is dependent also on the actions of its shareholders, including the Requisitionist, and on limitations imposed by the ISA.

Therefore, the Board encourages shareholders to vote in line with its recommendations, as set out in the GM notice.

Enquiries:

Iris Even Tov, External Director : office@bsd-c.com