BSD.L Regulatory News (BSD)

B.S.D. CROWN LTD - Further update in relation to Israel 18

PR Newswire

London, November 16

BSD Crown Ltd. (LSE: BSD)

(the “Company”)

Further update in relation to Israel 18

Ramat Gan, Israel, 16 November 2016

Further to the announcement dated 30 September 2016 regarding the memorandum of understanding ("MoU") entered into by Israel 18 B.V. ("Israel 18"), a company controlled by Mr. Gregory Gurtovoy, and Ta'aman Food Marketing Ltd. ("Taaman") (together, the "Parties" ) to set up a 50:50 joint venture for joint control over BGI Investments (1961) Ltd. ("BGI"), the Company’s controlling shareholder, following the loan agreement agreed between the Parties (the “Loan Agreement”), the Company hereby announces the principal terms of the MoU as announced by BGI:

1. Israel 18 will transfer all of its shares in BGI (approximately 71.5%) and the Company (approximately 19%) (the “Israel 18 Holdings”) to a new company (“NewCo”) and Taaman will pay Israel 18 US$10 million (the “Consideration”) for 50% of the shares in NewCo, such that the ownership of NewCo is split equally between Israel 18 and Taaman.

2. In the event that Israel 18 is not able to transfer the Israel 18 Holdings to NewCo, Taaman will hold 50% of the Israel 18 Holdings directly and the Parties will agree a different arrangement regarding the joint management and control of BGI within an agreed time frame from signing of the MoU.

3. In any joint venture structure agreed by the Parties the Israel 18 Holdings will be held by Adv. Yaakov Amster (the "Trustee") who will act as a trustee appointed jointly by the Parties and the Trustee will hold the voting rights attached to the Israel 18 Holdings and vote them in accordance with the joint instructions of the Parties.

4. Until Mr Gurtovoy has fulfilled all of the necessary conditions under the MoU and the Loan Agreement, Israel 18 will be entitled to 50% of all dividends distributed by NewCo and its subsidiaries while the remaining 50% will go to Taaman.

5. The following acts will constitute a breach of the MoU (and, in some cases, the Loan Agreement):

5.1. If Mr Gurtovoy/Israel 18 does not grant to the Trustee all powers of attorney necessary for the Trustee to exercise the votes attaching to any of the shares within the Israel 18 Holdings which are subject to separate legal disputes with third parties within an agreed time frame from signing the MoU and Mr Gurtovoy/Israel 18 fails to rectify the default within 14 days of that date.

5.2. If Mr Gurtovoy/Israel 18 is not able to transfer all of its shares within the Israel 18 Holdings to the Trustee within a period of 18 months from the date of the MoU (excluding such shares that cannot be transferred because of the restrictions imposed pursuant to the Company’s lawsuit against Israel 18 (the “BSD Shares”)).

5.3. If Mr Gurtovoy is not able to transfer the BSD Shares within a period of 36 months from the date of the MoU.

5.4. If the Company's lawsuit against Israel 18/Mr Gurtovoy is successful and Israel 18/Mr Gurtovoy does not pay its debt to the Company, Taaman can repay the debt and charge such payment against Mr Gurtovoy’s share of the Israel 18 Holdings which will be valued at USD 10 million for these purposes.

5.5. Mr Gurtovoy will have a period of 30 days to correct any violation of the MoU as stated above.

6. The Parties will convene general meetings of all of the stated companies within 30 days of the date of the MoU to replace all of the current directors with such new directors as are mutually agreed between the Parties. The representation on the board of directors will be proportionate to the holdings of the Parties in NewCo.

7. The following actions of NewCo, BGI and its subsidiaries will require the approval of both Israel 18 and Taaman:

7.1. Any payment not within the ordinary course of business.

7.2. Any loan, fundraising or increasing the relevant company’s debt that is not within the ordinary course of business.

7.3. Any loan or providing credit, collateral or indemnification to a third party.

7.4. Any dividend payment or any adoption, amendment, implementation or cancellation of any dividend policy.

7.5. The settlement of any lawsuit or legal or administrative proceedings regarding any of the companies in the group.

7.6. Any disposal or grant of security over of any of Newco’s assets or the assets of any of the other companies in the group.

7.7. Any acquisitions.

7.8. Any increase or dilution of Newco’s share capital.

7.9. The appointment of legal advisers and accountants to any of the group companies.

8. The MoU will be subject to the approval by the Israeli anti-trust authority and will not be binding or have any legal status until the approval is given as such, any of the above mentioned will not get into force as long as such approval will not receive . On receipt of this approval , the MoU will be implemented and the Company will be under the joint control of Israel 18 and Taaman. In this event, the MoU will constitute a binding and irrevocable agreement of the Parties.

9. In respect of any sale of shares in Newco, both parties will have rights of first refusal and tag-along/drag-along rights.

10. The term of the Loan Agreement will be extended provided the voting rights attaching to the Israel 18 Holdings are held by The Trustee.

11. It is BGI’s understanding that the Loan Agreement and the MoU are independent agreements and neither agreement is in substitution for the other.

12. In accordance with the Loan Agreement, Taaman will be able to sell any of the shares comprised in the Israel 18 Holdings and use the proceeds to repay the loan in the event that Israel 18 does not repay the loan in accordance with the terms of the Loan Agreement (as stated in the announcement dated 29 September 2016 issued by the Company)

Enquiries:

Gregory Gurtovoy, chairman of the board: office@bsd-c.com