Produce Investments Regulatory News (PIL)

Produce Investments plc

("PI" or the "Company")

Acquisition and Placing to raise £6.0m

HIGHLIGHTS

· Acquisition of The Jersey Royal Company Limited ("JRCL") ("Acquisition") for total consideration of £15.0m, to be satisfied by:

o £11.0m of cash; and

o 1,590,909 ordinary shares of 1 pence each in the Company ("Ordinary Shares") (approximately £4.0m at the Company's closing middle market price on 15 May 2014, being the last dealing day prior to the publication of this announcement)

· Significantly oversubscribed placing arranged by Shore Capital to raise £6.0m (before expenses) through the issue of 2,727,272 new Ordinary Shares at 220 pence per share

· Consideration for Acquisition to be part funded through proceeds of placing with the balance to be funded through existing cash resources and an increase in the Company's existing banking facilities with HSBC

· As a part of the deal the Company has entered into a put and call option to acquire Peacock Farm within 3 years for a fixed price of £6.35m. Peacock Farm owns the freehold property of JRCL's main pack site on Jersey

· JRCL, based in Jersey, has been established for 20 years, growing, packing and supplying the internationally recognised and protected Jersey Royal potato brand to a wide number of retailers in the UK

· JRCL also owns the Kent Potato Company Limited which operates from a site in Kent where it grows, packs and supplies retailers in the UK with locally sourced Kent potatoes

· Acquisition realises a number of benefits for PI and fits with its strategy to diversify its product and customer base

· The Company expects the Acquisition to be earnings enhancing from FY2015

Barrie Clapham, Chairman of PI, commented:

"I am delighted we have been able to purchase such a well known business. It takes the Company into a very significant sector of the potato market and we are both excited and confident about the future earnings potential. This Acquisition marks an exciting period for Produce Investments and the employees at both JRCL and KPCL, providing an opportunity to continue to develop a business which combines real food and farming heritage with the demands of modern supply chains and consumer passion for this high quality brand."

The Acquisition

The Company has acquired the entire issued share capital of The Jersey Royal Company Limited ("JRCL") from JR Property Holdings Limited ("Acquisition") for a total consideration of £11.0m in cash ("Cash Consideration") and the issue of 1,590,909 ordinary shares of 1 pence each in the Company ("Ordinary Shares") which amounts to approximately £4.0m at the Company's closing middle market price on 15 May 2014, being the last dealing day prior to the publication of this announcement ("Consideration Shares"). The Acquisition is being made on a cash free/debt free basis. The Cash Consideration will be funded through the Placing (defined below), existing cash resources and the increase of its existing banking facility with HSBC. As part of the Acquisition, the Company has also entered into a put and call option to acquire Peacock Farm from JR Property Holdings Limited within 3 years for a total fixed consideration of £6.35 million.

Jersey Royal Company

JRCL's business is based in Jersey in the Channel Islands and they operate from a number of key sites across the island. JRCL has been established for over 20 years, growing, packing and supplying the internationally recognised and protected Jersey Royal potato brand to a wide number of retailers in the UK. In addition, JRCL owns a business in Kent, the Kent Potato Company Limited ("KPCL"). KPCL operates from a site in Kent where it grows, packs and supplies retailers in the UK with locally sourced Kent potatoes.

In year ending 31 December 2013, JRCL (combined with the KPCL business) had unaudited revenue of £31.5m, unaudited loss before tax of £0.1m and unaudited net assets of £3.7m. This compares to the year ending 31 December 2010 when JRCL (combined with the KPCL business) had unaudited revenue of £31.2m, unaudited profit before tax of £5.0m and unaudited net assets of £8.7m.

Background to and reasons for the Acquisition

The Company believes that the Acquisition has a number of key attractions:

· Attractive brand proposition

Jersey Royals are a widely recognised 'brand' in the UK

· Enables greater influence over the early/new potato season

The Acquisition enables the Company to access the earliest season potatoes, which will enhance the Company's planning and strategy over the rest of its crop as it comes through the harvest season

· Strengthens the Company's product offering

The Acquisition will help strengthen the product offering to customers, offering them a wider range of potato varieties

· Broadens the Company's customer base

JRCL has historically sold potatoes into a majority of the main UK retailers which should help diversify the Company's customer risk profile and may provide cross-selling opportunities

The Placing

The Company has raised £6.0m (before expenses) through the issue of 2,727,272 new Ordinary Shares ("Placing Shares") at 220 pence per share ("Placing Price") by way of a significantly oversubscribed placing arranged by Shore Capital with new and existing institutional investors. The Placing Price is at a discount of approximately 12.9 per cent. to the closing middle market price on 15 May 2014, being the last dealing day prior to the publication of this announcement. The net proceeds of the Placing are expected to be approximately £5.7m and will be used to fund a portion of the cash consideration for the Acquisition and provide additional working capital for the Company.

In connection with the Placing, Shore Capital Stockbrokers Limited and Shore Capital and Corporate Limited (together "Shore Capital") have entered into a placing agreement with the Company ("Placing Agreement"), whereby Shore Capital has agreed to use reasonable endeavours, as agent for the Company, to procure placees for the Placing Shares. The Placing is not being underwritten. The Placing Agreement is conditional on inter alia on admission of the Placing Shares to trading on AIM.

Related party transaction

Under the AIM Rules for Companies, Toscafund Asset Management LLP as holder of more than 10 per cent. of the existing Ordinary Shares, is a related party for the purpose of the Placing and its participation in the Placing constitutes a related party transaction under Rule 13 of the AIM Rules. The Directors, having consulted with Shore Capital, the Company's Nominated Adviser, consider the terms of the Placing to be fair and reasonable insofar as the Company's shareholders are concerned.

Settlement and dealings

Application will be made to the London Stock Exchange for the Placing Shares and the Consideration Shares to be admitted to trading on AIM ("Admission"). It is expected that such Admission will occur at 8.00 am on 21 May 2014. Admission is subject to the Placing Agreement becoming unconditional in all respects (save only for Admission) and not being terminated in accordance with its terms.

The Placing Shares and Consideration Shares will, when issued, rank in full for all dividends with a record date on or after the date of Admission and otherwise equally with the existing Ordinary Shares from the date of Admission. The Placing Shares and Consideration Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.

For further information contact:

Produce Investments plc

Contact: Brian Macdonald

Telephone: 01890 819513

Shore Capital & Corporate Limited (Nomad to PI)

Contact: Stephane Auton/Patrick Castle

Telephone: 020 7408 4090

Hudson Sandler

Contact: Nick Lyon

Telephone: 020 7796 4133