Zambeef Prod. Regulatory News (ZAM)

Zambeef Products plc

("Zambeef" or the "Group")

Disposal of Zamanita

Zambeef (AIM: ZAM), the fully integrated agribusiness with operations in Zambia, Nigeria and Ghana, announces that it has entered into a sale and purchase agreement (the "SPA"), pursuant to which it has agreed to dispose of its wholly owned subsidiary, Zamanita Limited ("Zamanita") to Cargill Holdings BV ("Cargill") for a cash consideration of USD25.7 million (the "Consideration") (the "Disposal").

The Consideration will be adjusted for estimated closing working capital less estimated net financial debt. All of Zamanita's third party financial debt will be transferred out of the Group in accordance with the terms of the SPA.

Zamanita is one of the largest edible oil and soybean meal producers in Zambia, serving both domestic and export markets as well as selling into the domestic refined oils market. Following completion of the Disposal ("Completion"), Cargill will assume sole ownership of Zamanita's intellectual property, together with all of its remaining assets and debts, save as described below.

For the year ended 30 September 2014, Zamanita's audited accounts recorded revenue of USD67.9 million (ZMW399.2 million), a gross profit of USD9.9 million (ZMW58.3 million) and a loss after tax of USD2.0 million (ZMW11.5 million). Zamanita's net assets at 30 September 2014 were USD21.9 million (ZMW137.4 million). The book value of Zamanita in the Group's accounts was USD26.2 million (ZMW164.0 million).

Following Completion, there will be no change to the Group's board of directors or senior management team and its operational focus will remain unchanged. It is anticipated that the Consideration will be applied to Zambeef's continuing operations, including towards the reduction of the Group's indebtedness.

While the Disposal is not a fundamental change of business as defined in accordance with the AIM Rules for Companies ("AIM Rules"), it is classified as a Category 1 transaction in accordance with Section 9 of the Listing Requirements of the Lusaka Stock Exchange and, accordingly, approval of the Group's shareholders ("Shareholders") is required to be sought. A circular setting out further information on the Disposal and a notice convening an Extraordinary General Meeting of the Group (the "EGM") will shortly be sent to the Shareholders.

Rationale for the Disposal

Zambeef acquired Zamanita for US$16.0 million in January 2008, as a continuation of its strategy of vertical integration. In addition to its position as a leading edible oil and soybean meal producer, Zamanita owned the only solvent extraction plant in Zambia.

Over the last five years, the oil seed crushing industry has, together with many other domestic industries, matured and a number of new participants have also entered the market. As a result, it is no longer essential for Zambeef to be involved in this industry in order to secure its required supply of high quality soybean meal at a competitive price. Furthermore, oil seed crushing is a highly specialised and capital intensive business which is subject to fluctuations in foreign exchange rates and commodity prices.

The Disposal will allow Zambeef to focus on growing its core business, which is the retailing of cold chain meat and dairy products, delivered through the Group's extensive processing, distribution and retail network. Furthermore, the Disposal will allow Zambeef to unlock value, via a reduction in overall gearing (particularly US Dollar denominated debt) and in so doing reduce exchange rate exposure and interest costs.

The Financial Effects of the Disposal

The unaudited pro forma financial effects of the Disposal (the "Financial Effects") on Zambeef's basic earnings per share ("EPS"), headline earnings per share ("HEPS"), net asset value per share ("NAVPS") and net tangible asset value per share ("NTAVPS") are set out below using the Group's audited accounts and the audited accounts of Zamanita for the year ended 30 September 2014.

The Financial Effects have been prepared for illustrative purposes only, to assist shareholders in assessing the financial impact of the Disposal on Zambeef and, because of their nature, do not necessarily fairly present Zambeef's financial position, changes in equity, and results of operations or cash flows after the Disposal. The Financial Effects are the responsibility of the directors of Zambeef.

The SPA

The key terms included in the SPA are summarised below:

· The Completion date is scheduled for the later of 1 May 2015 or the first day of the month following the satisfaction of certain conditions precedent (the "Conditions Precedent").

On Completion:

o Zambeef will transfer 100 per cent. of Zamanita's issued share capital to Cargill;

o Zamanita will be acquired by to Cargill with the existing Standard Chartered Bank Zambia Plc bank debt and encumbrances, which as at 30 September 2014 were approximately USD27.0 million (ZMW169.4 million);

o Cargill will pay the Consideration to Zambeef, adjusted as described above;

o There are expected to be adjustments to the Consideration, depending on the closing working capital and the closing net financial debt shown in Zamanita's completion accounts;

· The SPA excludes from the Disposal the potential Zambia Revenue Authority ("ZRA") tax liability initially announced on 3 February 2012, of ZMW54.6 million (approximately USD8.6 million), for which Zambeef will assume full responsibility pending completion of the ongoing determination proceedings;

· The Conditions Precedent have to be completed before the expiry of six (6) months from the signature date of the SPA unless the date is extended by mutual consent;

· If at any time before completion Cargill considers, acting reasonably, that a material adverse change has occurred since the signing of the SPA, then Cargill may either proceed to completion or elect to terminate the SPA by notice to the Seller; and

· Zambeef has given certain representations, warranties, undertakings and indemnities to Cargill relating to the general status of Zamanita's assets and contracts, financial position, tax matters, environmental compliance and other relevant Zambia legislation.

Conditions Precedent

Completion is subject to the Conditions Precedent, which include:

· The Competition and Consumer Protection Commission of Zambia providing either negative clearance or approval for the Disposal, as required;

· Approval by Shareholders at a duly convened EGM, and approval by Cargill's board of directors;

· Receipt of approval from the Lusaka Stock Exchange, the Securities and Exchange Commission in Zambia and the AIM of the London Stock Exchange, where required in each case;

· The requisite consents and/or waivers from the lenders to the Group for the Disposal and the change in control of Zamanita;

· Zambeef and Zamanita having settled all intercompany loans and debt which at 30 September 2014 was a net amount due to Zambeef of USD3.4 million (ZMW21.6 million);

· Zambeef procuring the issuance of a stand-by letter of credit in favour of Zamanita to cover the potential ZRA duty claim.

· Due execution and signing of an agreement relating to certain administrative and support functions for Zamanita for a transitional period, up to 31 December 2015;

· Zamanita entering into and executing a new lease agreement with Zambia Railways Limited in respect of Stand number 4816 (private siding number 1143) in Lusaka.

Commenting on the transaction, Joint Chief Executive of Zambeef, Carl Irwin said: "The sale of Zamanita is an important transaction for Zambeef as it narrows our operational focus, reduces our exposure to foreign currency and commodity price fluctuations and strengthens our balance sheet. I am delighted that Cargill has agreed to retain Zamanita's staff."

**ENDS**

For further information, please contact:

Zambeef Products plc Tel: +260 (0) 211 369003

Francis Grogan, Joint CEO

Carl Irwin, Joint CEO

Strand Hanson Limited Tel: +44 (0) 20 7409 3494

Angela Hallett

James Spinney

Panmure Gordon Tel: +44 (0) 20 7886 2500

Hugh Morgan

Tom Salvesen

Peter Steel

Buchanan Tel: +44 (0) 20 7466 5000

Mark Edwards

Sophie McNulty

Robbie Ceiriog-Hughes