Zambeef Prod. Regulatory News (ZAM)

Zambeef Products Plc

("Zambeef" or the "Group")

Establishment of Hatchery Joint Operations

Zambeef (AIM:ZAM), the fully integrated agri-business with operations in Zambia, Nigeria and Ghana, is pleased to announce that on 29 May 2013 the Group entered into a joint venture operations agreement (the "JV Agreement") and a shareholders' agreement (the "Shareholders' Agreement") (together, the "Agreements") with Rainbow Farms Investments Proprietary Limited ("Rainbow Farms") to establish a broiler parent stock rearing, laying and hatching operation for the supply of day old chicks, Zamhatch Limited ("Zamhatch" or the "Company") (the "Transaction").

Background to, and reasons for, the Transaction

The establishment of Zamhatch is in line with the Group's strategically integrated business model, aimed at reducing risk and earnings volatility and capturing margin throughout the value chain, with a focus on supplying higher margin products. The Board considers that managing the quality and quantity of supply of day old chicks to its broiler division will enable the Group to maximise operational performance as well as create opportunities to generate revenue from the sale of day-old chicks to third parties.

The Zamhatch business will be developed at Mpongwe Farms and will also include an on-site feed mill to reduce transport costs that would otherwise be incurred in delivering feed from Zambeef's Lusaka-based operations.

Following completion of the Transaction, the Board expects Zamhatch to become operational over the next two to three years.

The Joint Venture Operations Agreement

The key terms included in the JV Agreement are set out below:

·; The ownership of Zamhatch will be 51 per cent. Rainbow Farms and 49 per cent. Zambeef;

·; Rainbow Farms will be responsible for supporting Zamhatch's local management in the following functions:

o Development of technical specifications and operating procedures;

o Facilities design and specifications;

o Veterinary and disease control and management; and

o Procuring future broiler parent stock for supply to Zamhatch.

·; Zambeef will be responsible for supporting Zamhatch's local management in the following functions:

o Legal matters and managing the impact of any changes to Zambian legislation on the Company's operations;

o Human resources, accounting and administration support; and

o Securing the supply of other resources for the operation of the Company.

The Shareholders' Agreement

The key terms included in the Shareholders' Agreement are set out below:

·; Each of Rainbow Farms and Zambeef is entitled to appoint two directors to the board of directors of Zamhatch;

·; Zamhatch will be funded through a combination of equity and loan capital pro rata to the initial shareholding, as well as third party sources, including bank loans or leases. Third party funding will not exceed 30 per cent. of Zamhatch's total funding requirements;

·; Following an initial two year period post-completion of the Transaction (or at any time, if Zambeef is in material breach of the Shareholders' Agreement or the JV Agreement) Rainbow Farms has the right to require that Zambeef purchase the whole of Rainbow Farm's shares in Zamhatch (the "Put Option");

·; If there is a change in control of Rainbow Farms, Zambeef has the right to require that Rainbow Farms sell the whole of Rainbow Farm's shares in Zamhatch to Zambeef (the "Call Option");

·; The purchase price for the Put Option or Call Option will be 51 per cent. of the consolidated EBITDA of Zamhatch (as at the date of the exercise of the option), multiplied by 7.5;

·; Alternatively, if the Put Option (or Call Option) is exercised within three years of the Effective Date, the purchase price will be the higher of: (a) 51 per cent. of the consolidated EBITDA of Zamhatch multiplied by 7.5 (as above); or (b) the amounts outstanding to Rainbow Farms on capital and loan account; and

·; The purchase price for the Put Option is payable in cash or in ordinary shares in the share capital of Zambeef. The purchase price for the Call Option is payable in cash only.

Any Put Option exercised by Rainbow Farms shall be subject to the condition precedent that within a period of 40 weeks from the first order placed by the Company for parent stock (and/or grandparent stock, if applicable) which follows deliver of the exercise notice, Rainbow Farms or the Company secures the right by the Company to be supplied with broiler parent stock (and/or broiler grandparent stock if the Company is utilising such stock) from such breeder, supplier or distributor reasonably acceptable to the Company, in volumes materially the same as that which the Company was receiving at the time of the delivery of the Exercise Notice.

There are no conditions precedent to completion of the Transaction.

Francis Grogan, Chief Executive of Zambeef, commented:

"We are delighted to be joining forces with Rainbow Farms for the development and operation of our hatchery. Zamhatch will ensure the consistency and quality of supply of day old chicks to our broiler division, in line with our integrated business model. We believe the Transaction will create one of the finest farm to fork poultry businesses in Africa."

For further information, please contact:

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

Francis Grogan, Chief Executive Officer

Yusuf Koya, Executive Director

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

Angela Hallett

James Spinney

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

Callum Stewart

Hannah Woodley

Buchanan Tel: +44 (0) 20 7466 5000

Mark Edwards

Sophie McNulty

www.buchanan.uk.com

Notes to Editors

Information on Zambeef

The Zambeef Group is one of the largest integrated agri-businesses in Zambia, involved in the primary production, processing, distribution and retailing of beef, chicken, pork, milk, eggs, dairy products, flour, bread, edible oils and stock feed, throughout Zambia, as well as Nigeria and Ghana. The Group is also one of the largest cereal row cropping operations in Zambia, with approximately 8,350 hectares of irrigated and approximately 8,650 hectares of rain-fed, arable, developed land available for planting each year.

The Group has approximately 5,000 employees.

Further information can be found on www.zambeefplc.com

This publication is in line with standard practice for London Stock Exchange AIM listed Companies.

Information on Rainbow Farms

Rainbow Chicken Limited ("Rainbow") is the holding company of two principal operating subsidiaries, being Rainbow Farms and Vector Logistics (Proprietary) Limited. These subsidiaries enable the group to operate as a vertically integrated chicken producer. Rainbow is incorporated in South Africa and was listed on the JSE Limited in 1989.

Rainbow is the pre-eminent processor and marketer of chicken in South Africa, producing 4.8 million birds per week. It is a fully integrated broiler producer that breeds and rears its own livestock, which it feeds from its own feed mills, processes, distributes and then markets as fresh, frozen, value-added and further-processed chicken.

In view of Rainbow's skills, experience and track record in adding significant value to the basic chicken product, Rainbow represents the ideal strategic partner for Zambeef as it seeks to move into the value add and processing market.

Rainbow operates in the local retail, wholesale and foodservice channels with four brands - Rainbow, Farmer Brown, Rainbow Simply Chicken and Rainbow FoodSolutions. It also produces a variety of dealer-own brands for a number of retailers and wholesalers.

Rainbow is a 70 per cent. subsidiary of Remgro Limited.

Further information can be found on www.rainbowchickens.co.za