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LABAT AFRICA LIMITED - Acquisition of 100% of Ace Genetics and Potential Specific Repurchase of Shares

Release Date: 09/12/2020 14:01
Code(s): LAB     PDF:  
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Acquisition of 100% of Ace Genetics and Potential Specific Repurchase of Shares

LABAT AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1986/001616/06)
(“Labat Africa” or “the Company”)
ISIN Code: ZAE 000018354 Share code: LAB


VOLUNTARY ANNOUNCEMENT RELATING TO THE ACQUISITION OF 100% OF AFRICAN CANNABIS
ENTERPRISES (PTY) LTD (“ACE GENETICS”) AND POTENTIAL SPECIFIC REPURCHASE OF SHARES

Shareholders are advised that following a satisfactory due diligence investigation, Labat has
concluded an agreement with the vendors of Ace Genetics (“Agreement”) in terms of which
it will acquire 100% of the shares in and claims against the Cape-based cannabis genetics
company for a purchase consideration of R1 804 001, to be settled by the issue of 1 804 000
Labat shares at an issue price of R1.00 per share (“Acquisition”). The effective date of the
Acquisition is 4 December 2020. The vendors are not related parties to Labat as defined in the
JSE Listings Requirements.

Rationale for the Acquisition
Labat requires a dependable and continuous flow of raw materials to ensure it meets the
growth in demand over the coming years and Ace Genetics, which grows its product in various
regions of the Western Cape, has an established capability to supply the entire Labat grow
facility raw materials. The Acquisition furthermore provides the Company with access to the
vendors’ collective 100 years of growing experience and this is very attractive to Labat as the
vendors are well positioned to assist with the implementation of all Labat’s grow activities and
to provide support and assistance with the Industrial Hemp roll out, which will add significant
value to the supply chain.

Ace Genetics has over 100 strains and sub-strains under cultivation with THC and CBD levels of
up to 33% and up to 20% respectively and is rapidly becoming the leading genetics company
in Africa. The company also has a large number of interested customers in the USA, Canada
and Europe who are wanting to procure the seed and cuttings.

The Acquisition brings to Labat a reliable and credible genetics partner and Labat is pleased
to on-board a group of leading experts in the cannabis industry who are committed to ensuring
South Africa takes its rightful place on the world stage in the field of cannabis innovation and
scientific excellence.

Put Option and Potential Specific Repurchase of Shares
In the event that the 30-day VWAP of the Labat shares on the JSE is less than R1.00 on the first
anniversary of the signature date of the Agreement (“Determination Period”), Topfruit (Pty) Ltd
(“Topfruit”) the largest of the three vendors of Ace Genetics, shall, for a period of 30 (thirty)
days after the last day of the Determination Period, have the right to require Labat to purchase
all or the remaining portion of the 900 000 Labat shares issued to it in settlement of the
acquisition of its 49% interest in and claims against Ace Genetics for a purchase consideration
of R1.00 per share (“Put Option”).

Categorisation and Circular
The Acquisition is not a categorised transaction in terms of section 9 of the JSE Limited Listings
Requirements and this announcement is made on a voluntarily basis. The potential specific
repurchase of shares arising as a result of the Put Option will, however, require shareholder
approval and it is intended that the required approval will be sought on the same day as the
forthcoming AGM.

Johannesburg
09 December 2020

Sponsor
AcaciaCap Advisors Proprietary Limited

Date: 09-12-2020 02:01:00
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