PROPOSAL TO ACQUIRE WEPEX AND MAKGARAPA, DISPOSE OF IMBALIE BEAUTY S SUBSIDIARIES AND BUSINESSES AND CAUTIONARY ANNOUNCEMENT

Transcription

1 IMBALIE BEAUTY LIMITED (Incorporated in the Republic of South Africa) (Registration number 2003/025374/06) JSE Share code: ILE ISIN: ZAE ("Imbalie Beauty or the Company or Group ) PROPOSAL TO ACQUIRE WEPEX AND MAKGARAPA, DISPOSE OF IMBALIE BEAUTY S SUBSIDIARIES AND BUSINESSES AND CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION 1.1 Shareholders are informed that Imbalie Beauty has on 1 June 2018 agreed to nonbinding proposals which will only become binding upon the signing of definitive agreements. The proposals are in respect of two acquisitions, which will be subject to the conditions precedent set out in the paragraphs which follow: 1.2 the acquisition by Imbalie Beauty of all the shares in and claims on loan account against Wepex Geotechnical (Proprietary) Limited (registration number 2016/468277/07), a company incorporated in South Africa ( Wepex RSA ) from the shareholders; 1.3 the acquisition by Imbalie Beauty of all the shares in and claims on loan account against Makgarapa Products (Proprietary) Limited (registration number CO 99/4389), a company incorporated in Botswana ( Makgarapa ) from the shareholders. 1.4 The proposal to acquire Wepex RSA and Wepex Botswana (a 100% owned subsidiary of Wepex RSA) is dealt with in one proposal and are jointly hereinafter referred to as the Wepex acquisition. Wepex RSA and Wepex Botswana are jointly hereinafter referred to as Wepex. 1.5 The businesses of Wepex and Makgapara are not related. 2. RATIONALE FOR THE PROPOSED WEPEX ACQUISITION Imbalie Beauty wishes to dispose of its current business, acquire an unrelated business and change its name. Wepex has been identified as an acquisition. It will be a condition precedent of the Wepex acquisition that Makgarapa also be acquired. 3. DESCRIPTION OF THE WEPEX BUSINESS Wepex is a specialist geotechnical contractor operating in the SADEC region. Key facts regarding Wepex include: Leading Geotechnical Contractor first incorporated in 2006; Wepex performs most of its work as sub-contractor to major construction companies; Wepex derives 50% of its revenue from Botswana, providing geotechnical construction services to the mining sector;

2 Wepex has developed several patented products for rock-fall mitigation currently exclusively used in mining applications. 4. TERMS AND CONDITIONS OF THE PROPOSED WEPEX ACQUISITION 4.1. It is proposed that Imbalie Beauty will acquire all the shares in and claims on loan account against Wepex for a purchase consideration of R (one hundred and eight million Rand) The proposed purchase consideration will initially be funded by a vendor loan from the sellers, which loan will thereafter be discharged by the issue to the sellers of (five billion four hundred thousand) shares in Imbalie Beauty at 2 (two) cents per share The proposed purchase consideration is based on Wepex having achieved profit after tax of not less than R (twenty million Rand) for the year ended 28 February 2018 and a minimum net asset value of R (thirty million Rand) on 28 February 2018, as reflected in its audited annual financial statements Any shortfall in profit after tax will result in a downward adjustment of the purchase price by a multiple of six times the shortfall, and any shortfall in net asset value will result in a downward adjustment of the purchase price by a Rand, for every Rand of the shortfall After completion of the proposed acquisition, Imbalie Beauty will change its name to Wepex Limited The major shareholders of Imbalie Beauty will provide irrevocable commitments to support the proposed transactions, as well as irrevocable commitments to vote in favour of a waiver of a mandatory offer to minority shareholders required by Section 117 read with Section 123 of the Companies Act and Companies Regulation 86(4) The shares to be issued to the vendors will be subject to the restriction that not more than 25% (twenty five percent) of the consideration shares will be disposed of prior to the first anniversary of the effective date of the transactions. 5. CONDITIONS PRECEDENT TO THE PROPOSED WEPEX ACQUISITION 5.1 The proposed Wepex acquisition will only become binding upon signature of a definitive agreement, which in turn will be subject to the fulfilment of the following conditions precedent: 5.2 Imbalie Beauty being satisfied with the outcome of the due diligence investigation to be conducted on Wepex; 5.3 Imbalie Beauty disposing of the following subsidiaries: Placecol Fresh Beauty (Pty) Limited; Imbalie Beauty Training Academy (Pty) Limited; Dream Nails Beauty (Pty) Limited; Imbalie Innovvation (Pty) Limited; Enjoy Beauty (Pty) Limited; and

3 Placecol Skin Care Clinic (Pty) Limited and warranting that after the disposals, Imbalie Beauty will have no actual or contingent liabilities; 5.4 Approval by the shareholders of Wepex of the transaction and waiver of the mandatory offer to minorities in terms of Companies Regulation 86(4); 5.5 Approval by the Imbalie Beauty board and its shareholders in respect of the transaction, the increase in authorised shares and the issue of shares to the vendors; 5.6 All regulatory approvals which may be required, including Competition Commission approval; 5.7 To the extent necessary, the consent of counterparties to material contracts in respect of the change in control of Wepex; 5.8 The vendors and other key employees of Wepex will sign service and restraint of trade agreements with the Company; 5.9 That the parties enter into a more detailed binding agreement reflecting these provisions, warranties and indemnities that are customary in transactions of this nature, and such other terms and conditions as may be acceptable to both parties. 6. RATIONALE FOR THE PROPOSED MAKGARAPA ACQUISITION It will be a condition precedent of the Wepex acquisition that Imbalie Beauty acquires Makgarapa. 7. DESCRIPTION OF THE MAKGARAPA BUSINESS Makgarapa is a construction and services company based in Orapa, Botswana. Key facts regarding Makgarapa include: Makgarapa is strategically situated inside the Orapa lease-area to service the upcoming infrastructure developments at, in and around the lease-area; Makgarapa has an existing ready-mix plant and quarry servicing the Orapa diamond fields; Makgarapa has industrial licences to manufacture pre-cast concrete elements for the local market; and Supply Geotechnical companies materials for lateral support work. 8. TERMS AND CONDITIONS OF THE PROPOSED MAKGARAPA ACQUISITION 8.1. It is proposed that Imbalie Beauty will acquire all the shares in and claims on loan account against Makgarapa for a purchase consideration of P (seventy million Pula).

4 8.2. P (sixty million Pula) of the proposed purchase consideration will be settled on the effective date of this transaction, and the balance in two equal payments of P (five million Pula) on 31 July 2019 and 31 July The proposed purchase consideration is based on Makgarapa: having achieved profit after tax of not less than P (fifteen million seven hundred thousand Pula) for the period ending 30 June 2018; having a minimum net asset value of P (forty-three million Pula) on 30 June 2018, as reflected in its audited annual financial statements for such period; having achieved profit after tax of not less than P (seventeen million five hundred thousand Pula) for the period ending 31 July 2019; having achieved profit after tax of not less than P (nineteen million five hundred thousand Pula) for the period ending 31 July Any shortfall in profit after tax will result in a downward adjustment of the purchase price by a multiple of four times the shortfall, and any shortfall in net asset value will result in a downward adjustment of the purchase price by a Rand, for every Rand of the shortfall After completion of the proposed acquisition, Imbalie Beauty will change its name to Wepex Limited The major shareholders of Imbalie Beauty will provide irrevocable commitments to support the proposed transaction. 9. CONDITIONS PRECEDENT TO THE PROPOSED MAKGARAPA ACQUISITION 9.1. The proposed Makgarapa acquisition will only become binding upon signature of a definitive agreement, which in turn will be subject to the fulfilment of the following conditions precedent: 9.2. Imbalie Beauty being satisfied with the outcome of the due diligence investigation to be conducted on Makgarapa; 9.3. Approval by the Imbalie Beauty board and its shareholders in respect of the transaction; 9.4. All regulatory approvals which may be required, including Competition Commission approval; 9.5. To the extent necessary, the consent of counterparties to material contracts in respect of the change in control of Makgarapa; 9.6. The vendors and other key employees of Makgarapa will sign service and restraint of trade agreements with the Company; 9.7. That the parties enter into a more detailed binding agreement reflecting these provisions, warranties and indemnities that are customary in transactions of this nature, and such other terms and conditions as may be acceptable to both parties;

5 9.8. The major shareholders of Imbalie Beauty will provide irrevocable commitments to support the proposed transaction. 10. REVERSE LISTING The reverse listing of Wepex will be subject to approval by the JSE. 11. CAUTIONARY ANNOUNCEMENT Shareholders are advised that, in the light of the fact that definitive agreements still have to be entered into, whereafter numerous conditions precedent referred to above have to be fulfilled, all of which may have a material effect on the price of the Company s securities, caution is required to be exercised by shareholders when dealing in their securities until a further announcement is made. 12. FURTHER ANNOUNCEMENT Shareholders will be notified once the definitive agreements have been entered into. Johannesburg 5 June 2018 Designated adviser Exchange Sponsors