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DJ Block Commodities Ltd: Agreement to Acquire Strategic Stake in South African Fertiliser Wholesale Distributor

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 Block Commodities Ltd (BLOC) 
Block Commodities Ltd: Agreement to Acquire Strategic Stake in South African 
Fertiliser Wholesale Distributor 
 
14-March-2018 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement that contains inside information 
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
     The information communicated within this announcement is deemed to 
     constitute inside information as stipulated under the Market Abuse 
 Regulations (EU) No. 596/2014. Upon the publication of this announcement, 
   this inside information is now considered to be in the public domain. 
 
14 March 2018 
 
      BLOCK COMMODITIES LIMITED 
 
      ("Block Commodities" or the "Company") 
 
      Block Commodities Limited / Epic: BLCC / Sector: Mining 
 
 Agreement to Acquire Strategic Stake in South African Fertiliser Wholesale 
      Distributor, 
 
      and divestment of Associate 
 
  Block Commodities Limited is pleased to announce that it has today entered 
  into an agreement to acquire a strategic 21% equity stake in VIPA Holdings 
    (Pty) Limited ("VIPA"), a South African wholesale distributer of quality 
          fertiliser and speciality plant and animal nutrition products (the 
      "Acquisition"). As one of the leading providers of fertilisers and raw 
  animal feed materials to South Africa's agricultural industry, VIPA shares 
 Block Commodities' business ethos of supporting farming communities, and as 
   such will provide the Company with access to high quality and specialised 
       agricultural products. The Acquisition, when completed, will form the 
        procurement platform for the Company's strategy to develop commodity 
       ecosystems in Africa based on blockchain technology, the initial such 
       ecosystem being based on the Company's existing fertilis er business. 
 
            Acquisition Overview 
 
  ? Block Commodities' 21% stake in VIPA will, on completion of the 
  Acquisition, provide the Company with improved purchasing capabilities and 
  access to the wholesale market for speciality fertilisers in South Africa 
  and across the continent. 
 
  ? The Acquisition will be effected by a combination of: 
 
            - a subscription for new shares in VIPA; and 
 
            - the purchase of existing shares in VIPA 
 
            by the Company. 
 
  ? The consideration payable for the Acquisition is as follows: 
 
- a cash subscription of USD 150,000 for new ordinary shares to be issued by 
            VIPA (the "Cash Subscription"); and 
 
- payment of the sum of USD 610,000 to existing shareholders of VIPA for the 
 acquisition of existing shares in VIPA, to be satisfied by the allotment of 
          748,463,318 new ordinary shares in the capital of the Company (the 
            "Consideration Shares"). 
 
  ? Completion of the Acquisition will be subject to, amongst other matters: 
 
- the completion of satisfactory due diligence by the Company into VIPA; and 
 
- all necessary and applicable third-party approvals having been obtained in 
all relevant jurisdictions to enable the parties to complete the Acquisition 
  (including without limitation, any approvals required by the South African 
Reserve Bank and from all relevant and applicable competition, anti-trust or 
            equivalent authorities with jurisdiction over the Acquisition). 
 
Block Commodities Executive Chairman, Chris Cleverly, said "We are delighted 
      to enter into this transaction with VIPA as it gives Block Commodities 
 access to the wholesale market and revenues of the South African fertiliser 
  market, as well as securing a significant relationship with an established 
         procurement operation that will underpin our own trading business". 
 
   VIPA Chief Executive, David Smillie, said "The VIPA Approach is - We feed 
people. VIPA is a highly organized and focused agricultural business that is 
  exporting large volumes of what is termed beneficiated fertilizer products 
 into Africa. Based in Durban and with offices throughout South Africa, VIPA 
  has the ability to provide first class trade execution services throughout 
the continent. Entering into this agreement with Block Commodities will help 
  guarantee the closure and completion of large scale Agricultural contracts 
   and provide access for product to thousands of small scale farmers in the 
 region. VIPA and Block Commodities will also collaborate in the development 
of strategic software to help streamline logistics and payments from clients 
            across Africa." 
 
            Background Information on VIPA Holdings (Pty) Limited 
 
  VIPA was founded in 2004 and has grown to be one of the top ten fertiliser 
 traders in South Africa. VIPA is at the forefront of product development in 
the plant nutrition and soil fertility business with its range of registered 
  and approved natural raw material additives and coatings which can convert 
      some of the large commodities such as Urea and MAP into more efficient 
      products, realising improved results and cost savings for its clients. 
 
In the year ending 28 February 2017, the unaudited turnover for VIPA was ZAR 
   177m. However, following the abrupt withdrawal from the market of a major 
   international trading partner, VIPA reported a loss before interest, tax, 
 depreciation and amortisation of ZAR 12.6m. VIPA is expecting a significant 
improvement in trading performance for the financial year ending 28 February 
            2018. 
 
            Consideration Shares 
 
       The Consideration Shares which will, on issue, amount to 16.3% of the 
  enlarged issued share capital of the Company, will be issued following the 
satisfaction of the conditions precedent outlined above. Further information 
on the timing of the completion will follow in due course. The Consideration 
            Shares will rank pari passu with the existing ordinary shares. 
 
            Divestment 
 
 As a result of its negotiations with VIPA, Block Commodities has decided to 
    focus on the wholesale market for speciality fertiliser products, as the 
 board considers that this will offer greater opportunities for expansion of 
            both businesses across the African continent. 
 
           Consequently, the Company has agreed with the vendors of Advanced 
Agricultural Holdings (Pty) Limited ("AAH") to unwind the investment made by 
 the Company into AAH, which completed on 16 June 2017. In this context, the 
   Company has therefore agreed to surrender its shareholding in AAH and the 
  221,601,740 shares issued to the AAH vendors as initial consideration will 
 also be surrendered. A further announcement will be made in due course once 
            this process has been completed. 
 
  The Directors of the Company accept responsibility for the content of this 
            announcement. 
 
For further information, please contact: 
 
Block Commodities Limited 
Chris Cleverly                              +44 (0) 20 7408 9200 
 
    NEX Exchange Corporate Adviser: 
 Alexander David Securities Limited 
    David Scott - Corporate Finance         +44 (0) 20 7448 9820 
James Dewhurst - Corporate Broking          +44 (0) 20 7448 9820 
 
Public and Investor Relations: 
Cassiopeia Services - Stefania       stefania@cassiopeia-ltd.com 
Barbaglio 
 
About Block Commodities 
 
Block Commodities' strategy is to maximise the value of African agricultural 
  and other commodities through the deployment of blockchain technology. The 
        resources will be linked through the vertical integration of primary 
   industries down to consumers via blockchain platforms. Using blockchain's 
ability to dynamically incorporate all market participants into an efficient 
 ecosystem, Block Commodities aims to facilitate the commercial operation of 
        such ecosystems in the context of the agricultural production cycle. 
 
         In reclaiming the value lost in African agricultural and extractive 
       industries through inefficient supply and distribution systems, Block 
  Commodities will help African farmers raise productivity and secure better 
      returns for produce. This is an important step in establishing African 
            communities as significant future global agricultural producers. 
 
The Acquisition and development of a significant relationship with VIPA will 
         directly assist Block Commodities in successfully implementing this 
            strategic vision. 
 
ISIN:          GG00B4QYTJ50 
Category Code: AGR 
TIDM:          BLOC 
Sequence No.:  5295 
 
End of Announcement EQS News Service 
 
663771 14-March-2018 
 
 

(END) Dow Jones Newswires

March 14, 2018 03:03 ET (07:03 GMT)