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Rainbow terms of rights offer

Rainbow shareholders were referred to the announcement released on SENS on 14 November 2012 and published in the South African press on 15 November 2012, relating to Rainbow”s acquisition of an effective 64.2% stake in New Foodcorp Holdings (Pty) Ltd. (Foodcorp Acquisition), to be funded by way of a fully underwritten rights offer.



Rights offer

It is proposed that a total of R3.9 billion of new equity be raised by way of a renounceable rights offer (Rights Offer) of 276 964 802 new Rainbow ordinary shares (Rights Offer Shares) at an issue price of R14.20 per Rights Offer Share (Rights Offer Price), in the ratio of 80 Rights Offer Shares for every 100 Rainbow ordinary shares held on the Rights Offer record date, which is expected to be close of business on Friday, 8 February 2013 (the Record Date). The Rights Offer Price represents a 5.0% premium to the 5-day volume weighted average price of Rainbow shares as at 5 December 2012.

3. Rationale for the Rights Offer



The proceeds from the Rights Offer will be used to fund the Foodcorp Acquisition, as well as other strategic growth opportunities.



Upon the successful completion of the Foodcorp Acquisition, the consolidated debt of the Rainbow group will be significant. The Rights Offer will ensure that the consolidated capital structure of the Rainbow group is appropriate, with flexibility to pursue strategic growth and development opportunities.



Underwriting

The Rights Offer will be fully underwritten by Remgro Ltd., through its wholly-owned subsidiary Industrial Partnership Investments (Pty) Ltd., or its assignee (the “Underwriter”). In terms of the underwriting agreement entered into between Rainbow and the Underwriter, the Underwriter has agreed to subscribe for all of the Rights Offer Shares that are not taken up by Rainbow shareholders or their renouncees in terms of the Rights Offer. An underwriting fee of 1.5% will be paid to the Underwriter.



Excess applications for Rights Offer Shares will not be allowed and any Rights Offer Shares that are not taken up pursuant to the Rights Offer shall be taken up by the Underwriter in accordance with the provisions of the underwriting agreement.



Salient dates and times

Subject to the fulfilment of the conditions precedent as set out below, the proposed salient dates and times for the Rights Offer are set out below.

*Last day to trade in Rainbow shares in order to participate in the Rights Offer (cum-entitlement) on Friday, 1 February 2013

*Rainbow shares commence trading ex-entitlement at 09:00 on Monday, 4 February 2013

*Listing of and trading in the letters of allocation on the securities exchange operated by the JSE Ltd. (JSE) commences at 09:00 on Monday, 4 February 2013

*Record Date on Friday, 8 February 2013

*Rights Offer opens at 09:00 on Monday, 11 February 2013

*Holders of dematerialised Rainbow shares will have their accounts at their CSDP or broker automatically credited with their letters of allocation on Monday, 11 February 2013

*Holders of certificated Rainbow shares will have their letters of allocation credited to an electronic register maintained by Rainbow”s transfer secretaries on Monday, 11 February 2013

*Circular and form of instruction, where applicable, posted to shareholders registered as such on the Record Date (“Qualifying Shareholders”) on Monday, 11 February 2013

*Last day for trading letters of allocation on the securities exchange operated by the JSE on Friday, 22 February 2013

*Listing and trading of Rights Offer Shares on the securities exchange operated by the JSE commences at 09:00 on Monday, 25 February 2013

*Rights Offer closes at 12:00 on (refer to note 4) Friday, 1 March 2013

*Record date for letters of allocation on Friday, 1 March 2013

*In respect of certificated Qualifying

*Shareholders (or their renouncees) wishing to exercise all or part of their nil paid rights, payment to be made and forms of instruction to be lodged with Rainbow”s transfer secretaries by 12:00 on Friday, 1 March 2013

*Rights Offer Shares issued on or about Monday, 4 March 2013

*In respect of dematerialised Qualifying Shareholders (or their renouncees) their CSDP or broker accounts will be debited with the aggregate Rights Offer Price and credited with Rights Offer Shares and share certificates posted to certificated Qualifying Shareholders (or their renouncees) by registered post on or about Monday, 4 March 2013

*Results of the Rights Offer announced on SENS on Monday, 4 March 2013

*Results of the Rights Offer published in the South African press on Tuesday, 5 March 2013



Notes:

1. Share certificates in respect of Rainbow shares may not be dematerialised or rematerialised between Monday, 4 February 2013 and Friday, 8 February 2013, both days inclusive.

2. All times are South African times.

3. CSDPs effect payment on a delivery versus payment basis in respect of dematerialised shares.

4. Dematerialised Rainbow shareholders are required to inform their CSDP or broker of their instructions in terms of the Rights Offer in the manner and time stipulated in the agreement governing the relationship between the RCL shareholder and their CSDP or broker.

5. The above dates and times are subject to amendment. Any amendments to the dates and times will be released on SENS and published in the South African press.



Conditions precedent

The implementation of the Rights Offer is subject to the fulfilment of the following conditions:

*Rainbow shareholders passing a special resolution, at the general meeting to be held on or about 15 January 2013 (General Meeting), in terms of section 36(2)(a) of the Companies Act No. 71 of 2008, as amended (“Act”) approving an increase in the authorised number of Rainbow shares and an amendment to the Memorandum of Incorporation of Rainbow in order to give effect to the increase in the number of Rainbow”s shares and such special resolution being filed with the Companies and Intellectual Property Commission;

*Rainbow shareholders passing a special resolution at the General Meeting in terms of section 41(3) of the Act, approving the issue of the Rights Offer Shares pursuant to the Rights Offer, which special resolution will also constitute a specific authority for the board of directors of Rainbow to issue the Rights Offer Shares, as envisaged in clause 6.7.2 of the Memorandum of Incorporation of Rainbow;

*the JSE approving the Rights Offer circular, including revised listing particulars, to Rainbow shareholders (Circular); and

*the JSE approving the listing of the letters of allocation and the listing of the Rights Offer Shares on the securities exchange operated by the JSE.



Unaudited pro forma financial effects of the Foodcorp Acquisition and the Rights Offer

These are available in the SENS announcement.



Further notices

It is anticipated that a finalisation announcement in respect of the Rights Offer will be released on SENS on 25 January 2013 and published in the South African press on 28 January 2013.



The Circular, incorporating revised listing particulars and a form of instruction in respect of letters of allocation, where applicable, will be posted to all Qualifying Shareholders on or about 11 February 2013.