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RCL Foods Plans Rainbow Chicken Listing; Shares to Unbundle at 1:1 Ratio | Rateweb
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RCL Foods Plans Rainbow Chicken Listing; Shares to Unbundle at 1:1 Ratio

RCL Foods has announced plans to list Rainbow Chicken Limited on the Johannesburg Stock Exchange (JSE). The announcement was made on June 4, 2024. The move includes the unbundling of Rainbow Chicken from RCL Foods.

Details of the Listing and Unbundling

Approval and Strategy

The separation and listing of Rainbow Chicken on the JSE have been approved. Rainbow Chicken has shown significant improvement in its operations. This includes a change in its chicken breed and increased operational resilience.

Board’s Confidence

The boards of RCL Foods and Rainbow Chicken are confident in Rainbow’s standalone potential. They believe Rainbow can deliver sustainable financial performance.

Distribution of Shares

The unbundling will distribute Rainbow Chicken shares to RCL Foods shareholders. Shareholders will receive one Rainbow share for each RCL Foods share they hold.

Shareholder Participation

The unbundling does not require shareholder approval. However, it requires approval from the Financial Surveillance Department of the South African Reserve Bank and the JSE.

Timetable of Principal Events

Here is the indicative timetable for the listing and unbundling:

EventDate
Publication of Pre-listing StatementJune 10, 2024
Release of Abridged Pre-listing Statement on SENSJune 10, 2024
Distribution of Pre-listing Statement to ShareholdersJune 10, 2024
Unbundling Finalisation Announcement on SENSJune 18, 2024
Last Day to Trade for EntitlementJune 25, 2024
RCL Foods Shares Trade “Ex” EntitlementJune 26, 2024
Listing of Rainbow Shares on the JSEJune 26, 2024
Announcement of Specified Ratio for Tax PurposesJune 27, 2024
Unbundling Record DateJune 28, 2024
Closing Price AnnouncementJune 28, 2024
Unbundling Operative DateJuly 1, 2024
Shareholders’ Accounts UpdatedJuly 1, 2024

Trading and Settlement

Shareholders will receive their Rainbow shares in electronic form. They must appoint a CSDP or broker to receive the shares on their behalf. Physical certificates can be requested after receipt.

Tax Considerations

General Tax Implications

The tax implications of the unbundling depend on individual circumstances. Shareholders are advised to seek independent tax advice.

Tax Relief

The unbundling is expected to qualify as an “unbundling transaction” under South African tax law. This means it should be disregarded for tax purposes in South Africa, except for distributions made to “disqualified persons.”

Allocation of Costs

Shareholders must allocate costs between RCL Foods shares and Rainbow shares for tax purposes. This allocation is based on the market value of the shares after distribution.

Securities Transfer Tax

No securities transfer tax will be payable on the transfer of Rainbow shares received through the unbundling.

Capital Gains Tax

South African residents are subject to capital gains tax on their worldwide assets. Non-residents may incur capital gains tax only on specific assets.

Restrictions on Foreign Shareholders

Compliance with Local Laws

The pre-listing statement is prepared in compliance with South African laws. Foreign shareholders should consult advisers to understand legal requirements in their jurisdictions.

Disposal Option

Foreign shareholders may dispose of their RCL Foods shares before June 25, 2024, to avoid participating in the unbundling.

Conclusion

RCL Foods’ decision to list Rainbow Chicken and unbundle it represents a significant step. This move is designed to unlock value for shareholders and ensure sustainable growth for Rainbow Chicken as a standalone entity.