CFI Holdings Circular to Shareholders - Jun 13

7/27/2019 CFI Holdings Circular to Shareholders - Jun 13

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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

ABRIDGED CIRCULAR TO SHAREHOLDERS

If you are in any doubt as to the action you should take, please consult you stockbroker, bank manager, legal advisor, accountant or otherprofessional advisor immediately. The purpose of this Abridged circular is to provide the shareholders of CFI Holdings Limited with an

overview of the requisite statutory and regulatory information regarding a transaction that will result in the dilution of CFI's shareholding inVictoria Foods (Private) Limited to enable them to make an informed decision at the Extraordinary General Meeting. The Notice of theExtraordinaryGeneralMeetingcontainingtheresolutionsrequiredtoimplementthe ProposedTransaction,isattachedto andformspartof

thisAbridged circular.

1. If you have disposed of your shares in CFI, the Circular when received should be handed to the purchaser of such shares or thestockbroker,banker orother agentthrough whomthe disposalwas effected.

2. CFIShareholdersareentitledto attendthe ExtraordinaryGeneral Meetingfor shareholdersto voteon theProposedTransactionwhichwill be heldat RoyalHarare GolfClub, 5 StreetExtension, Harare,Zimbabwe at 11:00hours on Friday26 July 2013.If you areunable toattendthe ExtraordinaryGeneralMeetingor anyadjournmentthereof,and wishtobe representedthereat,pleasecompleteandreturn

the attached Form of Proxy in accordance with the instructions contained therein to CFI's Transfer Secretaries, being First TransferSecretaries (Private)Limited,1 ArmaghAvenue,Eastlea, Harare,so asto bereceivednotlaterthan forty-eighthours beforethe timeof

theExtraordinary GeneralMeeting.

REGARDINGTHEDILUTION OFCFI'S 100%SHAREHOLDINGIN VICTORIAFOODS(PRIVATE)LIMITEDTHROUGH THEISSUE OF812,841 VICTORIA FOODS (PRIVATE) LIMITED ORDINARY SHARES TO GRINDROD TRADING LIMITED REPRESENTING 49% OFITSENLARGEDISSUED SHARECAPITAL

SEEKINGSHAREHOLDERAPPROVALFOR:THE DILUTION OF CFI'S 100% SHAREHOLDING IN VICTORIA FOODS (PRIVATE) LIMITED THROUGH THE ISSUE OF 812,841VICTORIA FOODS (PRIVATE) LIMITED ORDINARY SHARES TO GRINDROD TRADING LIMITED REPRESENTING 49% OF ITSENLARGED ORDINARYSHARECAPITAL

ANDINCORPORATINGA NOTICEOF EXTRAORDINARYGENERALMEETING ANDTHE RELATEDFORM OFPROXY;

Thefollowingdefinitionsapplythroughoutthis Abridgedcircularunlessotherwisestatedor thecontextrequiresotherwise.Inthis Abridgedcircular,unlessotherwiseindicated,thewordsorphrasesin thelefthandcolumnbearthemeaningstipulatedintherighthandcolumn.Wordsin the singular shall include the plural and vice versa, words denoting natural persons shall include juristic persons (whether corporate orincorporateandvice versa)and wordsin themasculineshallimportboththefeminineandneuter.

ActionRequired:

DEFINITIONS

ORDINARY

ISSUED

BoardofDirectors:

BusinessAddress andRegistered Office:

IMPORTANTDATES

Date

NOTES:

ACTIONTO BETAKEN BYSHAREHOLDERS

OPINIONSAND RECOMMENDATIONS

INSPECTIONOF CIRCULAR

SponsoringBroker:

CFI HOLDINGS LIMITED

Directors:

Address:

DearCFI Shareholder,

Simplisius J. Chihambakwe Non Executive Chairman of the Board of DirectorsGrace Muradzikwa Deputy Chairperson of theBoard of DirectorsGodfrey G. Nhemachena Non Executive Director

Friedbert Lutz Non Executive Director Timothy Nyika Non Executive Director Patricia S. Bwerinofa Non Executive Director Buzwani D. Mothobi Non Executive Director

AlbertJ. Nduna NonExecutive DirectorStephen P. Kuipa Group Chief Executive Officer

AcquilineR.Chinamo GroupFinance Director

CFIHoldings Limited1WynneStreetHarareZimbabwe

(P.O.Box 510,Harare)

EGM Noticepublished Friday 28 June 2013Abridgedcircular toshareholders published Friday28 June2013Circular distributedto CFI shareholders Friday 12 July 2013E GM Re cor d Da te f or pu rp os es o f be in g en ti tl ed t ov ot ei n th e EGM We dn es da y 24 Ju ly 201 3L as t Da te f or l odgi ng for ms or Pr oxy r el at in g to t he EGM ( by 1 3: 00 hr s) We dn es da y 24 Ju ly 201 3EGM of CFI shareholders (at 11:00 hrs) Friday 26 July 2013Publication of theResults of the EGM Tuesday 30 July 2013

The above dates are subject to change and any amendments will be published in the Zimbabwean press. All times indicated above andelsewhereinthisAbridgedcircularareZimbabweanlocaltimes.

If you have any questions on any aspects of this Abridged circular, please contact your stockbroker, accountant, banker, legal practitioner orother professional advisor, or Sean Gammon and/or Tawanda Masose at Imara Corporate Finance Zimbabwe, 1 Floor, Block Two,Tendeseka Office Park, Samora Machel Avenue, Harare, Zimbabwe; Telephone number +263 4 701320; Fax +263 4 701319;e-mail:[email protected]/[email protected]

Attend the EGM to approve the resolutions related to the Proposed Transaction. If a CFI shareholder has disposed of all their shares inCFI, the Circular when received should be handed to the purchaser or transferee of such shares or the stockbroker, banker or otheragentthroughwhomthedisposalwas effected.CFIshareholderswho areunabletoattendthe EGM,butwhowish tobe representedthereat,shouldcompleteandsignthe ProxyFormincluded with this Abridged circular in accordance with the instructions contained therein, and ensure it is either returned or posted toFirst Transfer Secretaries (Private) Limited, 1 Armagh Avenue, Eastlea, Harare or the registered offices of the Group being, 1 WynneStreet,Harare,so thatitis receivedbythe sharetransfersecretariesbynolaterthan9:00hoursonWednesday24July 2013.CFIShareholdersmayattendthe meetingin person,notwithstandingthecompletionand return ofa Proxy Form. Inorderto attendtheEGM,personswhohave recentlyacquiredCFIshareswhichhavenotbeenregisteredin theirnamesshouldensurethatsuch registrationiseffectedonorbeforethecloseofbusinessonWednesday24July2013.

The Directors have considered the terms of the Proposed Transaction and are of the opinion that they are fair and reasonable to CFIshareholders. Accordingly, the Directors recommend that CFI shareholders vote in favour of the Proposed Transaction. Those Directors

whoare shareholdersof CFIintend tovote in favourof theProposed Transactionin respectof the sharesin CFIowned, directlyor indirectly,bythem.

The public may inspect the full Circular to Shareholders during normal business hours from Wednesday 10 July 2013 to Wednesday 24 July2013,at thefollowingoffices:

ImaraEdwards Securities(Private) Limited

BlockTwo,TendesekaOffice ParkSamoraMachel AvenueEastlea,HarareZimbabwe

(P.O.Box 1475,Harare)

(Incorporated in Zimbabwe on 6 May 1996 under registration number 3403/96)S.J. Chihamba kwe (Non Executiv e Chairman), G. Muradz ikwa, G.G. Nhemache na, F. Lutz, T. Nyika, P.S. Bwerinof a,

B.D. Mothobi, A.J. Nduna, S.P. Kuipa (Chief Executive Officer), A.R. Chinamo (Finance Director)

No.1 Wynne Street, Harare, Zimbabwe.

OurGroupis aholdingcompany listedonthe ZSEwithshareholdingsin subsidiaries andassociatesinvolvedinpoultry,grain milling,retailingand property development. In February 2009, the Zimbabwean economy began the process of exiting an economic recession th at wascharacterised by hyperinflation, price controls and the shortage of basic goods and services. The overall effect of the recession on oursubsidiarybusinesseswasthe depletionofworkingcapitaland thelackof sufficientinvestmentin therequisiteinfrastructure.Since2009,CFIhas utilised debt finance to fund its capital requirements but the high cost and short tenure of the debt finance has negatively affected theGroup'sfinancial performance.

The lack of working capital with tenures and interest rates that match the Group's subsidiaries' requirements coupled with operatinginefficiencies has negatively affected their operational and financial performance resulting in operating overheads that current revenues andcashflowsareunabletosupport.

The Group has been actively exploring opportunities through which it can raise fresh capital in the form of equity and to restructure itscurrent debt obligations in order to address the issues stated above. The Board also recognises that along with the injection of new capital,

there is a requirement to facilitate the entry of new skills and business relationships into the Group's subsidiaries. It is envisaged that thecombinedinitiativeswillresultinthe Groupenhancingitslongtermfinancialperformance.

Auditors and Independent Reporting Accountants:

Legal Advisor:

Deloitte & Touche Chartered Accountants (Zimbabwe)Registered Public Auditors1 Kenilworth Gardens, NewlandsHarare, Zimbabwe

(P.O. Box 267, Har are)

Kantor & ImmermanMacDonald House

10 Selous AvenueHarare


CHAIRMAN'S LETTER

(A public company incorporated in the Republic of Zimbabwe on the 6 of May 1996 under registration number 3403/96)

Abridged circular

Board or the Directors

CFI or the Group

CMA

Conditions Precedent

Deloitte, Auditors or Reporting Accountants

EGM

Financial Advisor or Imara

FMCG

Grindrod Trading

JSE

Notice

Poultry Division or Crest Poultry Group

Proposed Transaction

Proxy Form

'Shareholders Agreement'

'Share Subscription Agreement'

Specialised Division

Sponsoring Brokers or Imara Edwards

Securities

US$

Victoria Foods

ZSE

Farm & City

First Transfer Secretaries

Shareholders

ThisAbridgedcirculartoCFIshareholderssettingoutthe termsandconditionsoftheproposedrecapitalisation

ofVictoriaFoods(Private)LimitedbyCFIandGrindrodTradingLimited;

TheboardofdirectorsofCFIHoldingsLimited;

CFI Holdings Limited, a company incorporated in Zimbabwe, an agro industrial holding company listed on theZimbabweStockExchange;

CollateralisedManagementAgreement;

Theconditionsprecedentsetoutinparagraph1.2ofPart1ofthisAbridgedCircular;

Deloitte and Touche Chartered Accountants (Zimbabwe), the Group's auditors and Reporting Accountantswithrespect tothe ProposedTransaction;

TheExtraordinaryGeneralMeetingofCFI Shareholderstobeheld onFriday26 July2013,whereapprovalwillbesoughtfortheresolutionstogiveeffecttotheProposedTransaction;

Imara Corporate Finance Zimbabwe (Private) Limited, a company incorporated in Zimbabwe, the financialadvisortotheGroupregardingtheProposedTransaction;

FastMovingConsumerGoods;

Grindrod Trading Limited, a limited liability Company incorporated in Mauritius under registration no.102126C1/GBL, the trading subsidiary of Grindrod Limited that trades in agricultural products, industrial rawmaterialsandmarinefuelsandlubricantsthatisthetransactingpartywithCFIregardingVictoriaFoods(Private)Limited;

The JS Securities Exchange or JS Limited, a company duly registered and incorporated with limited liabilityunder the laws of the Republic of South Africa, licensed as an exchange under the Securities Services Act, (Act36of2004),asamended;

ThenoticeconveningtheExtraordinaryGeneralMeetingincorporatedinthisAbridgedCircular;

The division that controls CFI's investments in the poultry sector under Crest Poultry Group (Private) Limitedcomprisingthe followingstrategic businessunits: Agrifoods,Agrimix, HubbardZimbabwe, SuncrestChickensandGlenaraEstates;

The recapitalisation of Victoria Foods which will be executed through the issuance of 812,8 41 ordinary sharesin Victoria Foods representing 49% of the issued ordinary share capital post theProposed Transac t ion for a cons iderat ion of US$ 3,250,000 and the prov is ion of aUS$2,750,000shareholdersloan;

TheformofproxyaccompanyingthisAbridgedCirculartoCFIshareholders;

TheagreementbetweenCFI HoldingsLimited,VictoriaFoods(Private)LimitedandGrindrodTradingLimitedpursuanttothe ShareSubscriptionAgreement.

The share subscription agreement between CFI Holdings Limited, Victoria Foods (Private) Limited andGrindrodTradingLimitedpursuantto whichVictoriaFoodswillissue812 841newordinarysharestoGrindrodTradingLimitedconstituting49%of theissuedsharecapital.

The division that holds CFI's investments in properties, Victoria Foods (Private) Limited, Kobenhavn Logistics(Private)Limited,MaitlandsZimbabwe(Private)LimitedandWindmill(Private)Limited;

ImaraEdwardsSecurities(Private)Limited,a companyincorporatedinZimbabwe,registeredmembersoftheZSEandsponsoringbrokerstoCFIregardingtheProposedTransaction;

United States Dollar, the legal tender of the United States of America in which monetary amounts in thisAbridgedcircular areexpressed;

Victoria Foods (Private) Limited,a company that is a 100% subsidiary of CFI and isengaged in maize and wheat milling and the distribution of FMCG, that is the subject of the ProposedTransaction;and

TheZimbabweStockExchange,constitutedintermsofthe SecuritiesAct(Chapter24:25)of2004.

ConsolidatedFarmingInvestmentsLimitedt/aFarm&CityCentre,a companyincorporatedinZimbabwethatis a subsidiary of CFI engaged in the retail and distribution of agricultural inputs and chemicals, hardware,buildingmaterialsandmotoraccessories;

First Transfer Secretaries (Private) Limited, a company incorporated in Zimbabwe which provides transfersecretarialservices toCFI;

to Grindrod Trading Limited

ShareholdersofCFIHoldingsLimited

incorporated in Zimbabwe

Financial Advisor

Imara Corporate Finance Zimbabwe (Private) Limited

Deloitte & Touche Chartered Accountants (Zimbabwe)

Auditors and Independent Reporting Accountants

First Transfer Secretaries

Share Transfer Secretaries

Sponsoring Broker

Imara Edwards Securities (Private) LimitedMEMBERS OF THE ZIMBABWE STOCK EXCHANGE

Legal Advisors

Kantor & Immerman Legal Practitioners

Date of issue of this circular: Friday 28 June 2013

Financial Advisor:Imara Corporate Finance Zimbabwe (Pvt) LtdBlock Two, Tendeseka Office ParkSamora Machel AvenueEastlea, Harare, Zimbabwe

(P.O. Box 1475, Ha rare)

Sponsoring Broker:Imara Edwards Securities (Pvt) LtdBlock Two, Tendeseka Office ParkSamora Machel AvenueEastlea, Harare, Zimbabwe

(P.O. Box 1475, Ha rare)

Share Transfer Secretaries in ZimbabweFirst Transfer Secretaries (Private) LimitedNo 1 Armagh Avenue,Eastlea, HarareZimbabwe

(P.O. Box 11, Harare)

Financial Advisor:Imara Corporate Finance Zimbabwe (Pvt) Ltd

Block Two, Tendeseka Office ParkSamora Machel AvenueEastlea, HarareZimbabwe


Share Transfer Secretaries:First Transfer Secretaries (Pvt) Ltd

No 1 Armagh Avenue,EastleaHarareZimbabwe


Group Company Secretary and Legal Counsel:P. HareGroup Company Secretary

1 Wynne Street, HarareZimbabwe


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CORPORATE INFORMATION


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1. THEPROPOSEDRECAPITALISATIONOF VICTORIAFOODS (PRIVATE)LIMITED

Mechanicsof theproposed transaction

Informationon GrindrodLimitedand GrindrodTradingLimited

1.2 Conditionsprecedent

2. CFIFINANCIALINFORMATION

Proforma financialinformation

EffectofUNAUDITED Assets UNAUDITED

G roup va lu at ion Cap ita l Loans Pr of orma31Mar2013 adjustments injection restructuring 31Mar2013

US$ US$ US$ US$ US$Note 1 Note 2 Note 3 Note 4 Note 5

ASSETSNon-currentassets

Total non-current assets 63,313,086 4,125,000 400,000 - 67,838,086

Currentassets

Total current assets 22,381,101 - 2,318,000 - 24,699,101

Total assets 85,694,187 4,125,000 2,718,000 - 92,537,187

EQUITYAND LIABILITIES

Non-currentliabilities

Total non-current liabilities 7,824,401 1,062,188 2, 750, 000 13,636,589

Currentliabilities

Total current liabilities 35,204,196 - (3,100,000) ( ) 30,104,196

Total equity and liabilities 85,694,187 4,125,000 2, 718, 000 - 92,535,187

Net asset value per share 0.40 0.46

NOTESTO THEUNAUDITED CONSOLIDATEDPRO-FORMA STATEMENT OFFINANCIAL POSITION

Note1

Note2

Note3

Note4

Note5

3. GROUP'SFUTUREPROSPECTS

VictoriaFoods isa 100% ownedsubsidiary housedin theSpecialised Divisionthat isa maizeand wheatmilling company.Its mainproductsarebakers flour,flour andmaizemeal marketedunderits brandname.VictoriaFoodsalso manufactures snackfoodsanddownpacksarange of FMCGs. CFI seeks to enter into an agreement with Grindrod Trading to recapitalise this subsidiary. Under the terms of theProposedTransaction,VictoriaFoodswill issue812,841new sharesto GrindrodTradingrepresenting49%of VictoriaFoodsissuedsharecapital post the Proposed Transaction. The subscription price to be paid by Grindrod will be US$ 3,250,000. As part of the ProposedTransaction, Grindrod will provide Victoria Foods with a US$ 2,750,000 shareholder loan which will bear interest at a rate of 8% perannum.TheloanhasnofixedtenureandinterestmaybevariedbutsubjecttothelimitsetbyReserveBank.GrindrodTradingwillalsosign

variouscommercial contractsthat will resultin VictoriaFoods accessinga US$12,000 ,00090 day,CMA grainprocurement facility foruseinits operations.TheproceedsoftheProposedTransactionwillbeallocatedtodebtrestructuring,repaymentof creditorsandtoongoing

workingcapital requirements.

CFI will restructure US$ 2,862,245 of its intergroup loan receivable that incorporates short and long term debt owed to it by VictoriaFoods,intoa shareholderloan.Thisshareholdersloanwillrank inallrespectstotheGrindrodTradingshareholdersloan.

GrindrodTradingLimitedis asubsidiaryofGrindrodLimited.GrindrodLimitedis aJSE listedSouthAfrica-basedholdingcompanythatisinvolved in the movement of cargo by road, rail, sea and air, through integrated logistics services. Grindrod Limited operates in fourdivisions: Shipping, Trading, Financial and Freight Services. The Shipping Division's fleet of dry cargo vessels and product and chemical

tankers trade under the banners of Island View Shipping and Unicorn Shipping. The Trading Division trades in agricultural products,industrial raw materials and marine fuels and lubricants. The Financial Services include corporate and structured finance, private clientservices,treasury,lending,financialsolutions,specialisedfinanceandpropertyfinance.FreightServicesincludeseafreight,shipagencies,logistics transport, logistics clearing and forwarding, terminals, specialised terminals, stevedores and travel. Its trading division, AtlasTrading & Shipping, was formed when Grindrod Limited purchased the agricultural commodity trading and shipping operations ofSeaboardCorporationof KansasCity,USA.

Theimplementation ofthe ProposedTransactionis conditionalupon;CFI receiving the relevant shareholder approvals being the resolutions tabled at the EGM concerning the Proposed Transaction and

theissuance ofVictoria Foodsshares toGrindrod Trading;Theapprovalofthe Competitionand TariffsCommission;Theapprovalofthe MinistryofYouthDevelopment,Indigenisationand EconomicEmpowermentandTheReserveBankofZimbabweExchangeControlapproval.

Theinformationsetout inthisparagraphshouldbereadin conjunctionwiththereportofthe IndependentReportingAccountantson theUnaudited Pro forma Financial Information of CFI which will form part of the Annexures in the full Circular to Shareholders. The ProFormafinancialinformation presentedbelowis forillustrativepurposesonlyand dueto itsnature,cannotgivea completepictureof thefinancial positionof theGroup afterthe ProposedTransaction.

Property, plant and equipment 60,026,644 4,125,000 400,000 - 64,551,644Investments 3,286,442 - - - 3,286,442

Inventories and biological assets 15,376,261 - 2,318,000 - 17,694,261Trade and other receivables 6,152,757 - - -Investments 257,219 - - - 257,219C ank balances 594,864 - - - 594,864

CapitalandreservesIssuedshare capital 1,055,009 - - - 1,055,009Share premium 73,440 - - -Share options reserve 156,004 - - - 156,004Non-distributable reserves 53,529,479 3,062,812 - - 56,592,291

Accumulatedlosses (12,148,342) - (182,000) - (12,330,342)Non-controlling interests - -Total equity 42,665,590 3,062,812 3,068,000 - 48,796,402

Long-term borrowings 2,695,277 - 2,000,000 7,445,277

Trade and other payables 20,953,032 - (2,100,000) - 18,853,032Short-term borrowings 12,670,165 - (1,000,000) (2,000,000) 9,670,165Bank overdraft 1,173,497 - - - 1,173,497Current tax liabilities 407,502 - - - 407,502

Representsthe unauditedconsolidatedstatementoffinancialpositionasat 31March2013.

Representsthe effectof thechangein accountingestimateon landandimprovements(properties)ownedbyVictoriaFoods.Thesubsidiary is changing the valuation base from carrying properties on the basis of marketvalue to depreciatedreplacement cost,

whichi sin linewith industrypeers andmore appropriatefor abusiness withspecialised properties.

Represents the application of the anticipated US$6 million proceeds in line with agreed priorities covering: investment inadditional property, plant and equipment US$0.4 million, funding critical working capital requirements US$2.4 million,servicing overduecreditors US$2.1million,repaymentof bankborrowingsUS$1millionandfundingtransactioncosts.

Represents the effect of the conversion of the Victoria Foods CFI Holdings Limited intergroup loan to a shareholder's loan US$2,9million,thereassignmentofbankborrowingsamountingto US$2millionfromtheGrouptoVictoriaFoods.

Representsthe unauditedconsolidatedproformastatementof financialposition aftertheinjectionofthe US$6 millionthe effectofagreedvaluationadjustmentsandloansrestructuringinitiativesasexplainedabove.

TheinjectionoflongtermcapitalintoVictoriaFoodsandtherestructuringofdebtisprojectedtohaveanimmediatepositiveimpactonitsfinancial performance with the enhanced working capital position positively impacting inventory levels and revenue generation.Managementisconfidentof VictoriaFoods'futureperformanceand viewsaninvestmentin workingcapitalasstrategicinmaintainingandpossiblyimprovingits marketposition.Theenhancingofcurrentgrainprocurementprocesseswillprovidea lowercost baseandensureconsistencyin throughputandproductsupplytothe market.

Overall,the longtermprospectsof theGroup'soperationsare positive.Thetradingenvironmentsforthemajorsubsidiariescontinuetobe attractive with strong local demand and legislation that continues to support the local production and processing of foods. CFI hasaccessto theassetsandhumanresourcesrequiredtoleverageoffthegrowthexpectedinagriculturalproductionandfoodconsumption.TherefurbishmentofinfrastructureandintroductionoftechnicalskillsatCrestPoultryGroupwillallowforbetterbirdperformanceandultimatelylowercostsandimprovedthroughput.

Non-coreassetsor assetsin whichCFIdoesnothave sufficientcontrolto directoperationsforthe benefitof thelargerGrouppotentiallyact as diversions of management attention and financial resources. CFI will continue to seek to exit these investments and will inject theproceeds of such disposals into continuing operations along with capital raised from the ongoing transactions. This will result in a morefocused,bettercapitalisedGroupgoingforward.Figure1 providesanoverviewoftheGroup'sstructureposttheProposedTransaction.

F = H E F = I KAs a result of the transactionCFI's shareholding in VictoriaFoods will be diluted to 51%. CFI and GrindrodTradingwill constitutea newboardofdirectorsand anew managementteamforVictoriaFoodswith GrindrodTradingappointinganequalnumberof representatives

tothe boardas CFI(two) andrepresentatives tothe m

6,152,757

ashandb

73,440

3,250,000 - 3,250,000

Deferredtax liabilities 5,129,124 1,062,188 - - 6,191,3122,750,000

anagementteam.

2,000,000

2,000,000

Figure1:CFIgroupstructurepostthe ProposedTransaction

CFIholds100%shareholdinginthevarioussubsidiarieslistedaboveunlessstatedotherwise

Thecostsincidental tothe ProposedTransaction,orincurredforthe purposesof bringingthe ProposedTransactionintoeffectincludingprinting,publishingandfeespayabletoprofessionaladvisorswhichwillamounttoapproximatelyUS$182,000willbe borneby theGroupandaresummarisedbelow:

Professional fees and regulatory charges 147,000Printing andpublishing costs 35,000

CFIhasnotmadeanyrecentmaterialdisposalsoracquisitions.

Save as discussed in this Abridged Circular, between 31 March 2013 and the date of this Circular, there have been no material adversechanges in CFIs financial position, operations, and no commissions, brokerages or other special terms have been granted by CFI inconnectionwiththeissueorsaleofitssharecapital.

TheDirectorsmay fromtimeto timedeclareandpayto thememberssuchdividendsand interimdividendsasappeartothe Directorsto

be justified by the profits of the Group. The Group in general meetings may declare dividends but no dividend shall exceed the amountrecommendedbytheDirectors.

The primary responsibility of the Board is to discharge its fiduciary responsibility to the Shareholders of the Group. The Board isaccordingly the highest policy organ of the Group and also acts to direct strategy. Meeting regularly, with a minimum of six scheduledmeetingsannually,the Boardreceiveskeyinformationpertainingtothe operationsofCFI frommanagement,thebusinessdivisionheadsand Board Committees. In the execution of its mandate, the Board is effectively supported by its Audit, Human Resources andRemuneration,FinanceandInvestmentCommittees.

S .J. C hi ha mb akw e 1 12 H ar ar e D ri ve, C hi si pi te C ha ir ma nG. Muradzikwa 1Yellow Wood Lane, Kambanji,Harare Deputy ChairpersonS.P. Kuipa 49 Arnold Edmonds Road, Glen Lorne, Group Chief Executive Officer

A.R.Chimano 1 Godfrey King Road, Borrowdale, Harare Group Finance DirectorG .G . N he mac hen a 1 Wh it es al e Roa d, G we ru N on Ex ec ut iv e Di re ct or T. N yi ka 5 0 Ke nt Roa d, Ch isi pi te , H ar ar e N on Ex ec ut iv e Di re ct or F. Lutz 10 D uthie A venue, Belgrav ia , Harare Non Executive D irecto r P.S . B we ri nof a Sh er wo od F ar m, G wer u N on Ex ec ut iv e Di re ct or B.D. Mothobi 48 Folyjon Cresent, Glen Lorne, Harare Non Executive Director

A.J. Nduna 128 Rye Hill, Greystone Park, Harare Non Executive Director

As at Friday 28 June 2013, (being the Last Practicable Date before the publication of this document), the Directors, directly and/orindirectly, held beneficial interests aggregating approximately 302,674 CFI shares representing 0,29% of the issued share capital of theGroup.DetailsofthedirectandindirectinterestsheldbytheCFIDirectorsinCFIsharesaresetoutinthetablethatfollows:

S.J. Chihambakwe - -G.Muradzikwa - -S.P. Kuipa 276,674 271,512

A.R.Chinamo - -G.G. Nhemachena - -T. Nyika 26,000 26,000F. Lutz - -P. S. Bwerinofa - -B.D. Mothobi - -

A.J.Nduna - -

NoDirectorisdisqualifiedby his/herofficefromcontracting withtheGroupeitheras avendor,purchaserorlender.At thistimenone ofthe Directors have an interest in any contracts of significance relating to services provided to CFI by third parties. The remuneration ofDirectors shall, from time to time, be determined by the shareholders at a General Meeting. However the Director's remuneration willnotchangeasa resultof theProposedTransaction.

According to the information received by the Directors, the following table details the Groups shareholding structure highlighting thetop ten shareholders as at Friday 28 June 2013 being the Last Practicable Date:

Stalap Investments (Private) Limited 29,771,320 28.23National Social Security Authority 13,583,720 12.87E.F.E. Securities Nominees (Private) Limited - NNR 7,591,305 7.20E.F.E Securities Nominees (Private) Limited 4,794,909 4.54Old Mutual Life Assurance Company Of Zimbabwe Limited 6,989,026 6.63Mining Industry Pension Fund 6,875,493 6.51Zimcor Limited 3,427,143 3.25Dunnet Investments (Private) Limited 2,000,517 1.90Zimbabwe Electricity Industry Pension Fund 1,800,805 1.71KHM Trust 1,615,386 1.53Top ten shareholders 78,449,624 74.37Remaining shareholders 27,051,251 25.63

TheDirectorsconfirmthattherewillbeno changesin theCFIshareholdingstructureasa resultofthisProposedTransaction.

Authorisation for the Proposed Transaction will be sought from Shareholders at the EGM scheduled for Friday 26 July 2013. Anyregulatoryapprovalsrequiredfor theProposedTransactionwillbe sought bythe Board.Naturally,the ProposedTransactioncanonlybeimplementedonce thoseapprovals havebeen obtained.

TheGroup'ssharesare notlistedonanyotherregionalorinternationalstockexchange.

4. COSTSOFTHETRANSACTION

Costs Amount US$

Total 182,000

5. RECENTACQUISITIONS ANDDISPOSALS

6. MATERIALCHANGES

7. DIVIDENDPOLICY

8. DIRECTORS,MANAGEMENT ANDEMPLOYEES

8.1BOARD

8.2 DIRECTORS DETAILS

Full Names Residential Address Position

9. DIRECTORS'INTERESTS

9.1 INTERESTSIN ORDINARYSHARES

Director Number of CFI Sharesheld28June2013 30September2012

Total shares 297,512

9.2 DIRECTORSSERVICECONTRACTS ANDREMUNERATION

10. MAJOR SHAREHOLDERS

Shareholders Shares held % of Total

Total 105,500,875 100.00

11. AUTHORISATIONAND APPROVALSFOR THEPROPOSED TRANSACTION

12.OTHERLISTINGS

302,674

100%

RETAIL DIVISION

Farm & City

Vetco


Crest Poultry Group t/a:

Agrifoods

Agrimix

Hubbard Zimbabwe

Crest Breeders

Suncrest

Glenara Estates

100%

POULTRY DIVISION

100%

SPECIALISED DIVISION

Properties

Victoria Foods (51%)

Maitlands

Windmill (14%)

(45%)

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13. ADEQUACYOF CAPITAL

14.WORKINGCAPITALANDCASHFLOW

15. MATERIALCONTRACTS

16. LITIGATIONSTATEMENTS

16.1

16.2

16.3

17. EXPERTCONSENTS

18. DOCUMENTSAND CONSENTSAVAILABLEFORINSPECTION

19. DIRECTORSOPINIONS,VOTING RECOMMENDATIONSAND RESPONSIBILITYSTATEMENTS

Director Position Signature

The Directors of CFI Holdings Limited believe that the execution of the Proposed Transaction will fully resolve the working capitalrequirements of Victoria Foods for the foreseeable future. Further capital raising transactions combining an appropriate mix of newequityand longtermdebtarehoweverstillnecessarytocapacitatetheGroupto serviceitsfinancialobligationsastheyfall due.

TheDirectors believethatthe workingcapital and cash flow requirementsfor theGroup willbe greatlyassisted by theexecution of theProposed Transaction. The working capital and capital requirements for the Poultry Division will need to be resolved to strengthen theGroup'soverallfinancialposition.

Atthe dateof issueof thisCircular, CFIhad notentered intoany materialcontracts, otherthan inthe ordinarycourse ofbusiness.

CFIRetailenteredinto afranchiseagreementwithUpridgeTrading(Private)LimitedtradingasAfrofoodswherebyAfrofoodswouldabsorb CFI Retail's employees during the franchise period. In years subsequent to entering the Franchise agreement, Afrofoodsbreached its duties and obligations as required under the agreement. Afrofoods was liquidated. There is a potential liability to CFIRetail attributable to employee benefits accrued during the employees' tenure with Afrofoods. The matter was referred toarbitrationand theoutcomeof thearbitrationisstillpending.

VictoriaFoods isth esubject ofa liquidationapplication byDominion TradingLimited FZ-LLCbased onan outstandingcredit paymentwhich at the time amounted to approximately US$ 6 million. The application for the liquidation of Victoria Foods is contested onvariousgrounds including the fact that the amountcl aimedby DominionTradingFZ-LLC is disputed.The matter is yet tobe heardatthe High Court of Zimbabwe. Meanwhile, Victoria Foods has made payments amounting to US$ 2,1 million as at 31 March 2013towardswhat VictoriaFoods believesto bethe correctoutstanding amount. The ProposedTransaction shouldaccelerate paymentstothis andother suppliers.The Directorsare ofthe opinionthat theclaim canbe resolvedsuccessfully bythe Group.

Litigation is in progress against a former customer Superbake Bakeries (Private) Limited for an amount of US$460 000 plus interestandcosts.TheDirectorsareoftheopinionthatthecasewillbesuccessfullyconcludedbytheGroup.

The Legal Advisor, Financial Advisor, Share Transfer Secretaries, Auditors and Independent Reporting Accountants and SponsoringBrokershavesubmittedtheirwrittenconsentsto actinthe capacitiesstatedandtotheirnamesbeingstatedinthis AbridgedCircular,and

theseconsents havenot beenwithdrawn asat 28 June2013.

BetweenWednesday10 July2013and Wednesday24 July2013,copiesofthe followingdocumentswillbe availableforinspection,duringnormal working hours, at the Group's offices at the address set out in the Corporate Information section at the beginning of thisdocument:

TheMemorandumandArticlesofAssociationofCFI;SignificantcontractsoftheGroup;TheCFI, GrindrodTrading,VictoriaFoods ShareSubscription Agreement;TheCFI,GrindrodTradingShareholdersAgreement;Latestvaluationsofimmovablepropertyof theGroup;

TheauditedfinancialstatementsforCFIfortheyearsended30September2009,2010,2011and2012;TheunauditedfinancialstatementsforCFIforthehalfyearsended31March,2010,2011and2012;TheIndependentAccountantsReportontheunauditedfinancialinformationofCFIforthe halfyear ended 31 March 2013 and ProformaunauditedfinancialinformationonCFIasateffectivedateandSignedlettersofconsentfromallexpertsandadvisors.

TheDirectors considerthe ProposedTransactiontobe fairandreasonable inso faras CFIshareholdersareconcerned andrecommendthatthe shareholdersvote infavour ofthe ProposedTransaction.

The Directors of CFI, whose names are given below collectively and individually accept full responsibility for the accuracy of theinformationgivenand certifythat tothebest oftheirknowledgeand beliefthereare nootherfactstheomissionofwhichwouldmakeanystatementfalseor misleading,thattheyhave madeallreasonableenquiriestoascertainsuchfactsand (ifapplicable)thatthe Circularand

theAbridged circularcontain allinformation requiredby law.

SignedontheoriginaldocumentatHararethis28 ofJune2013bytheDirectors:

S.J . Chihambakwe Chairman ________________________________________________________

G. Muradzikwa Deputy Chairperson

S.P. Kuipa Group Chief Executive Officer

A.R. Chinamo Group Finance Director

G.G. Nhemachena Non Executive Director

T. N yi ka No n E xe cu ti ve Di re ct or

F. L ut z No n E xe cu ti ve Di re ct or

P.S. Bwerinofa Non Executive Director

B.D. Mothobi Non Executive Director

A.J. Nduna Non Executive Director

VictoriaFoods AnnualFinancial Statementsfor theyears ended30 September2010, 2011 and2012;VictoriaFoods ValuationReportby ImaraCorporate FinanceZimbabwe;

________________________________________________________

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Yoursfaithfully

S.J. ChihambakweNon-ExecutiveChairmanoftheBoardof DirectorsofCFI

NOTICE OF EXTRAORDINARY GENERAL MEETING


ASA SPECIALRESOLUTION:

RESOLUTION1:

ASAN ORDINARYRESOLUTION:

RESOLUTION2:

P. HareCOMPANYSECRETARY

NOTE 1:

NOTE11:

FORM OF PROXY


RESOLUTIONS For Against Abstain

(Incorporated in Zimbabwe on 6 May 1996 under registration number 3403/96)

Notice is hereby given that an Extraordinary General Meeting of the shareholders of CFI Holdings Limited will be held at 11:00 hours on

Friday 26July 2013at theRoyalHarareGolfClub,5th StreetExtensionin Harare,Zimbabwetoconsiderand,ifthoughtfit, toadopt,withorwithoutamendment, thefollowing resolutions:

THAT, subject to regulatory approval the Directors of the Group be authorised to enter into the Share Subscription Agreement and theShareholders Agreement with Grindrod Trading Limited pursuant to which Victoria Foods shall issue 812 841 ordinary shares to GrindrodTradingLimitedconstituting49%of theissuedsharecapital.

THAT, the Directors of the Group (or any duly authorised committee thereof) be, and are, hereby authorised to do all such things that theymayconsidernecessaryor desirabletogiveeffectto,orpursuantto,orin connectionwith,theProposedTransaction.

A member of the Group entitled to attend and vote, is entitled to appoint a proxy to attend, vote and speak in his place at themeetingonhisbehalf,andthatproxyneednotalsobeamemberoftheGroup.

Tobe valid,ProxyFormsshouldbe completedandreturnedso asto reachtheregisteredofficeofthe Companyin Hararenot lessthan 48 hours before the time of the meeting. Completion of the Proxy Form does not preclude a person from subsequently attending andvotingi nperson.

(Incorporated in Zimbabwe on 6 May 1996 under registration number 3403/96)

For use by the Group's Shareholders at the EGM of Shareholders to be held at 11:00 hours on Friday 26 July 2013 at the Royal Harare GolfClub,5thStreetExtensioninHarare,Zimbabwe.

I/We__________________________________________________________________________________ ____(Namein blockletters)

of ___________________________________________________________________________________________________________

Beingtheholderof________________________________________________________________ sharesintheCompanyherebyappoint

1.____________________________________________ of________________________ ________________________ orfailing him/her

2 . of ________________________ ________________________ or failing him/h er

3. theChairmanof theEGMAsmy/our proxyto actfor me/usat theEGM forthe purposeof consideringand, if deemedfit, passing,with orwithout modification,theresolutions to be proposed thereat, and at each adjournment or postponement thereof, and to vote for and/or against the resolutionsand/or abstain from voting in respect of the shares in the issued share capital of the Group registered in my/our name (see NOTE pernoticeof EGM)inaccordancewiththe followinginstructions:

1 THAT,subjecttoregulatoryapprovals,thedirectorsof theGroupbeauthorisedtoenter intothe ShareSubscription Agreementand ShareholdersAgreementpursuanttowhichVictoriaFoods(Private)Limitedshallissue

toGrindrod TradingLimited, constituting49% ofthe issuedshare capital.

2 THAT,the directorsoftheGroup(orany dulyauthorisedcommitteethereof)be,andare,herebyauthorisedtodoallsuchthingsthattheymayconsidernecessaryordesirabletogiveeffectto,orpursuantto,orinconnectionwith,theProposedTransaction.

EverypersonpresentandentitledtovoteattheEGMshall,onashowofhands,haveonevoteonly,butintheeventofapoll,everyshareshallhaveonevote.

Signedat_______________________________on_________________________________________________________________2013

Signature(s)____________________________________________________________________________________________________

Assistedby me___________________________ _______________________________________________________________________Fullname(s)ofsignatory/iesif signingin arepresentativecapacity(seeNOTEpernoticeofEGM)(pleaseuseblockletters).

BYORDEROFTHEBOARD

____________________________________________

812,841 newordinaryshares

EachmemberentitledtoattendandvoteattheEGMisentitledtoappointonepersonashisproxy,whoneednotbeamemberoftheGroup,toattend, speakand votein his/herstead atthe EGM.

UniqueB

rands:CFI/12/13/3

Documents

CFI Holdings Circular to Shareholders - Jun 13