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AU$10.150
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Sale and Subscription Implementation Agreement - The a2 Milk Company

Market announcements

Sale and Subscription Implementation Agreement

May 21, 2010

A2 Corporation Limited and Freedom Nutritional Products Limited

Further to A2 Corporation Limited’s (NZAX:ATM) (A2C) announcement on 4 May 2010, A2C has today announced it has agreed to acquire the 50% interest in A2 Dairy Products Australia Pty Limited (ACN 125 331 213) (A2 Dairy Products) it does not already own giving A2C exclusive rights for the production and sale of a2 milk™ products in Australia and Japan.

A2C has entered into a Sale and Subscription Implementation Agreement (SSIA) with Freedom Nutritional Products Limited (ASX:FNP) (FNP), under which A2C will acquire the 50% interest in A2 Dairy Products from FNP in return for 120,376,950 fully-paid ordinary A2C shares comprising 25% of the enlarged A2C (Transaction).

A2C Chairman Cliff Cook said “I am delighted that we have been able to reach agreement with our partners at FNP to undertake this transaction. A2C will benefit greatly from having 100% control of the first proven and profitable market for a2 milk™ products. We can now set our sights firmly on future opportunities elsewhere in the knowledge the Australian market still has significant future growth potential for the Company. A2C will be well positioned for a very exciting future as a result of this transaction and I firmly believe it to be in the best interests of the Company and its shareholders.”

Conditions

The Transaction is subject to a number of conditions, including:

– A2C shareholders approving the Transaction;

– no A2C prescribed occurrence occurring, which includes changes in capital structure, dividends and capital returns, material changes to the constitution, creation of material encumbrances, material litigation and insolvency events;

– no A2 Dairy Products prescribed occurrence occurring, which includes material litigation, insolvency events and creation of material encumbrances without A2 Dairy Products Board approval;

– no A2C and A2 Dairy Products material adverse change which includes events which could result in a material diminution in A2C or A2 Dairy Products’ assets or EBITDA; and

– regulatory approvals required to implement the Transaction.

A2C Board recommendation

The directors of A2C have agreed to recommend the Transaction to A2C shareholders, subject to a satisfactory independent adviser’s report being obtained and fulfilment of their statutory and fiduciary duties.

Option

Under the SSIA, FNP has the right to acquire shares that would increase its shareholding in A2C to 27.5% at any time within 12 months from completion of the Transaction with an exercise price of A$0.11 per share. As with the Transaction, the granting of this option is subject to A2C shareholder approval.

Board appointments

On completion of the SSIA, Geoffrey Babidge, Perry Gunner and a FNP nominee will be appointed to the board of A2C.

It is the intention of the parties that Mr Babidge, FNP’s current managing director, will be appointed as managing director of A2C with effect from no later than the 2010 annual general meeting of A2C. Mr Babidge is in discussions with A2C regarding the terms of his engagement.

Timetable

The parties currently expect that the A2C shareholders meeting will be held in late July 2010.

 

For further information, please contact:

A2 Corporation Freedom Nutritional Products
Cliff Cook, Chairman
+6421 932254
Geoffrey Babidge, Managing Director & CEO
+61 419 990 987

 

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