ARC FUNDS LIMITED — Capital/Financing Update 2017

Mar 21, 2017

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ASX ANNOUNCEMENT

22 March 2017

Company Announcements Office

Dear Sir/Madam

Re: Non Renounceable Rights Issue

Please find attached correspondence being sent to all eligible shareholders today in relation to the above.

Yours faithfully

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Chris Lobb

Company Secretary

Australian Rural Capital Limited ABN 52 001 746 710

c/- Broadley Rees Hogan, Level 24, 111 Eagle Street, BRISBANE, QLD 4001 GPO Box 635 BRISBANE QLD 4001 phone: (07) 3223 9170

22 March 2017

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Dear Shareholder

Non Renounceable Rights Issue

Dear Shareholder,

On behalf of the Board of Australian Rural Capital Limited (ARC ), I am pleased to invite you to participate in the recently announced non-renounceable entitlement offer of 1 New Share in ARC for every 2.85 existing Shares currently held in ARC at an issue price of 50 cents per New Share ( Entitlement Offer ). The Entitlement Offer will result in the issuance of 3,218,660 new shares in ARC and will raise a total of approximately $1,600,000 before costs. The proceeds from this entitlement offer will be used for general working capital purposes, the further development of our funds management business and to continue our current direct investing activities. Shareholders with a registered address in Australia or New Zealand as at the Record Date of 7.00pm (Sydney time) on 24 March 2017 ( Eligible Shareholders ) will be entitled to subscribe for 1 fully paid ordinary share ( New Share ) for every 2.85 shares held at an issue price of $0.50 per New Share. Shares purchased on market on or after the “Ex Date” of 23 March 2017 will not carry an entitlement to participate in the Offer. If you have any doubt, please consult your sponsoring broker. Entitlements to New Shares pursuant to the Offer are non-renounceable and accordingly, there will be no trading of rights. This Entitlement Offer is fully underwritten by Baron Partners Limited ( Underwriters ). If you take up your Entitlement in full, you can also apply for additional shares under a Top Up Facility. For more information please refer to section 2.6 of the Offer Document. The Top Up Facility also gives shareholders who currently do not hold a marketable parcel of shares the opportunity to apply for additional shares, so as to increase your shareholding to a marketable parcel (a marketable parcel is 1,000 Shares). In the event of any shortfall in the allocation of any additional shares, the Board and the Underwriters will give priority to those Shareholders in order to enable them to create a marketable parcel.

The Directors of ARC, who currently hold shares representing approximately 23% of the current issued shares of the Company, have advised that they each intend to take up their full entitlement of New Shares under the Entitlement Offer respectively.

A personalised Entitlement and Acceptance Form accompanies the Offer Document which will be mailed to you shortly. This form details your Entitlement. If you want to participate in the Entitlement Offer this form must be completed in accordance with the instructions contained in the form.

Further details of the Offer are contained in the Offer Document which was lodged with the ASX on 21 March 2017. This document is available on the Company’s announcements platform at www.asx.com.au (ASX Code: ARC).

The Entitlement Offer closes at 5.00pm AEST on Thursday April 13 2017.

Australian Rural Capital Limited ABN 52 001 746 710

c/- Broadley Rees Hogan, Level 24, 111 Eagle Street, BRISBANE, QLD 4001 GPO Box 635 BRISBANE QLD 4001 phone: (07) 3223 9170

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Key Dates*

EVENT	DATE
Announcement of the Offer	21 March 2017
Lodgment of the following documents with ASX: • an Appendix 3B; • this Offer Document; and • a cleansing notice under section 708AA(2)(f) of the Corporations Act.	21 March 2017
Notice sent to Option holders regarding participation	21 March 2017
“Ex” Date where the Company’s existing shares will commence trading without the entitlement to participate in the Offer	23 March 2017
Record Date to determine Entitlements under the Offer	7.00pm (Sydney time) 24 March 2017
Dispatch Date to all Shareholders	28 March 2017
Opening Date for the Entitlement Offer	28 March 2017
Last day to extend Entitlement Offer Closing Date	10 April 2017
Closing Date for the Entitlement Offer	13 April 2017
Shares quoted on a deferred settlement basis	18 April 2017
ASX notified of under subscriptions	19 April 2017
New Shares for which valid applications have been received and accepted by the Company will be issued	21 April 2017
Normal trading of New Shares on ASX expected to commence	24 April 2017
Mail out of holding statements for the New Shares	24 April 2017
ARC in consultation with the Underwriters, reserves the right, subject to the listing rules of the ASX (Listing Rules), the_Corporations Act 2001_(Cth) (Corporations Act*) and other applicable laws to, without notice, vary any or all of the dates of the Offer (whether or not they are key dates), including extending the Offer, closing the Offer early, accepting late Applications either generally or in particular cases, or withdrawing the Offer. The Directors of ARC have each informed the Company that they will each be taking up their full entitlement of the New Shares. ARC encourages all Eligible Shareholders to participate in the capital raising. S

On receipt of the Offer Document please read carefully the details on how to submit your application, which are set out in this Offer Document. You should also consult your stockbroker, solicitor, accountant or other professional adviser to evaluate whether or not to participate in the Entitlement Offer.

On behalf of the Board of ARC, I encourage you to consider this investment opportunity to enable the further development of ARC and thank you for your ongoing support.

Yours Sincerely,

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James A Jackson Executive Chairman

Australian Rural Capital Limited ABN 52 001 746 710

c/- Broadley Rees Hogan, Level 24, 111 Eagle Street, BRISBANE, QLD 4001 GPO Box 635 BRISBANE QLD 4001 phone: (07) 3223 9170