CVC LIMITED — M&A Activity 2006

Nov 28, 2006

ASX ANNOUNCEMENT

29 November 2006

GREEN'S FOODS LIMITED ANNOUNCES RECOMMENDED CASH OFFER OF 90 CENTS PER SHARE

Green's Foods Limited (Green's) (ASX:GFD) and Nestlé Purina Petcare (NPPA), a division of Nestle Australia Limited, today announced a proposal under which NPPA would acquire 100% of the issued shares of Green's. The proposed acquisition of the shares is to be implemented by way of scheme of arrangement (Scheme).

NPPA is offering Green's shareholders 90 cents cash per share. The offer values Green's at an enterprise value of approximately \$137 million and represents a:

• 23.3% premium to Green's closing share price on Monday, 13 November 2006 of 73 cents, being the last full day of trading prior to Tuesday, 14 November, being the date of Green's announcement to the market commenting on press speculation:⁽¹⁾
• 25.4% premium to the three month volume weighted average share price of Green's (VWAP) up to and including Monday, 13 November 2006 of 71.8 cents per share:
• 29.5% premium to the six month VWAP up to and including Monday, 13 November 2006 $\bullet$ of 69.5 cents per share; and
• 62.2% premium to Green's 52 week share price low of 55.5 cents on 20 February 2006. $\blacksquare$

The enterprise value under the Scheme represents a multiple of 10.3 times Green's normalised earnings before interest, tax, depreciation and amortisation (EBITDA) for financial vear 2006 (FY06) of \$13.3 million and 18.9 times Green's normalised earnings before interest and tax (EBIT) for FY06 of \$7.3 million.

The Scheme will be immediately preceded by a sale of Green's consumer foods business and investment in Bestcare (Consumer Businesses) to GPG (No. 7) Pty Limited (GPL), an entity owned by Guinness Peat Group (Australia) Pty Ltd (GPG) and CVC Limited (CVC), for an enterprise value of approximately \$42 million (subject to the Scheme becoming effective). Green's consumer food business is focused on branded and private label blended foods and cereals and snacks with key brands including Green's, Basco, Lowan, Poppin and Lolly Gobble Bliss Bombs. Bestcare is a private label dog food business.

NPPA will retain Green's petfood business (Petfood Business) which sells dry dog food, pet treats and dry cat food primarily under the Supercoat brand. Having regard to the sale of the Consumer Businesses to GPL, NPPA is acquiring the Petfood Business for an effective net price of \$95 million.

On 14 November 2006, in response to an article appearing in the Australian Financial Review speculating as to the possible sale of Green's petfood business, Green's announced that it had recently received a number of approaches in relation to potential corporate opportunities, including confidential and incomplete proposals for the sale of various business units. At the same time, Green's confirmed that it had not entered into any agreement to sell any of its business units.

GPG and CVC own approximately 37.5% and 14.2% of Green's respectively. The directors of Green's not associated with GPG and CVC (Independent Directors) comprising Simon Rowell, Green's Chairman, Peter Tedesco, Green's Managing Director and Peter McLoghlin, a non-executive director of Green's have commissioned PKF Corporate Advisory Services (NSW) Pty Ltd as an independent expert to consider whether the Scheme is in the best interests of non-associated shareholders of Green's and whether the sale of the Consumer Businesses to GPL, an entity owned by GPG and CVC, is fair and reasonable.

In the absence of a superior proposal and subject to the independent expert's conclusions in relation to the Scheme, the Independent Directors of Green's unanimously endorse the Scheme proposal and the sale of the Consumer Businesses and recommend that Green's shareholders vote in favour of each proposed transaction. Subject to those same qualifications, all Independent Directors of Green's intend to vote all of the shares they hold or control in favour of each proposed transaction.

Commenting on the merger proposal, Green's Chairman, Simon Rowell said, "Green's have periodically received unsolicited and confidential expressions of interest in its petfood business. The Board decided to run a confidential and competitive due diligence process in respect of the petfood business to determine whether shareholder value could be optimised. This process resulted in a compelling offer being received from NPPA in relation to the Petfood Business".

"The Board was of the view that the sale of the petfood business alone was sub-optimal as it would have left Green's as a subscale listed entity holding a loss making consumer foods business and an investment in Bestcare. Accordingly, a privatisation of Green's was negotiated with NPPA whereby NPPA agreed to acquire Green's and to separately sell the loss making consumer foods business and investment in Bestcare to GPL, an entity owned by GPG and CVC".

"Following extensive negotiations, GPG and CVC also agreed to provide contractual protections to NPPA in the form of warranties and indemnities and to bear certain risks regarding the transaction so as to ensure Green's shareholders would receive the price of 90 cents per share. These contractual protections provided to NPPA helped facilitate an attractive price for all shareholders".

"The Independent Directors of Green's are of the view that the offer by NPPA of 90 cents cash per share is a compelling price for Green's".

Green's Managing Director, Peter Tedesco, said, "The Board of Green's is very pleased with the proposal from NPPA and has concluded that it is the most effective means of maximising shareholder value".

"The proposal for Green's shareholders is particularly attractive in light of current industry challenges. Supercoat, whilst an iconic premium dry dog food brand, faces an increasing demand for brand support and innovation to compete within a market where its major competitors are large multinationals with significant financial resources and international capabilities. The consumer foods business, which generated a significant loss in FY06 after a large writedown, faces even greater competitive pressures and is expected to continue to generate a loss in FY07 after allocation of central overheads. This business requires significant investment in building capability and restructuring to improve its performance".

"Given these challenges, the proposal from NPPA and the sale of the Consumer Businesses to GPL is considered very attractive from both a value and timing perspective".

"The price of 90 cents per share provides Green's shareholders with the opportunity to realise cash for their investment at a substantial premium to recent trading prices".

Transaction Details

The Scheme is subject to the Federal Court (Court) convening a meeting of Green's shareholders (Scheme Meeting). At the Scheme Meeting, a majority in number of those voting, and who represent at least 75% of the votes cast (excluding GPG, CVC and each of their respective associates), must approve the Scheme. If the requisite shareholder approval is obtained, the Scheme will then need to be approved by the Court at a second Court hearing. If the Court approves the Scheme, the Scheme will be binding on all shareholders.

The sale of the Consumer Businesses to GPL, an entity owned by GPG and CVC, requires shareholder approval under ASX Listing Rule 10.1. An ordinary resolution is required for the transaction to be approved (excluding GPG, CVC and each of their respective associates). The shareholder meeting in respect of the sale of the Consumer Businesses will take place in conjunction with the Scheme Meeting.

The Scheme proposal is subject to a number of conditions including:

• Green's shareholder approval in respect of the Scheme and the sale of the Consumer Businesses to GPL:
• the independent expert concluding that the Scheme is in the best interests of Green's shareholders:
• the approval of the Scheme by the Court; and
• * obtaining requisite regulatory consents and approvals (including FIRB, ASIC and ASX) on acceptable terms.

The other conditions to which the Scheme is subject are outlined in the attachment to this announcement.

The sale of Green's investment in Bestcare to GPL (through the sale of Green's 50% share in Supercoat-Bush's which holds 79% of Bestcare) is conditional on certain pre-emptive rights not being exercised by the other shareholder in Supercoat-Bush's. Neither the Scheme nor the sale of the consumer foods business is conditional on GPL acquiring Green's investment in Bestcare.

In the absence of a superior proposal and subject to the independent expert's conclusions in relation to the Scheme, the Independent Directors of Green's recommend that Green's shareholders vote in favour of the Scheme and the sale of the Consumer Businesses to GPL.

A copy of the independent expert's report, together with full details of the Scheme, will be sent to investors prior to the Scheme Meeting and shareholder meeting in respect of the sale of the Consumer Businesses as part of the Explanatory Booklet.

Timing

An Explanatory Booklet with full details of the transactions and the reasons for the unanimous recommendation of the Independent Directors is expected to be sent to Green's shareholders by late January 2007. The Scheme Meeting and shareholder meeting in respect of the sale of Green's Consumer Businesses is expected to be held by late February 2007. Assuming all necessary approvals are received, each transaction is expected to be completed by early March 2007.

Advisers

Caliburn Partnership is acting as financial adviser to Green's and Baker & McKenzie is acting as legal adviser.

Shareholder Information

For further information, contact:

Mr Simon Rowell Chairman Green's Foods Limited Telephone: +61 2 9830 9999

Mr Peter Tedesco Managing Director Green's Foods Limited Telephone: +61 2 9830 9999

Mr Ron Malek Joint Chief Executive Caliburn Partnership Mobile: +61 411 422 885

Mr Roger Feletto Executive Director Calibum Partnership Mobile: +61 418 485 190

ABOUT GREEN'S FOODS LIMITED

Green's Foods Limited is an ASX listed public company which has been operating in the Australian food market for over 25 years.

Green's manufactures and distributes a range of food products principally for the retail grocery sector. In FY06, Green's businesses generated normalised EBIT of \$7.3m.

Green's petfood business is primarily focused on the Supercoat brand, which spans dry dog food, pet treats and dry cat food. In FY06, Green's petfood business generated normalised EBIT of \$10.2m (prior to allocation of central overheads).

Green's consumer food business is focused on branded and private label blended foods (cake and muffin mix, pancakes, health foods, peanut butter) and cereals and snacks (breakfast cereals and popcorn). Key brands include Green's, Basco, Lowan, Poppin and Lolly Gobble Bliss Bombs. In FY06, Green's consumer food business generated normalised EBIT of \$2.5m (prior to allocation of central overheads and excluding the \$16.2m write down for the consumer business). After allocation of central overheads the consumer food business generated a loss.

Bestcare represents Green's private label dry dog food business in Australia. Green's holds a 39.5% economic interest in Bestcare (Green's owns 50% of Supercoat-Bush's which owns 79% of Bestcare).

Further information on Green's Foods Limited is available on the company website at www.greens.com.au.

ABOUT NPPA

Nestlé Australia Ltd (NAL) is a wholly-owned subsidiary of the Swiss-based global food and beverages company, Nestlé S.A. NAL has annual sales of more than \$2bn and employs over 4000 staff. NAL operates in multiple food and beverages categories in Australia, notably soluble coffee and confectionary and snacks. Key brands include Nescafe, Milo, Lucky Dog, Friskies, ONE and Uncle Tobys. NPPA is a division within NAL.

NPPA was advised by Sydney-based corporate advisory firm Longreach Ltd.

$\hat{r} = \hat{r}$

ATTACHMENT TO ASX ANNOUNCEMENT

KEY TERMS OF THE MERGER IMPLEMENTATION AGREEMENT

Share Scheme

Green's and NPPA have entered into a Merger Implementation Agreement dated 29 November 2006 to provide a framework for proposing and implementing a scheme of arrangement (Scheme).

If the Scheme is approved by both the shareholders in Green's and the Court (and if the other conditions set out below are satisfied or waived), the fully paid ordinary shares in Green's will be transferred to NPPA (or a wholly owned subsidiary) in consideration of the payment of 90 cents in cash for each share.

The Merger Implementation Agreement sets out the obligations of Green's and NPPA in relation to the Scheme. A copy of the Merger Implementation Agreement will be contained in the Explanatory Booklet to be provided to shareholders in Green's prior to the Scheme Meeting and shareholder meeting in respect of the sale of Green's consumer foods business and investment in Bestcare (Consumer Businesses).

A summary of the key terms of the Merger Implementation Agreement is set out below.

Conditions

Implementation of the Scheme is conditional upon:

• an independent expert concluding that the Scheme is in the best interests of Green's shareholders:
• * shareholders in Green's approving the Scheme and the sale of Green's Consumer Businesses by the requisite thresholds;
• Court approval of the Scheme;
• * obtaining regulatory consents or approvals (including FIRB, ASIC and ASX) on acceptable terms:
• no judicial authority or government agency taking any action or imposing any legal restraint or prohibition to prevent implementation of the Scheme;
• no "Prescribed Event" or "Material Adverse Change" occurring (each being defined terms in the Merger Implementation Agreement");
• " no change in the recommendation of the board of directors of Green's in respect of the Scheme: and

the warranties given by the parties remaining materially true and correct. $\blacksquare$

The parties are required to use reasonable endeavours to satisfy the conditions.

Implementation Obligations

Each party has separate implementation obligations under the Merger Implementation Agreement, including:

• preparation and despatch of Scheme Booklets;
• commissioning and preparation of the Independent Experts Report; and
• court applications and convening of Green's shareholder meeting.

Warranties and Indemnities

Mutual warranties and indemnities have been given in relation to capacity, authorisation, no contravention of respective constitutions and the accuracy of information provided in the scheme documentation. Green's has also given a warranty and indemnity in relation to no breach of its continuous disclosure obligations.

Exclusivity

During the exclusivity period:

• No shop restriction: Green's must ensure that neither it, its subsidiaries or any of its representatives takes any actions with a view to obtaining any expression of interest or proposal from any person in relation to a competing proposal;
• No talk restriction: Green's must ensure that neither it, its subsidiaries or any of its $\bullet$ representatives negotiates or enters into, continues or participates in negotiations or discussions with any person regarding a competing proposal, whether or not solicited by Green's (subject to the fiduciary duties exception specified below); and
• Notice of approach conditions: if a proposal is put to Green's by another person to engage $\mathbf{u}$ in any activity that might lead to a breach of the no shop or no talk restrictions (or would breach no talk restrictions were it not for the fiduciary duties exception) Green's must notify NPPA of the fact, unless its legal advice is that such disclosure would conflict with any fiduciary or legal obligations of the directors of Green's.

The exclusivity period is the period from the date of the Merger Implementation Agreement to the earliest of:

• the date the Scheme is implemented;
• the date ending 3 months after the date of the Merger Implementation Agreement; or $\blacksquare$
• the date the Merger Implementation Agreement is terminated in accordance with its terms.

The fiduciary duties exception provides that the no talk restriction does not apply in respect of unsolicited competing proposals where the board of directors of Green's reasonably considers, in good faith, that failing to respond would constitute a breach of their fiduciary or legal duties.

Green's Break Fee

Green's must pay NPPA a break fee (being the amount of costs, expenses and outgoings NPPA incurred in connection with the Scheme up to a maximum of \$1.3 million) if:

• a director of Green's makes a statement prior to approval of the Scheme by the Court that he does not support the Scheme, or fails to recommend the Scheme (except in limited circumstances):
• a proponent of a competing proposal is successful; or
• NPPA terminates the Merger Implementation Agreement as a result of a material and unremedied breach by Green's of its obligations under that agreement.

However, no break fee will be payable if the Scheme becomes effective despite the occurrence of any of these events.

NPPA Break Free

NPPA must pay a break fee to Green's (being the amount of costs, expenses and outgoings Green's incurs after 17 November 2006 in connection with the Scheme and shareholder approval for the GPL transactions, up to a maximum of \$1.3 million) if the conditions precedent to the Scheme are not satisfied as a result of certain regulatory intervention.

However, neither the Green's Break Fee or the NPPA Break Fee will be payable to the extent that it is unlawful, involves a breach of directors duties, or constitutes unacceptable circumstances.

For further information, contact:

Mr Simon Rowell Chairman Green's Foods Limited Telephone: +61 2 9830 9999

Mr Ron Malek Joint Chief Executive Calibum Partnership Mobile: +61 411 422 885 Mr Peter Tedesco Managing Director Green's Foods Limited Telephone: +61 2 9830 9999

Mr Roger Feletto Executive Director Caliburn Partnership Mobile: +61 418 485 190