BAWAN ANNOUNCES THE SIGNING OF A SHARE PURCHASE AGREEMENT TO ACQUIRE 100% OF THE SHARES IN ARNON PLASTIC INDUSTRIES COMPANY LIMITED IN CONSIDERATION FOR ONE HUNDRED NINETY-ONE MILLION (191,000,000) SAUDI RIYALS

Element List	Explanation
Transaction Details	Bawan is pleased to announce that it has entered into a share purchase agreement (“Agreement”) on 25/4/1440H (corresponding to 1/1/2019G) to acquire four hundred fifty thousand (450,000) shares representing 100% of the share capital of Arnon Plastic Industries Company Limited (single shareholder limited liability company) (“Arnon”) from its sole shareholder, Al Fozan Holding Company (“Al Fozan Company”) in consideration for the agreed purchase price of one hundred ninety-one million (191,000,000) Saudi riyals.

Element List

Explanation

Transaction Details

Bawan is pleased to announce that it has entered into a share purchase agreement (“Agreement”) on 25/4/1440H (corresponding to 1/1/2019G) to acquire four hundred fifty thousand (450,000) shares representing 100% of the share capital of Arnon Plastic Industries Company Limited (single shareholder limited liability company) (“Arnon”) from its sole shareholder, Al Fozan Holding Company (“Al Fozan Company”) in consideration for the agreed purchase price of one hundred ninety-one million (191,000,000) Saudi riyals.

Various valuation methods have been used to evaluate Arnon including discounted cash flow and profit return, as well as EBITDA multiples.

Bawan has appointed Riyadh Capital as the financial advisor for the transaction, Abuhimed Alsheikh hagbani (AS) in collaboration with Clifford Chance as legal advisor, PricewaterhouseCoopers (PwC) to carry out the financial due-diligence studies and Bain to carry out the commercial due-diligence. Transaction Value one hundred ninety-one million (191,000,000) Saudi riyals. Transaction Terms and Conditions The Agreement contains a number of warranties provided by Al Fozan Company in respect of the commercial activities of Arnon including but not limited to the accuracy and completeness of the information contained in the financial statements and accounts of Arnon as well as having valid title over all the assets of Arnon free from any liens or encumbrances in addition to other warranties related to the company’s plants and employees. The Agreement also stipulates that Al Fozan Company shall provide an unconditional bank guarantee of 15% of the purchase price valid for a period of two years from the date of the Agreement to cover any breach of warranties or indemnities due to Bawan, noting that the value of the compensation is not limited to the value of the bank guarantee.

The Agreement is subject to a number of conditions which must be satisfied by Al Fozan within (180) days from the date of signing the Agreement (the “Long Stop Date”) including without limitation, obtaining the required regulatory approvals.

Pursuant to the Agreement, Bawan shall supervise the implementation of the financial and operational policies of Arnon effective from 1/1/2019G through the formation of a new board of managers in Arnon, whose members are appointed by Bawan.

Pursuant to the terms of the Agreement, both parties may terminate the Agreement if any of the warranties provided by either party are not true and accurate or if either party is in breach of any condition and covenant set forth in the Agreement. Bawan may also terminate the Agreement if (i) a material change resulting in an adverse effect on Arnon took place in accordance with the test set out in the Agreement; or (ii) the conditions are not satisfied or waived by Bawan prior to the Long Stop Date due to a default of Al Fozan Company. Parties to transaction/parties involved Bawan and Al Fozan Company. Transaction funding method The consideration being one hundred ninety-one million (191,000,000) Saudi riyals will be paid to Al Fozan Company in cash on the date of signing the amended articles of association of Arnon before the notary public. It should be noted that the transaction has been financed by a combination of bank credit facilities and cash equity, financed by Bawan’s operational activities. Transaction signing Date 2019-01-01 Corresponding to 1440-04-25 Description of the business subject of the transaction The activities of Arnon comprise the production of packaging and insulator sheets made of polyethylene, polystyrene plates, polystyrene heat insulation sheets and polyethylene bottles. The last three years financial statement of asset subject of the transaction The net book value of 2015G, 2016G and 2017 as per the audited financial statements of Arnon amounted to SR 98.6 million, SR 117.6 million and SR 138.7 million, respectively, and SAR 157.3 million at the end of the third quarter of 2018G as per the unaudited management accounts of Arnon.

It should be noted that the revenue of Arnon for the years 2015G, 2016G and 2017G as per the audited financial statements amounted to 202.7 million Saudi riyals, 203.6 million Saudi riyals and 231.2 million Saudi riyals, respectively. The net income of Arnon for the years 2015G, 2016G and 2017G as per the audited financial statements of Arnon amounted to SR 16.0 million, SR 19.1 million and SR 21.1 million, respectively.

Arnon's revenue and net income for the nine months ending on 30 September 2018G as per its unaudited financial statements amounted to SAR 198.5 million and SR 18.6 million, respectively. Transaction reasons The transaction is of key importance to Bawan and is part of Bawan’s strategy to diversify its business, which will increase its customer segment and products and thus increase its revenue and cash flows. Expected impact on the company and its operations Bawan expects that the transaction will result in a positive financial impact on Bawan, which will be reflected on the results of its operations during the financial year 2019G. Related Parties It should be noted that the transaction is deemed a related party transaction given that the Agreement is signed between Bawan and Al Fozan Company which owns shares in Bawan. In addition, there are common board members in Bawan, Al Fozan Company and Arnon; being Abdullah Abdulatif Al Fozan, Fozan Mohammed Al Fozan and Basel Mohammed Al Gadhib.

The extraordinary general assembly has approved the transaction and the entry into the Agreement in its meeting held on 17/4/1440H corresponding 24/12/2018G. Additional Information Bawan will announce any material developments in respect of the transaction in due course.

The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.