BSD Crown Ltd. (LSE: BSD)

(the “Company”)

Ramat Gan, Israel, 18 January 2017

Company Update – Change of control over BGI shares in the Company

On 16 January 2017, BGI Investments (1961) Ltd. ("BGI"), made an announcement on the Tel Aviv Stock Exchange as summarised below.

BGI beneficially owns Company shares representing approximately 24.64% of the total issued and outstanding share capital of the Company (excluding dormant shares) and controls in aggregate, directly and through voting agreement proxies from Israel 18, approximately 43.65% of the voting rights in the Company (excluding dormant shares).

According to BGI’s announcement, on 15 January 2017, BGI entered into an agreement with Mr. Mordechai Peretz Hirshenboim (the “Agreement” and “"Purchaser" respectively), pursuant to which:

1. BGI will incorporate a new company (“Newco”) to which it will transfer all of its holdings in the Company (approximately 24.64% of the total issued and outstanding share capital of the Company (excluding dormant shares)).
2. The Purchaser will purchase from the Company 50% of Newco’s share capital in consideration of an amount equal to USD 8.624 million (the “Consideration”), to be paid in accordance with an agreed payment schedule. The consideration amount reflects a Company valuation of USD 70 million (the “BSD Transaction Valuation").
3. BGI will act in order to exercise the right of first refusal which BGI has under a voting agreement between BGI and Israel 18 BV (“Israel 18”) dated 20 March 2014 (the “Voting Agreement”) and to enable Newco to purchase the entire amount of Israel’s 18 direct holdings in the Company.

Israel 18 owns approximately 19.01% of the total issued and outstanding share capital of the Company (excluding dormant shares) ("Israel 18’s BSD Holdings").

Following the potential acquisition by Newco of Israel 18’s BSD Holdings, Newco will own approximately 43.65% of the voting rights in the Company (excluding dormant shares). It should be noted that the exercise of such right of first refusal is not a condition precedent for the completion of the transactions pursuant to the Agreement.

4. Any consideration received by Israel 18 upon exercise of such right of first refusal is expected to be used for the repayment of certain of Israel 18’s debts and the release of security interests provided to third parties to secure the repayment of such debts (including security over Company shares owned by BGI).

5.The Agreement contains provisions for joint control over Newco.

6. In addition, under the Agreement, the Purchaser grants BGI a put option to sell its entire holdings in Newco to the Purchaser, upon the lapse of a period of five years from the date of signing of the Agreement in consideration for an amount equal to USD 8.624 million, if the right of refusal described above has not been successfully exercised, or USD 8 million plus any shareholder loans provided by BGI to Newco as of the date of the exercise of the put option, if the right of refusal described above has been successfully exercised.

7. In connection with a claim filed by the Company against Israel 18 (as announced by the Company on 30 August 2016, the Company has secured a lien over certain Company shares and BGI shares owned by Israel 18, to secure an amount of USD13 million (subject to adjustments) which the Company considers to be owing to it by Israel 18. Under the Agreement, if it is held, in a final judgement, that the Company is entitled to exercise such lien, then the Company will be entitled to require the Purchaser to pay it an amount equal to up to USD13 million, against release from the lien and transfer to the Purchaser of Israel 18's entire holdings in BGI, amounting to approximately 71.59% of the issued and paid-up share capital of BGI.

8. Coming into force of the Agreement is conditional on:

1. BGI receiving a valuation for BSD from an external appraiser;
2. If such valuation shows a BSD valuation which is no more than 10% higher than the BSD Transaction Valuation, the Agreement will immediately come into force; or
3. If such valuation determines that BSD has a valuation which is more than 10% higher than the BSD Transaction Valuation, then the Consideration may be adjusted, at the Purchaser’s discretion, to reflect a valuation of 90% of the appraiser’s valuation. If the Purchaser is unwilling to adjust the Consideration as noted above, BGI may opt to terminate the Agreement.

The Company will provide further updates in due course.

Enquiries:

Eli Arad, Director: office@bsd-c.com