Unity Pacific : Off-market Takeover Offer »

ASX Announcement

28 July 2016

OFF-MARKET TAKEOVER OFFER

Unity Pacific Group (ASX: UPG) (Unity Pacific) is pleased to announce that negotiations in relation to an offer to acquire all of Unity Pacific's securities have now been completed.

Unity Pacific has entered into a Bid Implementation Deed with Ebert Investments Pty Ltd (Ebert Investments) on 28 July 2016, pursuant to which Ebert Investments or its nominee (the Bidder) proposes to make an off- market takeover bid for all of the stapled securities in Unity Pacific which are not currently held by Ebert Investments for consideration of, in respect of each stapled security, 47 cents being 41.5 cents cash and one

(1) share in the Bidder (San Remo Share), being a contingent value redeemable preference share deemed to be fully paid to an amount of 5.5 cents (the Offer).

Pursuant to the Bid Implementation Agreement, a process has been put in place for the sale of Unity Pacific's land in San Remo, Victoria (the Land), with the intention that it be sold within 9 months of the end of the Offer period.

Details of the Offer

Each San Remo Share entitles an accepting securityholder to receive an additional cash payment by way of redemption (Redemption Amount), in the event that the Land is sold within 9 months of the end of the Offer period and the net proceeds from the sale of the Land (after allowing for sale, marketing and agency costs for the Land) exceeds $6.0 million. In this scenario, each holder of a San Remo Share will be entitled to a Redemption Amount equal to the amount by which the net proceeds from the sale of the Land exceed

$6.0 million, converted to an amount per United Pacific stapled security. The obligation to redeem the San Remo Shares will be guaranteed by Warren Ebert and Ebert Investments.

The Board recently commissioned a new valuation of the Land (which is the subject of a separate ASX announcement today). The independent valuation of the Land as at 30 June 2016 was $8.5 million (the Valuation). If the Land is sold in the 9 month period for $8.5 million, after allowing for estimated transaction costs of $0.5 million (the Projected Sale), the total cash consideration received by securityholders pursuant to the Offer will be 47 cents per stapled security (comprising an upfront cash payment of 41.5 cents per stapled security and a further cash payment of 5.5 cents per stapled security upon redemption of the San Remo Shares).

However, the final outcome for securityholders will depend upon the ultimate net proceeds of the Land sale:

• If the Land is sold in the 9 month period and the net proceeds of the sale are higher than the Projected Sale, the Redemption Amount payable to securityholders will be higher than 5.5 cents per security.

• If the Land is sold in the 9 month period and the net proceeds of the sale exceed $6.0 million but are lower than the Projected Sale, the Redemption Amount payable to securityholders will be lower than 5.5 cents per security.

• If the Land is not sold within the 9 month period or the net proceeds of any sale do not exceed $6.0 million, then the San Remo Shares will be redeemed for nil consideration and the total cash consideration received by securityholders pursuant to the Offer will be 41.5 cents per security.

  Unity Pacific Group comprises Unity Pacific Limited ABN 11 110 831 288 and Unity Pacific Stapled Trust ARSN 111 389 596 Unity Pacific Investment Management Limited AFSL 338688

  Based on the Valuation, the Directors believe it is reasonable to expect that the sale of the Land will realise an amount at or around the $8.5 million valuation. However, no assurances can be given that this will be the case.

  The Offer is subject to a number of conditions including (among others):

  • Ebert Investments and its associates obtaining a relevant interest in at least 50.1% of Unity Pacific's stapled securities;

  • no material adverse change;

  • limitation on operating expenditure; and

  • no further distributions.

    Under the Bid Implementation Deed, Unity Pacific will be bound by customary exclusivity provisions including "no shop", "no talk", "notification" and "matching" obligations. A break fee of $130,000 will be payable to Ebert Investments by Unity Pacific in certain circumstances.

    A full copy of the Bid Implementation Deed, including all applicable conditions, is attached to this announcement. If the Projected Sale occurs, the total consideration of 47 cents per stapled security will represent:

  • a 9.3% - 11.9% premium to Unity Pacific's pro-forma net tangible assets per stapled security of 42 to 43 cents as at 30 June 2016 (as announced on 28 July 2016);

  • a 6.8% premium to the most recent closing price of 44 cents per stapled security on 19 July 2016;

  • a 19.3% premium to the 1 month volume weighted average price (VWAP) to 19 July 2016; and

  • a 21.1% premium to the 3 month VWAP to 19 July 2016.

    Unity Pacific's Chairman, Brett Heading, said "The off-market takeover Offer is the final step in completing a series of corporate initiatives. We have focused on maximising and realising increased value of Unity Pacific securities. This has been achieved from the successful sale of 308 Queen Street/88 Creek Street, Brisbane and Transferable Site Areas attached to the property at premiums to book value and, based on the Valuation, the expected sale price for the San Remo land."

    Managing Director, Chris Morton, added "While the expressions of interest process for the corporate entity has taken longer than anticipated, I am very pleased with the result that we have achieved for all of our securityholders. A material increase in total securityholder return has been achieved as a result of the process and the negotiations. The Offer provides an immediate cash return for the remaining corporate assets as well as the potential for price upside being achieved by the expected sale of the San Remo land."

    No Current Action by Securityholders

    Unity Pacific securityholders do not currently need to take any action in relation to the Offer.

    A bidder's statement will be sent to securityholders by Ebert Investments and it will detail how and when securityholders can accept the Offer. Unity Pacific will also send a target statement to securityholders, which securityholders should review and consider.

    The Directors of Unity Pacific unanimously recommend Unity Pacific securityholders accept the Offer in the absence of a superior proposal and each Director that is a securityholder intends to accept the Offer in the absence of a superior proposal.

    Unity Pacific is being advised by lawyers Jones Day and InterFinancial as corporate adviser.

    Value Realised for Securityholders

    Since 30 June 2015, the following transactions have resulted a material increase in Unity Pacific's net tangible asset value:

  • the improvement in the independently assessed value of the Land to $8.5 million;

  • the sale of 308 Queen St/88 Creek St, Brisbane at a premium to book value; and

  • the sale of 760m2 of transferrable development rights which attached to the above property at a premium to book value.

Unity Pacific's NTA per stapled security was $1.47 as at 30 June 2015. Since August 2015, securityholders have received $1.22 per stapled security through the payment of two capital distributions and may now realise the remainder of their investment if they accept the Offer. The considered and systematic manner in which the Board has conducted the above transactions and the corporate expressions of interest process has had the effect of increasing the potential value able to be realised by securityholders by $7.9 million or 22 cents per stapled security since 30 June 2015 (i.e. assuming the Land is able to be sold for the Valuation amount of

$8.5 million).

About Ebert Investments

Ebert Investments is part of the Sentinel Property Group (Sentinel), a privately-owned and Brisbane-based property investment group. Ebert Investments currently owns approximately 16.08% of Unity Pacific Group's stapled securities on issue.

The Marie Street Trust

Unity Pacific Funds Management Limited will continue to be the responsible entity and manager of The Marie Street Trust (the Trust). If the bid is successful, to provide management and supervisory continuity for the Trust's unitholders, it has been agreed that Chris Morton and Murray Boyte (2 of the 3 current directors) will continue to be directors of Unity Pacific Funds Management Limited.

ENDS

For further information, contact:

Brett Heading

Chairman

[phone]

Bid Implementation Deed

EXECUTION VERSION

Unity Pacific Limited (ABN 11 110 831 288) {UPG Co)

Unity Pacific Investment Management Limited (ABN 47 137 565 149) as responsible entity of the Unity Pacific Stapled Trust (ARSN 111 389 596) (UPG Trust RE)

Ebert Investments Pty Ltd (ACN 138 124 044) as trustee for Ebert Investment Trust (Bidder)

Jones Day Aurora Place

Level 41, 88 Phillip Street

Sydney NSW 2000

Tel: [phone]

Fax: [phone]

www .jonesday.com

AUl-930161383v2