ASX Release
Subject: Media release “Transaction with JBS Australia”

12 July 2018

Rural Funds Management Limited (“RFM”), as responsible entity and manager of Rural Funds Group (ASX: RFF), is pleased to announce that it has entered into conditional agreements with JBS Australia (“JBS”), Australia’s largest lot feeder and cattle processor.

As part of these agreements, RFF will acquire JBS-owned Australian feedlots (“Feedlots”) located in Queensland and New South Wales for $52.7 million. The facilities have a combined capacity of 150,000 Standard Cattle Units which represents approximately 15% of Australia’s lot fed cattle capability.

Concurrent with the acquisition, RFF will enter into a finance lease with JBS for a term of 10 years, with CPI indexation. The lease contains a call option for JBS to buy the feedlots back, and a put option for RFF to sell the feedlots to JBS, at year 10.

In addition to the finance lease, RFF will provide a limited guarantee of $75 million (“Guarantee”) to an existing entity called J&F Australia Pty Ltd (“J&F”) that currently acquires cattle for JBS Feedlots. J&F will become a wholly-owned subsidiary of RFM, however JBS will retain the day-to-day management of both the feedlots and cattle acquisitions for the feedlots. The Guarantee is subject to RFF unitholder approval at a general meeting to be held on 10 August 2018.

The provision of the finance lease and Guarantee confers no direct operating risk on RFF. In addition, obligations to RFF and RFM from JBS have been guaranteed by their parent company Baybrick Pty Ltd (Baybrick). Baybrick is a diversified entity with net assets of $2.3 billion and owns other food businesses such as Primo Smallgoods. The owner of Baybrick is JBS S.A, the largest protein processor globally and is listed on the Brazillian stock exchange with market capitalisation of approximately A$8.9 billion.