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JSE
OPT
OPT - Optimum Coal Holdings - Abridged Prospectus
Optimum Coal Holdings Limited
(formerly known as Optimum Coal Holdings (Proprietary) Limited)
(incorporated in the Republic of South Africa)
(Registration Number: 2006/007799/06)
JSE share code: OPT ISIN: ZAE000144663
("Optimum Coal" or the "Company" or the "Issuer")
ABRIDGED PROSPECTUS
Abridged prospectus relating to the listing of Optimum Coal Holdings Limited on
the main board of the JSE Limited ("JSE") with effect from the commencement of
business on Monday 29 March 2010. The information has been extracted from the
detailed prospectus issued by Optimum Coal, on Thursday, 11 March 2010.
This abridged prospectus is not an invitation to the public to subscribe for
shares in Optimum Coal, but is issued in compliance with the Listings
Requirements of the JSE for the purpose of providing information to the public
with regard to Optimum Coal.
1. Introduction and Offer particulars
On 12 February 2010 a resolution was passed by the board of directors of Optimum
Coal (the "Board") for an offer for subscription by Optimum Coal and an offer
for sale by certain of the Company`s existing shareholders ("Selling
Shareholders"), subject to certain conditions (the "Offer"), to selected
institutional and invited investors in South Africa and to selected
institutional investors in other jurisdictions to whom the Offer will
specifically be addressed, of up to 42,750,000 ordinary shares having a par
value of R0.000005 each ("Offer Shares") in the issued share capital of the
Company, pursuant to which the Company would list on the main board of the JSE
(the "Listing").
The Offer is subject to the aggregate sale and subscription of up to 42,750,000
Offer Shares and achieving the JSE free float and shareholder spread
requirements. The Listing will not proceed if the minimum subscription and sale
are not achieved or the JSE free float and shareholder spread requirements are
not met, and any acceptance of the Offer shall not take effect and no person
shall have any claim whatsoever against the Issuer, the Selling Shareholders,
the managers or any other person as a result of the failure of any condition.
The Issuer will not receive any of the proceeds from the Offer Shares being sold
by the Selling Shareholders. Investors will only be allowed to acquire shares
for an amount of no less than R100,000.
Subject to the fulfilment of the above conditions, 248,488,443 Optimum Coal
ordinary shares of a par value of R0.000005 each will be listed on the main
board of the JSE under the short name "Optimum", share code "OPT" and ISIN
ZAE000144663, with effect from the commencement of business on Monday, 29 March
2010.
All shares (including any Offer Shares) that are in issue as at the date of this
abridged prospectus will rank pari passu in all respects
2. Overview of the business of Optimum Coal
Optimum Coal was incorporated on 15 March 2006 as a Black Economic Empowerment
("BEE") coal mining and exploration company and acquired Optimum Collieries and
a 9.5% interest in Richards Bay Coal Terminal Company Limited ("RBCTCL") from
BHP Billiton Energy Coal South Africa Limited ("BECSA") on 30 June 2008. Prior
to the acquisition, Optimum Coal had no meaningful trading results. On 2
February 2010, Optimum Coal converted from a private company to a public
company.
Optimum Coal is the sixth largest producer of thermal coal in South Africa based
on 2009 coal production and South Africa`s fourth largest exporter of thermal
coal based on 2009 coal exports. The Company`s operations are located in the
Witbank coalfield region in the Mpumalanga Province of South Africa and include
Optimum Collieries, a large opencast and underground mining complex comprised of
the Kwagga, Pullenshope, Eikeboom and Boschmanspoort mines, and Koornfontein
Mines in which the Company currently has an effective 19.1% interest, held
through Koornfontein Holdings. Koornfontein Holdings owns 50.002% of Siyanda
Coal (Proprietary) Limited ("Koornfontein"), which is the owner of Koornfontein
Mines. Optimum Coal entered into transactions with Siyanda Resources
(Proprietary) Limited ("Siyanda"), which has a 43.7% effective interest in
Koornfontein Holdings, and Sentula Mining Limited ("Sentula"), which holds
49.998% in Koornfontein, in November 2009 and February 2010, respectively which
will, on completion, increase the Company`s effective interest in Koornfontein
to 91.0%. The estimated lives of the mines of Optimum Collieries and
Koornfontein Mines are 22 years and 18 years, respectively.
Optimum Coal produces thermal coal with low sulphur content for export and
domestic sale. The Company`s Optimum Collieries export sales are made primarily
into the European markets pursuant to a long-term supply agreement with BECSA
through the Richards Bay Coal Terminal ("RBCT"). The price that the Company
receives from BECSA is based on a published API#4 (all price index FOB Richards
Bay). Substantially all of the Company`s Optimum Collieries domestic sales are
to Eskom Holdings Limited ("Eskom"), the South African state-owned energy
utility for use in a power station that is an integral part of the South African
electricity generation grid. These sales are pursuant to a long-term contract
with a delivery requirement of 5.5 million tons per year at a fixed base price
with producer price inflation and coal cost index related escalation. Optimum
Coal does not produce any metallurgical coal.
As of 30 June 2009, Optimum Collieries had a reserve base of 272.8 million tons
of run-of-mine coal, of which 191.0 million tons were classified as saleable,
and Koornfontein Mines had a reserve base of 48.3 million tons of run-of-mine
coal, of which 30.7 million tons were classified as saleable.
Optimum Coal also has a 9.5% interest in RBCTCL, where it is the fourth largest
shareholder and the largest single BEE shareholder, which owns RBCT, one of the
largest coal terminals in the world and the key coal export port in South
Africa. The Company believes its shareholding and economic interest in RBCTCL
provides a strategic advantage due to the associated rights it has to use the
coal loading and export facility. The Company owns 6.86 million tons per year
entitlement, of which 6.5 million tons per year are available for its own use.
In addition, Koornfontein Mines owns 1.58 million tons per year entitlement, of
which 1.5 million tons per year are available for its own use.
The Issuer is a broad based black-owned and controlled mining company, with over
50% black equity ownership and voting control on its board of directors. Prior
to the Listing, unencumbered employee and community trusts owned 50,000,000
shares representing 22.3 % of the Issuer`s issued share capital.
In November 2009, the Company entered into a transaction upon completion of
which it will acquire a further 43.7% of the issued share capital of
Koornfontein Holdings from Siyanda, in addition to 38.3% of the issued share
capital of Koornfontein Holdings that it currently owns (the "2009 Koornfontein
Acquisition"). On the closing of the transaction in accordance with its terms,
the Company will be the holder of 82.0% of the issued share capital of
Koornfontein Holdings, and will consolidate Koornfontein Holdings into its
financial statements as a subsidiary. The Company`s effective interest in
Koornfontein Mines will increase from 19.1% to a controlling effective interest
of 41.0%. The agreement is subject to the consent of the Competition Commission,
and completion is expected in the first half of 2010. The purchase price will be
R310 million.
On 12 February 2010 the Company entered into a transaction with Sentula in
respect of the purchase by the Company of 49,998 ordinary shares in the issued
share capital of Koornfontein constituting 49.998% of the entire issued share
capital of Koornfontein and all of the claims of Sentula against Koornfontein,
for a purchase consideration of R670 million (the "2010 Koornfontein
Acquisition"). The agreement between the Company and Sentula is subject to
customary closing conditions. Assuming the completion of the 2009 Koornfontein
Acquisition and the 2010 Koornfontein Acquisition, the Issuer`s effective
interest in Koornfontein Mines will increase from 19.1% to 91.0%.
In addition to the Company`s operations, it has numerous coal projects at
various stages of development, including the Schoonoord project at Optimum
Collieries, the Vlakfontein and Overvaal projects in the Ermelo area and
Koornfontein Mines No. 4 Seam project. All these projects are expected to be
developed in the near to medium term, subject to final board approval.
Exploration work continues on various greenfield projects to improve resource
confidence with a view to prioritising the Company`s growth and development
pipeline.
In the year ended 30 June 2009, Optimum Coal:
- sold 9.3 million tons of coal, of which approximately 45% was exported;
- generated revenues of R3,964.7 million;
- had EBITDA of R1,439.9 million; and
- had net income of R747.2 million.
In the six months ended 31 December 2009, Optimum Coal:
- sold 5.1 million tons of coal, of which approximately 50% was exported;
- generated revenues of R1,500.0 million;
- had EBITDA of R454.2 million; and
- had net income of R69.7 million.
3. Key Strengths
The Company believes that the following strengths enhance its market position:
- it is one of South Africa`s largest coal mining companies, the fourth
largest thermal coal exporter and it also supplies coal to the local power
markets;
- it has an advanced mine life extension programme at the Optimum Collieries
that will continue to benefit its cash costs;
- it is a black-owned and controlled mining group;
- it has an experienced management team and workforce with relevant
experience in the coal mining industry; and
- it has a strong balance sheet that provides a good growth platform.
4. Business Strategy and Prospects
In the opinion of the directors the Company is well-positioned to take advantage
of current and future commercial opportunities to enhance shareholder value by
continuing to implement its strategy, which has the following key components:
- expanding the scope of its current coal operations and developing near-term
coal projects;
- continuing to opportunistically pursue coal acquisitions that will create
value and expand its business; and
- generating stakeholder value and empowering its people and the communities
in which it operates.
5. Directors
The names, ages and business addresses of the directors are set outbelow:
On the date of listing, the Board will comprise:
Name Business Address
Non-executive directors
Dr. Sivandran Munsami Gounden (50) - Holgoun House, 269 Veale Street,
(Chairman) New Muckleneuk 0181, Pretoria,
South Africa
Mr. Robert Michael Godsell (58) - (Deputy 14 Roxburgh Ave, Craighall Park
Chairman) 2196, Johannesburg
South Africa
Mr. Thomas Ignatius Borman (42) Unit B1003, Marlborough Gate,
Hyde Park Lane, Hyde Park 2196,
Johannesburg, South Africa
Mr. Peter Kennedy Gain (34) Unit B1003, Marlborough Gate,
Hyde Park Lane
Hyde Park 2196, Johannesburg,
South Africa
Mr. Eliphus Oki Monkoe (50) Unit B1003, Marlborough Gate,
Hyde Park Lane, Hyde Park 2196,
Johannesburg, South Africa
Dr. Mlungisi Kwini (51) 1st Floor Surrey House, 35
Rissik Street
Johannesburg 2001, South Africa
Ms. Nomavuso Patience Mnxasana (54) 934 Juarez Street, Kyalami
Estates, Midrand 1682,
South Africa
Mr. Christiaan Lourens Smit (58) 30 St Andrews Drive, Greenways,
Strand 7139, South Africa
Ms. Lulama Leonora Letlape (45) Mercedes Benz Building, Wierda
Road,
Centurion, South Africa
Mr. Deon S`Thembiso Carl Dhlomo (38) 4th Floor Rosebank Corner, 191
Jan Smuts Avenue
Parktown North, 2193,
Johannesburg, South Africa
Executive directors
Mr. Michael Solomon Teke (45) (Chief Unit B1003, Marlborough Gate,
Executive Office) Hyde Park Lane
Hyde Park 2196, Johannesburg,
South Africa
Mr. Douglas Robert Gain (33) - (Finance Unit B1003, Marlborough Gate,
Director) Hyde Park Lane, Hyde Park 2196,
Johannesburg, South Africa
Mr. Henry Christo White (48) - (Operations Unit B1003, Marlborough Gate,
Director) Hyde Park Lane, Hyde Park 2196,
Johannesburg, South Africa
6. Salient dates and times
2010
Opening date of the Offer at 09:00 on Thursday, 11 March
Publication of the prospectus Thursday, 11 March
Last date for indication of interest for Tuesday, 23 March
the purpose of the bookbuild at 14:00 on
Expected closing of the Offer at 17:00 Tuesday, 23 March
on
Offer price released on SENS Wednesday, 24 March
Offer price published in the press Thursday, 25 March
Settlement and proposed listing date on Monday, 29 March
the JSE
7. Share capital
On listing, the authorised share capital of Optimum Coal will be R10,000 divided
into 2,000,000,000 ordinary shares of R0.000005 each and the issued share
capital will comprise 248,488,443 fully paid ordinary shares of R0.000005 each,
amounting to R1,242 with a share premium of R2,547 million, all shares ranking
pari passu. There will be no other class of shares in issue by the Issuer at the
Listing Date.
8. Copies of the prospectus
This prospectus is only available in English and copies thereof may be obtained
during normal business hours from Thursday, 11 March 2010 until Monday, 22 March
2010 from the Issuer, Morgan Stanley & Co. International plc, J.P. Morgan
Equities Limited and Rand Merchant Bank, a division of FirstRand Bank Limited,
at their respective physical addresses which appear below:
The registered office of Optimum The office of Rand Merchant
Coal: Bank:
Unit B1003, Marlborough Gate 1 Merchant Place
Hyde Park Lane Cnr Rivonia Road and Fredman
Hyde Park 2196 Drive
Johannesburg Sandton 2196
South Africa Johannesburg
South Africa
The office of JP Morgan: The office of Morgan Stanley:
1 Fricker Road, corner Hurlingham 25 Cabot Square
Road Canary Wharf
Illovo London E14 4QA
Johannesburg, 2196 United Kingdom
South Africa
Johannesburg
11 March 2010
Joint bookrunners and managers
Morgan Stanley & Co. International plc
J.P. Morgan Equities Limited
Rand Merchant Bank, a division of FirstRand Bank Limited
Stabilisation Manager
FirstRand Limited
Merchant bank and sponsor
Rand Merchant Bank, a division of FirstRand Bank Limited
Attorneys
Davis Polk & Wardwell LLP
Werksmans Attorneys
Reporting accountants and auditors
KPMG
Date: 11/03/2010 07:28:20 Produced by the JSE SENS Department.
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