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KMB
KMB
Kumba - Terms of the BEE transaction and withdrawal of cautionary announcement
Kumba Resources Limited
(Incorporated in the Republic of South Africa)
(Registration number 2000/011076/06)
Share code: KMB & ISIN: ZAE000034310)
("Kumba" or "the company")
Terms of the black economic empowerment transaction and withdrawal of cautionary
announcement
1. Introduction
Kumba shareholders were advised through a joint announcement by Kumba, Anglo
American plc and Eyesizwe Mining (Proprietary) Limited, released on 13 October
2005, that Kumba had entered into a Transaction Framework Agreement, in terms of
which the parties thereto would enter into a series of transactions which, if
implemented, would result in the unbundling and separate listing of Kumba Iron
Ore Limited ("Kumba Iron Ore") and the transfer of a controlling interest in
Kumba (which would be renamed Exxaro Resources Limited ("Exxaro")) to Main
Street 333 (Proprietary) Limited ("BEE Holdco"), a black-owned and controlled
vehicle, by means of a fully funded and sustainable black economic empowerment
("BEE") transaction ("the transaction").
Kumba shareholders are advised that all legal agreements necessary to implement
the transaction have been finalised and that, subject to the fulfilment of the
conditions precedent set out in paragraph 14 below, the transaction will be
implemented.
2. Strategic rationale and prospects
Since its establishment in 2001, Kumba has viewed BEE as a strategic imperative
to establish itself as a company truly representative of South Africa"s
demographics. Accordingly, Kumba"s strategy was to:
- establish a leading, independent South African mining house;
- build a credible empowerment base for Kumba; and
- position Kumba to play a constructive role in the transformation and
development of the South African mining industry in particular and the South
African economy in general.
Kumba"s pre-listing statement, dated 29 October 2001 noted the following:
"Kumba views BEE as a fundamental prerequisite for the long-term development and
stability of the South African economy. Therefore, a distinguishing feature of
its strategy is to commit the company to meaningful and sustainable BEE
initiatives in all facets of its business. Progressive empowerment policies, the
setting of aggressive employment equity targets and BEE are integral components
of the company"s value system and code of conduct."
Similarly, Anglo American plc and the Industrial Development Corporation
("IDC"), as the major shareholders of Kumba and as significant participants in
the South African economy, are fully supportive of the letter and spirit of the
Mineral and Petroleum Resources Development Act ("MPRDA") and the Mining Charter
and have, therefore, played a key role in introducing meaningful and sustainable
BEE in Kumba. The transaction will establish Exxaro as the premier, empowered,
diversified mining company in South Africa, with a strong investment case,
capable of sustainable growth and representative of South Africa"s demographics.
While the Mining Charter prescribes BEE ownership targets of 15% by 2009 and 26%
by 2014, the transaction will, upon implementation, significantly exceed the
requirements of the Mining Charter through:
- establishing Exxaro as a 56% black-owned, controlled and managed mining
company; and
- the empowerment of Kumba"s iron ore assets through 26% black ownership of
Sishen Iron Ore Company (Proprietary) Limited ("SIOC").
Kumba believes that the separate listing of Kumba"s iron ore assets will unlock
value for all Kumba shareholders through creating Kumba Iron Ore as a focused
iron ore company and Exxaro as South Africa"s flagship empowerment company. In
addition, Exxaro will be positioned for growth through expansions and strategic
acquisitions, including the options to acquire Namakwa Sands and a 26% interest
in Black Mountain, as set out in paragraph 3.2 below.
3. The transaction
3.1 Transaction steps
The transaction comprises the following series of transaction steps, which will
be implemented contemporaneously and which will result in BEE Holdco obtaining a
52,7% shareholding in Exxaro before implementation of the Igoda transaction
described in paragraph 8.1.2 below::
Step 1
Kumba will transfer 79,38% of the issued ordinary shares in SIOC to Kumba Iron
Ore, a wholly-owned subsidiary of Kumba, in exchange for ordinary shares in
Kumba Iron Ore. Exxaro will, thereafter, hold 20,62% of SIOC directly.
The transfer by Kumba of the ordinary shares in SIOC to Kumba Iron Ore will be
subject to approval by Kumba"s shareholders in terms of section 228 of the
Companies Act, No 61 of 1973 ("Companies Act").
On the implementation of the SIOC Employee Share Participation Scheme ("SIOC
ESPS"), as set out in Step 8 below, Kumba Iron Ore"s interest in SIOC will
reduce to 77% and Exxaro"s interest in SIOC will reduce to 20%.
Kumba Iron Ore will further reduce its holding in SIOC to 74% as a result of the
disposal of 3% of SIOC to a broad-based community development trust established
for the benefit of communities in the Northern Cape Province of South Africa as
further described in Step 8.
Step 2
Kumba will unbundle, by way of a dividend in specie in terms of section 90 of
the Companies Act, the entire issued ordinary share capital of Kumba Iron Ore to
its shareholders by way of a reduction of Kumba"s share premium account. The
issued ordinary shares in Kumba Iron Ore will be listed on the JSE by way of an
introduction. Kumba will, subsequent to the unbundling and subject to approval
by Kumba shareholders, be renamed Exxaro.
Further information on the unbundling is included in paragraph 6 below.
Step 3
Exxaro will undertake a pro rata repurchase in terms of which it will make an
offer to Exxaro shareholders to repurchase 38 331 012 Exxaro shares on a pro
rata basis at the pro rata repurchase price of R45,99 per Exxaro share.
Further information on the pro rata repurchase is included in paragraph 7 below.
Step 4
Exxaro will acquire 100% of the equity in Eyesizwe Coal (Proprietary) Limited
("Eyesizwe Coal") for R1 603 million in cash. The vendors of Eyesizwe Coal will,
through a special purpose vehicle, subscribe for 54,1% of the ordinary shares in
BEE Holdco for a cash subscription of R1 393 million.
Should the Igoda transaction be implemented, the Eyesizwe Coal vendors will
receive a further purchase consideration of R135 million, of which R50 million
will be used to subscribe for additional shares in BEE Holdco, increasing the
indirect interests of the Eyesizwe Coal vendors in BEE Holdco to 55%. BEE Holdco
will, in turn, subscribe for 1 674 321 Exxaro shares for R29,86 per Exxaro
share, increasing BEE Holdco"s shareholding in Exxaro from 52,7% to 52,9%.
Step 5
Morning Tide Investments 168 (Proprietary) Limited ("Tiso SPV") and Eyabantu
Capital Consortium (Proprietary) Limited ("Eyabantu SPV") will each subscribe
for 9,7% of the issued share capital of BEE Holdco for a subscription price of
R250 million each in cash. The respective interests of Tiso SPV and Eyabantu SPV
will be reduced to 9,5% should the Igoda transaction be implemented.
The IDC will facilitate the subscription by Basadi Ba Kopane (Proprietary)
Limited ("BEE Women"s Group") for shares in BEE Holdco by selling 7 061 773
Exxaro shares to BEE Women"s Group in exchange for BEE Women"s Group preference
shares and cash. BEE Women"s Group will, in turn, sell all of the Exxaro shares
so acquired to BEE Holdco in exchange for an 11,2% interest in BEE Holdco after
implementing the transaction for an aggregate subscription price of R289
million. BEE Women"s Group"s interest in BEE Holdco will be reduced to 11,0%
should the Igoda transaction be implemented.
Step 6
The IDC will sell 34 436 840 Exxaro shares to BEE Holdco for a purchase
consideration of R1 603 million. The purchase consideration will be partly
settled by the issue of ordinary shares in BEE Holdco for a total issue price of
R394 million and the balance of the consideration will be settled through the
issue of BEE Holdco IDC preference shares.
Following the implementation of the transaction, the IDC will not hold any
Exxaro shares, however it will hold 15,3% of BEE Holdco"s issued ordinary share
capital. IDC"s interest in BEE Holdco will be reduced to 15,0% should the Igoda
transaction be implemented.
Step 7
Exxaro will issue 65 334 843 Exxaro shares to BEE Holdco, for a cash
consideration of R1 951 million, representing a subscription price of R29,86 per
Exxaro share.
Further information on the issue for cash is included in paragraph 9 below.
Step 8
A special purpose vehicle representing a trust, the beneficiaries of which are
communities in the Northern Cape Province, will acquire a 3% shareholding in the
issued share capital of SIOC from Kumba Iron Ore for a consideration of R458
million, to be settled through the issue of preference shares to Kumba Iron Ore.
In addition, SIOC will issue a 3,09% shareholding in the issued share capital of
SIOC to the SIOC ESPS, which will result in the SIOC ESPS owning 3,0% of SIOC
post the implementation of the transaction. Further information on the SIOC ESPS
is disclosed in paragraph 10 below.
Step 9
Anglo South Africa Capital (Proprietary) Limited ("ASAC") will sell 79 717 417
Exxaro shares to BEE Holdco for R35,75 per share. The purchase consideration
will be settled through the issue by BEE Holdco of 79 717 417 BEE Holdco ASAC
preference shares to ASAC. The dividends received by ASAC on the BEE Holdco ASAC
preference shares will be equal to the dividends received by BEE Holdco on the
Exxaro shares sold to BEE Holdco by ASAC.
BEE Holdco will advance an interest bearing loan of R2 850 million to Anglo
American SA Finance Limited.
Step 10
The Exxaro Employee Empowerment Participation Scheme ("Exxaro EEPS") will
subscribe for 3% of Exxaro"s issued share capital after the implementation of
the transaction. Further information on the Exxaro EEPS is disclosed in
paragraph 10 below.
3.2 Namakwa Sands and Black Mountain transactions
The Namakwa Sands option and the Black Mountain option, which are exercisable
within 90 days from the transaction completion date, grant Exxaro, through
wholly-owned subsidiaries, the right to acquire the following businesses from
Anglo Operations Limited:
- Namakwa Sands, as a going concern, for a cash consideration of R2 015
million, subject to certain price adjustments; and
- 26% of the issued ordinary share capital of Black Mountain SPV (which will
hold the Black Mountain business) for a cash consideration of R180 million,
subject to certain price adjustments.
The acquisitions resulting from the exercise of the options will be treated in
terms of the applicable provisions of the JSE Listings Requirements.
4. Group structure
4.1 Current group structure
The current structure of Kumba is reflected in the diagram below:
SEE PRESS ANNOUNCEMENT
4.2 Proposed group structure
The ownership structure of Exxaro and SIOC, after the implementation of the
transaction, and based on the assumption that the Igoda transaction is
implemented, is illustrated in the diagram below:
SEE PRESS ANNOUNCEMENT
5. BEE status
5.1 BEE Holdco"s empowerment status
BEE Holdco, Eyesizwe SPV, Eyabantu SPV, Tiso SPV, BEE Women"s Group and their
respective shareholders have undertaken to ensure that each of them retains its
historically disadvantaged South African ("HDSA") status until the earlier of
the tenth anniversary of the transaction completion date and the date on which
ASAC and BHP Billiton plc ("the designated parties") are satisfied that the
empowerment credits obtained, directly or indirectly, pursuant to the
transaction can no longer be lost or rescinded ("the final date") and therefore
that Exxaro remains an HDSA until the final date.
5.2 Exxaro"s empowerment status
BEE Holdco and Exxaro have given certain undertakings which will ensure that
Exxaro maintains its HDSA status until the final date. Exxaro"s articles of
association will therefore, subject to shareholder approval, incorporate various
provisions entrenching the majority HDSA status of its board of directors and
restricting the issue of new shares or the alteration of its share capital in a
manner that may result in Exxaro losing its HDSA status.
Exxaro has also given undertakings not to dispose of the assets of Eyesizwe Coal
or SIOC, or to the extent that the Namakwa Sands and Black Mountain options are
exercised, the Namakwa Sands business or its interest in Black Mountain, until
the final date to ensure that the designated parties continue to receive credits
under the Mining Charter.
6. The unbundling
Subject to the fulfilment of the conditions precedent set out in paragraph 14
below, Kumba will transfer 79,38% of its shares in SIOC into a wholly-owned
subsidiary, Kumba Iron Ore, in exchange for Kumba Iron Ore shares. Subsequent
thereto, the entire issued ordinary share capital of Kumba Iron Ore will be
distributed to Kumba"s existing shareholders by way of a dividend in specie in
terms of section 90 of the Companies Act by way of a reduction of Kumba"s share
premium account.
The sale by Kumba of the shares in SIOC to Kumba Iron Ore will be subject to
approval in terms of section 228 of the Companies Act by Kumba"s shareholders
and, accordingly, shareholders will be required to vote in favour of an ordinary
resolution approving the sale.
In the event that the requisite resolutions are passed, the issued ordinary
shares in Kumba Iron Ore will be listed on the JSE by way of an introduction. In
terms of the distribution, Kumba shareholders will receive one Kumba Iron Ore
share for every Kumba share held on the record date.
7. The pro rata repurchase
In terms of the pro rata repurchase and subject to the fulfilment of the
conditions precedent set out in paragraph 14 below, Exxaro will make an offer to
Exxaro shareholders to repurchase 38 331 012 Exxaro shares, being Kumba shares
"ex" the entitlement to the Kumba Iron Ore distribution, pro rata to their
shareholding, at the pro rata repurchase price of R45,99 per Exxaro share.
The shares to be repurchased in terms of the pro rata repurchase constituted
approximately 12,37% of the shares in issue at 7 September 2006 ("the last
practicable date"). As Kumba shares may be issued between the last practicable
date and the last day to trade to participate in the pro rata repurchase, as a
result of the issue of shares in terms of Kumba"s existing share incentive
schemes, the percentage of the shares to be repurchased may decrease. Should the
maximum number of shares be issued in terms of the existing share incentive
schemes, the shares to be repurchased in terms of the pro rata repurchase will
constitute approximately 11,93% of the shares in issue on the record date for
the pro rata repurchase.
Exxaro shareholders will be afforded the opportunity to tender excess Exxaro
shares into the pro rata repurchase to the extent that some Exxaro shareholders
may elect not to participate in the pro rata repurchase. Such excess Exxaro
shares will be acquired from Exxaro shareholders on an equitable basis.
Exxaro shareholders who become entitled to dispose of fractions of Exxaro shares
in terms of the pro rata repurchase will have such entitlement rounded up or
down to the nearest whole number.
To the extent required, ASAC has undertaken to offer to sell such additional
Exxaro shares in the pro rata repurchase to ensure that the maximum number of
Exxaro shares is repurchased. Exxaro will utilise distributable reserves to
execute the pro rata repurchase.
8. The Eyesizwe acquisition
8.1 Terms of the Eyesizwe acquisition
8.1.1 Purchase consideration
Subject to the fulfilment of the conditions precedent, Exxaro will acquire all
the shares in Eyesizwe Coal from the Eyesizwe Coal vendors for a cash
consideration of R1 603 million. The purchase consideration for Eyesizwe Coal
will be subject to the adjustments set out below.
The Eyesizwe Coal vendors will use R1 393 million to subscribe, through
Dreamvision Investments 15 (Proprietary) Limited ("Eyesizwe SPV"), for 54,1% of
the ordinary shares in BEE Holdco.
8.1.2 Igoda JV adjustment mechanism
In March 2006, Eyesizwe Coal entered into an agreement with Sasol Mining
(Proprietary) Limited to acquire a 35% stake in the Igoda JV ("the Igoda
transaction"). Should the Igoda transaction be completed, Exxaro will pay a
further R135 million in cash to the Eyesizwe Coal vendors. The Eyesizwe Coal
vendors will use R50 million of the proceeds to subscribe for further shares in
BEE Holdco through Eyesizwe SPV. BEE Holdco will, in turn, use the cash received
to subscribe for further shares in Exxaro at an issue price of R29,86 per Exxaro
share. This will result in BEE Holdco"s interest in Exxaro increasing from 52,7%
to 52,9%.
Further information on the Igoda JV is set out in paragraph 8.2.2 below.
8.1.3 New Clydesdale Colliery adjustment mechanism
The valuation of Eyesizwe Coal includes an amount of R326 million relating to
the New Clydesdale Colliery. Eyesizwe Coal has applied for the new order mining
rights required to enable it to continue operating the New Clydesdale Colliery.
In the event that these rights are not granted to Eyesizwe Coal, the purchase
price will be subject to adjustment.
In terms of the New Clydesdale Colliery adjustment mechanism, unless otherwise
agreed by Exxaro and the Eyesizwe Coal vendors, the Eyesizwe Coal purchase
consideration will be reduced by an amount of R326 million. The amount of the
reduction in the selling price will be subject to certain adjustments to take
account of tax and costs incurred by Exxaro as a result of the adjustment
mechanism.
Should the adjustment mechanism be implemented, Exxaro will implement a specific
repurchase of its shares from BEE Holdco, utilising an amount equal to the New
Clydesdale Colliery purchase price adjustment, at the same price at which the
shares were issued to BEE Holdco in terms of the issue for cash, being R29,86
per share, as described in paragraph 9 below.
In the event that the an adjustment of R326 million is made in respect of the
New Clydesdale Colliery adjustment mechanism, BEE Holdco"s interest in Exxaro
will decrease by approximately 1,2%.
8.1.4 Mafube JV adjustment mechanism
The valuation of Eyesizwe Coal of R1 603 million includes an amount of R404
million relating to the Mafube JV. Implementation of the Mafube JV is subject to
the fulfilment of certain conditions precedent relating to the conversion of
mineral rights and granting of prospecting rights. In the event that the
conditions precedent are not fulfilled and the Mafube JV does not become
operational, the Eyesizwe Coal vendors have agreed to an adjustment mechanism in
terms of which the purchase price paid by Exxaro for Eyesizwe Coal will be
reduced to take into account the fact that the Mafube JV will not be
implemented.
In the event that the Mafube JV is not implemented, the Eyesizwe Coal purchase
price will be reduced by R404 million. The amount of the reduction in the
selling price will be subject to certain adjustments to take account of tax and
costs incurred by Exxaro as a result of the adjustment mechanism.
Should the adjustment mechanism be implemented, Exxaro will repurchase shares
from BEE Holdco, utilising an amount of R404 million, at the same price at which
the shares were issued to BEE Holdco in terms of the issue for cash, being
R29.86 per share, as described in paragraph 9 below.
In the event that an adjustment of R404 million is made in respect of the Mafube
JV adjustment mechanism, BEE Holdco"s interest in Exxaro will decrease by
approximately 1,5%.
Further information on the Mafube JV is set out in paragraph 8.2.3 below.
8.2 Overview of Eyesizwe Coal
8.2.1 Eyesizwe Coal"s operations
Salient physical information relating to Eyesizwe Coal for the year ended 31
December 2005 and for the interim period ended 30 June 2006 is shown below:
Year Six months
ended ended
31 December 30 June
2005 2006
Total Production (million tonnes) 22,8 10,0
Total Sales (million tonnes) 22,4 10,0
- Eskom 20,2 9,1
- Other Domestic 1,4 0,4
- Exports 0,8 0,5
Capital Expenditure (R million) 36,6 36,6
Eyesizwe Coal is South Africa"s fourth-largest coal producer with a production
capacity of approximately 26,5 million tonnes per annum ("Mtpa"), which is sold
into both the export and domestic thermal coal markets (including Eskom power
stations). Eyesizwe Coal"s assets consist of four operating mines:
- Matla Colliery, a mining complex of underground shafts contracted to
supply approximately 12,5Mtpa of coal to Eskom"s Matla Power Station. The mine
has a capacity of 18Mtpa of coal;
- New Clydesdale Colliery, an underground and opencast mine which produces
approximately 1,0Mtpa of saleable coal, largely for the export market;
- Arnot Colliery, an underground and opencast mining complex that is
contracted to supply approximately 5,0Mtpa of coal to Eskom"s Arnot Power
Station. The mine is capable of supplying up to 6,5Mtpa of coal; and
- Glisa Colliery, which forms part of the Northern Block Complex, an
opencast and underground mine which produces approximately 1,0Mtpa of saleable
coal which is intended mainly for supply to the domestic industrial market.
Eyesizwe Coal"s assets also include, inter alia:
- other coal reserves or resources located in the Witbank and Waterberg
coalfields, totaling in excess of 5 billion tonnes of coal; and
- 830ktpa of throughput entitlement at Richards Bay Coal Terminal ("RBCT"),
translating to a 1,2% shareholding in RBCT.
8.2.2 The Igoda JV
If the Igoda transaction is implemented, Eyesizwe Coal will acqire a 35%
interest in the Igoda JV. The Igoda JV comprises the full value chain of Sasol"s
coal export mining business - the Twistdraai Colliery and beneficiation plant at
Secunda, the marketing and logistics components of its export coal business, as
well as Sasol Mining"s 5% shareholding in RBCT. The Igoda JV will mine,
beneficiate, market and supply utility coal for the international export market.
It will produce a minimum export production of 3,6 Mtpa and will supply
approximately 4 Mtpa of middlings coal to Sasol Synfuels at Secunda through
Sasol Mining. The Igoda JV has a life-of-mine in excess of 9 years.
8.2.3 Mafube JV
The Mafube JV is an incorporated joint venture established by ASAC and Eyesizwe
Coal and to which it is intended that the business currently conducted by Anglo
Coal in respect of, inter alia, the Springboklaagte mineral rights, and the
expansion project in respect of such business, is to be transferred as a going
concern. ASAC and Eyesizwe Coal will each hold 50% of the Mafube JV.
Phase I of the Mafube project has been implemented by Anglo Coal (which holds
the relevant old order mining licence) and coal is currently being supplied to
Eskom, Anglo Coal and Eyesizwe Coal.
Anglo Coal has proceeded with the feasibility study in respect of Phase II
(which involves the construction of a coal washing plant and an increase in the
coal extraction rate requiring the contribution of additional reserves for
mining post 2014) to produce between 4 and 6Mtpa of coal in order to yield
approximately 2 to 3Mtpa of export coal product and not less than 1,18Mtpa of
coal for supply to Eskom.
The Mafube JV will acquire the Mafube business from Anglo Coal once the
requisite mineral rights in respect of Phases I and II have been converted to
new order rights and consent has been obtained for the transfer of such rights
to the Mafube JV in accordance with the MPRDA.
8.3 Financial information
A summary of Eyesizwe Coal"s financial performance and position for the 2004 and
2005 financial years and the interim period ended 30 June 2006 is as follows:
Year Year Six months
ended ended ended
31 December 31 December 30 June
R million 2004 2005 2006*
EBITDA 130 156 24
EBIT 77 100 (7)
Net profit after tax 48 64 (25)
Net asset value 344 394 369
*A loss was reported at the Glisa Colliery (part of the Northern Block Complex)
during the first half of 2006. Initiatives are currently underway to restore the
profitability of these operations.
8.4 Related party transaction
The acquisition by Kumba of Anglo American plc"s interest in Eyesizwe Coal
is a small related party transaction in terms of paragraph 10.7 of the JSE
Listings Requirements, as Anglo American plc is a major Kumba shareholder.
Accordingly, an independent expert has provided the independent sub-committee of
the Kumba Board with a written opinion, dated Wednesday, 13 September 2006, that
at this date, based upon and subject to matters considered, assumptions used and
qualifications set forth therein, the total aggregate cash consideration paid by
Kumba to ASAC in terms of the acquisition of Eyesizwe Coal, from a financial
point of view, is fair and reasonable to Kumba shareholders in such capacity. A
copy of this opinion will available for inspection at the registered office of
Kumba from Monday, 9 October 2006 until Thursday, 2 November 2006.
9. The issue of shares for cash
Subject to the transaction becoming unconditional, Exxaro will issue 65 334 843
Exxaro shares to BEE Holdco for a cash consideration of R1 951 million,
representing a subscription price of R29,86 per Exxaro share.
In the event that the Igoda transaction is implemented, as discussed in
paragraph 8.1.2 above, Exxaro will issue a further 1 674 321 Exxaro shares to
BEE Holdco at R29,86 per Exxaro share, for a total cash subscription price of
R50 million.
10. Employee participation
Exxaro and SIOC will, respectively, implement the Exxaro EEPS and the SIOC ESPS,
to:
- provide a framework for the incentivisation and retention of certain
employees;
- provide for the promotion of black economic empowerment; and
- increase the broad-based participation in the transaction as contemplated
in the Mining Charter.
The Exxaro EEPS and SIOC ESPS will, respectively, place 3% of the equity in
Exxaro and SIOC under the control of their employees, the majority of whom are
HDSAs, and will also allow participants to participate in capital growth and
dividends in respect of a 3% interest in Exxaro and SIOC.
11. Conditional mandatory offer to Exxaro shareholders As a result of the
implementation of the transaction, BEE Holdco"s interest in Exxaro will exceed
35% and, accordingly, in terms of the Securities Regulation Panel ("SRP") Code
on Take-overs and Mergers ("SRP Code"), BEE Holdco is required to extend a
mandatory offer to Exxaro shareholders to acquire all of their Exxaro shares on
the same terms on which it has acquired control of Exxaro.
Kumba will request a written confirmation from the SRP in terms of Rule 8.1 of
the SRP Code allowing BEE Holdco to dispense with the requirement to extend the
mandatory offer to Kumba shareholders, provided that a simple majority of the
independent Kumba shareholders in general meeting vote in favour of a resolution
waiving the requirement for the mandatory offer ("whitewash resolution").
If the whitewash resolution is not approved or if the SRP does not grant
exemption from making the mandatory offer, BEE Holdco will implement the
mandatory offer, in terms of which it will make an offer to Exxaro shareholders
to acquire all their Exxaro shares for a cash consideration of R45,99 per Exxaro
share.
Should the whitewash resolution not be approved, or if the SRP does not dispense
with the requirement for the mandatory offer, BEE Holdco will publish an
announcement setting out its firm intention to make an offer and setting out the
full terms of the offer.
12. Financial effects
The table below sets out the pro forma financial effects of the transaction on
Kumba"s published:
- earnings per share and headline earnings per share for the six months
ended 30 June 2006, based on the assumption that the transaction had been
implemented on 1 January 2006; and
- net asset value and net tangible asset value per share at 30 June 2006,
based on the assumption that the transaction had been implemented on 30 June
2006.
The pro forma financial effects, which are the responsibility of the Kumba
directors, have been prepared for illustrative purposes only and, due to the
nature thereof, may not fairly present Kumba"s financial position, changes in
equity, results of operations or cash flows.
Before After Change
(cents) (cents) (%)
Earnings per share 348 6 343 1 723
Illustrative adjusted earnings per share 348 95 (1) (73)
Headline earnings per share 508 307 (40)
Net asset value per share 2 701 2 512 (7)
Net tangible asset value per share 2 680 2 087 (22)
Note 1: The illustrative adjusted earnings per share figure in the "After"
column shows the effect of the transaction on earnings per share after adjusting
for certain non-recurring accounting entries arising from the implementation of
the transaction.
13. Salient dates AND TIMES
2006
Circular and notice of general meeting posted
to Kumba shareholders on or about Monday, 9 October
Last day for receipt of proxies for the general meeting
by 10:00 on Tuesday, 31 October
General meeting of Kumba shareholders at 10:00 on Thursday, 2 November
Results of general meeting released on SENS on Thursday, 2 November
Results of general meeting published in the press on Friday, 3 November
Pro rata repurchase opens Friday, 3 November
Mandatory offer opens on* Friday, 3 November
Transaction expected to become unconditional
on or about Thursday, 9 November
Finalisation announcement released on SENS and
published in the press on or about Thursday, 9 November
Last day to trade to participate in the unbundling
and the pro rata repurchase on Friday, 17 November
Last day to trade to participate in the mandatory
offer on* Friday, 17 November
Kumba Iron Ore shares trade separately on the JSE on Monday, 20 November
Announcement of apportionment of base cost for
Capital Gains Tax purposes on or about Wednesday, 22 November
Last day to trade in Kumba shares prior to the change
of name on Friday, 24 November
Record date to participate in the unbundling
and the pro rata repurchase on Friday, 24 November
Pro rata repurchase closes at 12:00 on Friday, 24 November
Record date to participate in the mandatory offer on* Friday, 24 November
Mandatory offer closes at 12:00 on* Friday, 24 November
Kumba Iron Ore share certificates will be posted,
by registered post, at the risk of the certificated Kumba
shareholders concerned, to certificated Kumba
shareholders, and dematerialised Kumba shareholders
will have their accounts at their Central Securities
Depositary Participant ("CSDP") or broker updated
and credited on Monday, 27 November
Exxaro shares commence trading on the JSE on Monday, 27 November
Cheques in respect of the pro rata repurchase
consideration will be posted, by ordinary post,
at the risk of the certificated Kumba shareholders
concerned, to certificated Kumba shareholders,
and dematerialised Kumba shareholders will have
their accounts at their CSDP or broker updated
and credited on Tuesday, 28 November
Cheques in respect of the mandatory offer consideration
will be posted, by ordinary post,
at the risk of the certificated
Kumba shareholders concerned, to certificated Kumba
shareholders, and dematerialised Kumba shareholders
will have their accounts at their CSDP or broker updated
and credited on* Tuesday, 28 November
Record date for the change of name on Friday, 1 December
Exxaro share certificates reflecting the name change,
as well as share certificates in respect of shares not
repurchased, will be posted, by registered post, at the risk
of the certificated Kumba shareholders concerned,
to certificated Kumba shareholders, and dematerialised
Kumba shareholders will have their accounts at their CSDP
or broker updated on Monday, 4 December
*Assuming the whitewash resolution is not approved or the SRP does not dispense
with the requirement for the mandatory offer.
The above dates and times are subject to change. Any changes thereto will be
published in the press and released on SENS.
14. Conditions precedent
The transaction is subject to the fulfilment of, inter alia, the following
outstanding conditions precedent:
- approval by Kumba shareholders of the special and ordinary resolutions
necessary to implement the transaction;
- the registration by the Companies and Intellectual Property Registration
Office (CIPRO) of the special resolutions;
- obtaining of all outstanding regulatory approvals;
- obtaining of third party consents to the cession and delegation of
certain material contracts; and
- the determination to the satisfaction of BEE Holdco"s debt providers of
certain share cover ratios.
15. General meeting
A general meeting of Kumba shareholders ("the general meeting") will be
held at Kumba"s registered office, Roger Dyason Road, Pretoria West, at 10:00 on
Thursday, 2 November 2006 to consider and, if deemed fit, pass with or without
modification, the special and ordinary resolutions set out in the notice of
general meeting attached to and forming part of the circular to be sent to
shareholders as detailed in paragraph 16 below.
16. Further documentation
A circular setting out the full terms of the transaction and convening the
general meeting will be posted to shareholders on or about Monday, 9 October
2006. The circular will be accompanied by Revised Listing Particulars in respect
of Exxaro and a Pre-listing Statement in respect of Kumba Iron Ore.
17. Withdrawal of cautionary announcement
Kumba shareholders are referred to the terms of the transaction published in
this announcement and are advised that caution is no longer required to be
exercised when dealing in their Kumba shares.
27 September 2006
Merchant bank, transaction sponsor and debt adviser to Kumba
Rand Merchant Bank
A division of FirstRand Bank Limited
Attorneys to Kumba
Deneys Reitz Attorneys
Structuring, financial and debt adviser to Anglo American plc
Deutsche Securities
Member of the Deutsche Bank Group
Independent technical adviser
SRK Consulting
Engineers and Scientists
Steffen, Robertson and Kirsten (South Africa) (Pty) Ltd
(Registration number 95/12890/07)
Financial adviser to Eyabantu
Nedbank Capital
Attorneys to Anglo American plc
Webber Wentzel Bowens
Independent financial expert
Citigroup
Citigroup Global Markets Limited
Adviser to the IDC
ABSA Capital
Attorneys to the IDC
Hofmeyr
The Legal Authority
Hofmeyr Herbstein & Gihwala Inc.
www.hofmeyr.com
Attorneys to the Tiso Consortium
TWB
Tugendhaft Wapnick Banchetti And Partners
Attorneys to the Eyabantu Consortium and the BEE Women"s Group
Kwinana Nyapotse Inc.
Corporate law advisers to Kumba
CLS
Lead sponsor to Anglo American plc and Kumba
JP Morgan
J.P. Morgan Equities Limited
(Registration number 1995/011815/06)
Reporting accountants
Deloitte.
Deloitte & Touche
Registered Auditors
Facilitators
Bhp Billiton
IDC
Joint advisers to Eyesizwe
PriceWaterhouseCoopers
Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
Schwarznorthinc
Attorneys
Afropulse Group
Bell dewar hall
Reg 1995/004675/21
Maforah Nkwe Attorneys
Date: 27/09/2006 05:00:23 PM Produced by the JSE SENS Department
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