| Tue 7 Aug 2007, 8:56 | | ELD - Eland - Firm Intention By Xstrata South Afri |
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ELD
ELD
ELD - Eland - Firm Intention By Xstrata South Africa (Proprietary) Limited
To Make An Offer And Withdrawal Of Cautionary Announcement
Eland Platinum Holdings Limited
(Registration number: 2005/029957/06)
ISIN: ZAE000078655
JSE share code: ELD
("Eland")
Xstrata plc
(Registration number: 4345939)
ISIN: GB0031411001
LSE share code: XTA.L
("Xstrata")
FIRM INTENTION BY XSTRATA SOUTH AFRICA (PROPRIETARY) LIMITED TO MAKE AN
OFFER TO ACQUIRE THE ENTIRE ISSUED SHARE CAPITAL OF ELAND AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcements released by Eland on SENS,
Eland shareholders are advised that Xstrata South Africa (Proprietary)
Limited ("Xstrata SA"), an indirectly wholly-owned subsidiary of
Xstrata, has submitted to the board of directors of Eland ("the
Board") a notice of its firm intention to make an offer to acquire the
entire issued ordinary share capital of Eland (the "Offer").
2. THE OFFER
2.1 Terms and mechanism of the Offer
Xstrata SA is proposing to acquire, by way of a scheme of arrangement
in terms of section 311 of the Companies Act, No. 61 of 1973, as
amended (the "Scheme"), and subject to the conditions detailed in 2.5
below, the entire issued ordinary share capital of Eland ("Scheme
Shares") for an aggregate cash consideration of R7,525,050,540 being
R105 per Eland share (the "Scheme Consideration"). On the
implementation of the Scheme, Eland will become a wholly-owned
subsidiary of Xstrata SA and Eland`s listing on the JSE Limited
("JSE") will be terminated.
Should the Scheme not become operative, Xstrata SA will make a
substitute offer at the Scheme Consideration (the "Substitute Offer")
as further detailed in 3 below.
Subject to the Scheme becoming unconditional and being implemented, or
failing which, the closing of the Substitute Offer, Xstrata SA will
acquire Eltech Trust`s 9% interest in Eland Platinum Mines
(Proprietary) Limited ("EPM"), a 64.99% held subsidiary of Eland (the
"Eltech Trust Shares Acquisition").
2.2 Rationale for the Offer
The Offer represents an excellent opportunity for Xstrata`s Alloys
Business Unit to further develop its position in the platinum group
metals ("PGM") sector, currently represented by its interest in the
Mototolo Joint Venture. Eland`s assets are well positioned
geographically and strategically for future growth, in close proximity
to Xstrata`s chrome operations. The near-term production profile of
the Elandsfontein project, further potential from assets recently
acquired and strong growth pipeline provide an ideal platform from
which to grow a significant PGM business.
2.3 Funding and cash confirmation
Xstrata SA intends funding the Scheme Consideration through existing
Xstrata group resources. Rand Merchant Bank, a division of FirstRand
Bank Limited, has provided the Securities Regulation Panel ("SRP")
with the necessary cash confirmation letter confirming that Xstrata SA
has sufficient resources available to meet its obligations to satisfy
full acceptance of the Offer.
2.4 Market and financial information
The table below sets out a comparison between the Scheme Consideration
and the price at which Eland shares traded immediately prior to the
release of the first Eland cautionary announcement on 11 April 2007
(based on the closing price, 30 and 60 trading day volume weighted
average price ("VWAP")).
Rands Before the Scheme / Offer Premium (%)
Scheme Consideration
Market price on 11 89.00 (1) 105.00 18.0
April 2007
30 day VWAP to 11 59.94 (2) 105.00 75.2
April 2007
60 day VWAP to 11 54.45 (3) 105.00 92.9
April 2007
Notes:
1. The closing share price of Eland on the JSE on 11 April 2007, being
the last trading day preceding the release of the first cautionary
announcement ("pre announcement date").
2. The VWAP at which Eland shares traded on the JSE for the 30 trading
days up to and including the pre announcement date.
3. The VWAP at which Eland shares traded on the JSE for the 60 trading
days up to and including the pre announcement date.
2.5 Conditions precedent to the Offer
The implementation of the Offer by way of the Scheme is subject, inter
alia, to the fulfillment of the following conditions precedent:
2.5.1 the issue of an unqualified recommendation by the Board to the
shareholders of Eland to vote in favour of the Offer;
2.5.2 the receipt of a favourable "fair and reasonable" opinion from an
appropriate external adviser acceptable to the SRP;
2.5.3 the necessary approvals and consents of the Minister of Minerals
and Energy Affairs in terms of S11 of the Minerals and Petroleum
Resources Development Act;
2.5.4 Nedbank Capital, a division of Nedbank Limited ("Nedbank
Capital") written consent being obtained, in terms of the
relevant project finance arrangements, to a change in the
majority ownership and management of EPM as well as any other
relevant consents that may be required from Nedbank Capital;
2.5.5 the Eltech Trust Shares Acquisition being concluded;
2.5.6 all other approvals and consents and/or waivers as may be
necessary in respect of the Offer, including, without limitation,
approvals and consents from all relevant third parties, the SRP,
South African Reserve Bank and the South African competition
authorities;
2.5.7 the Scheme being approved by a majority representing not less
than three-fourths of the votes exercisable by members of Eland
entitled to attend and vote at the scheme meeting who are present
and voting (either in person or by proxy) at such meeting; and
2.5.8 the High Court of South Africa sanctioning the Scheme.
2.6 Opinions and recommendations
The Board has established a sub-committee headed by an independent non
executive director to manage and co-ordinate the Offer process and to
assist the Board in making a recommendation to Eland shareholders as
required by the Securities Regulation Code on Takeovers and Mergers
and the Rules of the SRP.
The sub-committee has appointed Merrill Lynch South Africa
(Proprietary) Limited ("Merrill Lynch") as the appropriate external
adviser to advise on whether the terms and conditions of the Scheme,
or failing the implementation thereof, the Substitute Offer, are fair
and reasonable to Eland shareholders. Merrill Lynch`s opinion will be
contained in the circular referred to in paragraph 4 below.
2.7 Irrevocable undertakings
Shareholders holding 51% of the issued ordinary shares of Eland have
provided Xstrata SA with irrevocable undertakings to inter alia vote
in favour of the Scheme and, in the event of a Substitute Offer being
made, to accept the Substitute Offer.
2.8 Scheme implementation agreement
Eland and Xstrata SA have entered into a Scheme Implementation
Agreement ("SIA") in which Eland has agreed to support and guide the
transaction as well as conduct its business in the normal course.
In terms of the SIA, Xstrata SA may, on or before the last business
day prior to the court hearing to sanction the Scheme, withdraw the
Offer in the event of a material adverse change to the consolidated
net assets and operations of Eland.
The SIA makes provision for a break fee of 1% of the aggregate
purchase consideration (being the aggregate of the Scheme
Consideration and consideration payable in terms of the Eltech Trust
Shares Acquisition) in the event that the Scheme or Substitute Offer
(as the case may be) is not implemented as a result of a breach of the
SIA by Eland.
Other than for the irrevocable undertakings and the SIA referred to
above there are no other arrangements, undertakings or agreements
(including compensation arrangements) which have any connection with,
or dependence on the Offer, between Xstrata SA, or any concert party,
and any director of Eland.
A summary of the key terms of the SIA will be contained in the
Circular referred to in paragraph 4 below.
3 SUBSTITUTE OFFER
Should the Scheme not become operative, Xstrata SA will make the
Substitute Offer at the Scheme Consideration. The Substitute Offer is
subject to the conditions precedent referred to in paragraph 2.5 save
for 2.5.7 and 2.5.8. Shareholders holding 51% of the issued share
capital of Eland have irrevocably undertaken to accept the Substitute
Offer. Should at least nine-tenths of the Eland shareholders accept
the Substitute Offer, Xstrata SA intends to invoke the provisions of
Section 440K of the Companies Act.
4 SALIENT DATES AND DOCUMENTATION
Further announcements, including the salient dates of the Offer, will
be released on SENS and published in the press in due course.
A circular containing full details of the Offer, including the Scheme
documentation, will be posted to Eland shareholders within 30 days of
this announcement.
5 WITHDRAWAL OF CAUTIONARY
Shareholders are advised that the Eland cautionary announcement is
hereby withdrawn and accordingly caution is no longer required to be
exercised when dealing in their Eland shares.
7 August 2007
Financial adviser and Equity capital market Attorneys to Eland
lead sponsor to Eland adviser and sponsor to Routledge
NMR Eland
Nedbank Capital
Merchant bank to Xstrata Attorneys to Xstrata
RMB Werksman
Date: 07/08/2007 08:56:01 Produced by the JSE SENS Department.
