| Fri 7 Sep 2007, 17:14 | | DMR - Diamond Core Resources Limited - Firm Intent |
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DMR
DMR
DMR - Diamond Core Resources Limited - Firm Intention
Diamond Core Resources Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/013468/06)
JSE share code: DMR & ISIN: ZAE000076956
("Diamond Core")
BRC DIAMOND CORPORATION
BRC Diamond Corporation
(Incorporated in Canada)
(Corporation number 627115-4)
TSX-V share code: BRC ISIN:
CA05565C1095
("BRC")
FIRM INTENTION BY BRC TO MAKE AN OFFER TO ACQUIRE ALL OF THE ISSUED ORDINARY
SHARES OF DIAMOND CORE AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcements published by Diamond Core on 4 June
2007, 5 July 2007 and 2 August 2007, shareholders are advised that the board of
directors of Diamond Core ("the Board") has received an offer from BRC ("the
Offer") to acquire all of the issued ordinary shares of Diamond Core and
thereby to effect a merger of BRC and Diamond Core ("the Merger"). This
announcement sets out the terms of the Offer.
2. Terms of the Offer
The Offer is to be effected, subject to the conditions set out in paragraph 4
below, by way of a court-sanctioned scheme of arrangement ("Scheme") under the
provisions of Section 311 of the Companies Act, 1973 (South Africa), in terms
of which Diamond Core shareholders will, if the Scheme becomes operative,
receive 1 new BRC common share for every 24.5 Diamond Core ordinary shares held
("the Scheme Consideration"). The common shares of BRC are presently listed on
the TSX Venture Exchange. However, BRC has applied for a listing of its common
shares on both the Toronto Stock Exchange and the JSE Limited ("JSE") (with
such listings being subject to meeting the listing requirements of such stock
exchanges).
3. Rationale for the Offer
The rationale for the Offer is to effect the Merger which will result in the
creation of a new growth focused diamond exploration and development company
with exploration opportunities in the Democratic Republic of Congo (which are
presently owned by BRC) and various mining rights and assets in the Republic of
South Africa (which are presently held by Diamond Core).
4. Conditions precedent to the Scheme
The implementation of the Scheme is subject to the fulfilment of the following
conditions precedent -
4.1 the Scheme being approved by a majority representing not less than
three-fourths of the votes exercisable by the Scheme members present and
voting, either in person or by proxy, at the meeting convened to consider the
Scheme;
4.2 the Court sanctioning the Scheme;
4.3 a certified copy of the Order of Court sanctioning the Scheme being
registered by the Registrar in terms of the Companies Act;
4.4 the competition authorities approving the Scheme in terms of the
Competition Act, either unconditionally or subject to such conditions as may be
acceptable to BRC and Diamond Core, acting reasonably;
4.5 the Exchange Control Division of the South African Reserve Bank approving
the Merger, including the listing of the common shares of BRC on the JSE,
either unconditionally, or subject to such conditions as may be acceptable to
BRC and Diamond Core, acting reasonably;
4.6 any Investment Canada Act approvals, consents, waivers, orders,
exemptions or authorizations, and the expiry of all waiting periods, in
connection with or required to permit, the completion of the Merger, the
failure to obtain which or the non- expiry of which would cause a material
adverse effect on BRC or materially impede the completion of the Merger, being
obtained or received on terms which will not cause a material adverse effect on
BRC or occurring, and reasonably satisfactory evidence thereof being delivered
to BRC;
4.7 BRC and Diamond Core being reasonably satisfied that no issuance of
securities or options, and no solicitation of any security holder of either BRC
or Diamond Core, requires registration with the US Securities and Exchange
Commission or a prospectus under the Prospectus Directive (EU);
4.8 there being no action taken under any applicable law or by any government
or governmental or regulatory authority which:
4.8.1 makes it illegal or otherwise directly or indirectly restrains, enjoins
or prohibits the completion of the Merger; or
4.8.2 results or could reasonably be expected to result in a judgment, order,
decree or assessment or damages directly or indirectly relating to the Merger
which is or could be materially adverse to BRC or Diamond Core, respectively,
on a consolidated basis; and
4.9 the approval of the listing of the common shares to be issued by BRC as
the Scheme Consideration on (a) the TSX Venture Exchange or the Toronto Stock
Exchange (as the case may be), and (b) the JSE.
5. Pre-Merger Agreement
As disclosed in the cautionary announcement dated 5 July 2007, BRC and Diamond
Core have entered into a pre-merger agreement ("the Agreement") which provides,
inter alia, for the implementation of the Merger and the Scheme, a non-solicit
arrangement and payment of a break-fee as described below and certain
assurances and confirmations between the parties. Under the Agreement BRC is
entitled to terminate the Agreement (and consequently withdraw its Offer) if at
any time prior to the posting of the Scheme circular (a) there shall have
occurred any event or change that has had, or would be reasonably likely to
have, a material adverse effect on Diamond Core; or (b) BRC`s due diligence
investigation reveals material adverse information respecting Diamond Core that
has not been generally disclosed in Diamond Core`s public disclosure documents.
In each case materiality will be determined by an independent professional
expert. The break fee referred to below is payable by BRC in the event it
terminates the Agreement pursuant to item (a).
6. Non-Solicitation and Break-Fee
Each of BRC and Diamond Core has agreed not to solicit competing offers to the
Merger and to give the other party the right to match any unsolicited competing
offers. Each party may terminate the Agreement if it receives an unsolicited
superior competing offer which the other party does not match.
Furthermore, they have each agreed to the payment of a break-fee of 1% of the
market capitalisation of Diamond Core if it terminates the Agreement in
response to a superior offer or if, in the case of Diamond Core, its
shareholders do not approve the Merger.
7. Market and financial information
The table below sets out a comparison between the Scheme Consideration and the
price at which Diamond Core shares traded immediately prior to the release of
the first Diamond Core cautionary announcement on 4 June 2007 and 6 September
2007 (based on the closing price and 10 and 30 trading day volume weighted
average price (VWAP)).
Before the Scheme
Scheme Consideration(1) Premium
(Rand cents) (Rand cents) (%)
Market price on 4 June 2007 190 203.7 7.2
10-day VWAP to 4 June 2007 172 203.7 18.4
30-day VWAP to 4 June 2007 158 203.7 28.9
Market price on 6 September 2007 140 203.7 45.5
10-day VWAP to 6 September 2007 141 203.7 44.4
30-day VWAP to 6 September 2007 149 203.7 36.7
Notes:
1. The Scheme Consideration consists of 1 BRC share for every 24.5 Diamond Core
shares. The Scheme Consideration has been valued based on a closing price for
BRC of C$7.30 and the prevailing exchange rate of Rand 6.8353 per Canadian
dollar as of 6 September 2007, being the day prior to this announcement.
8. Shareholder support
BRC has received irrevocable undertakings to vote in favour of the Scheme from
institutional shareholders holding 51.6% of the issued share capital of Diamond
Core. Details of the shareholders concerned and the number in percentage of
ordinary shares of Diamond Core held by them are set out in the table below -
Shareholder Number of Percentage of
ordinary shares ordinary issued share
held capital
Peregrine Capital 37 973 962 12.8%
RMB Asset Management 35 321 101 11.9%
Oryx Investment Management 24 864 228 8.4%
Cadiz African Harvest Asset
Management 24 071 916 8.1%
Clear Horizon 15 000 000 5.1%
Flagship Private Asset Management 8 972 000 3.0%
Ivy Asset Management 6 114 986 2.1%
BOE Private Clients 704 015 0.2%
51.6%
The irrevocable undertakings vary in form and include termination provisions
upon the occurrence of certain events, and in some cases, provide for limited
amounts of discretionary sales.
9. Opinions and recommendations
The Board (through an independent sub-committee comprising T Botoulas, G D
Hunter and C I Campbell) has appointed Venmyn Rand (Proprietary) Limited
("Venmyn") to advise it whether the terms and conditions of the Scheme are fair
and reasonable for Diamond Core shareholders.
The Board will make its recommendation to Diamond Core shareholders on receipt
by it of the final fair and reasonable opinion from Venmyn and on the
completion by the Board of its diligence exercise on BRC.
10. Documentation
A circular providing further information on the Offer and containing, inter
alia, a notice of scheme meeting, an Order of Court, a form of proxy and a form
of surrender and transfer will be posted to Diamond Core shareholders in due
course.
11. Important dates and times
Diamond Core shareholders will be advised of important dates and times of the
Scheme in due course.
12. Withdrawal of cautionary announcements
Diamond Core shareholders are advised that the cautionary announcements
concerning the Offer, referred to in paragraph 1 above, are hereby withdrawn.
7 September 2007
Corporate adviser and Attorneys to Diamond Competent person and
sponsor to Diamond Core Core independent advisor to the
board of Diamond Core
River Group Werksmans Attorneys Venmyn
Financial adviser to BRC Legal counsel to BRC Legal counsel to financial
adviser
RBC Capital Markets Macleod Dixon Fasken Martineau
Date: 07/09/2007 17:14:05 Produced by the JSE SENS Department.
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