| Wed 16 Apr 2008, 8:36 | | AQP - Aquarius - Announces repurchase of Implats` |
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AQP
AQP
AQP - Aquarius - Announces repurchase of Implats` Stakes and associated
equity capital and debt raising
Aquarius Platinum Limited
(Incorporated in Bermuda)
Share code ASX: AQP
Share code LSE: AQP
Share code JSE: AQP
ISIN number: BMG0440M1029
("Aquarius" or "the Company")
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION INTO OR IN THE UNITED STATES,
CANADA, OR JAPAN.
THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM PART OF AN OFFER OF SECURITIES
IN THE UNITED STATES OR ANY OTHER JURISDICTION.
Aquarius announces repurchase of Implats` stakes and associated equity
capital and debt raising
Aquarius Platinum Limited (ASX, LSE & JSE: "Aquarius or AQP") is pleased to
announce that it has entered into agreements with Impala Platinum Holdings
Limited ("Implats") to repurchase all the shares Implats currently holds in
Aquarius and that its subsidiary Aquarius Platinum (South Africa) (Pty) Ltd
("AQPSA") will repurchase all the shares Implats` holds in AQPSA. The
combined consideration for these repurchases is $790 million.
The Directors of Aquarius believe that the terms of the transactions are
highly attractive to shareholders:
- the share repurchase removes the only corporate shareholding in Aquarius
and will result in the company having a 100% free float;
- it leaves Aquarius strategically positioned as a strong, independent
platinum player, with full control of its cashflows post completion of
the approved Savannah Consortium share exchange; and
- the transaction is expected to be earnings accretive in the first full
year post completion.
Background
Implats approached Aquarius late last year with a proposal to exit its
shareholdings in both AQP and AQPSA as a result of a portfolio review.
Implats has made an exceptional return on its investments in the Aquarius
group. Implats` decision to exit is mutually beneficial and leaves Aquarius
strategically positioned as a strong, independent platinum player, with full
control of its cashflows (pending the completion of the approved Savannah
Consortium ("SavCon") share exchange). A simultaneous disposal of Implats`
stakes was viewed as desirable by both parties and this is achieved by these
transactions. Aquarius` Black Economic Empowerment ("BEE") credentials remain
intact and SavCon are fully supportive of the transactions.
SavCon is pursuing the final phase of the BEE transaction approved by
shareholders in Special General Meeting on 11 October 2004 which will result
in SavCon`s constituent members receiving shares in Aquarius in exchange for
SavCon`s shareholding in AQPSA. The number of new Aquarius shares to which
SavCon will be entitled upon the disposal of its revised equity interest of
32.5% in AQPSA to AQP remains 65,042,856 On completion of the final phase of
the BEE transaction Aquarius will own 100% of AQPSA.
Key Terms of the Agreements
Aquarius will repurchase the 21,425,898 common shares (approximately 8.4% of
Aquarius` issued share capital) currently held by Implats for GBP6.71
($13.34) per share, representing a total consideration of GBP143.8 million
($285 million). The price was determined using the 30-day volume weighted
average price ("VWAP") per share of GBP7.46 on the London Stock Exchange to
19 March 2008 (the day the principals agreed the pricing of a potential
transaction) less an agreed discount. The closing share price on the London
Stock Exchange on 14 April, the last trading day prior to this announcement,
was GBP8.10. The repurchased shares will be cancelled.
AQPSA will also repurchase Implats` 20% stake in AQPSA for a total
consideration of $504.9 million; comprising a cash payment of $459.0 million
to Implats and a Secondary Tax on Companies ("STC") charge of $45.9 million,
as required under South African tax legislation. The STC payment will be
incurred by AQPSA and will be treated as a once-off charge against its 2008
earnings. Following the transaction Aquarius` shareholding in AQPSA will
increase from 54% to 67.5% and SavCon, AQPSA`s BEE Partner will increase it`s
shareholding from 26% to 32.5%.The acquisition price agreed for Implats`
AQPSA stake took into account the parties respective views of value, future
cashflows, and dividend potential for the Implats minority stake in an
unlisted company, with appropriate discounts applied for both liquidity
issues and pre-emption rights.
Both repurchase transactions are inter-conditional and neither will be
independently implemented.
Rationale
Commenting on the transaction, CEO of Aquarius, Stuart Murray said:
"I am pleased that we have been able to add further value to our business by
agreeing the two repurchase transactions with Implats. Both parties have
achieved a most satisfactory outcome.
The Directors of Aquarius believe that the terms of the transactions are
highly attractive to shareholders, representing an appropriate valuation of
the assets while at the same time providing Implats with a cost effective
cash exit from its minority interests in the respective companies.
Given the pricing and funding mechanism of the repurchases, I believe the
transactions will enhance the company`s value and are expected to be neutral
for earnings for the 2008 financial year (save for the once-off STC tax
charge incurred by AQPSA and transaction costs associated herewith) and
earnings accretive for the 2009 financial year and thereafter, subject to
prevailing metal prices and exchange rates. The transactions will simplify
our corporate structure; a theme requested by shareholders, in a financially
sound manner and secures Aquarius a 100 percent free-float. Furthermore, on
completion of the SavCon share exchange, Aquarius will have full control over
its South African subsidiaries.
I believe that the repurchases are in the very best interest of
shareholders."
Financing the transactions
Aquarius intends to raise up to $400,000,000 through an accelerated bookbuild
placing to institutional investors immediately following this announcement to
finance the buy-back of Implats` shareholding in Aquarius and to assist AQPSA
with the financing of its buyback. The sole book runner is RMB Morgan Stanley
with co-leads Euroz Securities Limited and Investec Bank (UK) Limited. The
remainder of the consideration for the AQPSA buyback will be funded through a
combination of available cash resources (approximately $250 million) and debt
provided to AQPSA by Rand Merchant Bank.
Taking into account existing cash and borrowings, it is not anticipated that
the Group will have more than $275 million of debt funding outstanding
subsequent to the transaction at a time of continued strong operational
cashflows. AQPSA`s financial obligations in respect of its rehabilitation
obligations are not affected by this transaction and the cash backed
guarantee remains in place.
On completion of the book build, Aquarius will issue an Appendix 3B to the
ASX detailing the number of common shares placed and pricing thereof. No
shareholder approvals are required for completion of this transaction as the
number of shares to be issued following the capital raising will be below 15%
of the present issued capital of the Company.
Conditions Precedent
The implementation of the buy-back agreements is conditional upon:
- Aquarius raising the requisite funding to finance the respective
transactions; and
- Aquarius, AQPSA and Implats obtaining the relevant South African
regulatory approvals (as necessary) for the implementation of the
transactions.
It is envisaged that the completion of these transactions will be achieved by
25 April 2008.
Operating and Trading Update
Aquarius customarily prepares quarterly operating and trading reports which
are released by the end of the month following the close of the operating
quarter. As shareholders are aware, the Company will publish its third
quarter production and financial results on Thursday 24 April 2008. As the
repurchase agreements and associated financing are being announced before
consolidated accounts are available, AQP is providing investors a detailed
operating and trading update. Consolidated Profit & Loss, Balance Sheet and
Cashflow Statement for the quarter ended March 2008 will be published as
planned in the third quarter results on 24 April 2008.
Highlights
- Attributable production for the third quarter of approximately 111,524
4E PGM ounces (first 9 months: 389,337 ounces)
- Record 4E PGM basket prices achieved in the first two months of the
quarter for the group of $2,473 per PGM ounce. Underlying PGM prices
have remained strong in both March and April.
- An estimated net profit for the third quarter of between $70 and $75
million; actual net profit for the first two months of the quarter was
$56.6 million on revenues of $153 million.
Production Overview
The quarter ended March 2008 was an operationally challenging but unusually
profitable one for the Company.
Our management teams in both South Africa and Zimbabwe had to cope with
significant electrical power shortages. Both countries experienced a number
of new challenges, with reductions in power supply that ultimately impacted
production at all of our mines. By the quarter end the power situation in
Zimbabwe had stabilised and a new power supply contract with HCB is in
preparation.
The third quarter is traditionally the lowest production quarter in the
mining calendar of Aquarius, as the number of days `lost` to public holidays
(Christmas and New Year) is the highest of each operating quarter.
Additionally, at Marikana, production at the open-pit was closed for 5 days
by unusually high levels of rainfall in February and March. As previously
announced, AQPSA took over the mining operations at Everest at the end of
January. The Company has been able to transition to owner-operator at its
Everest mine faster and more seamlessly than was expected, with output at
revised targeted levels at the end of March.
At AQPSA a number of previously reported labour related issues also impacted
mining performance, most notably at Everest and Marikana.
In Zimbabwe the political situation in the run up to the 29 March elections
was calm. The economic environment, however, remains challenging, impacting
both the price and availability of goods. The mine initiative to assist with
provisioning of basics has been instrumental in keeping the workforce
motivated and productive.
Estimated Production and Working Cost Statistics are set out below
Q3 2008 AQPSA ASACS MIMOSA
Kroondal Marikana Everest CTRP Mimosa
(100%) (100%) (100%) (100%) (100%)
Tons milled (kt) 1,581.4 425.7 428.7 63.4 399
Head grade (g/t) 2.56 2.78 2.99 4.59 3.60
Recovery (%) 76.9 63.4 75.5 24.8 75.7
4E ozs in 100,020 24,223 31,107 2,309 34,281
concentrate
Cash cost 4,131 9,289 4,324 2,818 $362
(R/4E oz)
Cash cost 3,386 7,664 3,524 1,909 NA
(R/6E oz)
Aquarius Attributable Production
Total Q3 2008 YTD
4E oz in concentrate 111,524 389,337
Production Outlook
Total production in the third quarter was approximately 15,000 to 20,000 PGM
(4E) ounces below target for the reasons articulated above. It is
anticipated that the fourth quarter should see an improvement in production
at all operations. At Kroondal more output is expected from the K5 Shaft; at
Marikana the new labour relationship brokered by AQPSA between the
underground contractor and the workforce is due for implementation in April
2008; progress at Everest remains very encouraging and levels of 80 to 85% of
ultimate production rates should be achieved in the fourth quarter, and; at
Mimosa the short-term commissioning problems should be resolved and with a
large stockpile ahead of the plant the benefits of the Wedza Phase 5
expansion should start to materialise. Subject to the final regulatory
approvals for the Platinum Mile transaction, some additional production from
that operation will be added to group output.
Based on the production levels achieved to date, full year production is
envisaged to be in the range 520,000 to 530,000 PGM ounces, a level
comparable to the last financial year`s production.
Profitability
The Company has not in the past given profit guidance as several factors that
affect profits are beyond the control of the Company. It is however,
appropriate to draw shareholders` attention to the very strong run up in the
prices of platinum and rhodium in recent months.
Aquarius benefited from the exceptional commodity pricing environment and a
higher proportion of rhodium in its production mix to achieve record 4E
basket prices in the third quarter.
As reported the net profit for the Company for the half year to December 2007
was $106.6 million. Net profit for the first two months of the third quarter
(January and February 2008) amounted to $56.6 million on revenues of $153
million, demonstrating the benefit of the current high price environment.
Based on the production and cost data provided above, management estimates
that the quarterly Net Profit for Q3 will be approximately $70 to $75
million.
For further information please contact:
In Australia:
Willi Boehm
Aquarius Platinum Corporate Services
+61 (0)8 9367 5211
In United Kingdom and South Africa:
Nick Bias
Aquarius Platinum
+ 44 (0)7887 920 530
RMB Morgan Stanley, Sole Book Runner
Chris Meyer
CEO
+27 11 282 8286
Morgan Stanley
Peter Bacchus
Managing Director
+44 (0)207 425 4669
Alastair Cochran
Managing Director
+44 (0)207 677 5039
This announcement has been issued by the Company and is the sole
responsibility of the Company.
RMB Morgan Stanley, Morgan Stanley and Rand Merchant Bank are acting
exclusively for the Company and no one else in connection with the placing.
RMB Morgan Stanley, Morgan Stanley and Rand Merchant Bank will not be
responsible to anyone other than the Company for providing the protections
afforded to their respective clients nor for providing advice in relation to
the placing or any other matter referred to in this announcement.
This announcement is for information purposes only and does not constitute an
offer or an invitation to acquire or dispose of any securities or investment
advice in any jurisdiction.
This announcement is not for publication or distribution or release in the
United States of America (including its territories and possessions, any
state of the United States and the District of Columbia). This announcement
does not constitute or form part of an offer to sell or issue or solicitation
of an offer to purchase or subscribe for securities in the United States,
Australia, Canada, Japan or any other jurisdiction and should not be relied
upon in connection with any decision to acquire the placing shares or any
other Aquarius securities. The securities referred to herein have not been
and will not be registered under the United States Securities Act of 1933, as
amended (the "Securities Act"), and may not be offered, sold or transferred
within the United States, except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act. No public offering of the placing shares is being made or will be made
in the United States.
This announcement does not and is not intended to constitute an offer to the
public in South Africa in terms of Chapter VI of the South African Companies
Act, 1973 (as amended).
This announcement includes "forward-looking statements". All statements other
than statements of historical fact included in this announcement, including,
without limitation, those regarding Aquarius`s financial position, business
strategy, plans and objectives of management for future operations, are
forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Aquarius, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such forward-looking
statements are based on numerous assumptions regarding Aquarius`s present and
future business strategies and the environments in which Aquarius will
operate in the future and such assumptions may or may not prove to be
correct. There are a number of factors which could cause actual results,
performance of Aquarius, or industry results to differ materially from those
expressed or implied in forward looking statements. These forward-looking
statements speak only as of the date of this announcement. Aquarius expressly
disclaims any obligation (except as required by the rules of the UK Listing
Authority and the London Stock Exchange or the rules of the ASX Limited or
the JSE Limited) or undertaking to disseminate any updates or revisions to
any forward-looking statement contained herein to reflect any change in
Aquarius`s expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.
Neither this announcement nor any copy of it may be taken, transmitted or
distributed, directly or indirectly in or into the United States, Canada or
Japan.
Date: 16/04/2008 07:42:16 Produced by the JSE SENS Department.
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