| Thu 4 Dec 2008, 17:47 | | RNG - Randgold & Exploration Company Limited (Suspended) - Proposed merger with |
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RNG
RNG
RNG - Randgold & Exploration Company Limited (Suspended) - Proposed merger with
JCI Limited ("JCI"), general meeting of R&E shareholders and withdrawal of
cautionary announcement
Randgold & Exploration Company Limited (Suspended)
Incorporated in the Republic of South Africa)
Registration number 1992/005642/06)
Share code: RNG
ISIN: ZAE000008819 (Suspended)
Nasdaq trading symbol: RANGY (delisted)
ADR ticker symbol: RNG
("R&E" or "the Company")
PROPOSED MERGER WITH JCI LIMITED ("JCI"), GENERAL MEETING OF R&E SHAREHOLDERS
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
1.1 Shareholders are referred to the prior SENS announcements of 26 August
2008, 31 October 2008 and 6 November 2008, the latter being the joint
cautionary announcement of R&E and JCI pertaining to the proposed merger
between the companies ("the 6 November announcement").
1.2 On 4 November 2008, R&E made a proposal to JCI which was updated on
2 December 2008 ("the proposal").
1.3 With the respective boards of the companies having resolved to proceed
with the merger, a circular to R&E shareholders will be posted to R&E
shareholders on Friday, 5 December 2008 ("the circular").
1.4 In the circular, the approval of R&E shareholders is sought in order for
the board of directors of R&E ("the board of R&E") to proceed with the proposed
merger with JCI and obtain the necessary ratification from R&E shareholders for
the making of the proposal, in terms of which it is proposed that R&E and JCI
merge by way of a scheme of arrangement in terms of Section 311 of the
Companies Act (No.61 of 1973) as amended ("the Act")("the scheme of
arrangement") between JCI and all of its ordinary shareholders (excluding R&E)
in terms whereof, should such scheme of arrangement become unconditional, each
eligible scheme participant will transfer its ordinary shares in JCI ("JCI
shares") to the Company in exchange for the issue and allotment of new ordinary
shares in R&E ("R&E shares") on the basis of the merger ratio, being the
allotment of one new R&E share for every 95 JCI shares held by eligible JCI
scheme participants ("the merger ratio") on the scheme of arrangement`s record
date, subject to the fulfilment of certain conditions precedent as referred to
in paragraph 4 below ("conditions precedent").
2. R&E GENERAL MEETING
R&E shareholders will accordingly be required in general meeting to be held at
10h00 on Monday, 19 January 2009 at The Hilton, Rivonia Road, Sandton,
Johannesburg, South Africa ("R&E general meeting"), to consider and, if deemed
fit, approve the ordinary and special resolutions as set out in the notice of
general meeting enclosed in the circular and as further referred to in
paragraph 3 below, which approval is required in order to authorise the board
of R&E to proceed with the proposed merger and take such steps as are necessary
to implement the scheme of arrangement.
3. RESOLUTIONS TO BE TABLED AT THE R&E GENERAL MEETING
3.1 R&E shareholders are referred to the notice of R&E general meeting which
forms part of the circular in which the summarised resolutions as reflected
below are set out in full.
3.2 Such resolutions require:
3.2.1 that R&E shareholders ratify the proposal made to JCI on 4 November 2008
and updated on 2 December 2008 ("the proposal") in terms of which JCI, together
with the JCI scheme participants (excluding R&E), conclude the scheme of
arrangement on or before 31 March 2009 or such later date as R&E and JCI may
prior to 31 March 2009 agree in writing (provided that such later date shall
not exceed 90 (ninety) days after 31 March 2009), in terms whereof, subject to
the fulfilment of the conditions precedent to such scheme of arrangement each
eligible scheme participant, in South Africa and other permissible
jurisdictions, will transfer its JCI shares to the Company in exchange for the
issue and allotment of one new R&E share for every 95 JCI shares so
transferred, on the basis that where any fractional entitlement to a new R&E
share arises from the application of the merger ratio and:
such fractional entitlement to a new R&E share is 0.5 or more, such fraction
will be rounded up to the nearest whole number, and
such fractional entitlement to a new R&E share is less than 0.5, such
fraction will be rounded down to the nearest whole number;
3.2.2 that the proposal be ratified by R&E shareholders subject to the further
provison that:
the Net Asset Value of JCI at 31 March 2008 as set out in the circular
("the JCI NAV") does not reduce by more than 10%, excluding the effect that any
fluctuation in the prices of listed equities and derivatives and the JCI
group`s investment in Xelexwa (Pty) Limited (in liquidation) (formerly Jaganda
(Pty) Limited) may have thereon; and/or
the Net Asset Value of R&E at 31 March 2008 as set out in the circular
("the R&E NAV") does not increase by more than 20%, excluding the effect that
any fluctuations in the prices of listed equities and derivatives may have
thereon,
should either the JCI NAV or the R&E NAV fluctuate as set out above after the
making of the proposal but prior to 31 March 2009 (or such later date as R&E
and JCI may prior to 31 March 2009 agree in writing (provided that such later
date shall not exceed 90 (ninety) days after 31 March 2009), or the date on
which the last in time of the conditions precedent to such scheme of
arrangement as set out in paragraphs 2.6.1 to 2.6.6 of the circular to be
fulfilled, is fulfilled (whichever is the first occurring), the board of R&E
shall in either of such events be obliged to withdraw the proposal;
3.2.3 that subject to the passing of the resolution referred to in
paragraph 3.2.1 above, and the special resolution authorising the creation of
the new R&E shares referred to in paragraph 3.2.4 below, the Company be
authorised to make a cash payment to each eligible JCI scheme participant whose
fractional entitlement to a new R&E share upon application of the merger ratio
will be rounded down to the nearest whole number, in terms whereof such JCI
scheme participant, having so elected, will receive a cash payment of R16.19
for any such fractional entitlement that may be rounded downwards;
3.2.4 subject to the passing of the resolution referred to in paragraph 3.2.1
above, and the fulfilment of the conditions precedent pertaining to the scheme
of arrangement, as referred to in paragraph 4 below, that the Company approve a
special resolution increasing its authorised ordinary share capital by the
creation of 30 000 000 new R&E shares ("the new R&E shares") so as to ensure
that there are sufficient unissued R&E shares in the authorised share capital
of the Company for the issue and allotment of R&E shares as scheme
consideration to eligible JCI scheme participants;
3.2.5 following the adoption of the resolutions referred to in paragraphs 3.2.1
and 3.2.4, the new R&E shares are to be placed under the control of the board
of R&E who are authorised to issue and allot such new R&E shares for the
purposes of implementing the scheme of arrangement.
4. CONDITIONS PRECEDENT TO THE PROPOSED MERGER
4.1. R&E shareholders should note that notwithstanding their approval of the
proposed merger as contemplated in the circular, in order for the scheme of
arrangement to proceed there are various conditions precedent that will need to
be fulfilled, which include inter alia the following:
4.1.1 the approval by the requisite majority of R&E shareholders in general
meeting ratifying the proposal (being ordinary resolution number 1) as
described in paragraph 3.2.1 above, authorising the share capital of R&E to be
increased by the new R&E shares (being special resolution number 1) as
described in paragraph 3.2.4 above, and placing the new R&E shares under the
control of the board of R&E with the authority to allot and issue such new R&E
shares (being ordinary resolution number 4) as described in paragraph 3.2.5
above, as tabled in the notice of R&E general meeting attached to the circular,
by no later than Tuesday, 31 March 2009 or such later date as R&E and JCI may
prior to 31 March 2009 agree in writing (provided that such later date shall
not exceed 90 (ninety) days after 31 March 2009);
4.1.2 the approval by the requisite majority of eligible JCI scheme
participants representing not less than three-fourths of the votes exercisable
by such JCI scheme participants present and voting, either in person or by
proxy at the meeting to give effect to the scheme of arrangement by no later
than Tuesday, 31 March 2009 or such later date as R&E and JCI may prior to 31
March 2009 agree in writing (provided that such later date shall not exceed 90
(ninety) days after 31 March 2009);
4.1.3 the Registrar of Companies registering special resolution number 1 as set
out in the Notice of the R&E general meeting by no later than Tuesday, 31 March
2009 or such later date as R&E and JCI may prior to 31 March 2009 agree in
writing (provided that such later date shall not exceed 90 (ninety) days after
31 March 2009);
4.1.4 the High Court of South Africa sanctioning the scheme of arrangement by
no later than Tuesday, 31 March 2009 or such later date as R&E and JCI may
prior to 31 March 2009 agree in writing (provided that such later date shall
not exceed 90 (ninety) days after 31 March 2009);
4.1.5 the Registrar of Companies registering a certified copy of the Order of
Court sanctioning the scheme of arrangement in terms of the Act, by no later
than Tuesday, 31 March 2009 or such later date as R&E and JCI may prior to 31
March 2009 agree in writing (provided that such later date shall not exceed 90
(ninety) days after 31 Mach 2009);
4.1.6 the approval of all regulatory approvals or consents to the extent
required (including the Competition Authorities) being granted, necessary to
implement the scheme of arrangement by no later than Tuesday, 31 March 2009 or
such later date as R&E and JCI may prior to 31 March 2009 agree in writing
(provided that such later date shall not exceed 90 (ninety) days after 31 March
2009);
4.1.7 if ordinary resolution number 2, as described in paragraph 3.2.2 above,
and as set out in the notice of the R&E general meeting attached to the
circular is passed, then by not later than Tuesday, 31 March 2009 or such later
date as R&E and JCI may prior to 31 March 2009 agree in writing (provided that
such later date shall not exceed 90 (ninety) days after 31 March 2009), or the
date on which the last in time of the conditions precedent detailed in
paragraphs 4.1.1 - 4.1.6 above to be fulfilled, is fulfilled (whichever is the
first occurring), the NAV of R&E at 31 March 2008 (as set out in Annexure 5a
to the circular), shall not have increased by more than 20%, excluding the
effect that any fluctuation in the prices of listed equities and derivatives
may have thereon;
4.1.8 if ordinary resolution number 2, as described in paragraph 3.2.2 above,
and as set out in the notice of the R&E general meeting is passed, then by no
later than Tuesday, 31 March 2009 or such later date as R&E and JCI may prior
to 31 March 2009 agree in writing (provided that such later date shall not
exceed 90 (ninety) days after 31 March 2009), or the date on which the last in
time of the conditions precedent detailed in paragraphs 4.1.1 - 4.1.6 above to
be fulfilled, is fulfilled (whichever is the first occurring) the NAV of JCI
at 31 March 2008 (as set out in Annexure 6a to the circular), shall not have
reduced by more than 10%, excluding the effect than any fluctuation in the
prices of listed equities and derivatives and the JCI group`s investment in
Xelexwa (Pty) Limited (in liquidation) (formerly Jaganda (Pty) Limited may
have thereon.
If any of the above conditions precedent shall not have been fulfilled by the
date specified in this paragraph 4 for its fulfilment, the scheme of
arrangement shall lapse and be of no force and effect.
4.2 The effective date of the scheme of arrangement will be the date upon which
the final outstanding condition(s) precedent as set out in paragraph 4.1 is
fulfilled.
5. RELATED PARTIES AND VOTING
5.1 The adoption of the resolutions referred to in paragraph 3 above are
subject to such resolutions being approved by the requisite majority of R&E
shareholders, entitled to vote thereon, at the R&E general meeting.
5.2 The proposed merger is classified as a Category 1 transaction and as a
related party transaction in terms of the JSE Listings Requirements and
accordingly R&E is required to obtain shareholder approval (excluding that of
the related parties as set out in paragraph 5.3 below), ratifying the proposal
in general meeting.
5.3 In terms of the JSE Listings Requirements, in view of the fact that JCI
(and certain of its associates, being Consolidated Mining Management Services
Limited and JCI Investment Finance (Pty) Limited) hold in aggregate 10 634 023
shares in R&E, comprising 14.21% of the issued share capital of R&E, the
proposed merger is classified as a related party transaction. Accordingly,
although JCI and its aforementioned associates ("the related parties") will be
taken into account in determining whether or not a quorum is present, they will
be excluded from voting on ordinary resolutions numbers 1, 2 and 3 as set out
in the notice of the R&E general meeting attached to the circular.
5.4 Save for the restrictions on voting placed on the related parties as
described in paragraph 5.3 above, all R&E shares in issue, as held by R&E
shareholders, whether or not disputed R&E shares (i.e. shares that may have
been issued by the Company without the Company having received any value
therefor), are entitled to vote at the R&E general meeting, including American
Depositary Receipts (ADR) holders.
5.5 In addition, in terms of the JSE Listings Requirements pertaining to
related party transactions, the board of R&E is required to obtain a Fairness
Opinion in respect of the proposed merger. The companies have jointly motivated
their inability to produce a Fairness Opinion to the JSE. The opinion of the
mediators, being Messrs Schalk Burger, Charles Nupen and Harvey Wainer ("the
Mediators"), as expressed in their report of 3 November 2008 ("the Mediators`
Report"), has been included in the circular. The opinion of the Mediators, as
set out in the Mediators` Report has been included in the circular as it was
not possible to produce a Fairness Opinion (as is ordinarily required in terms
of the JSE Listings Requirements), as more fully explained in paragraph 6.3
below.
6. THE MERGER RATIO AND THE MEDIATORS` REPORT
6.1 Basis for the merger ratio as contemplated in the circular
6.1.1 The board of R&E has determined the merger ratio, as reflected in the
circular, based on what it views as a pragmatic solution to the impasse between
R&E and JCI and the resultant arbitration which seems inevitable.
6.1.2 The board of R&E has based the merger ratio on what it regards as being
an equitable ratio for both R&E and JCI shareholders under the current
circumstances.
6.1.3 Furthermore, the merger ratio enjoys the support of the Mediators as
reflected in the Mediators Report which report is included in the circular and
which is furthermore available for inspection as indicated in paragraph
10.2 below.
6.2 The impact of adverse market conditions on the merger ratio post 31 March
2008
6.2.1 By far the largest asset of JCI is its investment in Gold Fields Limited
("Gold Fields"). The investment in Gold Fields constitutes approximately 80% of
JCI`s NAV and 73% of the combined post-merger NAV of the enlarged R&E group
(should the JCI scheme become unconditional).
6.2.2 Recently, the world equity markets have experienced significant downward
trends, with the Gold Fields share price being no exception, having decreased
by some 42.57% from the monthly VWAP of R123.51 for March 2008 to R70.93 for
the month of October 2008.
6.2.3 Based on the proposed merger ratio of 95 to one, this reduction in the
value of the Gold Fields investment has contributed to the reduction in the NAV
of JCI from approximately R2 billion as at 31 March 2008 to R1.02 billion at 31
October 2008.
6.2.4 The board of R&E is of the opinion that the proposed merger ratio, after
considering the above reduction still remains a commercially acceptable
proposition, especially in the light of the alternative to a merger, namely
immediate arbitration, as an R&E shareholder will continue to share in
approximately 77% of the combined assets and liabilities of the combined
companies subsequent to the merger (if so approved by R&E shareholders and on
the assumption that the scheme of arrangement becomes unconditional).
6.3 The Mediators` Report
6.3.1 On 14 April 2008, the Mediators issued an opinion that "In the unusual
and variable circumstances (enumerated above), the swap ratio proposed by the
companies is in our opinion commercially prudent and not inequitable to the
shareholders of R&E and JCI." In arriving at their assessment, the Mediators
had regard to various factors and circumstances applicable to the companies at
such time, as more fully set out in paragraph 11.6.4 of the circular.
6.3.2 In October 2008, the Mediators were requested to advise whether the
opinion issued by them on 14 April 2008 still applied "in the significantly
changed financial circumstances of R&E and JCI since issuing that opinion."
6.3.3 In re-considering their opinion, the Mediators again took into account
various factors and the changed circumstances of the companies, as more fully
set out in paragraph 11.6.7 of the circular, and, based on such new set of
factors and circumstances taken into account by them, confirmed that their
opinion per paragraph 6.3.1 above remained unchanged.
6.3.4 The Mediators` Report is included in the circular and is furthermore
available for inspection in terms of paragraph 10.2 below.
7. RATIONALE FOR THE PROPOSED MERGER
7.1 Factors detracting from arbitration
JCI has denied all liability to R&E and litigation seems inevitable. Such
litigation will be time consuming and very costly before resolution is
obtained. In the interim, R&E may also not be able to pursue its ordinary
business and executive management will need to be dedicated to the prosecution
of the R&E claims. More importantly, the success of the arbitration is
constrained by JCI`s NAV of R1.02 billion at 31 October 2008, as set out in the
circular. There is no prospect of R&E being able to satisfy the R&E claims (if
successful) beyond the extent of JCI`s NAV. R&E`s prospects of success in the
arbitration cannot be assured. The present board of R&E is of the opinion that
protracted and expensive litigation is not in the best interests of
shareholders and regards the merger as a pragmatic means to restore shareholder
value, representing a sensible resolution to the impasse with JCI.
7.2 Support from various parties for the proposed merger
Certain of the shareholders of R&E have, since the R&E announcement dated 26
August 2008, requested the present board of R&E to revisit a merger, as a
possible means of bringing about a resolution to the difficulties faced by
them, indicating their support therefor. The Mediators re-affirmed their
support for a merger on 3 November 2008 as a commercially realistic basis for
resolving the difficulties facing the companies, as appears from the Mediators
Report. Faced with the alternatives to a merger, the board of R&E supports a
merger as a pragmatic means of resolving the difficulties which confront R&E
and its shareholders.
7.3 R&E and JCI post the merger
The merger alternative affords the shareholders of both R&E and JCI, a
mechanism whereby although the R&E claims remain unresolved, the new board of
the combined R&E and JCI will be appointed for the benefit of all shareholders
in R&E, and will be vested with the opportunity to determine how best to deal
therewith. Management intends focussing on increasing value within the group
(to the extent possible), and taking advantage of corporate opportunities which
may arise for the benefit of R&E and its shareholders, including the JCI scheme
participants.
The above (which is not intended to be exhaustive) is set out in more detail in
paragraph 5 of the main body of the circular, and should be considered and read
with the entire circular.
8. PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED MERGER
8.1 UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED MERGER BASED ON THE
CONSOLIDATED BALANCE SHEET OF R&E AT 31 MARCH 2008
The unaudited pro forma financial effects of the proposed merger on the
consolidated balance sheet of R&E before and after the proposed merger are set
out below. The unaudited pro forma financial effects are presented in a manner
consistent with that on which the consolidated balance sheet of R&E has been
presented in Annexure 8a, which is attached to the circular, which is in
accordance with the basis of preparation described in the accompanying notes
thereto as set out in the aforementioned Annexure 8a (in compliance with the
recognition and measurement requirements of IFRS).
In the respective notes to the consolidated balance sheet of R&E before the
proposed merger (attached as Annexure 8a to the circular) and the Group NAV
Statement of JCI at 31 March 2008 (attached as Annexure 6a to the circular),
the respective directors of R&E and JCI highlight certain limitations relating
to the lack of audited financial information as well as limitations on the
completeness of financial information. For a better understanding of the
circumstances and the basis of preparation of the consolidated balance sheet of
R&E at 31 March 2008 and the Group NAV Statement of JCI at 31 March 2008,
reference should be made to the respective notes thereto as reflected in the
aforementioned Annexures 8a and 6a included in the circular, respectively.
The unaudited pro forma financial effects have been prepared for illustrative
purposes only and because of its nature and the inhibiting factors referred to
above, the unaudited pro forma consolidated balance sheet after the proposed
merger may not give a fair reflection of R&E`s financial position after the
proposed merger. It has been assumed for the purposes of the pro forma
financial information that the proposed merger took place on 31 March 2008. It
does not purport to be indicative of what the financial position would have
been had the proposed merger been implemented on a different date. The
unaudited pro forma financial effects of the proposed merger are based on the
estimates and assumptions set out in the notes below. The directors of R&E are
responsible for the preparation of the unaudited pro forma financial
information.
The unaudited pro forma financial effects as set out below should be read in
conjunction with the unaudited pro forma consolidated balance sheet of R&E as
set out in Annexure 9a which is attached to the circular, together with any
estimates and assumptions upon which the financial effects are based, as
indicated in the notes thereto in the aforementioned Annexure 9a.
The independent reporting accountant`s report, issued by KPMG Inc., relating to
the unaudited pro forma consolidated balance sheet of R&E as set out in
Annexure 9a which is attached to the circular is included as Annexure 9b which
is attached to the circular and is available for inspection in terms of
paragraph 10.2 below.
The unaudited pro forma financial effects after the proposed merger as
presented below has been prepared from the information available to the
directors of R&E and includes the consolidated balance sheet of R&E at 31 March
2008 (attached as Annexure 8a to the circular) before the proposed merger and
the Group NAV Statement of JCI at 31 March 2008 (attached as Annexure 6a to the
circular), together with adjustments as further set out in the notes thereto.
Based on Consolidated % Difference
merger ratio Balance Sheet Pro forma
of 95:1 at 31 March 1 Consolidated
2008 1
Balance Sheet
at 31 March
2008 after
the proposed
merger 2
Net asset value per R&E
share (Cents) 766.72 2 523.77 229.16%
Net tangible asset value per
R&E share (Cents) 766.72 2 523.77 229.16%
Number of net R&E shares
in issue 74,813,128 83,568,118 3
Notes:
1. This column is extracted from the consolidated balance sheet of R&E at
31 March 2008 prepared on the basis described in the accompanying notes
thereto, which is in accordance with the recognition and measurement
requirements of IFRS, as detailed in Annexure 8a which is attached to the
circular. The qualified review report issued by the independent auditor, KPMG
Inc., on the consolidated balance sheet of R&E at 31 March 2008 is included in
Annexure 8b to the circular and is available for inspection in terms of
paragraph 10.2 below.
2. The pro forma financial effects after the proposed merger have been adjusted
taking into account the effects of the acquisition of JCI, based on the NAV of
JCI at 31 March 2008, adjusted in terms of the recognition and measurement
requirements of IFRS, based on the R&E directors` best estimate to reflect the
acquired assets and liabilities at fair value based on available information
included in the Group NAV Statement of JCI at 31 March 2008 and subject to the
inhibiting factors referred thereto in Annexure 6a and Annexure 8a, which is
attached to the circular. The Group NAV Statement of JCI at 31 March 2008 was
published on SENS by JCI on 24 November 2008. Annexure 6a of the circular
therefore reflects such published Group NAV Statement of JCI at 31 March 2008.
3. It has been assumed that 20 619 612 R&E shares will be issued in order to
effect the proposed merger in terms of the merger ratio (i.e. one R&E share for
every 95 JCI shares held by JCI scheme participants). The shares to be issued
were reduced by treasury shares and certain shares identified for cancellation.
Refer to the notes to Annexure 9a, which is attached to the circular, for
further details.
8.2 UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED MERGER ON THE NET
ASSET VALUE STATEMENT OF R&E AT 31 MARCH 2008
The unaudited pro forma financial effects of the proposed merger on the NAV
Statement of R&E, before and after the proposed merger are set out below.
These unaudited pro forma financial effects are presented in a manner
consistent with the basis on which the NAV Statement of R&E and JCI has been
presented which is in accordance with the basis of preparation described in the
accompanying notes thereto (which is not in accordance with IFRS) set out in
Annexures 5a and 6a, which is attached to the circular.
In the respective notes to the NAV Statement of R&E at 31 March 2008 (attached
as Annexure 5a to the circular) and the NAV Statement of JCI at 31 March 2008
(attached as Annexure 6a to the circular), the respective directors highlight
certain limitations relating to the lack of audited financial information as
well as limitations on the completeness of financial information. For a better
understanding of the circumstances and the basis of preparation of the
respective NAV Statement at 31 March 2008 of R&E (attached as Annexure 5a to
the circular) and the NAV Statement of JCI at 31 March 2008 (attached as
Annexure 6ato the circular), reference should be made to the respective notes
thereto.
The unaudited pro forma financial effects of the proposed merger on the NAV
Statement of R&E has been prepared for illustrative purposes only and because
of its nature and the inhibiting factors referred to above, the unaudited pro
forma combined NAV Statement as set out in Annexure 7a attached to the circular
may not give a fair reflection of R&E`s NAV position after the proposed merger.
It has been assumed, for the purposes of the unaudited pro forma financial
effects on the NAV Statement of R&E, that the proposed merger took place on 31
March 2008. It does not purport to be indicative of what the financial effects
on the NAV would have been had the proposed merger been implemented on a
different date. The unaudited pro forma financial effects of the proposed
merger on the NAV Statement of R&E are based on the estimates and assumptions
set out in the notes to Annexure 7a which is attached to the circular. The
directors of R&E are responsible for the preparation of the unaudited pro forma
financial effects of the proposed merger on the NAV Statement of R&E.
The unaudited pro forma financial effects as set out below should be read in
conjunction with the unaudited pro forma combined NAV Statement of R&E as set
out in Annexure 7a, which is attached to the circular, together with any
estimates and assumptions upon which the financial effects are based, as
indicated in the notes thereto in Annexure 7a.
The independent reporting accountant`s report, issued by KPMG Inc., relating to
the unaudited pro forma combined net asset value statement of the proposed
merger is attached to the circular as Annexure 7b.
The unaudited pro forma financial effects of the proposed merger on the
combined NAV Statement of R&E has been prepared from the information available
to the directors of R&E and includes the respective NAV Statements at 31 March
2008 of R&E (attached as Annexure 5a to the circular) and JCI (attached as
Annexure 6a to the circular) together with adjustments as further set out in
the notes to Annexure 7a attached to the circular.
Based on merger NAV %
ratio of 95:1 at 31 March Unaudited Difference
2008 1 pro forma
combined
NAV after
the
proposed
merger 2
Net asset value per
R&E share (cents) 836.07 2 790.67 233.78%
Net tangible asset value per
R&E share (cents) 836.07 2 790.67 233.78%
Number of net R&E shares
in issue 71,870,041 83,568,118 3
Notes:
1. This column is extracted from the Group NAV Statement of R&E at 31 March
2008 prepared on the basis of presentation described in the accompanying notes
thereto, as detailed in Annexure 5a, which is attached to the circular. The R&E
directors are responsible for the preparation and presentation of the Group Net
Asset Value Statement of R&E at 31 March 2008. The limited assurance report
issued by the independent auditor of R&E, KPMG Inc., on the Group NAV Statement
of R&E at 31 March 2008 is included in Annexure 5b which is attached to the
circular.
2. The pro forma financial effects after the proposed merger has been adjusted
taking into account the effects of the acquisition of JCI, based on the NAV
Statement of JCI at 31 March 2008 as prepared on the basis of preparation
described in the accompanying notes thereto as further set out in Annexure 6a
which is attached to the circular and after taking into consideration any
combination entries that arise on the acquisition of JCI.
3. It has been assumed that 20 619 612 R&E shares will be issued in order to
effect the proposed merger in terms of the merger ratio (one R&E share for
every 95 JCI shares held by JCI scheme participants). The 6 794 007 R&E shares
held by JCI have been treated as treasury shares on combination post the
proposed merger. Furthermore JCI treasury shares of 202 115 127 shares held by
subsidiary companies excluding those held by Matodzi, and after conversion into
R&E shares at the proposed merger ratio of one R&E share for 95 JCI shares,
amounting to 2 127 528 R&E, have also been treated as treasury shares on
combination post the proposed merger.
4. Shareholders are further advised, that based on the assumptions as
aforementioned, the unaudited pro forma combined NAV statement at 31 October
2008 has been prepared based on the NAV statement of R&E at 31 October 2008, as
set out in Annexure 5c which is attached to the circular, and any notes and
assumptions thereto and the unaudited NAV Statement of JCI at 31 October 2008,
as set out in Annexure 6c, which is attached to the circular, and any notes and
assumptions thereto. On a combined basis and after considering all combinations
adjustments, the unaudited pro forma combined net asset value and unaudited pro
forma combined net tangible asset value post the proposed merger will be
1613.57 cents per R&E share.
These figures have not been reviewed by or reported on by the Company`s auditor
or reporting accountant, KPMG Inc.
9. OPINIONS AND RECOMMENDATIONS OF THE R&E BOARD
9.1 The board of R&E having considered the terms and conditions of the proposed
merger, unanimously support the proposed merger and are of the opinion that the
terms thereof are fair and reasonable and in the interests of R&E shareholders
given the current circumstances of both R&E and JCI.
9.2 Accordingly, the board of R&E supports the proposed merger and recommends
that R&E shareholders vote in favour of the resolutions to be proposed at the
R&E general meeting.
10. DOCUMENTATION
10.1 The circular to R&E shareholders regarding the proposed merger will be
posted to all R&E shareholders on Friday, 5 December 2008, and will also be
available on the Company`s website at wwww.randgold.co.za with effect from such
date.
10.2 All documents as referred to in this announcement are available for
inspection during normal business hours at the registered office of R&E at
10 Benmore Road, Morningside, Sandton, Johannesburg, South Africa and at the
offices of the United Kingdom secretaries, St James Corporate Services Limited,
6 St James Place, London, SW1A 1NP, United Kingdom from Friday, 5 December 2008
up to and including Monday, 19 January 2008.
11. RENEWAL OF CAUTIONARY ANNOUNCEMENT
R&E shareholders should note that the cautionary announcement of 31 October
2008 is hereby further renewed. Accordingly, R&E shareholders should continue
to exercise caution when trading in their shares over the counter.
4 December 2008
Johannesburg
Sponsor and Corporate Adviser to R&E
PSG Capital (Pty) Limited
Attorneys to R&E
Van Hulsteyns
Auditors and Independent Reporting Accountants to R&E
KPMG Inc.
Date: 04/12/2008 17:47:01 Produced by the JSE SENS Department.
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