| Tue 23 Jun 2009, 14:08 | | MML - Metmar - Detailed terms announcement regarding the disposal by Metmar of |
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MML
MML
MML - Metmar - Detailed terms announcement regarding the disposal by Metmar of
its 21% interest in PGR 17 Investments (Proprietary) Limited and withdrawal
of cautionary
Metmar Limited
Incorporated in the Republic of South Africa
Registration number: 1998/007269/06
Share code: MML
ISIN code: ZAE000078747
("Metmar" or "the Company")
Detailed terms announcement regarding the disposal by Metmar of its 21% interest
in PGR 17 Investments (Proprietary) Limited and withdrawal of cautionary
announcement
1. Introduction
Metmar shareholders are referred to the announcements released on 25 and 29 May
2009 which set out details of the transaction in terms of which Metmar disposed
of its 21% interest in PGR 17 Investments (Pty) Limited ("PGR") and its interest
in Mogale Alloys (Pty) Ltd ("Mogale") to Ruukki South Africa (Pty) Limited
("Ruukki SA") with effect from 1 April 2009 ("the Disposal"). (Ruukki SA is 100%
owned by Ruukki Group PLC, a Finnish listed company.)
It was also announced that Ruukki SA had entered into an agreement, dated 25 May
2009, with certain of the PGR vendors, including Metmar, (the "Vendors") to
acquire, in aggregate, 84.9% of the equity of PGR and Mogale (the "Agreement").
The irrevocable offer agreement between Kermas Limited and the Vendors, details
of which were included in the SENS announcement released by Metmar on 2 June
2008, has accordingly been cancelled in terms of the Agreement.
All the conditions precedent to the Disposal, other than the approval of Metmar
shareholders, have now been met.
2. Purchase consideration
2.1 Settlement of the total purchase consideration
The total purchase consideration for 84.9% of the equity of PGR and Mogale due
in terms of the Agreement is ZAR 2 billion which is to be settled as follows:
- ZAR 1.2 billion in cash ("the first payment") which became payable on or
about 28 May 2009 (the "closing date") and of which ZAR 1.125 billion was due to
the Vendors and ZAR 75 million was paid to a trust set up for Mogale management.
(Metmar`s share of the first payment is ZAR 150.942 million plus interest
amounting to ZAR 2.485 million. Metmar received its share of the first payment
on 28 May 2009);
- ZAR 200 million in cash as an unconditional deferred payment payable on the
first anniversary of the closing date ("the first deferred payment"). (Metmar`s
share of the first deferred payment amounts to ZAR 26.834 million); and
- ZAR 600 million in cash as a conditional deferred payment by way of a 5
year vendor loan arrangement ("the second deferred payment"). (Metmar`s share
of the second deferred payment amounts to ZAR 70.439 million.)
Metmar`s aggregate share of the above payments amounts to ZAR 248.215 million
(excluding interest).
The Vendors will hold 40% of the PGR and Mogale shares sold to Ruukki SA as
security for non-payment of any portion of the outstanding purchase
consideration and interest payable in terms of the Agreement.
2.2 Payment of the second deferred payment
The second deferred payment becomes payable as set out below:
- ZAR 125.340 million within five business days after the date upon which the
12 MVA DC furnace situated on the PGR/Mogale premises has been successfully
commissioned and all governmental licences, permits, authorisations or
permissions which are necessary to operate the furnace have been obtained in
writing. (Metmar`s pro rata share amounts to ZAR 14.715 million); and
- three payments of ZAR 158.220 million each of which becomes payable within
five business days after which all governmental licences, permits or permissions
which are necessary to operate the large 40 MVA DC furnace, the number 1 20 MVA
submerged arc furnace and the number 2 20 MVA submerged arc furnace respectively
(and to earn revenue by manufacturing products at each such furnace) have been
obtained in writing. (Metmar`s pro rata share in each such payment amounts to
ZAR 18.575 million).
If a portion of the second deferred payment becomes due and payable on or before
31 December 2009, then such amount will bear interest at the prime rate of
interest charged by Standard Bank of SA Limited ("Prime"), reckoned from 1 April
2009 to the actual payment date (both days inclusive). If a portion of the
second deferred payment becomes due and payable on or after 1 January 2010, then
such amount will bear interest at Prime from the date upon which such portion
becomes due and payable until the actual date of payment (both days inclusive).
The Vendors have entered into a loan agreement dated 25 May 2009 with Ruukki SA
so as to facilitate the payment of the second deferred payment (the "Loan
Agreement"). The Loan Agreement provides that Ruukki SA will credit its books
in favour of the Vendors as and when the second deferred payments become
payable.
The Vendors have agreed to pay Ruukki SA a rebate of ZAR 22 million in respect
of interest due in terms of the Agreement upon receipt of the second deferred
payment (the "Rebate"). Metmar`s share of the Rebate is ZAR 2.952 million.
3. Unaudited pro forma financial effects of the Disposal
The table below sets out the unaudited pro forma financial effects of the
Disposal based on the assumption that the Disposal took place with effect from 1
March 2008 for income statement purposes and on 28 February 2009 for balance
sheet purposes.
The unaudited pro forma financial effects are presented for illustrative
purposes only and, because of their nature, may not give a fair reflection of
Metmar`s financial position or results of operations after the Disposal has been
implemented. The unaudited pro forma financial effects are the responsibility
of the directors of Metmar.
Before1 After2 %
Change
Audited Pro forma
Basic earnings per share 90.3 124.0 37.3
(cents)3
Headline earnings per 100.6 68.5 -31.9
share (cents)3
Net asset value per share 185.6 312.0 68.1
(cents)5
Tangible net asset value 163.5 278.2 70.2
per share (cents)5
Number of shares in issue 194 637 194 637 0
(000`s)
Weighted average number of 193 261 193 261 0
shares in issue (000`s)
Notes:
1. The financial information set out in the "Before" column has been extracted
without adjustment from the audited published results of Metmar for the year
ended 28 February 2009.
2. The financial information set out in the "After" column has been based on the
financial information set out in the previous column having adjusted for the
effects of the Disposal.
3. The pro forma earnings per share have been adjusted to include the following:
a. elimination of the equity accounted revenue relating to PGR;
b. interest on the proceeds of the Disposal amounting to ZAR 2.485 million;
c. profit on the Disposal amounting to ZAR 196.605 million;
d. capital gains taxation arising due to the Disposal amounting to ZAR 27.525
million;
e. transaction costs amounting to ZAR 1 million; and
f. the release of the difference between the net present value of the deferred
consideration and the actual amounts receivable amounting to ZAR 10.881 million
based on a NPV discount rate of 11% through the income statement.
4. The pro forma headline earnings per share have been adjusted to eliminate the
equity accounted revenue relating to PGR but excludes the profit on the Disposal
and the adjustments made to earnings per share set out in notes 3(b)-(f).
5. The pro forma net asset and net tangible asset values per share have been
adjusted to include the following:
a. elimination of the investment in an associate (PGR);
b. cash of ZAR 150.942 million received as a result of the Disposal;
c. deferred purchase considerations at fair value amounting to ZAR 23.832
million and ZAR 62.560 million respectively; Metmar`s share of the first and
second deferred payments (amounting to ZAR 97.273 million) being raised as a non
current financial asset;
d. profit on the Disposal;
e. capital gains taxation arising due to the Disposal; and
f. transaction costs expensed.
4. Categorisation of the Disposal, irrevocable undertakings and application of
proceeds
The Disposal is categorised as a Category 1 transaction in terms of the JSE
Limited Listings Requirements and is accordingly subject to the approval of
Metmar shareholders. A circular, incorporating a notice to convene a general
meeting of shareholders to approve the Disposal, will be posted to Metmar
shareholders in due course. Metmar shareholders holding 119 120 221 ordinary
Metmar shares (representing 61.2% of the company`s current issued share capital,
excluding treasury shares and those held in any share trust) have irrevocably
undertaken to support the Disposal. The Metmar board of directors will in due
course take a decision on the application or distribution of the net proceeds
from the disposal. Until then the funds will be used to reduce all debt and the
balance invested in a money market account.
5. Withdrawal of cautionary announcement
Metmar shareholders are referred to the cautionary announcements released on 30
May 2008, 2 June 2008, 18 June 2008, 24 November 2008 , 25 May 2009 and 29 May
2009 and are advised that, having regard to the disclosures made in this
announcement, it is no longer necessary to exercise caution when dealing in
Metmar shares.
Bryanston
23 June 2009
Sponsor: QuestCo Sponsors
Auditors: Grant Thornton
Attorneys: Edwin Jay
Date: 23/06/2009 14:08:46 Produced by the JSE SENS Department.
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