| Wed 23 Sep 2009, 17:47 | | MTX - Metorex - Proposed Disposal By Metorex Of Its Entire Shareholding In |
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MTX
MEMTX
MTX - Metorex - Proposed Disposal By Metorex Of Its Entire Shareholding In
Vergenoeg Mining Company (Proprietary) Limited ("Vergenoeg") And Further
Cautionary Announcement
METOREX LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1934/005478/06)
Share code: MTX
ISIN: ZAE000022745
Issuer code: MEMTX
("Metorex" or "the Company" or "the Group")
PROPOSED DISPOSAL BY METOREX OF ITS ENTIRE SHAREHOLDING IN VERGENOEG MINING
COMPANY (PROPRIETARY) LIMITED ("VERGENOEG") AND FURTHER CAUTIONARY ANNOUNCEMENT
Terence Goodlace, CEO of Metorex commented, "The sale of our 55% shareholding in
Vergenoeg for US$60 million forms an integral part of our strategy designed at
restoring the Metorex balance sheet by December 2009. The proceeds from this
sale will be used to reduce Ruashi debt and increases the total funds raised
since 30 June 2009, from the sale of assets for this purpose, to R945 million.
We at Metorex wish Minersa every success at Vergenoeg along with their
empowerment partner Medu Capital."
1. INTRODUCTION
Shareholders of Metorex are advised that Metorex, Minerales Y Productos
Derivados S.A. ("Minersa") and Vergenoeg entered into a sale of shares
agreement on 23 September 2009 whereby Metorex will dispose of its entire
shareholding in Vergenoeg comprising 137 500 ordinary shares constituting
55% of the issued ordinary share capital of Vergenoeg ("the Sale Shares"),
to Minersa, currently a 30% shareholder in Vergenoeg, for a cash
consideration of US$60 million ("Purchase Consideration") ("the
Transaction").
2. VERGENOEG
Vergenoeg has one of the world`s largest known fluorspar resources with a
long life operating mine based on current production rates. Situated 150
kilometres north of Johannesburg, Vergenoeg boasts a state-of-the-art
concentrator enabling it to meet market qualities and demand. Spanish-based
Minersa, has been an active partner and has provided advice on
metallurgical processes and international marketing to this operation for
many years.
3. RATIONALE FOR THE TRANSACTION
In line with the Metorex management`s ("Management") stated intention to
restructure and reduce debt at its Ruashi project in the Democratic
Republic of the Congo, Management has continued to pursue the strategy of
disposing of certain of the Group`s assets.
Minersa is currently a 30% shareholder in Vergenoeg and has the necessary
expertise to continue operating Vergenoeg successfully, thereby retaining
the integrity of the recently concluded Black Economic Empowerment ("BEE")
transaction involving Medu Capital ("Medu"), a consortium of BEE controlled
entities, as announced on 29 July 2009.
Through the disposal of its remaining interest in Vergenoeg, Metorex
continues to further define itself as a base metals producer through the
increased focus of its resources towards that objective and Management is
of the view that a deliberate and resolute approach towards the development
of the Ruashi project will generate value for shareholders.
The Purchase Consideration will assist with the execution of Management`s
ongoing strategy, as set out above, and will furthermore reduce debt levels
on the Ruashi project.
4. CONDITIONS PRECEDENT
The Transaction remains subject to the following conditions precedent as
contained in the sale of shares agreement between Metorex, Minersa and
Vergenoeg:
1. Medu, to the extent required, must agree in writing to either:
a) release Metorex from its obligations in terms of a put option
granted to Medu in the Vergenoeg shareholders` agreement entered
into between Minersa, Medu, Vergenoeg and Metorex ("Shareholders`
Agreement") ("Put Option"); or
b) Metorex ceding its rights and delegating its obligations in terms
of the Put Option, to Minersa;
2. Minersa, Medu and Vergenoeg must, to the extent required, release
Metorex from all its obligations in terms of the Shareholders`
Agreement;
3. Minersa must be satisfied with the results of the necessary due
diligence investigations;
4. approval must be obtained from the exchange control division of the
South African Reserve Bank, to the extent required, in respect of the
terms and conditions of the Transaction;
5. all the necessary approvals for the Transaction must be obtained from
the JSE Limited ("JSE") in terms of the Listings Requirements of the
JSE ("Listings Requirements");
6. to the extent required, the shareholders of Metorex must approve the
Transaction, as contemplated in the Listings Requirements;
7. the Transaction and all the related agreements must be unconditionally
approved by the competition authorities in all the relevant
jurisdictions in accordance with the relevant rules and regulations,
or conditionally approved on terms and conditions acceptable to
Metorex and Minersa;
8. the Transaction must be approved to the extent required, in terms of
the Mineral and Petroleum Resources Development Act No 28 of 2002,
either unconditionally, or subject to such conditions as may be
approved by Metorex and Minersa; and
9. the Standard Bank of South Africa Limited as well as other parties to
the lending agreement must release the Sale Shares from the existing
pledge and cession, on such terms and conditions as may be acceptable
to Metorex.
5. EFFECTIVE DATE
The effective date of the Transaction is 25 September 2009 ("Effective
Date") and the closing date means the third business day after all the
conditions precedent have been fulfilled ("Closing Date").
6. PURCHASE CONSIDERATION
The Purchase Consideration is an amount equal to US$60 million less all
dividends declared and distributions made in respect of the Sale Shares
during the period commencing on the Effective Date and ending on the
Closing Date.
Once conditions precedent 1 to 6, as disclosed in 4 above, have been
fulfilled, Minersa is required to pay Metorex US$25 million ("First
Payment") provided that Metorex procures an undertaking from its bankers
("the Undertaking") to refund the First Payment to Minersa in the event
that the remaining conditions precedent are not fulfilled. Within 3
business days after the Closing Date, Minersa shall pay Metorex US$35
million and in the event that the Undertaking was not procured, an amount
equal to the First Payment together with all interest accrued thereon less
all dividends declared and distributions made in respect of the Sale Shares
during the period commencing on the Effective Date and ending on the
Closing Date. Interest is payable on the Purchase Consideration from the
Effective date until the date upon which the Purchase Consideration is paid
by Minersa to Metorex
The Transaction is subject to warranties that are normal for a transaction
of this nature which include, inter alia the indemnification of Metorex by
Minersa against any claims, damages or costs resulting from Medu not
releasing Metorex from its obligations in terms of the Put Option.
Accordingly, Metorex has the right to waive condition precedent 1 as
described in paragraph 4 above.
7. PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects of the Transaction on Metorex are being
prepared by the directors of Metorex.
A further announcement and a circular, detailing the pro forma financial
effects of the Transaction, will be released in due course.
8. RELATED PARTY AND CATEGORISATION
Minersa and its associates currently hold in excess of 10% of Metorex`s
issued share capital making it a material shareholder in Metorex. In
addition Mr Alberto Barrenechea, a director of Metorex, is also a
shareholder and director of Minersa.
In terms of the Listings Requirements the Transaction is a related party
transaction and therefore requires the approval by Metorex shareholders.
The Transaction is furthermore categorised as a Category 2 transaction in
terms of the Listings Requirements.
9. FAIRNESS OPINION
In accordance with the Listings Requirements, a fairness opinion is
required as to the fairness of the Transaction to Metorex shareholders.
In this regard, the Board of Directors of Metorex has appointed Venmyn Rand
(Pty) Limited ("Venmyn") as independent expert advisor to provide an
independent fairness opinion.
Details of Venmyn`s opinion will be included in a circular to be posted to
shareholders detailing the Transaction.
10. CIRCULAR AND GENERAL MEETING
A circular setting out the full details of the Transaction and including
the notice of the general meeting of shareholders is in the process of
being finalised.
The salient dates and times applicable to the Transaction and the circular
detailing the Transaction will be announced in due course.
11. FURTHER CAUTIONARY
Metorex shareholders` attention is drawn to the fact that the pro forma
financial effects relating to the Transaction have not been included in
this announcement as required in terms of the Listings Requirements.
Accordingly, shareholders should continue to exercise caution when dealing
in their Metorex securities until a further announcement is made.
Rosebank
23 September 2009
Corporate advisor and sponsor: Legal advisor:
Barnard Jacobs Mellet Corporate DLA Cliffe Dekker Hofmeyer Inc.
Finance (Pty) Limited
Independent expert advisor:
Venmyn Rand (Pty) Limited
Date: 23/09/2009 17:47:08 Produced by the JSE SENS Department.
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