| Fri 12 Feb 2010, 15:56 | | SNU - Sentula - Sale Of Sentula`s 49.998% Interest In Koornfontein Coal Mine |
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SNU
SNU
SNU - Sentula - Sale Of Sentula`s 49.998% Interest In Koornfontein Coal Mine
Sentula Mining Limited
Incorporated in the Republic of South Africa
(Registration number 1992/001973/06)
Share code: SNU ISIN: ZAE000107223
("Sentula" or "the Company")
SALE OF SENTULA`S 49.998% INTEREST IN KOORNFONTEIN COAL MINE
1. Introduction
The board of directors of Sentula ("the Board") is pleased to advise
shareholders that, further to the cautionary announcement released on SENS
on Monday, 18 January 2010, the Board has successfully concluded an
agreement with Optimum Coal Holdings (Proprietary) Limited ("OCH") for the
sale to OCH of Sentula`s 49.998% interest in and shareholder`s claims
against Siyanda Coal (Proprietary) Limited, the company that operates the
Koornfontein Coal Mine ("Koornfontein"), for an aggregate cash
consideration of R670 million ("the purchase consideration") ("the
Koornfontein Sale").
Koornfontein is an underground colliery located adjacent to Eskom`s Komati
Power Station in Mpumalanga. Koornfontein currently sells approximately 3.3
million tonnes of coal per year, of which approximately 1.5 million tonnes
is exported annually under entitlement through the Richards Bay Coal
Terminal.
OCH is a majority black-owned coal mining company which was created
following the disposal by BHP Billiton Energy Coal South Africa
(Proprietary) Limited of its Optimum Colliery to a black economic
empowerment consortium in May 2008.
2. Rationale for the Koornfontein Sale
As set out in the SENS announcement dated 30 October 2009 informing
shareholders that the contemplated sale of Sentula`s interest in
Koornfontein to a potential purchaser had been terminated, the Board had
undertaken to continue with various initiatives to realise value from
Sentula`s proprietary coal portfolio. The Koornfontein Sale will realise a
significant portion of this portfolio and the purchase consideration will
be applied so as to strengthen Sentula`s balance sheet by reducing debt,
improving liquidity and ensuring that the Company remains financially
robust in a volatile trading environment. The purchase consideration will
also be used to fund future growth in the Company`s mining services
businesses and to further develop Sentula`s proprietary coal portfolio.
Mr Robin Berry, Chief Executive Officer of Sentula said: "This is a
significant transaction for Sentula as it realises substantial value for
shareholders. Furthermore, it reinforces our strategy of reducing our
gearing, enhancing cash flow, turning around underperforming operations and
it will further enable the company to move certain exploration and
development coal assets up the value curve."
3. Purchase consideration
The purchase consideration, being an amount of R670 million, is payable in
cash by OCH to Sentula on the closing date, being 5 business days after the
fulfilment or waiver (as the case may be) of the last of the conditions
precedent, which are set out in paragraph 4 below. OCH has provided Sentula
with a written unconditional guarantee issued by Standard Chartered Bank
Plc, Johannesburg Branch on 12 February 2010 in terms whereof it has
guaranteed the due and punctual payment by OCH to Sentula of the purchase
consideration.
4. Conditions precedent to the Koornfontein Sale and effective date
The Koornfontein Sale is subject to the fulfilment or waiver (as the case
may be) of the following conditions precedent:
4.1 the receipt of irrevocable undertakings from Sentula shareholders
holding no less than 50% of Sentula`s issued share capital to vote in
favour of the Koornfontein Sale on or before 26 February 2010;
4.2 the approval of the Koornfontein Sale by Sentula`s consortium of
financiers on or before 26 February 2010;
4.3 the approval of the Koornfontein Sale by a majority of Sentula
shareholders at a general meeting of Sentula shareholders on or before
13 April 2010; and
4.4 the approval of the Koornfontein Sale by the Competition Authorities,
to the extent required, on or before 31 August 2010.
The effective date of the Koornfontein Sale is 5 business days after the
fulfilment or waiver (as the case may be) of the last of the conditions
precedent.
Warranties which are normal in a transaction of this nature have been
provided by Sentula to OCH.
5. Pro forma financial effects of the Koornfontein Sale
The table below sets out the unaudited pro forma financial effects of the
Koornfontein Sale and of the rights offer which was implemented by Sentula
during December 2009 ("Rights Offer"). The unaudited pro forma financial
effects are intended to provide information on how the Koornfontein Sale
and the Rights Offer may have affected Sentula`s earnings, headline
earnings, net asset value and net tangible asset value per share measures
for the six month reviewed period ended 30 September 2009, had they
occurred on 1 April 2009 for income statement purposes and 30 September
2009 for balance sheet purposes.
The unaudited pro forma effects, which are the responsibility of the
directors of Sentula, have been prepared for illustrative purposes only
and, because of their pro forma nature, may not give a true reflection of
Sentula`s financial position, changes in equity and results of operations
or cash flows. The unaudited pro forma financial effects have been prepared
using accounting policies that comply with IFRS and that are consistent
with those applied in the reviewed results of Sentula for the six months
ended 30 September 2009.
Before Rights Pro Koornf Pro Percentage
Rights Offer forma ontein forma change from
Offer pro after Sale after post the
and forma Rights pro Koornf Rights
Koornf effect3, Offer forma ontein Offer to
ontein 7 effect Sale post the
Sale1, 4, 7 Koornfontei
2 n Sale
Earnings per share 16.2 (6.7) 9.5 46.2 55.7 486.3
(cents)5
Headline earnings per 15.2 (6.1) 9.1 (3.5) 5.6 (38.5)
share (cents)5
Net asset value per 979.0 (529.2) 449.8 48.0 497.8 10.7
share (cents)6
Net tangible asset 788.0 (412.9) 375.1 47.7 422.8 12.7
value per share
(cents)6
Weighted average 230 350 993 581 - 581 -
number of shares in 012 005 005
issue (000s)
Notes:
1. Earnings per share and headline earnings per share before the Rights
Offer and the Koornfontein Sale were extracted from the income
statement included in the published reviewed results for the six
months ended 30 September 2009.
2. Net asset value per share and net tangible asset value per share
before the Rights Offer and the Koornfontein Sale were extracted from
the balance sheet included in the published reviewed results for the
six months ended 30 September 2009.
3. It is assumed that in respect of the Rights Offer:
a. R501.9 million in cash was raised (prior to transaction and
underwriting costs);
b. transaction and underwriting costs of R39.8 million (pre-tax)
relating to professional, financial, legal and compliance fees
were paid. This is not expected to have a continuing effect on
Sentula;
c. R400.0 million of the net proceeds were used to repay a portion
of the long-term debt facilities, with the remainder of the net
proceeds being used to reduce the overdraft facilty; and
d. the repayment of the long-term debt facilities resulted in an
interest expense saving calculated at 10.95% of R25.3 million
(pre-tax). This is expected to have a continuing effect on
Sentula.
4. It is assumed that in respect of the Koornfontein Sale:
a. a purchase consideration of R670 million is received;
b. transaction costs of R10 million (pre-tax) relating to
professional, financial, legal and compliance fees are payable.
This is not expected to have a continuing effect on Sentula;
c. capital gains tax of R45.6 million is realised on the profit on
the Koornfontein Sale. This is not expected to have a continuing
effect on Sentula;
d. 50% of the purchase consideration (net of tax and transaction
costs) equating to R307.9 million is used to repay a portion of
the long-term debt facilities;
e. 50% of the purchase consideration (net of tax and transaction
costs) is maintained as working capital;
f. the repayment of the long-term debt facilities results in
interest expense savings of R16.8 million (pre-tax). This is
expected to have a continuing effect on Sentula;
g. income from associate of R23.9 million (net of tax) for the six
months ended 30 September 2009 will be forfeited. This is
expected to have a continuing effect on Sentula; and
h. a loan to Koornfontein, included in the value of investment in
associate, will be repaid. As a result, interest income of R0.6
million (pre-tax) will be forfeited. This is expected to have a
continuing effect on Sentula.
5. The pro forma financial effects on earnings per share and headline
earnings per share are calculated on the assumption that the Rights
Offer and the Koornfontein Sale were effective on 1 April 2009.
6. The pro forma financial effects net asset value per share and net
tangible asset value per share are calculated on the assumption that
the Rights Offer and the Koornfontein Sale were effective on 30
September 2009.
7. Taxes have been calculated based on the normal tax rate of 28% and
capital gains taxes at a rate of 14%.
6. Classification of the Koornfontein Sale and further documentation
The Koornfontein Sale is classified as a category 1 transaction in terms of
the Listings Requirements of JSE Limited. Accordingly, a circular
containing full details of the Koornfontein Sale and a notice to convene a
general meeting will be sent to Sentula shareholders in due course. The
general meeting will provide Sentula shareholders with the opportunity to
consider and, if deemed fit, to pass, with or without modification, the
resolution necessary to approve and implement the Koornfontein Sale.
7. Withdrawal of cautionary announcement
Shareholders are advised that caution is no longer required to be exercised
by shareholders when dealing in Sentula`s securities.
Johannesburg
12 February 2010
SponsorMerchantec Capital
Adviser on the Koornfontein Sale
RFA Consulting (Proprietary) Limited
Legal advisersCliffe Dekker Hofmeyr Inc.
Auditors
KPMG Inc.
Date: 12/02/2010 15:56:02 Produced by the JSE SENS Department.
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