| Mon 29 Mar 2010, 16:00 | | WSL - Wescoal - Announcement Of Firm Intention By Wescoal To Acquire The Entire |
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WSL
WSL
WSL - Wescoal - Announcement Of Firm Intention By Wescoal To Acquire The Entire
Issued Share Capital Of South African Coal Mining Holdings Limited ("SACMH") And
Cautionary Announcement
WESCOAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/006913/06)
JSE Share code: WSL & ISIN: ZAE000069639
("Wescoal" or "the Company")
ANNOUNCEMENT OF FIRM INTENTION BY WESCOAL TO ACQUIRE THE ENTIRE ISSUED SHARE
CAPITAL OF SOUTH AFRICAN COAL MINING HOLDINGS LIMITED ("SACMH") AND CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Shareholders of Wescoal and shareholders of SACMH are advised that Wescoal has
submitted to the board of directors of SACMH written notice of its firm
intention to make an offer to acquire all the ordinary shares making up the
entire issued ordinary share capital of SACMH ("the Transaction") on terms and
conditions set out below.
This offer, which if concluded, will be an affected transaction as defined by
the Securities Regulation Code and Rules ("SRP Code") of the Securities
Regulation Panel ("SRP").
2. BACKGROUND INFORMATION ON SACMH
SACMH is a public company incorporated in South Africa, listed on the JSE
Limited ("JSE"). SACMH` listing was suspended on 4 May 2009.
SACMH owns the following mines which have been placed under "care and
maintenance" from 1 April 2009:
- Umlabu Colliery is situated in the magisterial district of Ermelo,
Mpumalanga and is an opencast and close pit mine with an expected life of
mine of 19 years.
- Vlakfontein Coal Deposit ("VCD") comprising potentially exploitable
resources adjacent to the Umlabu Colliery.
- Sterkfontein Prospecting Area comprising potentially exploitable resources
adjacent to the VCD.
SACMH has access to the Blinkpan Siding and Umlabu Siding and owns the Voorslag
siding.
SACMH has a 207 000 tonne allocation at the Richard Bay Coal Terminal ("RBCT")
through the Quattro Allocation and an export allocation of 500 000 tonnes in the
Phase V expansion of the RBCT.
3. RATIONALE FOR THE TRANSACTION
The Transaction would significantly accelerate Wescoal`s growth as a junior
miner and remove current entry barriers to the export market.
The SACMH reserve statement includes the Vlakfontein mining asset with 35
million total tons in situ that, following extraction and beneficiation, would
make 13 million saleable tons available to Wescoal for the export and local
markets.
The Quattro Allocation currently allows SACMH an export allocation of 207 000
tons per annum that will be increased to 500 000 tons on completion of the
Richards Bay Coal Terminal Phase V expansion project. Coupled with this, the
SACMH owned Voorslag siding will give Wescoal immediate access to the
strengthening export markets that would otherwise be reliant on Spoornet owned
sidings and the remote possibility of the company securing its own export
allocation through one of the ports.
This Transaction would give Wescoal the critical mass and sustainability
required to be a recognised player in the expanding coal mining industry.
4. OFFER
Wescoal notified the Board of SACMH of its firm intention to make an offer to
acquire all the issued shares of SACMH in exchange for the issue by Wescoal of
11.11 Wescoal shares for every 100 SACMH ordinary shares held subject to the
suspensive conditions set out in paragraph 4.2 below.
The scheme consideration will entail that 50 222 415 Wescoal shares will be
issued by Wescoal at an issue price of 90 cents per share, for a total purchase
consideration of R 45 200 174.
4.1 MANNER OF GIVING EFFECT TO OFFER
4.1.1 Scheme of Arrangement
Wescoal will propose a scheme of arrangement between SACMH and the SACMH
ordinary shareholders ("scheme members"), in terms of section 311 of the
Companies Act, 1973 (Act 61 of 1973), as amended ("the Companies Act"), for the
purpose of acquiring the entire issued share capital of SACMH ("the Scheme"), by
the issue of 11.11 Wescoal ordinary shares for every 100 SACMH ordinary shares
held ("the scheme consideration"). The offer will be made in accordance with the
SRP Code.
On the effective date of the scheme, Wescoal will invite two representatives of
the former majority shareholders of SACMH to join the Wescoal board.
If the Scheme is successful, application will be made to the JSE to terminate
the listing of the shares of SACMH on the JSE.
4.1.2 The substitute offer
In the event that the Scheme fails or does not become operative, Wescoal will
make a conditional offer to SACMH ordinary shareholders to acquire all their
ordinary shares by the issue of 11.11 Wescoal ordinary shares for every 100
SACMH ordinary shares held ("the offer consideration") in terms of section 440
of the Companies Act which will be conditional on acceptance by shareholders of
SACMH holding no less than 50.1% of the total issued ordinary shares of SACMH
("the substitute offer").
On the effective date of the substitute offer, Wescoal will invite two
representatives of the former majority shareholders of SACMH to join Wescoal`s
board.
If the Scheme becomes operative, the substitute offer will not be implemented.
4.2 CONDITIONS PRECEDENT TO THE TRANSACTION
The Transaction will be subject to the fulfilment of inter alia the following
conditions precedent:
- Approval of the Transaction by the Board of SACMH by not later than 30
April 2010;
- That the four interrelated schemes of arrangement in respect of South
African Coal Mining (Breyten) (Pty) Limited, Ilanga Coal Mines (Pty)
Limited, South African Coal Mining Equipment Company (Pty) Limited and
South African Coal Mining Operations (Pty) Limited:
- are sanctioned by the High Court and implemented by not later than 30
April 2010;
- that there is no appeal, review or threatened legal action against any
of the said schemes; and
- that Wescoal be satisfied with the net result of the four schemes of
arrangement and court orders for the SACMH group, particularly its
balance sheet, assets and liabilities post the schemes by no later
than 30 April 2010.
- That Standard Bank of South Africa Limited, the secured financiers of SACMH
by not later than 31 May 2010:
- approves the Transaction in writing;
- undertakes in writing to restructure its loans to SACMH;
and that the terms and conditions of the revised arrangement between SACMH
and Standard Bank are to Wescoal`s satisfaction.
- Wescoal obtaining irrevocable undertakings from two key SACMH shareholders
to accept the offer in terms of the Transaction by no later than 30 April
2010.
- Wescoal conducting a due diligence investigation into SACMH to its complete
satisfaction and concluding such investigation by not later than 31 May
2010;
- the approval by the shareholders of Wescoal of the Transaction and issue of
Wescoal shares in consideration, if required by JSE Listing Requirements ;
- the approval of the Scheme by the scheme members of SACMH at the scheme
meeting convened by the Court, representing not less than 75% of the votes
exercisable by scheme members present and voting either in person or by
proxy at the scheme meeting;
- SACMH obtaining the requisite regulatory approvals;
- the High Court sanctioning the Scheme in terms of the Companies Act;
- a certified copy of the Order of Court sanctioning the Scheme being lodged
with and registered by the Registrar of Companies in terms of the Companies
Act;
- the unconditional approval of the Scheme or the Transaction by the
Competition Authorities and any other regulatory approvals to the extent
required; and
- in respect of the substitute offer only, acceptances being received in
respect of a minimum of 50.1% of the votes attached to all the issued
ordinary shares of SACMH and approval of the substitute offer by all
regulatory authorities including the Competition Authorities.
Wescoal shall be entitled to waive any of the aforementioned suspensive
conditions or extend the dates for fulfilment.
5. EXISTING HOLDING OF SACMH SHARES
Neither Wescoal nor any of its directors currently hold or control any shares in
SACMH.
6. FURTHER ANNOUNCEMENT
Shareholders will be kept up to date on all developments relating to the offer.
Financial effects will be announced once sufficient information has been
obtained from SACMH.
7. CAUTIONARY ANNOUNCEMENT
Shareholders are advised to exercise caution in dealing in the company`s
securities on the JSE until such time as a further announcement is made.
Designated Adviser
Exchange Sponsors
Johannesburg
29 March 2010
Date: 29/03/2010 16:00:01 Produced by the JSE SENS Department.
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