| Wed 31 Mar 2010, 17:18 | | SAH - South African Coal Mining Holdings Limited - Firm intention to make an |
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SAH
SAH
SAH - South African Coal Mining Holdings Limited - Firm intention to make an
offer received from JSW Energy
SOUTH AFRICAN COAL MINING HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1994/009012/06)
Share code: SAH ISIN: ZAE000102034
("SACMH" or "the Company")
ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER RECEIVED FROM JSW ENERGY
LIMITED ("JSW") TO ACQUIRE A STAKE IN THE ISSUED ORDINARY SHARE CAPITAL OF SACMH
AND TO PROVIDE FINANCE TO REOPEN THE MINE
1 INTRODUCTION
1.1 Shareholders are referred to previous announcements by SACMH, the latest
being dated 30 March 2010, that SACMH regularly receives unsolicited offers
to buy or invest in its business. The SACMH board ("the Board") undertook
that all serious offers in respect of which the Board has received
satisfactory external proof of funding will be submitted to shareholders
for consideration as soon as practically possible.
1.2 The Board has received a letter from JSW containing a firm intention to
lend funds to SACMH to enable it to discharge its liability to The Standard
Bank of South Africa (Proprietary) Limited ("SBSA"), to provide new funding
to reopen the mine and to make an offer to acquire a stake in the issued
ordinary shares of SACMH, being all the shares save for those held by Royal
Bafokeng Capital (Pty) Limited ("Royal Bafokeng") and Mainsail 55 (Pty) Ltd
("Mainsail"). If concluded, the transaction will be an affected transaction
as defined by the Securities Regulation Code and Rules ("SRP Code") of the
Securities Regulation Panel ("SRP").
1.3 Details of the offer and the conditions precedent to which it is subject
are set out below.
1.4 This announcement summarizes the information provided in the letter of firm
intention to make the offer addressed to the Board.
1.5 The offer is contained in a letter from JSW dated 10 March 2010, which was
modified with some technical corrections by amending letters on 18, 24, 25
and 30 March 2010. JSW has indicated their intention to make further
revisions to the offer, which can be expected by the end of next week.
2 THE OFFER
2.1 The offeror:
JSW is a public company incorporated in India, listed on both the Bombay
Stock Exchange and the National Stock Exchange. It is part of the JSW Group
which operates in the steel, power, cement, software and infrastructure
sectors. Its revenue for the year ended 31 March 2009 was in excess of USD
3.6 billion.
JSW has since 2000 developed, constructed and operated power plants. It is
a coal-off taker and not a coal trader.
JSW owns no shares in SACMH. The offer is extended by JSW or its nominee
(hereafter jointly referred to as "JSW").
2.2 The offer:
JSW notified the Board of its firm intention to:
2.2.1 lend to SACMH sufficient funds to enable it to discharge its liability
to SBSA, the largest secured financiers of SACMH, provided that
contemporaneously on discharging the liability, SBSA:
- transfers to JSW its 71.8 million shares in SACMH; and
- cedes to JSW all its securities held by SBSA for SACMH`s indebtedness
(including SACMH shares pledged to SBSA by Royal Bafokeng) without any
further consideration; and
2.2.2 make an offer to acquire all the issued shares of SACMH, save for
those held by Royal Bafokeng and Mainsail, in respect of which shares
JSW reserves the right to make an offer at some future date at a
predetermined value ("the JSW Offer").
It is intended that SBSA would receive 71.8 million shares in SACMH as
a result of the conversion of R40 million of its debt into equity in
terms of the section 311 compromise with creditors in South African
Coal Mining (Breyten) (Pty) Limited ("Breyten"), ("the Breyten
Compromise"), the subsidiary of SACMH in which the SBSA debt resides.
Sanction by the High Court of the Breyten Compromise is outstanding.
No agreement has been reached with SBSA in respect of 2.2.1 above.
2.3 Manner of giving effect to the offer
2.3.1 JSW will advance an amount of R70 million to SACMH to enable it to
discharge its liability to SBSA, provided that contemporaneously
therewith:
- SBSA transfers to JSW its 71.8 million shares in SACMH; and
- SBSA cedes to JSW all its securities held by SBSA for SACMH`s
indebtedness including pledged shares to it without any further
consideration.
2.3.2 JSW shall be entitled to appoint the majority of directors on the
Board.
2.3.3 JSW will commence normalizing the position of SACMH to resume mining
operations forthwith upon acquiring the minority shares;
2.3.4 To implement the JSW Offer, JSW intends to propose a scheme of
arrangement in terms of section 311 of the Companies Act, 1973 ("the
Act") between SACMH and all the ordinary shareholders of SACMH other
than Royal Bafokeng and Mainsail for JSW to acquire all those shares,
which will number 157.4 million shares and comprise 29.07% of the
total issued share capital of SACMH ("the Scheme"). The purchase
consideration will be 25 cents per share payable once the Scheme
becomes operative. The JSW Offer will be made in accordance with the
SRP Code.
2.3.5 Alternatively to the Scheme, JSW will make a general offer to all
SACMH`s shareholders, other than Royal Bafokeng and Mainsail, to
acquire all of their shares at 25 cents per share, on the basis that
should it be accepted by shareholders in respect of 90% or more of the
ordinary shares that are the subject matter of the general offer, then
JSW reserves the right to invoke the provisions of section 440(K) of
the Act to compulsorily acquire those ordinary shares in respect of
which the general offer was not accepted.
2.3.6 JSW intends entering into a "put and call" agreement with Royal
Bafokeng and Mainsail, in terms of which Royal Bafokeng and Mainsail
will be entitled to put their 130.3 million remaining shares in SACMH
to JSW. JSW shall have the right to call on Royal Bafokeng and
Mainsail to sell to JSW all their remaining shares in SACMH. No party
may exercise its rights until after 14 December 2010. . The purchase
consideration shall be 25 cents per share plus interest.
2.3.7 If the Scheme is successful or the general offer becomes
unconditional, application will be made to the JSE Limited ("JSE") to
terminate the listing of the shares of SACMH on the JSE.
2.3.8 JSW intends approaching SBSA, Royal Bafokeng and Mainsail to enter
into an agreement to record the terms and conditions contained in
JSW`s letter.
2.4 Conditions precedent
2.4.1 The JSW Offer is subject to inter alia the following conditions
precedent:
- legal and financial due diligence investigations; on 18 March 2010
SACMH was informed by JSW`s attorneys that this condition could be
modified provided that JSW receives a certificate from the board of
directors of SACMH confirming that the information disclosed in
connection with a number of matters were true and correct;
- the consent of the Competition Authorities;
- receipt of all regulatory approvals required from the Exchange Control
Department of the South African Reserve Bank, the SRP, the Department
of Mining and the JSE;
- receipt of all regulatory approvals required under Indian Securities
Exchange Law and Regulations;
- Court sanction of the Breyten Compromise;
- agreement with SBSA in respect of paragraph 2.2.1;
- the "put and call" agreement with Royal Bafokeng and Mainsail referred
to in 2.3.6 above;
- Royal Bafokeng and Mainsail waiving their rights to dispose of their
shares in SACMH;
- delivery of audited financial statements of SACMH and all its
subsidiaries for the financial years ended 2008 and 2009, as well as
management accounts.
2.4.2 The Scheme shall inter alia be subject to the following conditions
precedent:
- the approval of the scheme by SACMH shareholders entitled to vote
("Scheme Members") at the meeting of scheme members ("the Scheme
Meeting") convened by the High Court of South Africa ("the Court"),
representing not less than three-fourths of the votes exercisable by
Scheme Members present and voting, either in person or by proxy, at
the Scheme Meeting on or before a certain date to be agreed to;
- the Scheme being sanctioned by the Court;
- a certified copy of the order of the Court sanctioning the Scheme
being registered by the Registrar of Companies in terms of the Act;
and
- the Scheme becoming unconditional.
2.4.3 If the Scheme does not become operative, and JSW elects to make the
general offer, then the general offer shall inter alia be subject to
the condition precedent that JSW receives acceptances in respect of
not less than 90% of the issued shares, other than shares held by
Royal Bafokeng and Mainsail.
2.5 Funding of the JSW Offer
Confirmation has been provided to the Board and the SRP that
sufficient resources are available to JSW to satisfy full acceptance
of the JSW Offer by the IDBI Bank of India. The IDBI Bank is a large
public sector bank in India. As the confirmation was provided by a
foreign bank JSW was requested to supply confirmation from a South
African Bank that JSW has sufficient resources, or that JSW`s foreign
bank is of acceptable standing and that the board could accept their
confirmation regarding JSW`s resources.
2.6 Period
The JSW`s Offer is open for acceptance by the Board until Friday, 23
April 2010.
2.7 Approvals, consents and undertakings received
The Board is not aware of any approvals, consents and undertakings
received by JSW at the date of making the JSW Offer. SBSA however
informed the Board that it has entered into an agreement with Shanduka
Coal (Proprietary) Limited ("the Potential Preferred Offeror") to sell
SBSA`s secured claim against SACMH to the Potential Preferred Offeror
and to grant the Potential Preferred Offeror a period of exclusivity
in respect thereof.
3 OPINION AND RECOMMENDATIONS
On 18 March 2010 the Board received and accepted a proposal from the
Potential Preferred Offeror. Due to the time constraints in this proposal,
the Board obtained telephonic approval from the SRP to evaluate and
recommend the proposal from the Potential Preferred Offeror prior to
obtaining an opinion from an external adviser as required by the SRP Code.
After having evaluated the terms and conditions of the proposal by the
Potential Preferred Offeror (set out in a separate announcement), the Board
believed that it was in the best interests of the Company and its
stakeholders to recommend the proposal received from the Potential
Preferred Offeror to its shareholders.
The Board is of the opinion that the JSW Offer, as it stands currently, is
less attractive to SACMH and its stakeholders than the offer by the
Potential Preferred Offeror. The Board has therefore decided not to
recommend the current JSW Offer to its shareholders.
The Board will appoint an external adviser to evaluate all offers received
and to make appropriate recommendations to the Board and SACMH
shareholders.
Johannesburg
31 March 2010
Sponsor:
Exchange Sponsors
Date: 31/03/2010 17:18:02 Produced by the JSE SENS Department.
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