| Mon 26 Jul 2010, 12:06 | | SAL - Sallies Limited - Introduction of African Renaissance Holdings Limited as |
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SAL SALD
SAL
SAL - Sallies Limited - Introduction of African Renaissance Holdings Limited as
a Black Economic Empowerment shareholder
Sallies Limited
(Incorporated in the Republic of South Africa)
(Registration number 1903/001879/06)
Share code: SAL ISIN: ZAE000022588
JSE Code: SALD ISIN: ZAE000117305
("Sallies" or "the Company")
INTRODUCTION OF AFRICAN RENAISSANCE HOLDINGS LIMITED AS A BLACK ECONOMIC
EMPOWERMENT ("BEE") SHAREHOLDER OF WITKOP FLUORSPAR MINE (PROPRIETARY) LIMITED
AND BUFFALO FLUORSPAR (PROPRIETARY) LIMITED (WHOLLY OWNED SUBSIDIARIES OF
SALLIES LIMITED) ("THE TRANSACTION")
1 Introduction
The directors of Sallies are pleased to announce that Sallies, Witkop
Fluorspar Mine (Proprietary) Limited ("Witkop") and Buffalo Fluorspar
(Proprietary) Limited ("Buffalo") have entered into agreements with African
Renaissance Holdings Limited ("ARH") for the subscription by ARH for 1 581
Witkop ordinary shares for a total amount of R85 577 000 ("subscription
consideration"), and the purchase of 260 Buffalo ordinary shares from
Sallies at par value which Transaction will result in ARH owning 26% of
each of the previously wholly owned subsidiaries.
2 Witkop - brief company profile
Witkop is a wholly owned subsidiary of Sallies which owns Witkop Fluorspar
Mine. The mine is located near Zeerust in the North West Province and mines
fluorspar ore from which it produces acid grade filter cake fluorspar, a
product which contains 97% calcium fluoride ("CaF2"). Witkop exports its
output to international customers who produce mainly hydrofluoric acid,
which is then further processed into refrigerant gases, fluoro-polymers and
aluminium trifluoride. Witkop also produces small quantities of
metallurgical grade fluorspar and agricultural lime which are sold to the
local market. The Witkop mine is currently on "care and maintenance".
3 Buffalo - brief company profile
Buffalo is a wholly owned subsidiary of Sallies which owns Buffalo
Fluorspar Mine. The mine is located near Mookgophong in the Limpopo
Province. It produces acid grade filter cake fluorspar by reprocessing the
slimes dams created from previous mining operations. As with Witkop,
Buffalo`s product contains 97% CaF2 which it exports to international
customers. Buffalo also produces small quantities of metallurgical grade
fluorspar which is sold to the local market. The Buffalo mine is also
currently on "care and maintenance".
4 ARH - brief company profile
ARH is a Black-empowered investment holding company incorporated in 1993 to
transform the economic landscape in South Africa and champion active Black
participation and ownership in strategic economic sectors. ARH is owned and
managed by historically disadvantaged South Africans {as defined in the
Mineral and Petroleum Resources Development Act, No 28 of 2002 ("MPRDA")}
led by Thero Setiloane, Max Maisela, Jurgen Kogl, Windsor Shuenyane, Gavin
Pieterse, Bobby Makwetla and George Negota.
To date ARH has acquired various interests inter alia in T-Systems SA
Limited, Petra Diamonds Limited, NARE Diamonds Limited and in Metaf
Investments Holdings (Proprietary) Limited
(www.africanrenaissanceholdings.com).
Given a history of successfully pioneering new black business ventures, ARH
aims to build an industrial and service portfolio which will focus on ICT,
mining, power generation, and manufacturing as well as retail. The
investment opportunity presented in Witkop and Buffalo aligns with ARH`s
strategic intents and complements other targeted investment initiatives.
5 Salient features of the Transaction
The salient features of the Transaction are set out below:
5.1 ARH will subscribe for 1 581 Witkop ordinary shares of R0.50 each at
R54 128.40 per share for a total of R85 577 000, which represents an
interest of 26% in the issued share capital of Witkop. Furthermore,
ARH will be entitled to appoint a director to the board of Witkop.
5.2 In accordance with the provisions of Section 38 of the Companies Act
No 61 of 1973, Witkop will provide financial assistance to ARH
amounting to R85 577 000 to enable ARH to effect the payment for the
subscription consideration. Sallies will subscribe for 2 cumulative
non-redeemable preference shares of R1 each in the share capital of
Witkop and whose dividend rate shall be based on the prime rate
reduced by the corporate tax rate per annum, compounded monthly in
arrears calculated on each of the amounts owed by ARH to Witkop and
Witkop to Sallies from time to time.
5.3 ARH will purchase for cash 260 ordinary shares in Buffalo from Sallies
at par value. Sallies will subscribe for 1 cumulative non-redeemable
preference share of R1 in the share capital of Buffalo and whose
dividend rate shall be based on the prime rate reduced by the
corporate tax rate per annum, compounded monthly in arrears calculated
on the amount owed by Buffalo to Sallies from time to time. ARH will
be entitled to appoint a director to the board of Buffalo.
5.4 Upon completion of the Transaction, including the repayment of debt
referred to in paragraph 5.2 and 5.3 above, ARH undertakes to
distribute 31% of all shareholder distributions received by ARH from
Witkop and Buffalo, to the Witkop Community and the Buffalo Community
respectively in order to promote the interests of the Witkop and
Buffalo employees within the Communities.
6 Rationale of the Transaction
The Transaction seeks to improve the Company`s BEE empowerment credentials
with the objective of complying with the requirements of the MPRDA, the
Broad-Based-Economic Charter for the South African Mining Industry, and the
Codes of Good Practice for the Minerals Industry.
7 Conditions precedent
The Transaction is subject to the following conditions precedent:
- the amendment of the Memoranda and Articles of Association of both
Witkop and Buffalo to allow for the amendment of the authorised share
capital, the creation, allotment and issue of the preference shares;
- the amendment of the Articles of Association of both Witkop and
Buffalo so as to provide that the preference dividends may be paid in
accordance with and subject to the provisions of Section 90 of the
Companies Act;
- the approval by the shareholders of both Witkop and Buffalo to place
the authorised but unissued shares of both companies under the control
of the respective directors in terms of section 221 of the Companies
Act; and
- the requisite JSE and shareholder approval.
8 Related party classification
Given that Jurgen Kogl (a director of ARH) is currently a non-executive
director of Sallies, the Transaction is classified as a related party
transaction in terms of the Listings Requirements of the JSE Limited
("Listings Requirements"). Accordingly, Bridge Capital Advisors
(Proprietary) Limited has been appointed as the Independent Professional
Expert to provide an opinion as to whether the terms and conditions under
which the financial assistance is being offered are fair to the Sallies
shareholders. The fairness opinion will be incorporated in the circular to
be posted to shareholders in due course and lie for inspection at the
Company`s registered office for a period of 28 days from the date of
posting the circular.
The implementation of the Transaction is subject to a simple majority of
votes of shareholders being cast in favour of the resolution in respect of
the Transaction. In compliance with the Listings Requirements, all related
parties including their associates will be precluded from voting their
shares.
9 Board opinion and recommendation
The Sallies board is firmly of the opinion that the Transaction is in the
best interests of the both the Company and its shareholders. Those
directors that are entitled to vote on the Transaction are in unanimous
agreement that the Company is best served by having a strong BEE profile
for its public and private sector customers. Furthermore, the majority
shareholder, Firebird Global Master Fund Limited has indicated its full
support of the Transaction and will vote in favour of all the resolutions
pertaining to the Transaction.
10 Financial effects of the Transaction
The pro forma financial effects of the Transaction on Sallies earnings,
headline earnings, net asset value and net tangible asset value per share
are less than 3% and, therefore, have not been presented.
11 Circular to shareholders
In terms of the Listings Requirements, Sallies is required to prepare a
detailed circular to shareholders setting out full details of the
Transaction and incorporating a fairness opinion, notice of the general
meeting and form of proxy. The circular to shareholders will be posted to
shareholders in due course.
Johannesburg
26 July 2010
Sponsor and Independent Professional Expert: Bridge Capital Advisors (Pty)
Limited
Legal advisers: Cliffe Dekker Hofmeyr Inc.
Date: 26/07/2010 12:06:03 Produced by the JSE SENS Department.
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