| Fri 28 Jan 2011, 16:26 | | MVL - Mvelaphanda Resources Limited - Cancellation of AFRIPALM 2 option |
|
MVL
MVL
MVL - Mvelaphanda Resources Limited - Cancellation of AFRIPALM 2 option
MVELAPHANDA RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1980/001395/06)
Share code: MVL
ISIN: ZAE000050266
("Mvela Resources")
CANCELLATION OF AFRIPALM 2 OPTION
1 Background
On 19 January 2007 Mvela Resources entered into an option agreement ("Option
Agreement"), with, inter alia, Newshelf 849 (Proprietary) Limited ("Afripalm 2")
in terms of which Mvela Resources granted Afripalm 2 an option to subscribe, in
cash, for 10 million ordinary shares in Mvela Resources at a price per share of
R34.35 escalated at a rate equal to 75% of ABSA Bank Limited`s prime overdraft
lending rate ("Option").
The Option was exercisable between 1 May 2010 and 30 April 2014.
Afripalm 2 paid an upfront fee of R10 million to Mvela Resources in
consideration for the grant of the Option to it.
The Option was granted by Mvela Resources to Afripalm 2 to further the
participation of black women in the capital of Mvela Resources. 10% of the
shares in Afripalm 2 are held by Afripalm Resources (Proprietary) Limited
("Afripalm Resources"), and 90% are held by the trustees of the Liyema Trust, a
trust established to, inter alia, achieve broad-based socio-economic development
and empowerment of black women.
2 Cancellation of Option
For the reasons stated in paragraph 4 below, Mvela Resources and, inter alia,
Afripalm 2 have entered into an agreement to cancel the Option Agreement (and
accordingly the Option) ("the Transaction").
A cash consideration of R150 million ("Consideration") is payable by Mvela
Resources to Afripalm 2 against cancellation of the Option Agreement (and
accordingly the Option). The fairness of the Consideration has been determined
using standard option valuation techniques.
3 Small related party transaction
The Transaction is a "related party transaction" and the value is approximately
1.4% of Mvela Resources` market capitalisation. The Transaction is therefore
classified as a "small related party transaction" in terms of Section 10.7 of
the JSE Limited ("JSE") Listings Requirements ("Listings Requirements").
One Capital Advisory (Proprietary) Limited ("One Capital") has been appointed to
advise whether or not the terms of the Transaction are fair as far as the
shareholders of Mvela Resources ("Shareholders") are concerned.
One Capital has found the terms of the Transaction to be fair to the
Shareholders and the JSE has approved the fairness opinion provided by One
Capital. The fairness opinion will lie open for inspection for a period of 28
days from the date of this announcement at Mvela Resources` registered office,
being 1A Albury Park, Magalieszicht Avenue, Dunkeld West, Sandton, 2196.
4 Rationale for the Transaction
It is Mvela Resources` strategy to distribute the majority of its assets to the
ordinary shareholders. Mvela Resources` directors believe that the Transaction
is consistent with this strategy in that it achieves finality on the Option.
Prior to the cancellation of the Option Agreement (and accordingly the Option),
Afripalm 2 is under no obligation to exercise the Option, and the Option remains
exercisable until 30 April 2014.
Furthermore, the Option Agreement makes provision for possible adjustments to
the exercise price of the Option or the number of ordinary shares in the capital
of Mvela Resources which are the subject of the Option if Mvela Resources makes
a distribution of assets in specie. Any such revaluation process could
potentially delay the implementation of Mvela Resources` strategy.
5 Conditions precedent
The Transaction remains subject to the fulfilment of, inter alia, the condition
precedent that a special resolution of Afripalm 2`s shareholders approving the
Transaction is registered by the Companies and Intellectual Property
Registration Office ("CIPRO").
6 Unaudited pro forma financial effects of the Transaction
The unaudited pro forma income statement and pro forma statement of financial
position and the pro forma financial effects as of and for the financial year
ended 30 June 2010 have been prepared to illustrate the effect of the
Transaction (after the recent exercise of 2.26 million share options under the
Mvelaphanda Resources Limited Share Option Participation Scheme ("the exercise
of share options"), the Gold Fields Limited ("Gold Fields") share distribution
and the sale of 10 million Gold Fields shares) as if the Transaction had
occurred on 1 July 2009 for purposes of calculating the earnings per ordinary
share ("EPS") and the headline earnings per ordinary share ("HEPS"), and on 30
June 2010, for purposes of calculating the net asset value ("NAV") per ordinary
share and net tangible asset value ("NTAV") per ordinary share. The unaudited
pro forma financial information is presented for illustrative purposes only and,
because of its nature, may not give a fair reflection of Mvela Resources`
financial results or financial position going forward.
The unaudited pro forma financial information has been prepared using accounting
policies that are consistent with International Financial Reporting Standards
and with the basis on which the historical financial information of Mvela
Resources has been prepared.
Mvela Resources` directors are responsible for the compilation, contents and
preparation of the unaudited pro forma financial information contained in this
announcement and for the financial information from which it has been prepared.
Their responsibility includes determining that the unaudited pro forma financial
information has been properly compiled on the basis as stated, that the basis is
consistent with the accounting policies of Mvela Resources for previous
financial years and that the pro forma adjustments are appropriate for the
purposes of the unaudited pro forma financial information disclosed in terms of
the Listings Requirements.
After the After the After the Effect of the
Gold Fields exercise of Transaction Transaction
distribution share options (3) (Change from (2)
(1) (2) to (3))
Basic EPS per
ordinary share (51) (50) (53) (3)
(cents)
3
Basic HEPS per
ordinary share 3 0 (3)
(cents)
2 757
NAV per 2 750 2 681 (69)
ordinary share
(cents)
2 757
NTAV per 2 750 2 681 (69)
ordinary share
(cents)
215 064 169
Weighted
average number
of ordinary
shares in 217 324 169 217 324 169
issue
215 621 101
Number of
ordinary
shares in
issue at 30 217 881 101 217 881 101
June 2010
Notes:
1 The "After the Gold Fields distribution" column is based on the unaudited
pro forma financial effects extracted from the circular that was
distributed to the shareholders of Mvela Resources and published on SENS on
15 December 2010, which were based on the Mvela Resources` audited and
published financial results for the year ended 30 June 2010, adjusted for
the sale of 10 million Gold Fields shares and for the distribution of 22.2
million Gold Fields shares.
2 The "After the exercise of share options" column is based on the unaudited
pro forma financial effects for the year ended 30 June 2010 "After the Gold
Fields distribution" column and after adjusting for the following material
items:
- EPS and HEPS
2.1) 1 230 000 and 1 030 000 Mvela Resources share options were exercised on 2
August 2010 and 22 December 2010 respectively resulting in cash receipts of
R46.4 million. For the purposes of these unaudited pro forma financial effects,
it was assumed that these options were exercised on 1 July 2009, resulting in an
equivalent increase in the weighted average number of ordinary shares in issue
during the period. Accordingly, a pro forma adjustment of interest earned of
R2.2 million based on the cash received at interest rates of between 6% p.a. and
6.5% p.a. (being the interest rates applicable for actual interest bearing
deposits made by Mvela Resources during 2009/10), and the resultant tax expense
of R620 000 is included. These are of a recurring nature.
- NAV and NTAV
2.2) 1 230 000 and 1 030 000 share options were exercised on 2 August 2010 and
22 December 2010 respectively resulting in total cash received of R46.4 million.
For the purposes of these unaudited pro forma financial effects, it was assumed
that these options were exercised on 30 June 2010, resulting in an equivalent
pro forma increase in the number of shares on that date.
3 The "After the Transaction" column is based on the unaudited pro forma
financial results for the year ended 30 June 2010 "After the Gold Fields
distribution" column, and "After adjusting for the exercise of share
options" and after the following material items:
- EPS and HEPS
3.1) it is assumed that the Transaction was effective on 1 July 2009.
3.2) for accounting purposes, the Transaction is treated as the buy-back of an
equity instrument; therefore, the Consideration is charged directly to equity.
An adjustment of interest foregone of R9.8 million based on the payment made at
interest rates of between 6% p.a. and 6.5% p.a. (being the interest rates
applicable for actual interest bearing deposits made by Mvela Resources during
2009/10), and the resultant tax saving of R2.7 million is included. These are
of a recurring nature.
- NAV and NTAV
3.3) it is assumed that the Transaction was implemented on 30 June 2010.
3.4) for accounting purposes, the Transaction is treated as the buy-back of an
equity instrument and therefore the Consideration is charged directly to equity.
Johannesburg
28 January 2011
Sponsor: J.P. Morgan Equities
Attorneys to Mvelaphanda Resources Limited: Bowman Gilfillan Inc.
Attorneys to the trustees for the time being of the Liyema Trust: Cliffe Dekker
Hofmeyr Inc.
Attorneys to Afripalm Resources (Proprietary) Limited: Edward Nathan Sonnenbergs
Inc.
Independent Expert: One Capital
Date: 28/01/2011 16:26:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
