| Thu 14 Apr 2011, 14:00 | | ANG - Anglogold Ashanti proposes restructuring of BEE transaction and gives |
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ANG
ANANO
ANG - Anglogold Ashanti proposes restructuring of BEE transaction and gives
notice of general meeting
ANGLOGOLD ASHANTI PROPOSES RESTRUCTURING OF BEE TRANSACTION AND GIVES NOTICE
OF GENERAL MEETING
AngloGold Ashanti Limited
Incorporated in the Republic of South Africa
Registration Number: 1944/017354/06)
ISIN Number:ZAE000043485
JSE Share Code: ANG
("AngloGold Ashanti/Company")
14 April 2011
ANGLOGOLD ASHANTI PROPOSES RESTRUCTURING OF BEE TRANSACTION AND GIVES NOTICE
OF GENERAL MEETING
AngloGold Ashanti is proposing to restructure its Black Economic
Empowerment ("BEE") share ownership transaction first announced in 2006, to
ensure the intended benefits will accrue to its recipients, namely its South
African employees, through the Bokamoso ESOP trust and BEE Partner, Izingwe
Holdings (Proprietary) Limited ("Izingwe") (an investment company controlled
by black investors) ("proposed restructuring"). The total incremental
accounting cost to AngloGold Ashanti of the proposed restructuring which is
subject to shareholders` approval, is around R120.5 million (approximately
$17.8 million), while the pro-forma impact on adjusted headline earnings* and
net asset value per share is 0.4% and 0.2% respectively.
"We`ve taken a proactive stance, in partnership with Izingwe and our
employees, to ensure this economic empowerment initiative has the intended
benefit," AngloGold Ashanti Chief Executive Officer Mark Cutifani said. "We
believe this has been achieved at a very reasonable cost to shareholders,
while delivering clear upside for AngloGold Ashanti, its employees and South
Africa as a whole."
Further details on the financial effects of the proposed restructuring and
its rationale are included below and in the circular which has been posted
separately.
TERMS OF THE PROPOSED RESTRUCTURING
The principal component of the restructured transaction is the proposed
reinstatement over the next three years of a total of some 1.37 million E
Ordinary shares ("E shares")**, that have either lapsed or are expected to
lapse without realising the anticipated value for their holders. This is
largely due to the market and economic circumstances (including the
performance of the company`s share price in rand terms) which have prevailed
since the launch of the BEE transaction in 2006. Also, an additional 48,923
new ordinary shares will be allotted to employees who qualify for the scheme
as of the original cut-off date.
The E shares issued to the Bokamoso ESOP trust and Izingwe are effectively
share appreciation rights which, upon vesting in the intended recipients, will
be net settled with equity. The proposed restructuring entails a resetting of
the strike price of the E shares at R320 for the Bokamoso ESOP and R330 for
Izingwe, as well as providing on vesting for both a minimum payout ("floor")
of R40 per E share and a maximum payout per E share of R70 for Izingwe and R90
for members of the Bokamoso ESOP. While the floor price provides certainty to
all beneficiaries of the BEE transaction, the creation of a ceiling serves to
limit the cost to AngloGold Ashanti and its shareholders.
? Headline earnings adjusted for the effect of unrealised non-hedge
derivatives, fair value adjustment on convertible bonds and interest rate
swaps per share.
** E Shares are E Ordinary shares having a par value of R0.25 each in
the share capital of AngloGold Ashanti created to facilitate the BEE
transaction.
RATIONALE FOR THE PROPOSED RESTRUCTURING
AngloGold Ashanti has committed itself to participating in the
transformation and development of South Africa for the future benefit of all
South Africans. While the failure of Izingwe and the members of the Bokamoso
ESOP trust to realise the intended value of the BEE transaction could be
viewed as a normal risk of share ownership, it should be borne in mind that
this transaction provides an ongoing opportunity for AngloGold Ashanti and
various trade unions to ensure closer alignment of their interests. The BEE
transaction was also designed to enable AngloGold Ashanti to further play its
part in ameliorating SA`s historical legacy by enhancing entrepreneurship.
This is in addition to the separate BEE transactions that AngloGold Ashanti
concluded with African Rainbow Minerals in 1998 and 2001.
The Board believes that proactively implementing the proposed restructuring
will be recognised by government, AngloGold Ashanti`s employees, Izingwe and
society as a whole, as reinforcing the company`s continued commitment to the
spirit of transformation and empowerment as contained in the Mining Charter.
Management believes that the amendment of this transaction has the potential
to enhance labour relations within AngloGold Ashanti`s South African
operations, and, more broadly, reinforce AngloGold Ashanti`s reputation as a
good corporate citizen in South Africa.
UNAUDITED PRO FORMA FINANCIAL INFORMATION RELATING TO ANGLOGOLD ASHANTI
The unaudited pro forma financial information of AngloGold Ashanti was
prepared in order to show the effects of the proposed restructuring, assuming
that the proposed restructuring took place to its full extent on 1 January
2010 for purposes of the income statement for the twelve month period ended
and as at 31 December 2010 for purposes of the statement of financial
position. The unaudited pro forma financial effects have been prepared using
accounting policies that are consistent with IFRS and with the basis in terms
of the accounting policies adopted by AngloGold Ashanti.
The information has been prepared for illustrative purposes only and may
not, because of its nature, fairly present the issuer`s financial position,
changes in equity, results of operations or cash flows. It does not purport to
be indicative of what the results or financial results would have been if the
proposed restructuring had actually occurred at an earlier date.
The directors are responsible for the compilation, contents and
presentation of the unaudited pro forma financial effects and for the
financial information from which it has been prepared. Their responsibility
includes determining that:
- the unaudited pro forma financial effects have been properly compiled on
the basis stated;
- the basis is consistent with the accounting policies adopted by AngloGold
Ashanti; and
- the pro forma adjustments are appropriate for the purposes of the
unaudited pro forma financial information disclosed in terms of the Listings
Requirements.
Unaudited pro forma per share information of AngloGold Ashanti
US$ (cents) Before the After the Movement
Proposed proposed
Restructuring restructuring
Net asset value per share 1 1,071 1,069 (0.2)%
Net tangible asset value per
Share 1 1,021 1,018 (0.3)%
Basic earnings per share 2 20 17 (15.0)%
Diluted earnings per share 3 20 17 (15.0)%
Headline earnings per share 4 33 30 (9.1)%
Headline earnings adjusted for
the effect of unrealised non-
hedge derivatives, fair value
adjustment on convertible bonds
and interest rate swap per
share 5 (473) (475) (0.4)%
Weighted average number of
shares in issue 6 371,870,821 372,730,378 0.2%
Weighted average diluted
number of shares in Issue 7 373,440,427 374,299,984 0.2%
Number of shares in issue 8 384,010,206 384,869,763 0.2%
Net debt to net capital
Employed 9 31% 31%
In these pro formas, shares refers to AngloGold Ashanti ordinary shares.
Notes:
1. Net asset value per share is computed by dividing total equity of
$4,113 million by the number of shares in issue, being 384,010,206 before the
proposed restructuring and 384,869,763 after the proposed restructuring. Net
tangible asset value per share is computed by dividing total equity (excluding
intangible assets) of $3,919 million by the number of shares in issue, being
384,010,206 before the proposed restructuring and 384,869,763 after the
proposed restructuring.
2. Basic earnings per share is computed by dividing net earnings by the
weighted average number of shares in issue.
3. The diluted earnings per share is computed by dividing net earnings by
the weighted average diluted number of shares in issue.
4. Headline earnings removes items of a capital nature from the
calculation of earnings per share. Headline earnings per share is computed by
dividing headline earnings by the weighted average number of shares in issue.
5. Headline earnings adjusted for the effect of unrealised non-hedge
derivatives, fair value adjustment on convertible bonds and interest rate
swaps divided by the weighted average number of shares in issue.
6. The weighted average number of shares in issue was 371,870,821 for the
period ended 31 December 2010 and as a result of the issuance of 859,557
shares, the weighted average number of shares in issue for that period would
have been 372,730,378.
7. The weighted average diluted number of shares in issue was 373,440,427
for the period ended 31 December 2010 and as a result of the issuance of
859,557 shares, the weighted average diluted number of shares in issue for
that period would have been 374,299,984. The weighted average diluted number
of shares in issue for the period ended 31 December does not assume the effect
of 33,524,625 shares issuable upon the conversion of the convertible bonds, as
their effects are anti-dilutive.
8. The number of shares in issue as at 31 December 2010 was 384,010,206
and, as a result of the issue, the number of shares in issue as at that date
would have been 384,869,763. This assumes that all E shares will convert into
ordinary shares.
9. Net debt includes both long-term and short-term debt and is net of
cash. Net capital employed is calculated as shareholders` equity adjusted for
other comprehensive income and deferred taxation, plus minority interests,
interest bearing debt, less cash.
CONDITIONS PRECEDENT TO IMPLEMENTING THE PROPOSED RESTRUCTURING.
Implementation of the proposed restructuring is subject to the following
conditions being fulfilled:
- the passing of all necessary resolutions by the requisite majority of
shareholders at the general meeting; and
- registration (insofar as required) of the special resolution with the
CIPRO/Companies Office;
SALIENT DATES AND TIMES
2011
Last day to lodge forms of proxy for the general
meeting by 12:00 (1) on Monday, 9 May
General meeting to be held at 12:00 (2) on Wednesday, 11 May
Results of general meeting
- released on SENS on Wednesday, 11 May
- published in the South African press on Thursday, 12 May
Special resolutions registered with the CIPRO /
Companies Office on or about Friday, 20 May
(1) The above dates and times are subject to change. Any material changes
will be released on SENS and published in the press.
(2) All times referred to in this announcement are local times in South
Africa.
INDEPENDENT FAIRNESS OPINION
A fairness opinion is required to be obtained from an independent expert
because the proposed restructuring, includes the issue of further unlisted
voting securities for which a special dispensation was granted by the JSE
Limited, in respect of the original BEE transaction, to waive the restrictions
outlined in paragraph 4.24 of its Listings Requirements. In addition a
fairness opinion is required as convertible securities are being issued to
Izingwe, of which Mr Sipho Pityana, a non-executive director of AngloGold
Ashanti and Chairman of Izingwe holds indirectly through a family trust, 44%
of Izingwe and is therefore regarded as a related party to AngloGold Ashanti
in terms of the Listings Requirements. The Board has appointed The Standard
Bank of South Africa Limited, acting through its Mergers and Acquisitions
Division ("Standard Bank"), as the independent expert to advise on the
fairness of the financial terms and conditions of the proposed restructuring.
Having considered the financial terms and conditions of the proposed
restructuring, Standard Bank is of the opinion that the financial terms and
conditions of the proposed restructuring are fair, both in relation to the
further issue of unlisted voting securities and in light of the fact that the
issue includes an issue of shares to a related party.
CIRCULAR TO SHAREHOLDERS
A circular convening a general meeting to be held on Wednesday, 11 May at
12:00 South African time (or as soon as the annual general meeting to be held
on the same day is concluded), at the Auditorium, 76 Jeppe Street, Newtown,
Johannesburg, South Africa, at which, shareholders will be asked to approve
various resolutions to give effect to the amendment to the transaction was
posted to shareholders today, Thursday, 14 April 2011.
An electronic copy of the circular is available from the company`s website
at www.anglogoldashanti.com and printed copies are available, on request, from
The Company Secretary, AngloGold Ashanti Limited, P O Box 62117, Marshalltown,
2107, Fax +27 11 637 6677 or from the contacts listed below.
Merchant bank and transaction sponsor : Rand Merchant Bank (A division of
FirstRand Bank Limited)
Corporate law advisers: Tabacks and Associates (Pty) Limited
Independent expert: Standard Bank of South Africa Limited
Reporting accountants: Ernst & Young Inc.
ENDS
14 April 2011
Merchant bank and transaction sponsor Rand Merchant Bank (A division of
FirstRand Bank Limited)
Contacts
Tel: E-mail:
Alan Fine (Media) +27 11 637 6383 afine@AngloGoldAshanti.com
Mike Bedford (Investor) +27 11 637 6273 mbedford@anglogoldashanti.com
Stewart Bailey(Investor) +1 2128364303 sbailey@anglogoldashanti.com
or +27 82 330 9628
Date: 14/04/2011 14:00:01 Produced by the JSE SENS Department.
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