| Thu 14 Apr 2011, 14:15 | | ANG - Anglogold Ashanti NUM Solidarity UASA Izingwe Holdings and ESOP |
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ANG
ANANO
ANG - Anglogold Ashanti, NUM, Solidarity, UASA, Izingwe Holdings and ESOP
Trustees announce restructuring of their employee share ownership plan and
economic empowerment transaction
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")
ANGLOGOLD ASHANTI, NUM, SOLIDARITY, UASA, IZINGWE HOLDINGS AND ESOP TRUSTEES
ANNOUNCE RESTRUCTURING OF THEIR EMPLOYEE SHARE OWNERSHIP PLAN AND ECONOMIC
EMPOWERMENT TRANSACTION
AngloGold Ashanti Limited, the National Union of Mineworkers (NUM), Solidarity,
UASA - The Union (UASA), Izingwe Holdings (Proprietary) Limited and the Bokamoso
ESOP Board of Trustees are pleased to announce agreements between them on the
restructuring of the empowerment transactions concluded respectively between the
company and the unions, and the company and Izingwe in 2006. The restructuring
proposals are still subject to approval by other AngloGold Ashanti shareholders.
These new arrangements follow a period of consultation between the parties which
began late last year. These interactions were motivated by the fact that share
price performance since the onset of the 2008 global financial crisis led to a
situation where the first two tranches of E shares (otherwise known to
participants as loan shares), which operate essentially as share appreciation
rights, vested and lapsed at no additional value to Bokamoso ESOP beneficiaries
and Izingwe.
Ordinarily, this would be accepted as a normal risk of share ownership. However,
AngloGold Ashanti takes the view that the empowerment transactions were designed
to enable AngloGold Ashanti to further play its part in ameliorating SA`s
historical legacy. In addition, the Bokamoso ESOP was established in
consultation with the trade unions to ensure a closer alignment of the interests
of employees and the company. And the empowerment transaction with Izingwe was
additionally designed to contribute to enhancing entrepreneurship (in addition
to the transactions that AngloGold Ashanti entered into with African Rainbow
Minerals in 1998 and 2001).
In this light, the Board of AngloGold Ashanti has taken the view that it is
appropriate that, as far as possible the E shares, on vesting, should see the
transfer of an element of value.
ESOP beneficiaries also benefit from ownership of ordinary shares transferred at
no cost. This aspect of the ESOP is unaffected by this restructuring
transaction.
To explain the original scheme and envisaged changes to it:
The original scheme saw 2,880,000 E shares (along with 960,000 ordinary shares)
transferred to the Bokamoso ESOP trust on behalf of the just over 30,000
eligible employees, and 1,400,000 E shares transferred to Izingwe effective
November 2006. These E shares were to vest in five equal annual tranches from
November 2009 to November 2013.
Based on a R320 share price prevailing at the time, the E shares were
transferred at 10% discount, giving a base price of R288. A notional interest
rate of 7% for the Bokamoso ESOP and 8% for Izingwe was applied, partially
offset by 50% of dividend flows.
Both sets of empowerment transaction beneficiaries have benefited from dividend
flows and a once-off payout at the time of the 2008 AngloGold Ashanti rights
issue. And ESOP members have enjoyed the benefits of vested ordinary shares.
Unfortunately, the company`s share price had not reached the strike price level
on either of the vesting dates, leaving the shares "underwater" and hence left
to lapse at zero value.
In order to remedy this situation in a manner that would ensure an element of
value accruing to participants, though at a reasonable incremental cost to
AngloGold Ashanti shareholders, consultations between AngloGold Ashanti
management and the unions and Izingwe respectively have led to a conclusion
whereby:
Lapsed loan shares that vested without value will be reinstated
The strike (base) price will be fixed at R320 per share for the Bokamoso ESOP
and R330 for Izingwe
The notional interest charge will fall away
As previously, 50% of any dividends declared will be used to reduce the strike
price
As previously, the remaining 50% is paid directly to participants under the
empowerment transaction
The life span of the scheme will be extended by an additional one year, the last
vesting being in 2014, instead of 2013. A minimum payout on vesting of the E
shares has been set at R40 each and a maximum payout of R70 each per E Share for
Izingwe and R90 each for members of the Bokamoso ESOP (ie employees), plus the
impact of the 50% of dividend flow. While the floor price provides certainty to
all beneficiaries of the empowerment transactions, the creation of a ceiling
serves to limit the cost to AngloGold Ashanti and its shareholders.
The payout per share to the Bokamoso ESOP participants at vesting will therefore
be calculated as follows: Share price (maximum R410) minus (strike price minus
50% of dividend), subject to a minimum payout of R40 per share.
AngloGold Ashanti CEO Mark Cutifani comments:"We`ve taken a proactive stance, in
partnership with Izingwe and our employees, to ensure this economic empowerment
initiative has the intended benefit. 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."
May Hermanus, who chairs the Bokamoso ESOP board of trustees, speaking also on
behalf of union nominees on the board, says: "The absence of value flowing to
members on vesting dates in respect of the E shares was worrying to trustees and
members of the scheme. We therefore welcome the constructive and creative
thinking that has gone into remedying this problem for ESOP members"
And Izingwe Holdings chairman Sipho Pityana says: "Our common commitment to
create an inclusive economic dispensation, by redressing the unfair
discrimination of the past, resonates powerfully when major players in the
economy, of the kind AngloGold Ashanti is, take decisive steps to ensure the
success of the black economic empowerment project. The fact that this was done
without pressure from government is positive commentary on AGA and its
leadership"
JOHANNESBURG
14 APRIL 2011
MERCHANT BANK AND TRANSACTIONAL SPONSOR : RAND MERCHANT BANK (A DIVISION OF
FIRST RAND BANK LIMITED)
Contacts Tel: E-mail:
Alan Fine (AngloGold Ashanti) +27(0)11637-6383 /
+27(0)83 2500757 afine@anglogoldashanti.com
Lesiba Seshoka (NUM) +27(0)11377-2047 /
+27(0)82 8036719 lesibas@num.org.za
Ashley Ally (Izingwe) +27(0)11726-1112 /
+27(0)83 4494293 ashley@izingwe.com
Mike Bedford (Investors) +27(0)11637 6273 /
+27(0)82 3748820 mbedford@anglogoldashanti.com
Stewart Bailey (Investors) +1 212 836 4303 /
+1 646 338 4337 sbailey@anglogoldashanti.com
Date: 14/04/2011 14:15:01 Produced by the JSE SENS Department.
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