| Tue 28 Jun 2011, 12:29 | | ASR - Assore Limited - Assore and Shanduka Resources conclude a transaction |
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ASR
ASR
ASR - Assore Limited - Assore and Shanduka Resources conclude a transaction
which results in the disposal by Shanduka resources of its interest in Assore.
Assore Limited
(Incorporated in the Republic of South Africa)
(Registration number 1950/037394/06
Share code: ASR ISIN: ZAE000146932
("Assore")
Shanduka Resources (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/017835/07)
("Shanduka Resources")
ASSORE AND SHANDUKA RESOURCES CONCLUDE A TRANSACTION WHICH RESULTS IN
THE DISPOSAL BY SHANDUKA RESOURCES OF ITS INTEREST IN ASSORE FOR R2.7
BILLION AND FACILITATES A THIRD BROAD BASED BLACK ECONOMIC
EMPOWERMENT ("BBBEE") TRANSACTION
1 HIGHLIGHTS
- Assore and Shanduka Resources, through its wholly-owned subsidiary, Main
Street 343 (Proprietary) Limited ("MS343"), have entered into a transaction
to facilitate a third BBBEE transaction which enables Assore to secure long
term empowerment, whilst simultaneously enabling Shanduka Resources to
realise value on its investment in Assore through the sale of its entire
interest in Assore, in advance of the expiry of the 2014 lock-in period
applicable to these shares
- The 16,464,450 Assore ordinary shares held by Shanduka Resources,
representing an 11.79% interest in Assore, will be acquired and warehoused
by Main Street 904 (Proprietary) Limited ("MS904"), pending the refinement
of a structure that will see BBBEE groupings benefit through a third BBBEE
transaction ("Third Empowerment Transaction")
- Shanduka Resources will dispose of its Assore shares in advance of the
expiry of the 2014 lock-in period applicable to such shares at a discount
to the current market price, creating an immediate economic benefit for the
Third Empowerment Transaction and ensuring the sustainability thereof, for
the future BBBEE beneficiaries
- Assore supports the acquisition by MS904, as the Third Empowerment
Transaction will enable it to secure BBBEE ownership of 26.1% post the
expiry of the 2014 lock-in period applicable under its first BBBEE
transaction with Shanduka Resources and, through the discount achieved,
reduces the cost of the Third Empowerment Transaction
2 INTRODUCTION
On 10 November 2005, Assore entered into its first empowerment transaction,
pursuant to which 15.02% of Assore`s issued ordinary share capital was acquired
by Assore`s empowerment partners, being Shanduka Resources and the Bokamoso
Trust ("First Empowerment Transaction"). The First Empowerment Transaction
facilitated Assore`s achievement of the 2009 BBBEE equity ownership target set
for mining companies in the Mineral and Petroleum Resources Development Act
("MPRDA") and the Broad-Based Socio-Economic Empowerment Charter for the South
African Mining Industry ("the Charter") and its associated Scorecard.
On 1 December 2009, Assore announced a second empowerment transaction, which
resulted in an additional 11.1% of Assore`s issued ordinary share capital being
controlled by the Bokamoso Trust ("Second Empowerment Transaction"). Pursuant to
the First Empowerment Transaction and the Second Empowerment Transaction, Assore
achieved 26% BBBEE equity ownership as measured under the MPRDA, the Charter and
its associated Scorecard.
Shanduka Resources, a wholly-owned subsidiary of Shanduka Group (Proprietary)
Limited ("Shanduka"), holds its 11.79% interest in Assore through a wholly-owned
subsidiary, Main Street 343 ("MS343"). The investment in 2005 by Shanduka
Resources in Assore has yielded attractive returns to Shanduka and its
shareholders, which include several broad-based beneficiaries.
In terms of the agreements governing the First Empowerment Transaction, Shanduka
Resources is only permitted to sell its Assore shares without the permission of
Assore after 1 May 2014. The opportunity, however, has arisen for Shanduka
Resources to dispose of its investment in Assore through the sale by MS343 of
its entire interest in Assore to MS904, a special purpose vehicle owned by two
independent empowerment trusts set up by Assore.
As the Third Empowerment Transaction will allow Shanduka Resources to dispose if
its entire shareholding in Assore in advance of 2014 by way of a single
transaction, as well as to facilitate the creation of an immediate economic
benefit and ensure the sustainability of the Third Empowerment Transaction for
Assore`s future BBBEE shareholders, Shanduka Resources has agreed to dispose of
its interest in Assore at a price of R163.00 per Assore share for approximately
R2.7 billion, which represents a 23% discount to Assore`s 30-day VWAP of R212.91
as at Monday, 16 May 2011, the date on which the offer was first made to
Shanduka Resources.
MS904 shall fund the acquisition from Shanduka Resources by way of a third party
loan facility to be advanced to MS904 by The Standard Bank of South Africa
Limited ("Standard Bank"). Assore is pleased to announce that it has agreed to
support MS904 in the acquisition of Shanduka Resources` 11.79% interest in
Assore, by guaranteeing MS904`s funding obligations to Standard Bank for the
following reasons:
- The Third Empowerment Transaction secures BBBEE ownership for Assore in
excess of 26% post 2014 as required by the MPRDA, the Charter and its
associated Scorecard
- The shares will ultimately be owned and controlled by and for the benefit
of BBBEE groupings, who will become long-term shareholders in Assore
- The discount achieved on the Assore shares creates an immediate economic
benefit underpinning the Third Empowerment Transaction and ensures the
sustainability of the Third Empowerment Transaction for the future BBBEE
beneficiaries
Assore`s support and financial assistance provided to MS904 is more fully
described in paragraph 4 below and is subject to the fulfilment of the
conditions precedent set out in paragraph 5 below.
3 RATIONALE
Assore is supportive of the broad-based economic imperatives contained in the
MPRDA, the Charter and its associated Scorecard. Assore is of the view that the
Third Empowerment Transaction will provide additional certainty to Assore by
maintaining its BBBEE equity ownership of 26% up to and beyond 2014 as currently
specified under the Charter, and will thus serve as a cornerstone of its ongoing
BBBEE strategy. Assore accordingly supports MS904 in the acquisition of Shanduka
Resources` entire interest in Assore, on the basis that these shares will be
utilised for the purposes of the Third Empowerment Transaction.
The Third Empowerment Transaction will be implemented in two phases. Phase I
involves the acquisition by MS904 of Shanduka Resources` 11.79% interest in
Assore, from MS343. In Phase II, the independent trusts which currently own
MS904 will be further refined such that BBBEE groupings will become the ultimate
beneficiaries of such trusts.
Assore expects to furnish shareholders with further details pertaining to Phase
II of the Third Empowerment Transaction during the latter half of 2011.
4 OVERVIEW OF SUPPORT AND FINANCIAL ASSISTANCE PROVIDED TO MS904 BY ASSORE
In Phase I of the Third Empowerment Transaction, Standard Bank will lend to
MS904 approximately R2.7 billion to enable it to acquire the Assore shares from
Shanduka Resources. Assore has agreed to provide a guarantee to Standard Bank
for the funding provided to MS904, in the event that MS904 defaults on its
repayment obligations in respect of the loan.
In return for Assore providing such guarantee in favour of Standard Bank, MS904
has agreed to indemnify Assore against any payments required to be made by
Assore under the aforementioned guarantee, and has, as further security to
Assore, agreed to provide a security cession and pledge in favour of Assore over
the Assore shares acquired by MS904.
Assore has agreed to subordinate any claims which it may have against MS904 to
those claims which Standard Bank may have against MS904 pursuant to the loan
advanced by Standard Bank, for so long as any amounts remain outstanding
thereunder by MS904.
In terms of section 44 of the Companies Act, 2008 (Act 71 of 2008) ("the
Companies Act"), a company is prohibited from granting financial assistance to
any person for the purposes of, or in conjunction with, such person acquiring
shares in such company, other than if authorised by a special resolution of its
shareholders. Assore is of the view that the guarantee provided by Assore to
Standard Bank and Assore`s agreement to subordinate its claims against MS904 to
those of Standard Bank pursuant to the loan, amounts to the granting by Assore
of financial assistance as contemplated in the Companies Act. Consequently,
Assore shareholders will be required to grant their approval for such financial
assistance by way of special resolution at a general meeting to be convened for
this purpose.
5 CONDITIONS PRECEDENT
The implementation of the financial assistance is subject to the fulfilment of
various suspensive conditions. These include, inter alia:
- the execution of all agreements relating to the financial assistance;
- the approval by the JSE of all documentation to be sent to Assore
shareholders, to the extent required;
- all other relevant regulatory approvals being obtained by all parties, to
the extent required; and
- the special and ordinary resolutions to be proposed in the circular sent to
Assore shareholders, being approved by the requisite majority of Assore
shareholders at the general meeting.
6 SALIENT DATES AND TIMES
Date: 28/06/2011 12:29:01 Produced by the JSE SENS Department.
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