| Tue 28 Jun 2011, 16:46 | | SAL/SALD - Sallies Limited - Loan facility convertible into Sallies ordinary |
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SAL SALD
SAL
SAL/SALD - Sallies Limited - Loan facility convertible into Sallies ordinary
shares
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")
LOAN FACILITY CONVERTIBLE INTO SALLIES ORDINARY SHARES
This announcement replaces the announcement that was released earlier today on
SENS as there was an incorrect assumption in the financial effects.
1 Introduction and information relating to the loan
On 23 June 2011, Sallies entered into a convertible loan agreement with TSC
Investments Limited ("TSC") ("the Agreement") whereby Sallies will borrow
$2,800,000 from TSC ("the Loan"), which under certain circumstances is
convertible into an estimated 167,153,957 ordinary shares in Sallies
("Conversion Issue").
Sallies announced on SENS on 19 January 2011 that it had secured a working
capital facility of US$ 8 million from Maghreb Minerals Plc ("Maghreb facility")
in order to recommission the Witkop Mine. To date, US$ 5 million of the Maghreb
facility have been drawn down. The convertible loan has been raised as a
substitute for the remaining US$ 3 million of the Maghreb facility.
The loan from TSC attracts an interest rate equal to the three month London
Interbank Offered Rate ("Libor") plus 200 basis points until the date on which
it is either converted or repaid by Sallies, as applicable. The conversion is at
TSC`s sole and absolute discretion or on receipt of the mandatory offer by
Maghreb Minerals Plc to Sallies` minority shareholders and debenture holders as
announced on SENS on 28 December 2010 ("the mandatory offer").
The shares can be converted at a price equal to the lesser of:
90% (ninety per cent) of the 30 (thirty) day volume weighted average share price
("VWAP") per share of Sallies Limited (rounded up to the nearest half cent)
calculated on the signature date (being 11.50 cents per share); or
90% (ninety per cent) of the 30 (thirty) day VWAP (rounded up to the nearest
half cent) per share, calculated on the last business day prior to the
subscription date.
If TSC has not exercised its right of conversion, the loan is repayable at the
earlier of 3 January 2012 or the day on which the mandatory offer is announced
and becomes unconditional and binding.
2 Conditions Precedent
The loan is subject, inter alia, to the following conditions precedent being
fulfilled by no later than 31 July 2011:
* the approval of the South African Reserve Bank, exchange control division
of the loan and the terms thereof;
* Firebird Global Master Fund Ltd and Firebird Global Master Fund II Ltd,
being the current controlling shareholder of Sallies, to vote in favour of
the resolutions approving the terms of the loan agreement and to demand
that Sallies convene a general meeting of shareholders by no later than 30
September 2011; and
* all permissions required, including shareholder approval, and compliance
with all regulatory obligations to the extent necessary to effect the loan.
3 Financial Effects
The unaudited pro forma financial effects of Sallies before and after the
Conversion Issue are based on the reviewed results of Sallies for the 6 months
ended 31 December 2010. The unaudited financial effects are presented for
illustrative purposes only, to provide information on how the Conversion Issue
may have impacted on the results and financial position of Sallies. The
unaudited pro forma financial effects are the responsibility of Sallies`
directors. Due to the nature of the unaudited pro forma financial effects,
they may not fairly present Sallies` financial position and the results of its
operations after the Conversion Issue. It has been assumed for purposes of
the headline and diluted headline loss and diluted loss per share that the
Conversion Issue took place with effect from 1 July 2010 and 31 December 2010
for the computation of the tangible net asset value and net asset value per
share. The financial effects do not purport to be indicative of what the
financial results would have been, had the Conversion Issue been implemented
on a different date. The unaudited pro forma financial information has been
presented in a manner consistent in all respects with IFRS and Sallies`
accounting policies have been applied consistently throughout the period.
The pro forma financial effects of the Conversion Issue have been calculated
based on the following assumptions:
* The Loan and the accrued interest thereon was not repaid during the period
under review and TSC elected to convert such repayment into Sallies
ordinary shares on 31 December 2010;
* The Rand amount repaid in respect of the Loan was calculated for
illustrative purposes using the exchange rate of R6.80 to US$1.00 on 31
December 2010 and using an estimated number of shares of 167,153,957 which
has been calculated based on compound interest accruing on the Loan for a
period of 6 months at an interest rate of 0.303% plus 200 basis point and a
conversion price of 11.50 cents per ordinary share, being a 10% discount to
the 30 day VWAP of the Sallies ordinary shares at the date of signing the
Agreement (rounded up to the nearest half cent.)
Before the After the %
Conversion Conversion change
Issue Issue
Amount Amount
Basic loss per share (cents) -5.0 -4.3 13.6
Diluted loss per share (cents) -5.0 -4.3 13.6
Headline loss per share (cents) -4.9 -4.3 13.5
Diluted headline loss per share -4.9 -4.3 13.5
(cents)
Net asset value per share (cents) 1.9 3.7 95.4
Tangible net asset value per share 0.5 2.5 439.2
(cents)
Shares in issue (`000) 724,556 891,710 23.1
Weighted average number of shares in 683,388 850,542 24.5
issue (`000)
Diluted weighted average number of 683,388 850,542 24.5
shares in issue (`000)
Notes:
1 The "Before the Conversion Issue" loss, diluted loss, headline loss and
diluted headline loss per share have been extracted without adjustment from
the published, reviewed results of Sallies for the 6 months ended 31
December 2010. The "Before the Conversion Issue" net asset and tangible net
asset value per share have been calculated from the financial information
presented in the published, reviewed results of Sallies for the 6 months
ended 31 December 2010.
2 The "After the Conversion Issue" assumes:
a The conversion of the Loan on 31 December 2010 into 167,153,957
ordinary shares at a 10% discount to the 30-day VWAP (Rounded up to
the nearest half cent) on the date of signing the Agreement resulting
in an IAS 39 charge of R 2.136 million;
b The accrual of interest amounting to R183,000 at a rate of 0.303% plus
200 basis points over the 6-month period of the Loan; and
c Estimated transaction costs amounting to R 250,000.
4 Circular to shareholders
Ordinary shareholder approval is required to approve the terms of the Loan, as
the Loan may result in a conversion of the Loan into Sallies ordinary shares,
classified as a specific issue of shares for cash in terms of the JSE Listing
Requirements. A circular containing details of the Loan and the terms thereof
as well as a notice of general meeting, will be posted to ordinary shareholders
in due course.
Pretoria
28 June 2011
Sponsor: Bridge Capital Advisors (Pty) Limited
Reporting Accountant and Auditor: BDO (South Africa) Incorporated
Legal advisor: Fasken Martineau DuMoulin (Pty) Limited
Date: 28/06/2011 16:46:01 Produced by the JSE SENS Department.
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