| Mon 7 Nov 2011, 10:00 | | AMS - Amplats - Terms announcement relating to the proposed community |
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AMS
ANANP
AMS - Amplats - Terms announcement relating to the proposed community
development transaction involving certain Amplats` Mine host communities
Anglo American Platinum Limited
(formerly Anglo Platinum Limited)
(Incorporated in the Republic of South Africa)
Registration number: 1946/022452/06
Share code: AMS ISIN: ZAE000013181
("Amplats")
TERMS ANNOUNCEMENT RELATING TO THE PROPOSED COMMUNITY DEVELOPMENT TRANSACTION
INVOLVING CERTAIN AMPLATS` MINE HOST COMMUNITIES
KEY HIGHLIGHTS
- Development Trusts and LSA NPC (as defined below) to receive dividends
and potential capital appreciation on approximately 6.3 million Amplats
shares (representing approximately 2.33% of Amplats share capital);
- Transaction value of R3.5 billion facilitated by Amplats through a
notional vendor finance mechanism;
- Benefits accrue to the Beneficiaries (as defined below) and will be
utilised at community level for sustainable community projects;
- Access to dividends and other cashflow incentives from the outset;
- Based on the share price performance of Amplats, the funding mechanism
provides the potential for early settlement of all or a part of the
notional vendor finance mechanism, subject to meeting certain equity
triggers; and
- Beyond compliance broad-based BEE transaction.
1. INTRODUCTION
Amplats is pleased to announce that it has, subject to the fulfilment of
the conditions precedent set out in paragraph 8 below, resolved to
implement a Mine host community development transaction, pursuant to
which Amplats will establish a trust ("Lefa La Rona Trust") through
which the Beneficiaries (defined below) will hold a participation
interest (as described in more detail in paragraph 3.3 below). Amplats
will issue 6 290 365 Amplats ordinary shares ("the Subscription Shares")
to Lefa La Rona Trust ("the Transaction"). The Subscription Shares will
be issued subject to a notional vendor finance ("NVF") mechanism,
described in more detail in paragraph 5 below. The Transaction value is
R3.5 billion and will equate to a 2.33% ownership interest in Amplats.
The Transaction is designed to provide integrated benefits to the
Beneficiaries in the form of cash flow benefits from the outset, and
potential equity ownership in Amplats at the end of the 10-year NVF
period. Further details on the mechanics of the Transaction and the NVF
mechanism will be contained in the circular to be posted to Amplats
shareholders on or about 14 November 2011.
2. TRANSACTION RATIONALE
Amplats has committed itself to undertaking a comprehensive assessment
of its Mine host community benefit programmes in order to achieve best
industry practice and bring about positive working relationships between
Amplats and its various Mine host communities. The need for ongoing
community development and sustainable economic transformation is
recognised as a commercial and social imperative. Amplats has been
exploring innovative ways of enhancing and optimising the benefits that
accrue to Mine host communities at the Mogalakwena Mine, Dishaba/Tumela
Mine (formerly Amandelbult), Twickenham Mine and the Rustenburg Mines
(formerly collectively referred to as "Rustenburg Section")
(collectively, "the Mines") and extending such benefits to include key
labour sending areas to the Mines ("LSAs").
Amplats has been guided by the following objectives in designing the
Transaction:
- improve and entrench Amplats` relationship with the Mine host
communities, building on existing platforms and the significant
positive strides Amplats has achieved to date;
- develop self-sustaining Mine host communities that are not solely
dependent on the Mines;
- design a sustainable structure that furthers Amplats` objectives of
empowering Mine host communities affected by its mining operations;
- ensure transparency through meaningful engagement and governance
structures; and
- give embodiment to Amplats and Anglo American plc principles of
community engagement and empowerment.
The Transaction underscores Amplats` commitment to empowerment and
community development. Amplats believes that the Transaction and the
related development dialogue with the Mine host communities will mark a
significant step towards true broad-based and sustainable empowerment
and the ongoing development of the Beneficiaries.
3. INFORMATION ON THE BENEFICIARIES
Amplats has identified the need to consider broader community benefit
schemes for those affected communities surrounding the Mines that have
not previously participated in Amplats empowerment ownership
transactions. Amplats has also identified major LSAs from where a
significant portion of its labour force originates from and wishes to
extend the benefits of the Transaction to such LSAs. The Beneficiaries
are the four Development Trusts and the LSA NPC as described in
paragraph 4 below.
The participation interests of each of the Beneficiaries, with the
exception of the LSA NPC (described in paragraph 4 below), under Lefa La
Rona Trust have been determined in accordance with the anticipated
resources and reserves usage of each Mine over a 30 year period as
estimated on 31 December 2010. The LSA NPC`s (described in paragraph 4
below) participation interest is based on fixed proportion allocated by
Amplats. Based on this criteria, the Beneficiaries will have the
following participation interests in the Transaction:
Number of Participating % of Gross
Subscription Interest in Amplats Exposure (R)
Shares held the Trust held
indirectly through the
Trust post
the
Transaction
Rustenburg 1 440 493 22.9% 0.53% 801,500,000
development
trust
Dishaba/Tumela 1 616 624 25.7% 0.60% 899,500,000
development
trust
Mogalakwena 1 704 689 27.1% 0.63% 948,500,000
development
trust
Twickenham 629 037 10.0% 0.23% 350,000,000
development
trust
LSA NPC 899 522 14.3% 0.34% 500,500,000
Total 6 290 365 100% 2.33% 3,500,000,000
4. TRANSACTION MECHANISM
The Lefa La Rona Trust has been established for, inter alia, the purpose
of subscribing for, and holding the Subscription Shares. The Mine host
communities and LSAs will participate in the Transaction through
separate trusts ("Development Trusts") that will be established for each
Mine and a non-profit company that will be established for the LSAs
("LSA NPC") (collectively, "the Beneficiaries"). Amplats is issuing the
Subscription Shares to the Lefa La Rona Trust. The Development Trusts
will be established following further engagement and consultation with
the Mine host communities and affected stakeholders as part of an on-
going engagement and capacity building programme.
The Lefa La Rona Trust will be the link between Amplats and the
Beneficiaries in order to vote the Amplats shares and distribute cash
flows received to the Development Trusts and LSA NPC. Pursuant to the
fulfilment of all the conditions precedent ("the Closing Date"), the
Lefa La Rona Trust will subscribe for the Subscription Shares at their
par value. The number of Subscription Shares is calculated with
reference to the 30-day volume weighted average price ("VWAP") of an
Amplats ordinary share as at 3 November 2011, being R556.41 per share.
Amplats will make a cash advance equal to the aggregate amount of the
par value of the Subscription Shares ("Subscription Price") to enable
the Lefa La Rona Trust to subscribe for the Subscription Shares, as
described more fully in paragraph 5 below.
The Beneficiaries will, through the Lefa La Rona Trust and for the
duration of the NVF Period (defined below), receive cash flow benefits
as fully described in paragraphs 5.4 and 5.5 below, in the form of:
- annual dividends on the Subscription Shares, subject to paragraph
5.4 below; and
- guaranteed amount to fund development projects of up to R20 million
per year payable to the Lefa La Rona Trust if the aggregate
dividend payable to Lefa La Rona Trust is less than R20 million per
year.
In addition, the Beneficiaries will have the ability, through the Lefa
La Rona Trust, to receive other cash flow benefits in the form of:
- annual social investment incentives of up to R30 million per annum
over and above the guaranteed amount ("CSI Cash Spend") for social
development projects put forward by the Development Trusts and
approved by Amplats, for the duration of the NVF Period; and
- a further cash incentive will be payable to the Beneficiaries
(excluding the LSA NPC) subject to the Development Trusts achieving
pre-determined annual health and safety targets ("KPI Cash
Incentive").
5. TRANSACTION FUNDING
5.1 Issue of Subscription Shares
5.1.1 Amplats has established the Lefa La Rona Trust to, inter alia,
subscribe for the Subscription Shares at par value of 10 cents each
and to administer the Subscription Shares for the benefit of the
Beneficiaries.
5.1.2 Amplats will advance the Subscription Price of R629,037 to enable
the Lefa La Rona Trust to subscribe for the Subscription Shares.
5.1.3 The Subscription Shares will constitute approximately 2.33% (after
the issue thereof to the Lefa La Rona Trust) of Amplats` issued
ordinary share capital.
5.2 Notional Vendor Finance mechanism
5.2.1 NVF will be provided by Amplats to the Lefa La Rona Trust with a
value of approximately R3,325 million (implying a 5% entry discount
for the benefit of the Lefa La Rona Trust). NVF will be provided
for a 10 year period ("NVF Period") at a fixed notional interest
rate of 9.08%, nominal annual compounded annually in arrears
("Notional Rate").
5.2.2 In terms of the NVF mechanism, Amplats will have the right to
repurchase a formula-determined number of Subscription Shares at
their par value of 10 cents each at the end of the NVF Period. The
number of Subscription Shares to be repurchased by Amplats will be
calculated, so as to give Amplats a required notional rate of
return on its NVF in respect of the Subscription Shares equal to
the Notional Rate. The remaining Subscription Shares after the
repurchase has been affected in terms of the Subscription and
Repurchase agreement ("Unencumbered Shares") shall remain in the
Lefa La Rona Trust until the end of the NVF Period.
5.2.3 Early settlement of part or all of the NVF will take place if
certain Amplats ordinary share price triggers are met as follows:
5.2.3.1 If at any time during the five year period from the Closing Date
("First Period"), the difference between the market value of
Amplats ordinary shares, equal in number, to the Subscription
Shares held by the Lefa La Rona Trust and the outstanding NVF
("Equity Value") equals to/exceeds R1.4 billion, 33% of the
outstanding NVF will automatically be settled at that time, thereby
locking in a value of approximately R462 million Unencumbered
Shares for the benefit of Lefa La Rona Trust.
5.2.3.2 Subject to a cumulative reduction to the extent that an earlier
trigger was activated, if during the three year period following
the expiry of the First Period ("Second Period"), the Equity Value
achieved equals to/exceeds R1.7 billion, 50% of the outstanding NVF
will automatically be settled at that time, thereby locking in a
value of approximately R850 million Unencumbered Shares for the
benefit of Lefa La Rona Trust.
5.2.3.3 Subject to a cumulative reduction to the extent that earlier
triggers were activated, if at any time during the NVF Period, the
Equity Value achieved equals to/exceeds R2.0 billion, 100% of the
outstanding NVF will automatically be settled at that time,
thereby locking in a value of approximately R2 billion of
Unencumbered Shares for the benefit of Lefa La Rona Trust.
5.2.4 Further details on the mechanics of the NVF mechanism and early
repurchase mechanism will be contained in the circular to be posted
to Amplats shareholders on or about 14 November 2011.
5.3 Restrictions and encumbrance
The Lefa La Rona Trust will not be entitled to dispose, encumber or
otherwise pledge the Subscription Shares during the NVF Period.
Subsequent to the full settlement of the NVF, Lefa La Rona Trust
restrictions on 40% of the remaining Amplats ordinary shares will
be lifted with 60% of the shares remaining subject to restrictions
for a further period of 20 years.
5.4 Dividends
5.4.1 During the NVF Period Lefa La Rona Trust, as a shareholder in
Amplats, will be entitled to 40% of dividends declared by Amplats
on its ordinary shares ("Unrestricted Dividend"), which will be
paid to Lefa La Rona Trust and in turn distributed to the
Beneficiaries in proportion to their respective participation
interests, net of any Trust liabilities.
5.4.2 During the NVF Period 60% of any dividend declared by Amplats on
its ordinary shares, which would ordinarily have accrued to Lefa La
Rona Trust had the restrictions and limitations under the
Subscription and Repurchase agreement not been imposed on those
shares, will be notionally applied to settle the NVF.
5.4.3 Pursuant to the equity triggers applicable during the NVF Period
and/or settlement of the NVF balance, the Lefa La Rona trust will
be entitled to 100% of the dividends attributable to the
Unencumbered Shares ("Unencumbered Dividend").
5.5 Other cash flow benefits
5.5.1 To the extent that in any year during the NVF Period, the
Unrestricted Dividend plus any Unencumbered Dividend received by
Lefa La Rona Trust is less than R20 million, the Lefa La Rona Trust
will receive a guaranteed amount of up to R20 million from Amplats
wholly owned subsidiary namely Rustenburg Platinum Mines ("RPM")
for development projects.
5.5.2 During the NVF Period, the Lefa La Rona Trust may also receive the
CSI Cash Spend from RPM if there are CSI projects proposed by the
Beneficiaries and approved by RPM to be implemented as contemplated
in Lefa La Rona Trust Deed; and
5.5.3 The Lefa La Rona Trust may also receive the KPI Cash Incentive cash
distribution, on behalf of the Beneficiaries (excluding the LSAs)
to the extent that the health and safety targets as set by RPM in
consultation with the Mines, in the respective years have been met.
5.6 Voting
Lefa La Rona Trust shall be entitled to exercise all voting rights
attached to the Subscription Shares of which it is the registered
owner until the Subscription Shares are either repurchased by
Amplats or transferred to the Beneficiaries, at which point the
Beneficiaries shall be entitled to exercise all voting rights
attached to their shares.
5.7 Effective date of the Transaction
The Transaction will be implemented with effect from the date that
all conditions precedent as detailed in paragraph 8 below have been
met, which is expected to be on or about 15 December 2011.
6. ESTIMATED ECONOMIC COST OF THE TRANSACTION
Amplats has estimated the economic cost of implementing the
Transaction to be approximately R1,161 million. This represents
approximately 0.77% of the market capitalisation of Amplats as at
the two trading days preceding the date of this announcement
(approximately R151.7 billion). This figure was calculated in
accordance with the guidance provided in IFRS 2 - Share Based
Payments. The total economic cost will be charged to the Amplats
statement of comprehensive income when the Transaction is
implemented.
7. PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTION
The unaudited pro forma financial information of Amplats,
reflecting the financial effects of the Transaction, is based on
the assumption that the Transaction had been implemented on 1
January 2011 for purposes of the statement of comprehensive income
for the six months ended 30 June 2011 and as at 30 June 2011 for
purposes of the statement of financial position.
The information is the responsibility of the Directors and has been
prepared for illustrative purposes only and may not, because of its
nature, give a fair reflection of the financial position, changes
in equity, results of operations or cash flows of Amplats. It does
not purport to be indicative of what the financial results would
have been if the Transaction had actually occurred at an earlier
date.
Unaudited pro forma per share information for the six months ended
30 June 2011
For the six months ended 30 June Before the After the Movement
2011 Transaction Transaction (%)
Net asset value per share ("NAV") 21,423 21,410 (0.1%)
(rand)1
Basic earnings per share ("EPS") 1,273 829 (34.9%)
(cents)2
Diluted EPS (cents)3 1,268 821 (35.3%)
Headline EPS (cents)4 1,236 792 (35.9%)
Diluted headline EPS (cents)5 1,232 785 (36.3%)
Weighted average number of shares 261.5 261.5 0.0%
in issue (million)6
Weighted average diluted number of 262.5 263.9 0.5%
shares in issue (million)7
Number of shares in issue (net of 261.2 261.2 0.0%
shares subject to repurchase)
(million)8
Notes:
1. NAV per share is computed by dividing total equity attributable to
Amplats ordinary shareholders by the number of Amplats ordinary
shares in issue (net of the shares subject to repurchase). Tangible
net asset value per share is equal to net asset value per share as
the Company does not reflect the historical cost of intangible
assets separately as the historical cost of the intangibles held by
Amplats is not material.
2. Basic EPS is computed by dividing net earnings attributable to
Amplats ordinary shareholders by the weighted average number of
Amplats ordinary shares in issue. The reduction in basic EPS is due
to the impact of the upfront IFRS 2 facilitation charge of R1,161
million on net earnings for the period.
3. The diluted EPS is computed by dividing net earnings attributable
to Amplats ordinary shareholders by the weighted average diluted
number of Amplats ordinary shares in issue.
4. Headline earnings is calculated in terms of Circular 3/2009 on
Headline Earnings issued by the South African Institute of
Chartered Accountants. Headline earnings per share is computed by
dividing headline earnings attributable to Amplats ordinary
shareholders by the weighted average number of Amplats ordinary
shares in issue.
5. The diluted headline earnings per share is computed by dividing
headline earnings attributable to ordinary shareholders by the
weighted average diluted number of shares in issue.
6. The weighted average number of Amplats ordinary shares in issue was
261.5 million for the six months ended 30 June 2011. The Lefa La
Rona Trust is not consolidated and the issuance of the Subscription
Shares has not been taken into consideration in calculating the
weighted average number of shares in issue as it is subject to the
repurchase by Amplats and for accounting purposes, it is treated as
though Amplats has granted an option over its own equity to the
Mine host communities. The option issued by Amplats impacts only on
the weighted average diluted number of shares in issue.
7. The weighted average diluted number of Amplats ordinary shares in
issue was 262.5 million for the six months ended 30 June 2011 and
as a result of the issuance of 6.3 million Subscription Shares, the
weighted average diluted number of Amplats ordinary shares in issue
for that period has been adjusted to the extent that the
Subscription Shares are issued for "no consideration" as per IAS 33
- Earnings Per Share.
8. The number of Amplats ordinary shares in issue at 30 June 2011 was
261.2 million. Although Amplats has issued 6.3 million Subscription
Shares, these shares have not been taken into consideration for
basic and headline earnings per share, and the number of shares in
issue after the Transaction have also not been adjusted for these
Subscription Shares that are subject to repurchase by Amplats.
8. CONDITIONS PRECEDENT
The implementation of the Transaction is subject to the fulfilment of
the following suspensive conditions, namely:
- the approval of the following resolutions by the required majority
of votes at the Amplats general meeting:
- a specific authority to issue the Subscription Shares;
- a specific authority to repurchase the Subscription Shares; and
- approval for the giving of financial assistance to the Lefa La Rona
Trust for the subscription of the Subscription Shares;
- the requisite JSE Limited approvals including confirmation in
writing that it will admit the Subscription Shares to listing.
9. SALIENT DATES AND TIMES
2011
Record date to be entitled to receive notice of the Wednesday, 09 November
General Meeting
Circular posted to Amplats shareholders on or about Monday, 14 November
Last day to trade Amplats ordinary shares in order Friday, 02 December
to be eligible to vote at the General Meeting
Record date to be entitled to vote at the General Friday, 09 December
Meeting
Last day for receipt of forms of proxy for the Monday, 12 December
general meeting by 12:00 on
General meeting to be held at 12:00 on Wednesday, 14 December
Results of the general meeting released on SENS on Wednesday, 14 December
Results of the general meeting published in the Thursday, 15 December
press on
Special resolutions filed with Companies and Thursday, 15 December
Intellectual Properties Commission on
Expected issue and listing date of Subscription Thursday, 15 December
Shares on the JSE Limited on
Notes:
1. The abovementioned times and dates are South African times and
dates and are subject to change. Any such change will be released
on SENS.
2. If the date of the general meeting is adjourned or postponed, forms
of proxy must be received by no later than 48 hours prior to the
time of the adjourned or postponed general meeting, provided that
for the purposes of calculating the latest time by which forms of
proxy must be received, Saturdays, Sundays and public holidays will
be excluded.
10. CIRCULAR TO AMPLATS SHAREHOLDERS
Amplats shareholders are advised that in accordance with the JSE Limited
Listings Requirements, a circular to shareholders containing the full
details of the Transaction, including a notice to convene a general
meeting, will be posted on or about 14 November 2011.
Johannesburg
7 November 2011
Merchant bank and sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Legal and tax advisers
Webber Wentzel
Independent Reporting Accountants
Deloitte and Touche
Community Engagement advisors
SRK Consulting (South Africa)
Date: 07/11/2011 10:00:01 Produced by the JSE SENS Department.
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