| Thu 8 Dec 2011, 17:05 | | ASR - Assore Limited - Announcement relating to PHASE II of Assore`s third |
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ASR
ASR
ASR - Assore Limited - Announcement relating to PHASE II of Assore`s third
empowerment transaction
Assore Limited
(Incorporated in the Republic of South Africa)
(Registration number 1950/037394/06
Share code: ASR ISIN: ZAE000146932
("Assore")
ANNOUNCEMENT RELATING TO PHASE II OF ASSORE`S THIRD EMPOWERMENT TRANSACTION
1. INTRODUCTION
Assore is pleased to announce the conclusion of the agreements relating
to the second phase ("Phase II") of its third empowerment transaction
("Third Empowerment Transaction"), which will result in 11.79% of the
entire issued ordinary share capital of Assore, being 16 464 450 Assore
ordinary shares with a market value of approximately R3.5 billion
(based on the 30 day volume weighted average price of an Assore share
("30 day VWAP") of R211.66 as at Friday, 2 December 2011) ("BEE
Shares"), being placed under the control of broad-based black economic
empowerment ("BEE") groupings, which include the historically
disadvantaged South African ("HDSA") members of the communities
surrounding Assore`s operations and non-managerial Assore employees.
After the implementation of Phase II, Assore will have BEE ownership of
26.1%, which is required to secure and retain its mining rights.
As communicated to shareholders in the announcement dated 28 June 2011
and the circular to shareholders dated 8 July 2011, the Third
Empowerment Transaction is being implemented in two phases. The first
phase ("Phase I") involved the acquisition of the BEE Shares from Main
Street 343 (Proprietary) Limited ("MS343"), a wholly-owned subsidiary
of Shanduka Resources (Proprietary) Limited ("Shanduka Resources"), by
Main Street 904 (Proprietary) Limited ("MS904"), for an aggregate
purchase price of R2.7 billion. Phase I was approved by the
shareholders of Assore on 10 August 2011 and subsequently implemented
on 19 August 2011.
Phase II introduces sustainable, long-term vendor financing between
Assore and MS904 in relation to its holding of the BEE Shares, as well
as the amendment of the trust deeds relating to the Fricker Road Trust
("the Fricker Road Trust Deed") and the Assore Employee Trust ("the
Assore Employee Trust Deed") to define their respective beneficiaries
and the manner in which they will derive benefits from their effective
interests in Assore.
2. RATIONALE
Assore is supportive of the broad-based economic imperatives contained
in the Mineral and Petroleum Resources Development Act ("MPRDA"), the
Broad-Based Socio-Economic Empowerment Charter for the South African
Mining Industry ("Charter") and its associated Scorecard. Assore is of
the view that meaningful participation at an equity level by HDSA
persons is a social and commercial imperative for all South African
companies, particularly for those in the mining industry wishing to
secure and retain their mining rights, and that it is furthermore
essential to sustain South Africa`s economic and democratic structures.
On 10 November 2005, Assore entered into its first empowerment
transaction, which was implemented during February 2006, pursuant to
which 15.02% of Assore`s then issued ordinary shares were acquired by
Assore`s BEE partners, Shanduka Resources and the Bokamoso Trust (the
"First Empowerment Transaction"). The First Empowerment Transaction
marked Assore`s achievement of the 2009 empowerment requirement of 15%
BEE ownership.
On 1 December 2009, Assore announced its second empowerment
transaction, which resulted in an additional 11.1% of Assore`s issued
ordinary shares being controlled by the Bokamoso Trust (the "Second
Empowerment Transaction").
Pursuant to the First and Second Empowerment Transactions, Assore`s
resultant BEE equity ownership achieved the 26% target set for mining
companies in the MPRDA for 1 May 2014, well ahead of this deadline.
The Third Empowerment Transaction will enable Assore to continue to
meet, up to and beyond 1 May 2014, the HDSA equity ownership target of
26%, and will thus serve as a cornerstone of Assore`s ongoing BEE
strategy.
3. OVERVIEW OF THE THIRD EMPOWERMENT TRANSACTION
3.1 Phase I
Phase I involved the acquisition by MS904, of the BEE Shares from
Shanduka Resources ("the Phase I Acquisition"). In terms of a
short-term bridge facility agreement, an amount of R2.7 billion
was advanced to MS904 by The Standard Bank of South Africa Limited
("Standard Bank") for purposes of facilitating the Phase I
Acquisition ("the Facility Agreement"). The Facility Agreement was
guaranteed by Assore, which amounted to the provision of financial
assistance by Assore to MS904 as contemplated under Section 44 of
the Companies Act, 2008 (Act 71 of 2008) ("the Companies Act"),
and shareholders were required to approve such financial
assistance by way of a special resolution. This approval was
granted at a general meeting of the shareholders of Assore held on
10 August 2011.
3.2 Phase II
Phase II introduces a long-term vendor financing structure between
Assore and MS904, to replace the funding provided by Standard Bank
in terms of the Facility Agreement, and amends the Fricker Road
Trust Deed and the Assore Employee Trust Deed.
The Fricker Road Trust Deed has been amended to define, as
beneficiaries, the HDSA members of the communities who are living,
working or operating in and around the mining and beneficiation
operations of Assore and its subsidiaries ("Fricker Road Trust
Beneficiaries"). The Fricker Road Trust will utilise the dividends
received from the Assore ordinary shares it owns indirectly,
through MS904, to fund and facilitate projects and/or activities
for the benefit of such HDSA persons, with a focus on health and
education. The Fricker Road Trust owns 51% of MS904.
The Assore Employee Trust Deed has been amended to define, as
beneficiaries, the full-time, permanent, non-managerial employees
of Assore and its subsidiaries, who have been in the employ of
Assore for at least one year ("Assore Employee Trust
Beneficiaries"). The Assore Employee Trust will utilise the
economic benefits derived from the Assore ordinary shares it owns
indirectly, through MS904, to make distributions to such
beneficiaries, as well as to provide them with exposure to the
growth in the price of Assore ordinary shares according to a
formula. The Assore Employee Trust owns 49% of MS904.
4. FUNDING OF THE THIRD EMPOWERMENT TRANSACTION
Phase II will be funded by way of a subscription, by Standard Bank for
preference shares in Assore to the value of R2.85 billion ("Assore
Preference Shares"). The Assore Preference Shares will confer on
Standard Bank the right to receive preferential, cumulative cash
dividends at a rate equal to 75% of the prime rate.
Assore will, in turn, capitalise MS904 by subscribing for preference
shares in MS904 to the value of R2.85 billion ("MS904 Preference
Shares"). This will provide MS904 with the aggregate funding required
to discharge its current obligations to Standard Bank in respect of the
Facility Agreement, comprising the capital amount plus accrued
interest. The MS904 Preference Shares will confer, on Assore, the right
to receive preferential, cumulative cash dividends at a rate equal to
the rate in respect of the Assore Preference Shares.
The subscription by Standard Bank for the Assore Preference Shares, as
well as the subsequent subscription by Assore for the MS904 Preference
Shares, are being implemented to enable Assore to establish a
sustainable, long-term vendor financing structure for the Third
Empowerment Transaction.
Assore shareholders will accordingly be requested to approve, by way of
special resolutions, the amendment of Assore`s Memorandum of
Incorporation to record the alterations to Assore`s share capital and
to include the rights, terms and privileges attaching to the Assore
Preference Shares, in order to satisfy the requirements of section 16
of the Companies Act. Assore is also of the view that the vendor
financing structure amounts to the provision of financial assistance by
Assore to MS904 ("the Phase II Financial Assistance") and will require
Assore shareholder approval in terms of section 44 of the Companies
Act.
5. DIVIDENDS RECEIVED BY MS904
In terms of the agreement relating to the MS904 Preference Shares,
dividends paid by Assore and received by MS904 will be utilised as
follows:
* 77% of the dividends received by MS904 will be used to service
and, to the extent possible, redeem the MS904 Preference Shares;
and
* the balance of 23% of the dividends received by MS904, will be
declared and paid as a dividend to the Fricker Road Trust and the
Assore Employee Trust, in proportion to their respective
shareholdings in MS904 to enable them in turn to make
distributions to their respective beneficiaries.
6. THE FRICKER ROAD TRUST
6.1 Shareholding
The Fricker Road Trust will indirectly own 6.0% of Assore`s issued
ordinary share capital through its 51% shareholding in MS904. The
market value of its indirect shareholding in Assore is
approximately R1.8 billion, based on the 30 day VWAP of R211.66 as
at Friday, 2 December 2011.
6.2 Beneficiaries
The Fricker Road Trust Beneficiaries include members of the
communities of HDSA persons, who are living, working or operating
in and around the mining operations of Assore and its
subsidiaries. The Fricker Road Trust Beneficiaries specifically
exclude members of the communities surrounding Assmang Limited`s
("Assmang") mining and beneficiation operations, who benefit from
a range of initiatives operated by Assmang.
6.3 Trustees
The board of trustees of the Fricker Road Trust ("Fricker Road
Trust Trustees") will be constituted as follows:
- there will, at all times, be four trustees;
- the majority the Fricker Road Trust Trustees will, at all
times, be HDSAs and independent;
- 25% of the appointed trustees will be female; and
- Assore will be entitled, but not obliged, to appoint one
trustee.
6.4 Operation of the Fricker Road Trust
The Fricker Road Trust will be funded on an ongoing basis by the
dividend income received from MS904 in respect of the BEE Shares
held by it.
These dividends will enable the Fricker Road Trust to fund and
facilitate projects and activities of a sufficient scale to
meaningfully contribute to the health, education and empowerment
of the Fricker Road Trust Beneficiaries.
The Fricker Road Trust Trustees will determine the aggregate
amount available for allocation during a particular financial
year.
All of the expenses, costs, disbursements and liabilities incurred
in or arising out of the formation or administration of the
Fricker Road Trust in the ordinary course will be borne by the
trust.
The Fricker Road Trust will endure in perpetuity, or until the
date that the trust is finally wound-up and liquidated as agreed
between Assore and the Fricker Road Trust Trustees.
7. THE ASSORE EMPLOYEE TRUST
7.1 Shareholding
The Assore Employee Trust will indirectly own 5.8% of Assore`s
issued ordinary share capital through its 49% shareholding of
MS904. The market value of its indirect shareholding in Assore is
approximately R1.7 billion, based on the 30 day VWAP of R211.66 as
at Friday, 2 December 2011.
7.2 Beneficiaries
All full-time, permanent, non-managerial employees of Assore or
any of its subsidiaries regardless of whether such employees are
HDSAs or not, and who have been employed on a permanent basis for
a period of not less than one year, as well as such other
employees as may be designated as beneficiaries by the Assore
allocation committee ("Allocation Committee") from time to time
will be eligible to become beneficiaries of the Assore Employee
Trust. The Assore Employee Trust Beneficiaries specifically
exclude employees of Assmang, who benefit from a range of
initiatives operated by Assmang.
7.3 Trustees
The board of trustees of the Assore Employee Trust ("Assore
Employee Trust Trustees") will be constituted as follows:
- there will at all times be seven trustees;
- it will comprise of three independent trustees, three
trustees nominated by the Assore Employee Trust Beneficiaries
and one trustee appointed by Assore;
- the majority of trustees will be HDSAs and at least 25% of
the trustees shall be female; and
- the beneficiary trustees will be nominated by the Assore
Employee Trust Beneficiaries, from their ranks, and selected
by the Allocation Committee, and will serve in office for a
period not exceeding two years.
7.4 Allocations
Assore Employee Trust Beneficiaries will be eligible to receive
equity participation rights ("Equity Participation Rights") and
dividend participation rights ("Dividend Participation Rights") in
the Assore Employee Trust:
- Equity Participation Rights will be allocated to
beneficiaries each year based on salary, so long as they
remain in the employ of Assore, and will be subject to a
forfeiture profile depending on the reason for a beneficiary
leaving the employ of Assore; and
- Dividend Participation Rights will be allocated to
beneficiaries each year based on salary, so long as they
remain in the employ of Assore, and will entitle the
beneficiaries to share proportionately in the dividend income
received from MS904, and available for distribution, in
respect of the underlying Assore ordinary shares held by it.
Dividend Participation Rights will lapse 1 year after
allocation.
7.5 Operation of the Assore Employee Trust
The Assore Employee Trust will be funded on an ongoing basis by
the dividend income received from MS904 in respect of the BEE
Shares held by it.
80% of the total dividend income received by the Assore Employee
Trust from MS904, less trust expenses, will be paid out to Assore
Employee Trust Beneficiaries pro rata to the Dividend
Participation Rights held by them, with the remaining 20% being
used to purchase Assore shares on the open market ("Equity Reserve
Shares"), in order to effect future payments relating to the
settlement of Equity Participation Rights, as discussed below.
Equity Participation Rights will entitle Assore Employee Trust
Beneficiaries to share in the increase in the price of the Assore
ordinary shares over time according to a formula.
These rights will be subject to a ten year lock-in period from the
first allocation date, after which the trustees will, in each
year, dispose of such number of Equity Reserve Shares as will be
sufficient to settle any payments due as a result of the formula
applicable to the vested Equity Participation Rights.
All of the expenses, costs, disbursements and liabilities incurred
in or arising out of the formation or administration of the Assore
Employee Trust in the ordinary course will be borne by the Assore
Employee Trust.
The Assore Employee Trust will endure in perpetuity, or until the
date that the trust is finally wound-up and liquidated as agreed
between Assore and the Assore Employee Trust Trustees.
8. SUSPENSIVE CONDITIONS
The implementation of Phase II of the Third Empowerment Transaction,
including the provision by Assore of the Phase II Financial Assistance,
is subject to the fulfilment of various suspensive conditions
including, inter alia:
- the approval of the relevant special and ordinary resolutions by
the requisite majority of votes by shareholders required at a
general meeting of shareholders; and
- to the extent required, the obtaining of all approvals of any
regulatory authorities as may be required to implement Phase II of
the Third Empowerment Transaction, either unconditionally or on
terms acceptable to all parties.
9. CIRCULAR TO SHAREHOLDERS AND NOTICE OF GENERAL MEETING
Shareholders are advised that a circular providing additional
information on Phase II of the Third Empowerment Transaction ("the
Circular") which includes, inter alia, a notice of general meeting and
a form of proxy, will be posted to Assore shareholders on or about
Wednesday, 14 December 2011.
The general meeting of Assore shareholders to approve the relevant
special and ordinary resolutions to implement Phase II of the Third
Empowerment Transaction ("the General Meeting") will be held on
Thursday, 19 January 2012 at 10:00 at the registered offices of Assore,
being Assore House, 15 Fricker Road, Illovo Boulevard, Johannesburg.
10. SALIENT DATES AND TIMES
Record date, as determined by the board Friday, 9 December 2011
of directors of Assore in accordance
with section 59 of the Companies Act,
to be eligible to receive the Circular
and notice of General Meeting
Friday, 6 January 2012
Last day to trade Assore ordinary
shares on the JSE Limited in order to
be recorded in the share register on
the record date to be eligible to vote
at the General Meeting
Friday, 13 January 2012
Record date to be eligible to vote at
the General Meeting
Tuesday, 17 January 2012
Last day for receipt of forms of proxy
for the General Meeting by 10:00
Thursday, 19 January 2012
General Meeting to be held at 10:00
Thursday, 19 January 2012
Announcement of results of the General
Meeting on the Securities Exchange News
Service ("SENS")
Announcement of results of the General
Meeting published in the press Friday, 20 January 2012
Monday, 13 February 2012
Anticipated implementation of Phase II
of the Third Empowerment Transaction
Notes:
1. The abovementioned dates and times are South African local times
and dates, and are subject to change. Any such material change
will be released on SENS and published in the South African press.
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 South
African public holidays will be excluded.
Johannesburg
8 December 2011
Investment bank and sponsor to Assore
Standard Bank
Attorneys to Assore
Webber Wentzel Attorneys
Programme and implementation managers
Barnstone Corporate Services
Date: 08/12/2011 17:05:01 Produced by the JSE SENS Department.
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