| Thu 29 Mar 2001, 0:00 | | De Beers - Firm Intention Announcement |
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DB Investments
RC Luxembourg No: B 78985
Incorporated as a societe anonyme under the laws of Luxembourg
De Beers Consolidated Mines Limited
1888/000007/06
Incorporated in the Republic of South Africa
De Beers Centenary AG
Incorporated under the laws of Switzerland
29 March 2001
Not for release, publication or distribution in or into Canada, Japan or the
United States of America
FIRM INTENTION ANNOUNCEMENT
US$17.1 BILLION RECOMMENDED OFFER FOR DE BEERS
1. INTRODUCTION
On 15 February 2001, De Beers Consolidated Mines Limited ("DBCM") and De Beers
Centenary AG (together "De Beers") and DB Investments ("DBI"), a company to be
owned by Central Holdings Limited ("CHL") (45%), Anglo American plc ("Anglo
American") (45%) and Debswana Diamond Company (Proprietary) Limited
("Debswana") (10%), announced that agreement had been reached on the terms of a
recommended offer for De Beers, subject to the satisfaction of certain
pre-conditions.
CHL, Anglo American, Debswana and DBI presently own or control 159,395,536 De
Beers Linked Units, representing an aggregate interest of 39.9% of De Beers
Linked Units in issue.
De Beers and DBI today announce that all of the pre-conditions required for the
making of the offer to De Beers Linked Unit holders (as described in the
announcement of 15 February 2001) have been satisfied and that, accordingly,
DBI intends to proceed with the offer.
The offer will be implemented, inter alia, by way of a scheme of arrangement
under section 311 of the South African Companies Act ("the Scheme"), and will
involve the distribution by De Beers to its Linked Unit holders (including
bearer Linked Unit holders, together the "De Beers Linked Unit holders") of its
entire holding of Anglo American shares and the acquisition by DBI of all
outstanding De Beers Linked Units (the "Transaction").
2. TERMS OF THE TRANSACTION
The Transaction will result in independent De Beers Linked Unit holders (being
all Linked Unit holders other than CHL, Anglo American and Debswana and their
subsidiaries) receiving, for each De Beers Linked Unit, consideration of (the
"Scheme Consideration"):
* 0.43 of an Anglo American share;
* US$14.40 (ZAR115.34(1)) in cash; and
* an amount equal to the Anglo American final dividend for the year ended 31
December 2000 (subject to approval by shareholders of Anglo American at its
Annual General Meeting scheduled for 15 May 2001) of US$1.30 (or the equivalent
in South African Rands (ZAR9.9743(2))) for each Anglo American share received.
(1) On the basis of an exchange rate of ZAR8.0100 to US$1.00 on 28 March 2001.
The actual amount to be paid to a De Beers Linked Unit holder in a currency
other than United States dollars will depend on the exchange rate to be
calculated as described in section 7 of this announcement.
(2) The amount in South African Rands has been fixed on the basis of exchange
rates as set out in the Notice of Recommended Final Dividend issued by Anglo
American on 14 March 2001.
De Beers Linked Unit holders who were on the De Beers register on 23 March 2001
and bearer Linked Unit holders will also receive the De Beers combined final
dividends for the year ended 31 December 2000 of US$1.00 per De Beers Linked
Unit (or the equivalent in South African Rands (ZAR7.77) or Pounds Sterling
(GBP0.69))(3), which are payable on 16 May 2001.
If the implementation date of the Scheme (the "Implementation Date"), being the
second Friday following the date on which the last of the conditions precedent
of the Scheme as set out in Appendix 1 (the "Conditions Precedent") is
satisfied, occurs after 30 June 2001, De Beers Linked Unit holders will be
entitled to receive interest on the principal cash component of the Scheme
Consideration (being the amount of US$14.40 per De Beers Linked Unit) at the
one month London Interbank Offered Rate for the period from 1 July 2001 to the
Implementation Date.
(3) The amounts in South African Rands and Pounds Sterling have been fixed on
the basis of exchange rates as at 26 February 2001.
The aggregate value received by independent De Beers Linked Unit holders,
including the De Beers combined final dividends of US$1.00, will be US$41.85
(ZAR335.22(4)) per De Beers Linked Unit, on the basis of an Anglo American
share price of US$60.21 at the close of business on 28 March 2001, being the
last business day prior to this announcement.
Based on the fully diluted number of De Beers Linked Units, consideration of
US$41.85 (ZAR335.22(4)) per De Beers Linked Unit corresponds to an implied
total equity value for De Beers of US$17.1 billion and:
* represents a premium of 27 per cent. to the price of a De Beers Linked Unit
of US$32.90 on 31 January 2001, the last business day prior to the first
cautionary announcement issued by De Beers in relation to the Transaction;
* represents a premium of 64 per cent. to the average of the daily prices of
a De Beers Linked Unit of US$25.57 over the 12 month period ended 31 January
2001; and
* attributes a value of US$8.7 billion to De Beers' current investment in
Anglo American and a value of US$8.4 billion to De Beers other than its
investment in Anglo American (the "Diamond Business"), which represents a
premium of 173 per cent. to the average daily implied market value of the
Diamond Business over the 12 month period ended 31 January 2001.
(4) Based on an exchange rate of ZAR8.0100 to US$1.00 on 28 March 2001.
Full details of the terms and conditions of the Transaction will be included in
the Scheme circular and related documentation (the "Scheme Circular").
3. ANGLO AMERICAN FINAL DIVIDEND
With respect to the Anglo American shares received by them under the
Transaction, De Beers Linked Unit holders will receive an amount equal to the
Anglo American final dividend for the year ended 31 December 2000 of US$1.30
per share (or the equivalent in South African Rands (ZAR9.9743)). This amount
will be payable in South African Rands in respect of those Anglo American
shares to be registered on Anglo American's South African branch register and
in US Dollars or Pounds Sterling, depending on elections of De Beers Linked
Unit holders, in respect of those Anglo American shares to be registered on
Anglo American's UK register.
De Beers Linked Unit holders will not receive the Anglo American shares due to
them under the Transaction until the Implementation Date.
4. ANGLO AMERICAN BONUS ISSUE
Anglo American shares to be distributed to De Beers Linked Unit holders will be
distributed together with any new Anglo American shares which would be allotted
in respect of those shares pursuant to a bonus issue proposed by Anglo
American. The proposed bonus issue will consist of three new Anglo American
shares for each Anglo American share in issue at the close of business on the
bonus issue record date, which is expected to be during May 2001.
The proposed bonus issue is conditional on the approval by Anglo American
shareholders at an Anglo American extraordinary general meeting (which is
expected to be held on the same day as the Scheme meeting), of appropriate
resolutions authorising the bonus issue. It is also conditional on the UK
Listing Authority agreeing to admit the new Anglo American shares to the
Official List and the London Stock Exchange, the JSE Securities Exchange South
Africa and the SWX Swiss Exchange agreeing to admit the new Anglo American
shares to trading. The bonus issue is not conditional on the Transaction
proceeding and the Transaction is not conditional on the bonus issue.
The Scheme will provide that, should the proposed bonus issue be effected, De
Beers Linked Unit holders would receive 1.72 new Anglo American shares per De
Beers Linked Unit (rather than the 0.43 of an Anglo American share per De Beers
Linked Unit which they would otherwise have been entitled to). The new Anglo
American shares will rank pari passu in all respects with the then existing
Anglo American shares.
5. INDEPENDENT DIRECTORS' COMMITTEE RECOMMENDATION
The Independent Directors' Committee of De Beers' directors, which has been so
advised by N M Rothschild & Sons Limited ("Rothschild"), considers the terms of
the Transaction to be fair and reasonable to independent De Beers Linked Unit
holders. The Independent Directors' Committee has therefore unanimously
recommended the Transaction to the boards of De Beers who, in turn, are
recommending the Transaction to De Beers Linked Unit holders. The independent
directors of De Beers who are Linked Unit holders intend to vote in favour of
the Transaction. In providing its advice, Rothschild has taken into account the
commercial assessment of the Transaction by the Independent Directors'
Committee.
6. MIX AND MATCH ELECTION
Independent De Beers Linked Unit holders will be entitled to elect under the
terms of the Transaction, subject to availability and against surrender of De
Beers Linked Unit certificates, to vary the proportions in which they receive
their share of some of the Anglo American shares (representing approximately
0.1 (or approximately 0.4 if the proposed bonus issue proceeds) of an Anglo
American share for each De Beers Linked Unit) and cash forming part of the
Scheme Consideration (the "Mix and Match Elections").
However, the total number of Anglo American shares and the total amount of cash
to be received by independent De Beers Linked Unit holders under the
Transaction will not be varied as a result of Mix and Match Elections.
Accordingly, the satisfaction of Mix and Match Elections will be dependent upon
the extent to which other independent De Beers Linked Unit holders make
offsetting elections. To the extent that a De Beers Linked Unit holder's Mix
and Match Election cannot be satisfied in full, it will be scaled down on a pro
rata basis.
Mix and Match Elections must be made and received prior to 4.00 pm on the
record date of the Scheme, being the Friday immediately following the date on
which the last of the Conditions Precedent of the Scheme is satisfied (the
"Record Date"), which is expected to be during May 2001. The number of Anglo
American shares to be received in exchange for cash will be determined on the
basis of a price per Anglo American share, in US Dollars, calculated as the
average of the daily closing prices of Anglo American shares on the London
Stock Exchange converted to US Dollars at the Noon Buying Rate on each of the
relevant dealing days during the period commencing on the day of the posting of
the Scheme Circular and ending on the day prior to the date of the Scheme
meeting. Full details will be provided in the Scheme Circular.
7. CURRENCY ELECTIONS FOR SCHEME CONSIDERATION AND ANGLO AMERICAN DIVIDEND
ENTITLEMENT
Independent De Beers Linked Unit holders who are registered on the South
African section of De Beers' register with an address within the Republics of
South Africa or Namibia or the Kingdoms of Lesotho or Swaziland (the "Common
Monetary Area") will be entitled to receive the cash component of the Scheme
Consideration (being the amount of US$14.40 per De Beers Linked Unit and the
Anglo American final dividend entitlement, subject to any Mix and Match
Elections or any fractional entitlements) in South African Rands only.
Independent De Beers Linked Unit holders on the South African section of De
Beers' register with an address outside the Common Monetary Area (other than
emigrants from a country within the Common Monetary Area with blocked South
African Rand accounts) will receive the cash component of the Scheme
Consideration in US Dollars unless they elect to receive Pounds Sterling.
Independent De Beers Linked Unit holders on the UK section of De Beers'
register will receive the cash component of the Scheme Consideration in US
Dollars if their address is outside the UK, and Pounds Sterling if their
address is within the UK, unless they elect to receive Pounds Sterling or US
Dollars respectively. Such elections must be made and received prior to 4.00 pm
on the Record Date. Full details will be provided in the Scheme Circular.
The exchange rate for payments to be made in South African Rands in respect of
the cash component of the Scheme Consideration, excluding the Anglo American
dividend entitlement, will be at a rate determined by reference to the average
daily European Central Bank relevant rates of exchange over a period not
exceeding five trading days commencing on the trading day following the date on
which the High Court of South Africa sanctions the Scheme. Payments in respect
of the cash component of the Scheme Consideration in Pounds Sterling will be
fixed at the prevailing spot rate for the exchange of US Dollars into Pounds
Sterling at the time the foreign exchange trade is made, being two days prior
to the Implementation Date.
8. VOTING ARRANGEMENTS
Only independent De Beers Linked Unit holders on the register at the close of
business on the day preceding the date of the Scheme meeting will be eligible
to vote to approve the Scheme at the Scheme meeting. The Scheme must be
approved by at least 75 per cent. of the votes cast before it can be
implemented.
Holders of bearer Linked Units will be entitled to vote at the meetings to
effect the Transaction in accordance with the "Conditions of Issue" of the
bearer Linked Units.
Beneficial holders of De Beers Linked Units who hold their investments through
custodian banks or nominees are not eligible to vote at the meetings to effect
the Transaction but should make arrangements with their respective custodian
banks or nominees as to voting on their behalf.
9. SHARE REGISTERS
Participants in the Scheme who have a registered address in the Common Monetary
Area, or are emigrants from a country within the Common Monetary Area, and
whose documents of title are restrictively endorsed in terms of South African
Exchange Control Regulations will have their entitlements to Anglo American
shares registered on the South African branch register of Anglo American.
Participants in the Scheme with registered addresses outside the Common
Monetary Area and who are not emigrants from a country within the Common
Monetary Area will have their entitlements to Anglo American shares registered
on the UK register of Anglo American.
10. TERMS OF PROPOSALS FOR PREFERENCE SHARES
DBCM intends to propose the cancellation of the 40 per cent. cumulative
preference shares of ZAR5.00 each (the "First Preference Shares") and 8 per
cent. cumulative second preference shares of ZAR1.00 (the "Second Preference
Shares") it has issued on the following terms:
* for each 40 per cent. cumulative preference share, ZAR 32.00 in cash and
all dividends accrued from 1 January 2001 up until the operative date of the
scheme in relation to the First Preference Shares (the "First Preference
Consideration"); and
* for each 8 per cent. cumulative second preference share, ZAR 1.00 in cash
and all dividends accrued from 1 January 2001 up until the operative date of
the scheme in relation to the Second Preference Shares (the "Second Preference
Consideration").
The proposal in respect of the First Preference Shares represents a 42 per
cent. premium to the average closing price of ZAR22.59 of the First Preference
Shares for the 12 month period ended 31 January 2001, being the last business
day prior to the release of the first cautionary announcement in relation to
the Transaction.
The proposal in respect of the Second Preference Shares represents a 41 per
cent. premium to the average closing price of ZAR0.71 of the Second Preference
Shares for the 12 month period ended 31 January 2001.
The proposals will be made to holders of the First Preference Shares and Second
Preference Shares by way of separate South African schemes of arrangement to be
proposed by DBCM and further details will be provided in the documentation
relating to such schemes, to be sent out at the same time as the Scheme
Circular. Neither scheme of arrangement in relation to the First Preference
Shares and Second Preference Shares is dependent on the Scheme or the other
preference share scheme becoming operative and vice versa.
The Independent Directors' Committee, which has been so advised by Rothschild,
considers the terms of each of the proposals to holders of the First Preference
Shares and Second Preference Shares to be fair and reasonable.
Rothschild has confirmed to the Securities Regulation Panel in South Africa
that DBCM has sufficient resources to satisfy its obligations in respect of the
payment of the First Preference Consideration and Second Preference
Consideration under the terms of the relevant preference share schemes.
11. DE BEERS INCENTIVE SCHEME PARTICIPANTS
Arrangements will be made with all De Beers option and convertible debenture
holders, being participants in the DBCM Incentive Scheme, under which those
participants will, should the Transaction become unconditional, be required to
sell their rights or De Beers Linked Units under the DBCM Incentive Scheme on
terms and conditions similar to those applying to participants in the Scheme.
12. FINANCING OF THE TRANSACTION
Dresdner Bank Luxembourg S.A. and UBS AG have underwritten senior credit
facilities in favour of DBI consisting of an amortising term loan facility of
US$3.3 billion (with a final maturity of five years), a short term bridge
facility of US$1.45 billion, and, on repayment of the short term bridge
facility, a revolving facility of US$1.0 billion (with maturity of five years).
The term loan facility is repayable as to four annual payments of US$330
million each with the balance being payable on maturity.
In addition, Anglo American and Debswana will hold 10 year, 10 per cent.
cumulative redeemable preference shares in DBI in the aggregate amount of
US$857 million. These preference shares will be redeemable in four equal
instalments in years 2007 to 2010 inclusive, subject to early redemption in
certain circumstances.
The Securities Regulation Panel in South Africa has been satisfied by UBS
Warburg Ltd. that, in accordance with Rule 21.7 of the Securities Regulation
Code on Take-overs and Mergers, sufficient funds are available to enable the
cash portion of the Scheme Consideration to be paid.
13. FINANCIAL EFFECTS OF THE TRANSACTION
13.1 DE BEERS LINKED UNIT HOLDERS
The table below sets out the pro forma financial effects of the Transaction for
independent De Beers Linked Unit holders assuming the Transaction is approved
and based on the assumptions set out below.
Per Linked Notes Before the After the
Unit Transaction Transaction
(SA Rands) (SA Rands) % change
Market value i, ii 255.60 314.66 23.1
Market value i, iii 319.80 332.29 3.9
Market value i, iv 315.20 327.21 3.8
Net asset
value v, vi 183.54 247.89 35.1
Headline vii, viii,
earnings ix, xi 28.58 22.14 (22.5)
Dividends xii, xiii 10.59 12.18 15.0
Per Linked Notes Before the After the
Unit Transaction Transaction
(US Dollars) (US Dollars) % change
Market value i, ii 32.90 40.50 3.1
Market value i, iii 40.58 42.17 3.9
Market value i, iv 39.35 40.85 3.8
Net asset
value v, vi 24.26 32.75 35.1
Headline vii, viii,
earnings x, xi 4.22 2.83 (32.9)
Dividends xii, xiii 1.37 1.32 (3.6)
ASSUMPTIONS
i. Based on closing market prices of a De Beers Linked Unit on the JSE
Securities Exchange and an Anglo American share on the London Stock Exchange
and currencies (South African Rands/US Dollar and US Dollar/Pounds Sterling)
converted at the relevant Noon Buying Rates.
ii. On 31 January 2001, being the day immediately prior to the publication of
the first cautionary announcement in relation to the Transaction.
iii. On 14 February 2001, being the day immediately prior to the publication
of the detailed cautionary announcement reflecting the terms of the Transaction
iv. On 28 March 2001, being the day immediately prior to the publication of
this announcement.
v. The amount in the "Before" column is based on the net asset value of De
Beers at 31 December 2000 on a fully diluted basis.
vi. The amount in the "After" column is based on the pro forma net asset
value of Anglo American at 31 December 2000 on the basis of the diluted number
of Anglo American shares outstanding assuming the Transaction had been in
effect from 3 January 2000, and applying the ratio of 1.72 Anglo American
shares per De Beers Linked Unit.
vii. The amounts in the "Before" column are based on the audited financial
results of De Beers for the year ended 31 December 2000, adjusted to include
the effect of DBCM Incentive Scheme options and debentures assuming they had
been exercised on 3 January 2000, the first business day of the last financial
year.
viii. The amounts in the "After" column have been calculated utilising the
pro forma results of Anglo American for the twelve months ended 31 December
2000 assuming the Transaction had been in effect from 3 January 2000, and
applying the ratio of 1.72 Anglo American shares per De Beers Linked Unit.
ix. The amount in the "After" column includes after-tax interest which a
South African holder of De Beers Linked Units would have earned on the
principal cash component of the Scheme Consideration, being the amount of
US$14.40 per De Beers Linked Unit, after conversion to South African Rands at a
rate of 6.126 Rands per US Dollar ruling on 3 January 2000 and applying a South
African marginal tax rate of 42.0 per cent. on an equivalent amount invested at
the Negotiable Certificate of Deposit interest rate of 11.9 per cent. (net
annual compound monthly) for the 12 months ended 31 December 2000.
x. The amount in the "After" column includes after-tax interest which a UK
holder of De Beers Linked Units would have earned on the principal cash
component of the Scheme Consideration, being the amount of US$14.40 per De
Beers Linked Unit, applying a UK marginal tax rate of 40.0 per cent. on an
equivalent amount invested at the London Interbank Deposit interest rate of
5.8175 per cent. (net annual compound monthly) calculated as a spread of 12.5
basis points below the London Interbank Offered Rate for US dollar deposits for
the 12 months ended 31 December 2000.
xi. Effects on headline earnings per De Beers Linked Unit have been
calculated utilising the fully diluted weighted average number of De Beers
Linked Units in issue for the year ended 31 December 2000, being 407,361,434 De
Beers Linked Units (assuming that the DBCM Incentive Scheme options and
debentures had been exercised on 3 January 2000) and a diluted number of Anglo
American shares outstanding of 1,421,480,392 following the bonus issue and
cancellation of Anglo American shares.
xii. The amount in the "Before" column reflects the year 2000 dividends
declared by De Beers. No adjustment has been made as a result of the conversion
of options and debentures issued under the DBCM Incentive Scheme as considered
in the impact on earnings.
xiii. The amount in the "After" column reflects the year 2000 dividends
declared by Anglo American in respect of the Anglo American shares to be
distributed pursuant to the Transaction, and the after-tax interest calculated
as detailed in assumptions ix and x.
13.2 FIRST PREFERENCE SHARES
The table below sets out the pro forma financial effects of the scheme relating
to the First Preference Shares, based on the assumptions listed below:
Per First Before the After the
Preference First First
Share Notes Preference Preference
Share Scheme Share Scheme %
(SA Rands) (SA Rands) change
Market value on
31 January 2001 i 20.00 32.77 63.9
Market value on
14 February 2001 ii 30.00 32.77 9.2
Market value on
28 March 2001 iii 27.00 32.77 21.4
Income iv 2.00 2.26 13.0
ASSUMPTIONS
i. Based on the closing market price of a First Preference Share on 31
January 2001 being the day immediately prior to the publication of the first
cautionary announcement concerning the Transaction implemented by way of the
Principal Scheme, compared with ZAR32.77 per share being the First Preference
Consideration assuming the operative date of the scheme relating to the First
Preference Shares is 21 May 2001.
ii. Based on closing market price of a First Preference Share, on 14 February
2001 being the day immediately prior to the publication of the detailed
cautionary announcement concerning the Transaction to be implemented by the
Principal Scheme, compared with ZAR32.77 per share being the First Preference
Consideration assuming the operative date of the scheme relating to the First
Preference Shares is 21 May 2001.
iii. Based on the closing market price of a First Preference Share, on 28
March 2001 being the day immediately prior to the publication of this
announcement, compared with ZAR32.77 per share being the First Preference
Consideration assuming the operative date of the scheme relating to the First
Preference Shares is 21 May 2001.
iv. The income per First Preference Share has been calculated on the
assumption that the First Preference Consideration assuming the operative date
of the scheme relating to the First Preference Shares is 21 May 2001, being
ZAR32.77 per share, was invested from 1 January 2000 to 31 December 2000 in an
interest bearing account yielding 11.9 per cent. per annum (the negotiable
certificate of deposit rate) before tax and an after-tax return of 6.9 per
cent. per annum (based on a tax rate of 42.0 per cent.).
13.3 SECOND PREFERENCE SHARES
The table below sets out the pro forma financial effects of the scheme relating
to the Second Preference Shares, based on the assumptions listed below:
Per Second Before the After the
Preference Second Second
Share Notes Preference Preference
Share Scheme Share Scheme %
(SA Rands) (SA Rands) change
Market value on
31 January 2001 i 0.72 1.03 43.1
Market value on
14 February 2001 ii 0.73 1.03 41.1
Market value on
28 March 2001 iii 0.77 1.03 33.8
Income iv 0.08 0.07 (12.5)
ASSUMPTIONS
i. Based on the closing market price of a Second Preference Share on 31
January 2001 being the day immediately prior to the publication of the first
cautionary announcement concerning the Transaction implemented by way of the
Principal Scheme, compared with ZAR1.03 per share being the Second Preference
Consideration assuming the operative date of the scheme relating to the Second
Preference Shares is 21 May 2001.
ii. Based on closing market price of a Second Preference Share, on 14
February 2001 being the day immediately prior to the publication of the
detailed cautionary announcement concerning the Transaction to be implemented
by the Principal Scheme, compared with ZAR1.03 per share being the Second
Preference Consideration assuming the operative date of the scheme relating to
the Second Preference Shares is 21 May 2001.
iii. Based on the closing market price of a Second Preference Share, on 28
March 2001 being the day immediately prior to the publication of this
announcement, compared with ZAR1.03 per share being the Second Preference
Consideration assuming the operative date of the scheme relating to the Second
Preference Shares is 21 May 2001.
iv. The income per Second Preference Share has been calculated on the
assumption that the Second Preference Consideration assuming the operative date
of the scheme relating to the Second Preference Shares is 21 May 2001, being
ZAR1.03 per share, was invested from 1 January 2000 to 31 December 2000 in an
interest bearing account yielding 11.9 per cent. per annum (the negotiable
certificate of deposit rate) before tax and an after-tax return of 6.9 per
cent. per annum (based on a tax rate of 42.0 per cent.).
14. CONDITIONS
The Scheme is subject to a number of conditions, including the following:
* approval of the Scheme by a majority representing 75 per cent. of the votes
exercised by independent De Beers Linked Unit holders;
* approval of certain resolutions relating to the Transaction by DBCM
shareholders;
* approval of amendments to the Deposit Agreement by a simple majority of
holders of Depositary Receipts issued by Centenary Depositary AG;
* approval of the Transaction by independent Anglo American shareholders at
an extraordinary general meeting;
* the sanction of the Scheme by the High Court of South Africa; and
* certain competition approvals and finalisation of tax clearances granted in
principle, in relation to the Transaction.
The Conditions Precedent to the Scheme becoming operative are set out in full
in the Appendix.
15. ANGLO AMERICAN CURRENT TRADING AND DIVIDEND
Anglo American announced its preliminary results for the year ended 31 December
2000 on 14 March 2001. Headline profit increased by 53 per cent. to US$2,000
million and profit for the year increased by 26 per cent. to US$1,957 million
compared with the previous year. Total operating profit, excluding operating
exceptional items of US$266 million, increased by 62 per cent. to US$3,480
million.
Acquisitions announced during the year totalled around US$4 billion whilst
disposal of non-core assets (excluding the disposal of a 15.3 per cent. stake
in First Rand) generated cash proceeds of US$1,278 million. Expansionary
capital expenditure totalled US$841 million and with Anglo American's ongoing
focus on cost control, annualised cost savings over the last two years exceeded
US$290 million.
The recommended final dividend of US$1.30 gives a total dividend for 2000 of
US$1.90 per ordinary share, an increase of 27 per cent. on last year.
The following is an extract from the preliminary results announcement issued by
Anglo American on 14 March 2001:
"The increasing evidence of an economic slowdown in the United States could
have implications for global growth and, therefore, commodity prices. However,
the recent moves by the Federal Reserve Bank to stimulate US growth, combined
with a satisfactory outlook for Europe, could lead to a resumption of global
economic growth in the second half of 2001 and a recovery from the lower prices
presently being experienced in some commodity sectors.
"Should this assessment prove optimistic, Anglo American's major operating
divisions are all well positioned on the cost curve to generate profits and
cash flows during any slowdown. In addition, Anglo American's balance sheet is
conservatively geared and Anglo American will continue to look for
opportunities to add shareholder value during the coming year."
16. TIMETABLE
The posting of the Scheme Circular will be subject to the High Court of South
Africa granting an order convening the De Beers Scheme meeting, and the
Circular being approved by the Securities Regulation Panel, the JSE Securities
Exchange South Africa and the South African Reserve Bank. It is expected that
the Scheme Circular will be posted by mid-April 2001 and that the Scheme
meeting will be held by early May 2001.
17. SOURCES AND BASES
(i) A consideration of US$41.85 in respect of each De Beers Linked Unit,
expressed in ZAR terms as ZAR335.22 is based on a ZAR to US$ exchange rate of
8.0100 which was the noon buying rate in the City of New York for cable
transfers as announced by the Federal Reserve Bank of New York for customs
purposes (the "Noon Buying Rate") on 28 March 2001, being the last business day
prior to this announcement.
(ii) A consideration of US$41.85 is based on an Anglo American share price of
US$60.21, which was the official close price of an Anglo American share of
GBP41.95 as quoted on the London Stock Exchange on 28 March 2001, being the
last business day prior to this announcement, converted to US$ at a US$ to GBP
exchange rate of 1.4352, being the Noon Buying Rate on such date.
(iii) The price of a De Beers Linked Unit on 31 January 2001, the last
business day prior to the first cautionary announcement issued by De Beers in
relation to the Transaction, of US$32.90, is based on the ruling price of a De
Beers Linked Unit of ZAR255.60 as quoted on the JSE Securities Exchange South
Africa on 31 January 2001, converted to US$ at a ZAR to US$ exchange rate of
7.7700, being the Noon Buying Rate on such date.
(iv) The average price of a De Beers Linked Unit over the 12 month period
ended 31 January 2001 of US$25.57 is based on the average of the daily ruling
prices as quoted on the JSE Securities Exchange South Africa over the period,
converted from ZAR to US$ at the Noon Buying Rate prevailing on each day.
(v) The implied market value of the Diamond Business on any day is based on
De Beers' market capitalisation less the market value of its investment in
Anglo American on that day.
(vi) On 28 March 2001, the number of De Beers Linked Units in issue was
399,958,775 and the fully diluted number of De Beers Linked Units was
407,546,615.
APPENDIX 1
CONDITIONS PRECEDENT TO THE SCHEME
The Scheme will become operative on the Operative Date, being the business day
following the date on which the last of the following Conditions Precedent is
fulfilled:
1. the Scheme having been approved by a majority representing three-fourths
of the votes exercisable by independent De Beers Linked Unit holders, present
and voting either in person or by proxy at the Scheme Meeting;
2. shareholders of DBCM passing the following resolutions at a general
meeting of shareholders of DBCM, each of which will be expressed to take effect
conditionally upon and contemporaneously with the order sanctioning this Scheme
being registered by the South African Registrar of Companies (the "Registrar")
and the special resolution being registered by the Registrar:
2.1 a special resolution in terms of section 85 of the South African
Companies Act authorising DBCM to purchase, with effect from the Operative
Date, from De Beers Linked Unit holders, 1 per cent. (rounded up to the nearest
whole number) of each such Linked Unit holder's holding of deferred shares in
DBCM, each linked to a Depositary Receipt (the "Scheme Shares"), as registered
on the record date of the Scheme for a consideration equal to approximately
0.32 of an Anglo American Share per De Beers Linked Unit and the Anglo American
final dividend entitlement;
2.2 an ordinary resolution in terms of article 10.3 of the articles of
association of DBCM cancelling without a return of capital and with effect from
the Operative Date, all of the Scheme Shares held by independent De Beers
Linked Unit holders after the purchase by DBCM of Scheme Shares in terms of the
immediately preceding sub-paragraph; and
2.3 an ordinary resolution approving the amendment of the DBCM Incentive
Scheme to require each participant in the DBCM Incentive Scheme to sell his
rights or De Beers Linked units to DBI for a consideration which equals the
consideration received by De Beers Linked Unit holders under the Scheme plus
US$1.00 per Scheme Share;
3 the registration by the Registrar of Companies of the special resolution
authorising the purchase by DBCM of the 1 per cent. of the Scheme Shares
referred to in sub-paragraph 2.1;
4 the passing by the holders of Depositary Receipts of a resolution
authorising an amendment to the Deposit Agreement so as to permit the sale to
DBI by the Depositary of its underlying assets, comprising shares and
participation certificates in relation to the Depositary Receipts held by
independent De Beers Linked Unit holders, and to regulate the delivery to DBCM
of the consideration with respect to such sale to DBCM for inclusion in the
Scheme Consideration and to regulate the cancellation of those Depositary
Receipts held by independent De Beers Linked Unit holders and subject to, inter
alia, the condition precedent that such resolution will become effective
contemporaneously with the order of the High Court of South Africa sanctioning
the Scheme and not otherwise being registered by the Registrar;
5 the approval, in accordance with the Listing Rules of the UK Listing
Authority (the "UK Listing Rules"), by holders of Anglo American shares (other
than DBI, DBCM, DBCAG, CHL and Debswana and their respective associates for the
purposes of the UK Listing Rules) of the Transaction, of the terms on which it
is proposed that Anglo American participate in DBI and of the terms of the
management agreement between CHL and DBI and any other transaction proposed to
be entered into by Anglo American in connection with the Transaction which
would constitute a transaction with a related party for the purposes of the UK
Listing Rules;
6 the approval of the Commissioner for the South African Revenue Service in
respect of the distribution of the unbundled Anglo American shares as
consideration for the purchase by DBCM, from De Beers Linked Unit holders of 1
per cent. (rounded up to the nearest whole number) of each such Linked Unit
holder's holding of Scheme Shares, as an "unbundling transaction" as defined in
section 60 of the South African Income Tax Act, 113 of 1993 (as amended);
7 the unqualified approval of the Scheme by the South African Competition
Tribunal in terms of the Competition Act, 1998 (as amended);
8 If:
8.1 notification of the Transaction is required pursuant to Council
Regulation (EC) 4064/89 (the "ECMR"), the European Community Commission adopts
a decision declaring either that the Transaction falls outside the scope of the
ECMR, or alternatively, that the Transaction is compatible with the Common
Market, either unconditionally or subject to the fulfillment of certain
conditions or commitments which DBI (acting reasonably and in good faith)
considers acceptable, or finally, the European Community Commission does not
adopt a decision within the required time periods;
8.2 competition authorities of individual member states of the European
Community (each a "National Authority") otherwise have jurisdiction to examine
the Transaction, each National Authority having such jurisdiction adopts a
decision of equivalent effect to any of those set out in paragraph 8.1 above
(this paragraph being interpreted mutatis mutandis);
8.3 competition authorities in Canada or Israel have jurisdiction to examine
the Transaction and each such authority having such jurisdiction either (i)
adopts a decision approving the Transaction or a decision of equivalent effect;
(ii) confirms its non-disapproval of the Transaction; or (iii) adopts a
decision of equivalent effect to any of those set out in paragraph 8.1 above
(this paragraph being interpreted mutatis mutandis).
9. the Scheme being sanctioned by the Court; and
10. the order of Court sanctioning the Scheme being lodged with and
registered by the Registrar.
ENQUIRIES
DE BEERS
(www.debeersgroup.com)
Rory More O'Ferrall +44 20 7430 3126
Andrew Lamont (UK Media) +44 20 7430 3515
Joan Braune (International PR) +44 20 7430 3505
Richard Chetwode (International IR) +44 20 7430 3102
Tracey Peterson (SA Media) +27 11 374 7388
Mark Irvine (SA IR) +27 11 374 7174
DBI
Nicky Oppenheimer +44 20 7430 3076
Clifford Elphick +27 11 638 2125
CHL
Grant Stubbs +44 20 7242 1216
Clifford Elphick +27 11 638 2125
ANGLO AMERICAN
Nick von Schirnding (UK IR) +44 20 7698 8540
Edward Bickham (UK Media) +44 20 7698 8547
Mike Spicer (SA Media) +27 11 638 3301
Anne Dunn (SA Media and IR) +27 11 638 4730
DEBSWANA
Louis Nchindo +267 351 131
Joe Matome +267 351 131
N M ROTHSCHILD & SONS
(Adviser to De Beers)
Nicholas Wrigley +44 20 7280 5000
Mark Hill +44 20 7280 5000
Stephen Gorven +27 11 797 8200
HSBC
(Sponsor in RSA and broker to De Beers)
Simon Birkett +44 20 7336 2202
Michele Acton +44 20 7336 9000
Keith Rayner +27 11 481 4378
UBS WARBURG
(Adviser to DBI)
Ken Costa +44 20 7568 2822
Campbell Stewart +44 20 7568 2360
Alexander Wilmot-Sitwell +44 20 7568 2165
MERRILL LYNCH
(Adviser to Anglo American)
Mark Preston +44 20 7867 2524
Kevin Smith +44 20 7867 3356
Nick Pagden +27 11 305 5555
CAZENOVE
(Sponsor in RSA and broker to Anglo American)
Nick Wiles +44 20 7588 2828
Piers Coombs +44 20 7588 2828
S G HAMBROS
(Adviser to Debswana)
Michael Sorkin +44 20 7676 6615
Clifford Halvorsen +44 20 7676 6925
Jan Newman +27 11 784 5050
SMITHFIELD FINANCIAL
(PR adviser to De Beers)
John Antcliffe +44 20 7360 4900
John Kiely +44 20 7360 4900
BRUNSWICK
(PR adviser to DBI)
Alan Parker +44 20 7404 5959
N M Rothschild & Sons Limited, which is regulated in the UK by The Securities
and Futures Authority Limited, is acting for De Beers and no one else in
connection with the Transaction, and will not be responsible to anyone other
than De Beers for providing the protections afforded to customers of N M
Rothschild & Sons Limited nor for providing advice in relation to the
Transaction.
HSBC Investment Bank plc, which is regulated in the UK by The Securities and
Futures Authority Limited, is acting for De Beers and no one else in connection
with the Transaction, and will not be responsible to anyone other than De Beers
for providing the protections afforded to customers of HSBC Investment Bank plc
nor for providing advice in relation to the Transaction.
UBS Warburg Ltd., which is regulated in the UK by The Securities and Futures
Authority Limited, is acting for DBI and no one else in connection with the
Transaction, and will not be responsible to anyone other than DBI for providing
the protections afforded to customers of UBS Warburg Ltd. nor for providing
advice in relation to the Transaction.
Merrill Lynch International, which is regulated in the UK by The Securities and
Futures Authority Limited, is acting for Anglo American and no one else in
connection with the Transaction, and will not be responsible to anyone other
than Anglo American for providing the protections afforded to customers of
Merrill Lynch International nor for providing advice in relation to the
Transaction.
Cazenove & Co., which is regulated in the UK by The Securities and Futures
Authority Limited, is acting for Anglo American and no one else in connection
with the Transaction, and will not be responsible to anyone other than Anglo
American for providing the protections afforded to customers of Cazenove & Co.
nor for providing advice in relation to the Transaction.
SG Hambros Corporate Finance, a division of Societe Generale, which is
regulated in the UK by The Securities and Futures Authority Limited, is acting
for Debswana and no one else in connection with the Transaction, and will not
be responsible to anyone other than Debswana for providing the protections
afforded to customers of SG Hambros Corporate Finance, a division of Societe
Generale, nor for providing advice in relation to the Transaction.
This announcement does not constitute an offer or an invitation to acquire
shares or securities.
Issued by De Beers and DBI. Approved by UBS Warburg Ltd., a subsidiary of UBS
AG, for the purposes of section 57 of the Financial Services Act 1986. UBS
Warburg Ltd. is regulated in the UK by The Securities and Futures Authority
Limited. This does not constitute a recommendation regarding the De Beers
Linked Units. The value of an investment may go up as well as down. De Beers
Linked Unit holders should seek advice from an independent financial adviser as
to the suitability for the individual concerned.
29 March 2001
