| Thu 11 Apr 2002, 0:00 | | Rareco restructure of par value of authorised and |
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RARE EARTH EXTRACTION COMPANY LIMITED
("RARECO") (RCO)
ISIN CODE: ZAE000005807
NEW ISIN CODE: ZAE000038329
THE RESTRUCTURE OF THE PAR VALUE OF THE AUTHORISED AND
ISSUED SHARE CAPITAL, GENERAL ISSUE OF SHARES FOR CASH
SPECIFIC ISSUE OF SHARES FOR CASH AND ADDITIONAL SHARES
Members are advised that the main shareholder of Rareco, Mr Trevor Blench, has
provided the company with loan funding to assist it in its development phase. At
meetings of the board of directors held on 20 October 2000 and 25 April 2001, it
was resolved that these should be converted into ordinary shares.
In September 2001 the board of directors raised additional share capital amounting
to R286 935-75 on the basis that 1 147 731 ordinary shares would be issued at
25 cents each.
Rareco's ordinary share capital has been structured on the basis of ordinary shares
that were issued at a par value of 36 cents each. The Rareco share price declined
to below 36 cents during 2001 and, accordingly, it has become necessary to effect
a restructure of the ordinary share capital to enable the company to issue shares at
the prevailing market prices that existed at the time that the above decisions were made.
Restructuring of the authorised and issued share capital:
In September 2001 the board of directors raised additional share capital from overseas
investors who have agreed to invest R286 935-75 on the basis of an issue of 1 147 731
ordinary shares at 25 cents each thereby providing working capital for the short term.
As the par value of the shares is 36 cents, Rareco is unable to issue shares at the price
of 25 cents unless the par value of the authorised share capital restructured.
The amount of R286 935-75 has, accordingly, been invested as a loan until the shares
can be issued.
The directors of the company therefore consider it appropriate to restructure the existing
authorised and issued share capital of the company in order to provide for a flexible
structure to issue shares in the future.
In order to achieve this objective a general meeting is to be convened to consider and,
if deemed fit, pass a number of special and ordinary resolutions to give effect to the
restructuring. The following will be proposed:
* That the authorised capital of the company, comprising of 60 000 000 ordinary shares
of a par value of 36 cents each, be converted into 72 000 000 "A" ordinary shares of a
par value of 1 cent each, 32 000 000 convertible, redeemable preference shares of
36 cents each and 26 000 000 ordinary shares of 36 cents each which will be subject
to the rights, privileges and conditions contained in the company's articles of association.
* That the share premium account be utilised to allot and issue 31 852 269 "A" ordinary
shares of a par value of 1 cent each to the existing ordinary shareholders on the basis
of one "A" ordinary share for every ordinary share held.
* That the issued share capital, comprising 31 852 269 ordinary shares of 36 cents each,
be converted into 31 852 269 convertible, redeemable preference shares at a par value
of 36 cents each.
* That the 31 852 269 convertible, redeemable preference shares in issue be converted
to 31 852 269 "A" ordinary shares with a par value of 1 cent each at a premium of
35 cents each, by redeeming the preference shares at par and applying the proceeds to
the subscription and issue of one "A" ordinary share of a par value of 1 cent at a premium
of 35 cents each.
* That the authorised share capital be amended by subdiving 26 000 000 ordinary shares
of a par value of 36 cents each into 468 000 000 ordinary shares of a par value of 2 cents
each.
* That the 63 704 538 "A" ordinary shares in issue be converted into 31 852 269 ordinary
shares with a par value of 2 cents each.
General issue of shares for cash:
In terms of a resolution approved at the annual general meeting of the company held on
14 December 2001, the directors were given an authority to issue ordinary shares for cash
in terms of the JSE Listings Requirements. Negotiations were entered into with various
investors represented by UBS in Switzerland whereby these investors invested an amount
of R286 932-75 in Rareco on 27 September 2001 initially by way of a loan. Based on a
weighted average share price of 26,5 cents, it was agreed to issue 1 147 731 shares at an
issue price of 25 cents each. The proceeds are being utilised in the working capital of the
company.
The issue of these shares can however only take place once the proposals to restructure
the share capital of Rareco are implemented. On 1 February 2002, it was announced in
the press that Rareco had placed 3 000 000 shares at 36 cents each with independent
local and foreign investors in terms of a general issue of shares for cash.
Specific issue of shares for cash:
The amount of the loan funding provided by Mr Trevor Blench totals R1 379 644. At board
meetings held on 20 October 2000 and 25 April 2001, it was agreed that the amount of this
loan should be converted into 6 300 000 ordinary shares to be issued at 21,899111 cents
each. The conversion price has been determined based on the ruling share prices on the
dates when Mr Blench made the loans to the company. The weighted average share price
based on the share prices ruling on the dates that Mr Blench's loans were made is
21,51 cents. It has been agreed that a premium of 1,83% be applied for the conversion.
Mr Blench, who is the chairman of Rareco, already holds 6 000 000 shares in Rareco.
He is therefore regarded as a related party and, accordingly at the general meeting to be
held on 29 April 2002, he will not be included in determining the quorum for the passing
of a resolution to approve the specific issue of shares for cash to convert his loan into
ordinary share. He will not vote his shares at the general meeting.
The above transactions are subject to shareholders approval at a general meeting to
be held on Monday, 29 April 2002.
Salient Dates
Announcement published on Friday, 5 April 2002
Circular posted to shareholders on Friday, 5 April 2002
Last day for lodging forms of proxy for the general meeting (by 10:15) on
Friday, 26 April 2002
General Meeting at 10:15 on Monday, 29 April 2002
Results of general meeting published and second surrender form posted to shareholders
on Friday, 3 May 2002
Last day to trade at close of business on Friday, 17 May 2002
Shares will trade in the new par value from commencement of trading on Monday,
20 May 2002
Change of share certificates from commencement of trading on Monday, 20 May 2002
Record date Friday, 24 May 2002
New share certificates, for those shareholders that requested certificated shareholding,
posted against surrender of existing share certificates, from Monday, 27 May 2002
Accordingly, subject to shareholders approval
* shares will trade in the new par value from the commencement of trading on Monday,
20 May 2002 and the new ISIN Code will be ZAE000038329.
* the authorised ordinary share capital will be reduced to R9 360 000 divided into
468 000 000 ordinary shares of 2 cents each;
* an additional listing will be granted from Monday, 20 May 2002 in respect of
1 147 731 ordinary shares of 2 cents each at 25 cents in terms of the general issue
of shares for cash; and
6 300 000 ordinary shares of 2 cents each at 21,899111 cents per ordinary share
in terms of the specific issue of shares for cash.
Authorised Ordinary Share Capital: R9 360 000-00
Listed Ordinary Share Capital: R786 000 divided into 39 300 000 ordinary shares of
2 cents each.
