| Wed 4 Sep 2002, 0:00 | | Zenith Concessions Limited - Abridged Revised List |
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Zenith Concessions Limited - Abridged revised listing particulars statement and
announcement
Zenith Concessions Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/009012/06)
JSE Share code: ZNT ISIN: ZAE000009064
("Zenith" or "the company")
Abridged revised listing particulars statement and announcement
in respect of:
* the increase in authorised share capital;
* the capitalisation of directors` loans;
* the acquisition of diamond recovery rights;
* the acquisition of mining and other equipment;
* a general authority to issue shares for cash;
* the amendment of the company`s articles of association;
* a change of control and waiver of the requirement to make a
mandatory offer to minorities; and
* notice of the transfer of Zenith shares onto the STRATE system of
electronic settlement.
1. ABRIDGED REVISED LISTING PARTICULARS STATEMENT
The abridged revised listing particulars statement herein contained is not an
invitation to the public to subscribe for shares in the company, but is issued
in compliance with the Listings Requirements of the JSE Securities Exchange
South Africa ("the JSE") for the purpose of giving information to the public
with regard to the company.
2. DOCUMENTATION
A circular to shareholders ("the circular"), which is subject to the approval
of the JSE and the Securities Regulation Panel, containing details of certain
proposals, together with detailed revised listing particulars, will be sent to
shareholders today.
3. NATURE OF ACTIVITIES, INCORPORATION, HISTORY AND BACKGROUND
Zenith was incorporated on 8 November 1994 as a mining holding company and
was listed on the JSE in the Venture Capital Market on
29 May 1995. Since disposing of its operating subsidiary during the financial
year ended 30 June 2000, no significant mining operations have taken place. The
listing of Zenith shares on the JSE was suspended on 4 May 2000.
The company announced on 25 September 2001 that, in terms of certain
proposals ("the proposals"), the company is being recapitalised and, subject to
the fulfilment of certain suspensive conditions, is acquiring operating assets.
This announcement provides an update of the proposals.
Zenith is in the business of exploiting small mining opportunities with a low
cost base. Accordingly, the company will avoid expensive and capital intensive
underground mining involving high intensity shaft sinking and the extraction of
underground reefs and deposits.
In pursuance of the exploitation of the diamond recovery rights proposed to
be acquired in terms of paragraph 4.3 below, the immediate focus of the company
will be directed to the same low intensity reclamation of diamonds from slimes
dams and tailings dumps of previously discontinued diamond mining operations,
where warranted, as well as to surface mining of diamonds from alluvial
deposits, diamond-bearing gravel and other diamondiferous materials and
deposits. In view of the limited life span of the mining of the slimes dam in
respect of the diamond recovery rights being proposed for acquisition in
paragraph 4.3 below, Zenith has embarked on a programme to identify and evaluate
various diamond deposits for acquisition. In addition, the company is assessing
certain prospecting licences in respect of potential diamondiferous gravels. The
intention with this programme of expansion is to build up an ore inventory base
and a pool of mining opportunities to secure the ongoing long-term viability of
the company beyond the life of the current proposals.
4. THE PROPOSALS
4.1 The increase in the authorised share capital
In order to give effect to the recapitalisation, the acquisition of diamond
recovery rights and the acquisition of mining and other equipment as defined and
set out below, it is proposed that the authorised share capital of the company
is increased from 100 000 000 ordinary shares of 1 cent each to 400 000 000
ordinary shares of 1 cent each.
4.2 The capitalisation of directors` loans ("the recapitalisation")
Since the reconstitution of the board in June 2000, the company has been
provided with financial support by the executive directors, namely DC Bird and
SD Crossland, by way of loan funding on directors` loan accounts. Their loan
claims totalled R1 093 124 and R416 116, respectively, at 30 June 2002. It is
proposed that these loan accounts are capitalised by the issue of a total of 150
924 000 new Zenith shares at an issue price of 1 cent per share.
DC Bird and SD Crossland are directors of Zenith and, accordingly, the issue of
shares to them constitute related party transactions. As such, DC Bird and SD
Crossland will be precluded from voting at the general meeting on the
resolutions relating to the issue of shares to them.
4.3 The acquisition of diamond recovery rights
Mafikeng Diamonds (Proprietary) Limited ("MDPL") is the holder of a mining
license (ML3/2000) over the Setlopo alluvial diamond deposit and a mining
license valid until 7 May 2010. Mr Giglio Carlo Maria Rader ("Rader") has
entered into a contract with MDPL to recover diamonds on the premises,
specifically from the fine tailings (slimes) dumps on the premises, more
particularly by retreating these dumps. Zenith, in turn, concluded an agreement
with Rader on 5 July 2001 whereby Rader has ceded his rights under the said
contract to Zenith ("the acquisition of diamond recovery rights").
The purchase consideration of R1 million for the acquisition of diamond
recovery rights will be settled as follows:
* an amount of R500 000 will be paid in cash:
- as to R150 000 upon the recapitalisation of Zenith; and
- as to R350 000 over a period of 28 months in equal monthly
payments commencing once production has started on the mine and
diamonds are being recovered;
* the balance of R500 000 will be settled by the issue of new Zenith
shares at an issue price of 2 cents per share.
In addition to the purchase consideration detailed above, a rights royalty of
10% of gross sales is payable to MDPL in respect of diamonds of less than 2
carats and 15% in respect of diamonds of more than 2 carats in accordance with
the agreement between MDPL and Rader, dated 23 June 2001, in terms of which
Rader acquired the diamond recovery rights.
Rader has provided warranties that are usual for a transaction of this
nature. Zenith has satisfactorily concluded a due diligence investigation into
the existence and viability of the diamond recovery rights held under mining
license ML3/2000.
It is expected that production will commence as soon as all the suspensive
conditions have been satisfied and the diamond recovery rights in question have
been transferred to Zenith.
The agreement in respect of the acquisition of diamond recovery rights is
subject to the following remaining suspensive conditions:
* the approval of the shareholders of Zenith in general meeting; and
* the lifting of the suspension of the listing of Zenith shares on the
Venture Capital Market of the JSE.
4.4 The acquisition of mining and other equipment
The company requires the use of certain equipment necessary to carry out its
anticipated diamond recovery operations in respect of the retreating of the
slimes dump and other office and computer equipment for the administration of
the company. It is estimated that the aggregate cost price of such equipment is
in the amount of approximately R1,7 million. Due to the financial position of
the company, it is unable to acquire these assets by way of outright purchase,
financial lease or instalment sale agreement. Gemdicor Mining Company
(Proprietary) Limited ("Gemdicor"), a company beneficially owned and controlled
by DC Bird, has consequently acquired the required mining, office and computer
equipment in June 2002 to facilitate the acquisition of mining, office and
computer equipment ("the acquisition of mining and other equipment") and has
entered into an agreement with Zenith in terms whereof Gemdicor will sell these
mining, office and computer assets to Zenith for a purchase consideration of R1
670 178,99, which is equal to Gemdicor`s cost of acquiring those assets.
The purchase consideration for the acquisition of mining and other equipment
will be discharged as follows:
* as to an amount of R454 178,77, by way of the issue of 45 417 877 new
Zenith shares to Gemdicor at an issue price of 1 cent per Zenith share. The
purpose of this issue of shares to Gemdicor is to ensure that Zenith has
sufficient share capital to comply with the Listings Requirements of the JSE;
and
* as to the balance, on a financial lease over 36 equal monthly instalments.
The instalments shall be calculated as an amortisation over 36 months, payable
monthly in advance, together with interest at a rate equal to the prime
overdraft lending rate of FirstRand Bank Limited, prevailing from time to time.
The risks and benefits of ownership of assets with a corresponding value shall
be transferred to Zenith only after all amounts outstanding to Gemdicor in terms
of such financial lease have been paid in full.
DC Bird and Gemdicor have agreed to provide this funding to the company on a
loan basis for a maximum of R1,2 million in order to comply with the Listings
Requirements of the JSE and to ensure the continued operation of Zenith.
In addition:
* Gemdicor has undertaken not to withdraw the mining and other equipment from
Zenith`s operations, subject to the approval of the requisite resolutions to
implement the proposals;
* DC Bird and Gemdicor have jointly and severally undertaken to guarantee
payments to the lessor of the equipment to Gemdicor, even if Zenith does not pay
the monthly instalments to Gemdicor in terms of the financial lease obligation
in respect of the mining and other equipment, as described in this paragraph
4.4, subject to the approval of the requisite resolutions to implement the
proposals; and
* DC Bird and Gemdicor have jointly and severally undertaken to provide
Zenith with sufficient working capital to ensure the going concern and adequacy
of working capital of Zenith for at least the first 36 months after the
reinstatement of listing of Zenith, to the extent necessary, subject to the
approval of the requisite resolutions to implement the proposals.
The acquisition of mining and other equipment is subject to the
implementation of the acquisition of the diamond recovery rights, all regulatory
approvals and a waiver of an offer to minority shareholders to the extent
applicable.
DC Bird is a director of Zenith, as well as a director and the sole
beneficial shareholder of Gemdicor and, as such, the acquisition of mining and
other equipment and the resultant issue of shares to Gemdicor, as set out above,
constitute related party transactions. As a related party, DC Bird and his
associates, as defined in the Listings Requirements of the JSE, will be
precluded from voting at the general meeting on the resolutions relating to the
acquisition of mining and other equipment and the issue of shares to Gemdicor.
4.5 A general authority to issue shares for cash
The board will seek a general authority to issue shares for cash in
accordance with the Listings Requirements of the JSE, the articles of
association of the company and the provisions of the Companies Act (Act No 61 of
1973), as amended, so that further funding for the company can be raised from
time to time.
4.6 Amendment to Zenith`s articles of association to facilitate the
implementation of STRATE
The JSE requires that all transactions in securities of companies listed on
the JSE be settled electronically by way of STRATE. Accordingly, the directors
propose that the company`s articles of association be amended to allow all
transactions in Zenith shares to be settled electronically by way of STRATE.
5. CHANGE OF CONTROL AND WAIVER OF OFFER TO MINORITY SHAREHOLDERS
As a result of the recapitalisation and in particular the issue of shares to
DC Bird and Gemdicor, there will be a change of control in Zenith. In terms of
the Securities Regulation Code on Take-overs and Mergers and the Rules of the
Securities Regulation Panel ("the Code"), DC Bird would be required to make an
offer to the independent minority shareholders. Independent minority
shareholders will be requested to waive the requirement for such offer in terms
of Rule 8.7 of the Code. The implementation of the proposals is conditional upon
the requisite majority of the independent minority shareholders passing this
resolution.
6. PRO FORMA FINANCIAL INFORMATION
6.1 Pro forma balance sheet
Set out below is the unaudited pro forma balance sheet based on the audited
balance sheet of Zenith at 30 June 2002. The pro forma balance sheet is provided
for illustrative purposes only to show the effect of the proposals, as if the
proposals had occurred on 30 June 2002 and, because of its pro forma nature, may
not give a true picture of the financial position of Zenith.
Before Adjustments After
R R R
ASSETS
Non-current assets 94 382 2 699 311
Property, plant and equipment 85 742 1 604 929(1) 1 690 671
Loan receivable 8 640 8 640
Intangibles - 1 000 000(2) 1 000 000
Current assets 33 016 (116 984)
Trade and other receivables 4 501 4 501
Recoverable deposit 1 1
Cash and cash equivalents 28 514 (150 000)(3) (121 486)
Total assets 127 398 2 582 327
EQUITY AND LIABILITIES
Capital and reserves (1 728 362) 735 057
Share capital and premium 5 799 000 2 463 419(4) 8 262 419
Accumulated loss (7 527 362) (7 527 362)
Current liabilities 1 855 760 1 847 270
Trade and other payables 1 855 760 (358 490)(5) 1 497 270
Vendors for acquisition - 350 0006 350 000
Total equity and liabilities 127 398 2 582 327
Shares in issue (`000) 44 210 265 552
Notes:
1. Property, plant and equipment increase by R1 604 929, being the balance of
the mining and other equipment acquired from Gemdicor, as proposed in paragraph
4.4 above. Certain items of office and computer equipment to the value of R65
250 of the R1 670 179 in respect of the acquisition of mining and other
equipment were already included in the financial statements for the year ended
30 June 2002.
2. This intangible asset arises as a result of the acquisition of diamond
recovery rights for a total purchase consideration of R1 000 000, as proposed in
paragraph 4.3 above. The project cash flow forecast, which is an extrapolation
of the project cash flow forecast contained in the complete competent person`s
report, indicates a net present value of the future cash flows (net of the
purchase consideration of R1 000 000) in respect of the diamond recovery rights
of between R819 163 and R974 446.
3. Cash and cash equivalents decrease by R150 000, being the upfront cash
portion of the purchase consideration in terms of the acquisition of diamond
recovery rights.
4. The share capital and premium increases as a result of:
* the payment of R500 000, being a portion of the purchase consideration for
the acquisition of diamond recovery rights which will be settled by the issue of
25 000 000 new shares at 2 cents each;
* the capitalisation of the directors` loan accounts at 30 June 2002 in the
amount of R1 509 240 by the issue of 150 924 000 new shares at 1 cent each; and
* the acquisition of mining and other equipment from Gemdicor by way of the
issue of 45 417 877 new shares to Gemdicor.
5. Trade and other payables:
* reduce by R1 509 240 as a result of the recapitalisation; and
* increase by R1 150 750, being the balance of the R1 216 000 part payment of
the purchase consideration in respect of the acquisition of mining and other
equipment (R65 250 of the R1 670 179 in respect of the acquisition of mining and
other equipment was already included in the financial statements for the year
ended 30 June 2002, as described in note 1 above).
6. The entry "vendors for acquisition" refers to the balance of the purchase
consideration in respect of the acquisition of diamond recovery rights.
6.2 Pro forma financial effects
The table below sets out the unaudited pro forma financial effects of the
proposals on the audited financial results of Zenith for the year ended 30 June
2002. The pro forma financial effects are provided for illustrative purposes
only and, because of its pro forma nature, may not give a true picture of the
financial results and position of Zenith.
Financial effects Notes Before1 After2 Change
(cents) (cents) (%)
Loss per share 3 (1,7) (0,3) 82,4
Headline loss per share 3 (1,7) (0,3) 82,4
Net asset value per share 4 (3,9) 0,3 107,7
Net tangible asset value per share 4 (3,9) (0,1) 97,4
Notes:
1. Extracted from the audited results of Zenith for the year ended 30 June
2002.
2. The pro forma financial effects on loss per share, headline loss per share,
net asset value per share and net tangible asset value per share after the
proposals.
3. The effect on loss per share and headline loss per share is based on 265
551 884 shares in issue during the period from 1 July 2001 to 30 June 2002, on
the assumptions that the proposals were effected on
1 July 2001 and that no income was earned from the acquisition of diamond
recovery rights.
4. The effect on net asset value per share and net tangible asset value per
share is based on 265 551 884 shares in issue on 30 June 2002, on the assumption
that the proposals were effected on 30 June 2002.
7. GENERAL MEETING OF SHAREHOLDERS
The general meeting is scheduled to be held on Thursday,
26 September 2002 at 10:15 (or on the conclusion or adjournment of the annual
general meeting of the company which will commence at 10:00 on the same day,
whichever is the later) at which the requisite resolutions to implement the
proposals will be tabled.
8. DIRECTORS
The current directors of the company are DC Bird, SD Crossland,
I Banhegyi and M Weetman. Mr Banhegyi will retire as director of Zenith by way
of annual rotation of directors at the annual general meeting of Zenith to be
held on Thursday, 26 September 2002 ("the seventh annual general meeting").
Mr Banhegyi has not offered himself available for re-election. The directors
propose that Ms WD Bailey, the current acting financial manager of Zenith, be
appointed as the financial director of Zenith at the seventh annual general
meeting. Set out below are the full names, ages, addresses and designations of
the board of directors of Zenith as it is to be reconstituted:
David Clifford Bird (37) 16 Sandpiper Crescent Executive chairman
Flamingo Vlei
Cape Town
Stephen David Crossland (31) 9 Tintagel Road Managing director
West Beach
Cape Town
Mark Weetman (31) Mercury House Non-executive
101 Central Street director
Houghton
Wendy Dianne Bailey (30) 16 Owerbosch Close Proposed financial
Blouberg Sands director
Cape Town
9. STRATE
Shareholders are advised that Friday, 11 October 2002 had been set by the JSE
as the date scheduled for Zenith to be officially transferred onto the new
STRATE system of electronic settlement.
10. IMPORTANT DATES AND TIMES
2002
Dematerialisation commencement date Monday, 23 September
Last day for lodging forms of proxy for
the annual general meeting (10:00)
and the general meeting (10:15) on Monday, 23 September
Annual general meeting (10:00) and general meeting
(10:15 or on the conclusion or adjourment of the
annual general meeting, whichever is the later) on Thursday, 26 September
Results of the general meeting published
in the press on Friday, 27 September
Validated shares (surrendered for dematerialisation),
accepted by and entered into the records of the CSDP,
on or before Monday, 14 October
Listing of new Zenith shares on Monday, 14 October
TRANSACTIONS IN ZENITH SHARES CAN ONLY BE SETTLED IF
THOSE ZENITH SHARES HAVE BEEN DEMATERIALISED IN
RESPECT OF TRANSACTIONS ENTERED INTO ON THE JSE
ON OR AFTER Monday, 14 October
Lifting of suspension of trading in Zenith shares
from commencement of trade on (*) Monday, 14 October
First electronic settlement in respect of
transactions in Zenith shares entered into on
the JSE on Monday, 14 October 2002 on Monday, 21 October
*Note: The lifting of suspension of trading in Zenith shares is subject to the
fulfilment of all suspensive conditions and the approval by the Listings
Committee of the JSE of the reinstatement of the listing of the company`s
shares.
11. DETAILED REVISED LISTING PARTICULARS
This abridged revised listing particulars statement is not a full copy of
the revised listing particulars which forms part of the circular that will be
posted to shareholders today. Copies of the circular may be obtained during
normal business hours from:
- Zenith, Unit 51 Frazzitta Business Park, Corner Koeberg and Freedom Roads,
Milnerton, 7441;
- Corporate and Merchant Advisors Limited, Trade House, 33 Impala Road,
Chislehurston, Sandton, 2196;
- Fisher Hoffman PKF (Port Elizabeth), 27 Newton Street, Newton Park, Port
Elizabeth, 6045;
- Computershare Investor Services Limited, 2nd Floor, Edura, 41 Fox Street,
Johannesburg, 2001.
By order of the Board
ZENITH CONCESSIONS LIMITED
Cape Town
4 September 2002
Sponsor and corporate adviser
Corporate and Merchant Advisors
(Registration number 1999/001129/06)
Reporting accountants and auditors
Fisher Hoffman PKF (Jhb) Inc.
Chartered Accountants (SA)
Registered Accountants & Auditors
(Registration number 1994/001166/21)
Joint corporate adviser
Benefique Capital
Attorneys
Ribbens Attorneys & Conveyancers
Date: 04/09/2002 08:13:35 AM Produced by the JSE SENS Department
