| Tue 28 Jan 2003, 18:19 | | Firm Intention Announcement Lnm To Make A Revised |
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Firm Intention Announcement Lnm To Make A Revised Offer For 12.19% Of The Issued
Release Date: 28/01/2003 17:55:05 Code(s): JSE
Firm Intention Announcement LNM To Make A Revised Offer For 12.19% Of The Issued
Share Capital Of Iscor Limited
LNM Holdings N.V.
(Registration number: 65443)
Member of the LNM Group
FIRM INTENTION ANNOUNCEMENT LNM TO MAKE A REVISED OFFER FOR 12.19% OF THE ISSUED
SHARE CAPITAL OF ISCOR LIMITED
1. INTRODUCTION
HSBC Investment Services (Africa) (Pty) Ltd ("HSBC") is authorised to
announce that LNM Holdings N.V. ("LNM") intends to revise its partial offer (the
"original offer") set out in LNM`s circular to shareholders of Iscor Limited
("Iscor" or the "Company"), other than LNM and its nominees (the "Iscor minority
shareholders") dated 6 December 2002 (the "original offer circular") by:
* increasing the cash consideration from R30.00 cum dividend to R33.00 cum
dividend per Iscor share. Iscor declared an interim dividend of R1.00 per Iscor
share for all Iscor shareholders recorded in the register on 14 February 2003,
the record date, and
* committing to make a voluntary offer (a "new voluntary offer") to acquire
the shares of the Iscor minority shareholders should LNM`s holding of Iscor
shares reach 60 per cent of Iscor`s issued share capital (the "60 per cent
threshold"),
(the "revised offer").
The revised offer price represents a premium of approximately:
* 52.1 per cent to the closing market price of R21.70 on 2 December 2002, the
last trading day prior to the original announcement;
* 39.7 per cent to the volume weighted average closing price over the 30
trading days prior to 2 December 2002, of R23.62 per share; and
* 30.4 per cent to the closing market price of R25.30 on 24 October 2002,
Iscor`s all time high closing share price post unbundling and prior to the
original announcement.
The revised offer will be subject to the satisfaction or waiver, as
applicable, of the conditions referred to in paragraph 5 of this announcement.
2. INFORMATION ON LNM
Established in 1976, the LNM Group is the second largest steel maker in the
world. The LNM Group operates major steel making plants in ten countries and is
a major supplier to the automotive industry and the appliance industry in the
European Union and North America. The LNM Group is also the most globally
diversified steel business in the world and this global presence gives it
substantial purchasing and marketing flexibility.
The LNM Group has a history of participating in the acquisition of businesses
and thereafter improving their operating performance. An efficient operator at
the lower end of the global cost curve, the LNM Group possesses significant
turnaround expertise. Since 1989, the LNM Group has made ten acquisitions in
nine different countries: Algeria, Canada, France, Germany, Kazakhstan, Mexico,
Romania, Trinidad and the United States of America, and has successfully
improved the operating performance of the acquired entities. In addition, LNM is
in the process of acquiring a controlling interest in Nova Hut in the Czech
Republic which is expected to be completed during February 2003.
LNM is a wholly-owned member of the LNM Group.
3. BACKGROUND TO THE REVISED OFFER
On 6 December 2002 LNM made the original offer to the Iscor minority
shareholders to acquire a further 12.19 per cent of the issued share capital of
Iscor, equivalent to 18.7 per cent of each Iscor minority shareholder`s holding,
for a cash consideration of R30.00 cum dividend per share, subject to the
fulfilment or waiver of conditions set out in the original offer circular.
On 20 December 2002 the independent directors of the Iscor board (the
"independent Iscor directors") posted a circular to Iscor minority shareholders
(the "Iscor circular") setting out information and explanations relating to the
original offer. The independent Iscor directors, having considered the advice of
Investec Bank Limited which was appointed by them to advise on the fairness of
the original offer, concluded that the terms of the original offer were fair and
reasonable to the Iscor minority shareholders. The independent Iscor directors
recommended that Iscor minority shareholders vote in favour of a resolution (the
"waiver resolution") to be proposed at a general meeting of Iscor scheduled for
Wednesday, 22 January 2003 (the "general meeting") waiving the requirement under
Rule 8 of the Securities Regulation Panel Code on Takeovers and Mergers (the
"SRP Code") to make a mandatory offer ("mandatory offer") to the Iscor minority
shareholders and accept the original offer.
On 17 January 2003 LNM announced that it was committing to make a new
voluntary offer. LNM made no representation that it will, or will seek to,
achieve the 60 per cent threshold.
On 22 January 2003, at the commencement of the general meeting of Iscor
shareholders, a duly appointed representative of LNM requested that, in terms of
section 192 of the Companies Act, 1973 (Act 61 of 1973) as amended, the general
meeting be adjourned. The rationale for the adjournment was to provide LNM with
an opportunity to reconsider certain terms of the original offer with a view to
addressing certain concerns expressed by Iscor minority shareholders. A
requisite majority of Iscor shareholders approved the request to adjourn the
general meeting and it has been adjourned to 14h00 on Wednesday, 12 February
2003 in the Auditorium, Iscor Centre, Roger Dyason Road, Pretoria West (the
"adjourned general meeting").
The Iscor minority shareholders are referred to the original offer circular,
the Iscor circular and the above announcements, which should be considered in
conjunction with this announcement.
4. RATIONALE FOR THE REVISED OFFER
LNM continues to believe that its strategic association with Iscor is a key
factor in the current and future success of Iscor. Iscor`s 2002 annual report
states that the strategic association ensures Iscor`s participation in the
benefits of consolidation in the international steel industry by providing Iscor
with technology sharing, market access, procurement leverage, productivity
benchmarking and skills transfer.
The association between Iscor and LNM is designed to enhance the earnings of
Iscor for the benefit of all Iscor shareholders. LNM considers that the success
of the strategic association may be demonstrated through the performance of the
Iscor share price since LNM`s association with Iscor commenced. As at 2 December
2002, being the last trading day prior to the publication of the original
announcement on 3 December 2002 (the "original announcement"), Iscor shares were
trading on the JSE Securities Exchange South Africa (the "JSE") and closed at a
price of R21.70 per share. This represents an increase for Iscor shareholders of
266.6 per cent over the price of R5.92 per share as at the close of business on
26 November 2001, the first day that Iscor traded as a focused steel producer
post unbundling. This was four days after LNM entered into the Business
Assistance Agreement with Iscor on 22 November 2001 (the "Business Assistance
Agreement").
LNM, therefore, believes that its involvement and incentivisation as a long
term strategic investor under the Business Assistance Agreement is beneficial to
all Iscor shareholders. Given the current level of LNM`s holding in Iscor, under
Rule 8 of the SRP Code, LNM would be obliged, upon receipt of remuneration
shares, to extend a mandatory offer at the same issue price it received its
remuneration shares, to the Iscor minority shareholders to acquire all of their
Iscor shares, as it would hold more than 35 per cent of the issued share capital
of Iscor.
Since the inception of its association with Iscor, LNM has discussed with
Iscor management and the South African Government the options for its future
participation in Iscor. Shareholders are referred to the press release, dated 3
December 2002, concerning the Department of Trade and Industry`s support for the
proposed transaction. LNM believes that it is currently in the best interests of
Iscor`s business and all Iscor shareholders that Iscor continues to be a South
African listed entity with a sufficient free float of independent shareholders
to maintain a liquid market in Iscor shares. In order to provide further
assurance to Iscor minority shareholders in that regard, LNM decided on 17
January 2003 to commit to make a new voluntary offer to acquire the Iscor shares
of Iscor minority shareholders should its holding of Iscor shares reach the 60
per cent threshold.
LNM also continues to believe that Iscor minority shareholders should be
offered the chance to sell a portion of their Iscor shares at a premium to the
current share price. This will provide Iscor minority shareholders with the
opportunity to crystallise a significant profit on their investment in Iscor.
Following discussions with various Iscor minority shareholders, LNM has decided
to respond positively to concerns expressed in relation to its original offer by
increasing its offer from R30.00 cum dividend per share to R33.00 cum dividend
per share for 12.19 per cent of the outstanding shares in Iscor. Therefore, the
original offer was structured and is now being revised so as to allow Iscor
minority shareholders, dependant on acceptances of the revised offer, to realise
the value of 18.7 per cent or more of their respective holdings of Iscor shares
at a significant premium to the current market price. The price of R33.00 cum
dividend per share is significantly higher than, not only the price as at close
of business on 2 December 2002, the last trading day prior to the original
announcement of R21.70 per share, but also the all time high closing share price
post the restructuring and unbundling of Iscor and prior to the original
announcement of R25.30 per share on 24 October 2002.
As a result of increasing its shareholding in Iscor, LNM expects to be in a
position to transfer a greater level of technology, especially significant to
South Africa`s rapidly growing motor industry, to further enhance its purchasing
and marketing co-ordination and further accelerate Iscor`s transformation into a
world class producer with global access.
The independence of the Iscor board, the maintenance of an arm`s length
business relationship between LNM and Iscor, and corporate governance standards
generally applicable to Iscor should not, in LNM`s view, be adversely affected
by the revised offer.
Consequently, LNM encourages the Iscor minority shareholders to vote in
favour of the waiver resolution to be proposed at the adjourned general meeting
and to accept the revised offer.
5. TERMS OF THE REVISED OFFER
5.1 The revised offer consideration
The revised offer will be for a cash consideration of R33.00 cum dividend
per Iscor share (subject to pro-ration as described below). This represents a
premium of 52.1 per cent to the closing market price of R21.70 on 2 December
2002, the last trading day prior to the original announcement, and a premium of
39.7 per cent to the volume weighted average closing price over the 30 trading
days ended on 2 December 2002 of R23.62 per share.
In accordance with paragraph 6.1.4 of the original offer circular, the Iscor
shares tendered to LNM pursuant to the revised offer will be acquired by LNM
fully paid, without any right of set-off, and free from all liens,
counterclaims, equities, mortgages, charges, encumbrances, rights of pre-emption
and other interests whatsoever and together with all rights now or hereafter
attaching thereto, including all voting rights and the right to receive and
retain all dividends, other distributions, benefits or rights declared, made or
paid after the date of the original offer, irrespective of the actual date of
registration or transfer of the offer shares into the name of LNM or its
associated companies. Accordingly, the reference to "cum dividend" above means
that the amount of any dividend declared and paid by Iscor to the Iscor minority
shareholders after the date of the original offer up to and including the
closing date of the revised offer will be deducted from the cash consideration
of R33.00 per Iscor share.
Iscor minority shareholders will be entitled to tender up to their entire
holding of Iscor shares. If acceptances in excess of 12.19 per cent of Iscor`s
issued share capital are received, LNM will purchase the maximum number of Iscor
shares as shall constitute 12.19 per cent of Iscor`s issued share capital, which
equates to 18.7 per cent of each minority shareholder`s holdings (the "maximum
number"). The excess Iscor shares will be purchased on a pro rata basis, with
the shares tendered by accepting Iscor shareholders scaled back proportionately
(with downward adjustments to avoid purchases of fractional shares).
If the revised offer becomes or is declared unconditional and a certificated
Iscor minority shareholder has accepted the revised offer in respect of some or
all of its Iscor shares and surrendered its documents of title, a cheque in
respect of the revised offer consideration for such shares (or part thereof in
the circumstances referred to in paragraph 6.1.3 of the original offer circular)
will be posted to it, or electronically transferred, depending on its election,
at its risk, subject to paragraph 6.1.3 of the original offer circular, within
three U.S. business days of the date of the announcement that the revised offer
has become unconditional or receipt of its documents of title by the receiving
agent, whichever is the later. In the event that the aggregate number of shares
tendered under the revised offer is greater than the maximum number, the
documents of title in respect of any Iscor shares of each Iscor minority
shareholder which are not purchased by LNM will be returned to the relevant
Iscor minority shareholder.
If the revised offer becomes or is declared unconditional and a
dematerialised Iscor minority shareholder has accepted the offer in respect of
some or all of its holdings, such holdings (or part thereof in the circumstances
referred to in paragraph 6.1.3 of the original offer circular) will be withdrawn
from its account at the CSDP or broker and the revised offer consideration will
be credited to the dematerialised Iscor minority shareholder`s account at the
CSDP or broker, as the case may be, under the terms of the custody agreement
entered into between the dematerialised Iscor minority shareholder and its CSDP
or broker, subject to paragraph 6.1.3 of the original offer circular, within
three U.S. business days of the announcement that the revised offer has become
or been declared unconditional or on receipt of acceptance from the CSDP or
broker, whichever is the later.
5.2 New voluntary offer
LNM commits to make a new voluntary offer to acquire the Iscor shares of
Iscor minority shareholders should its holding of Iscor shares reach the 60 per
cent threshold.
The new voluntary offer will be made in accordance with the provisions of
Rule 8 of the SRP Code. The terms of the new voluntary offer, including the
price, will be determined at the date of that offer. Any voluntary offer is and
will, at all times, be conditional upon the revised offer becoming unconditional
and LNM having attained the 60 per cent threshold. LNM makes no representation
that it will, or will seek to, achieve this level of shareholding.
5.3 Conditions of the revised offer
The revised offer will be subject to the following conditions:
5.3.1 the requisite approval by Iscor shareholders (excluding LNM and its
nominees) of the waiver resolution to be proposed at the adjourned general
meeting;
5.3.2 the approval of the Securities Regulation Panel (the "SRP") of the
acquisition by LNM pursuant to the revised offer of up to 12.19 per cent of
Iscor`s issued share capital and confirmation, subject to the fulfilment of the
condition referred to in paragraph 5.3.1 above, that the SRP will not require
LNM to make a mandatory offer;
5.3.3 no action, proceedings, investigation or inquiry of any governmental or
regulatory authority or court having been instituted or threatened which would
prohibit or interfere with the revised offer to an extent which is material to
Iscor or require a divestiture of any material businesses or assets; and
5.3.4 LNM not becoming aware prior to the revised offer being declared
unconditional of any material adverse effect, with regard to Iscor`s plant,
property and equipment, and any adverse effect to Iscor`s business profitability
exceeding 50 per cent of current levels.
LNM has the right, in its sole discretion, to waive or amend, in whole or
in part, any of the conditions referred to in paragraphs 5.3.3 and 5.3.4 above.
The revised offer will be subject to the terms and conditions set out in
the original offer circular as amended in a revised offer circular (the "revised
offer circular") to be posted to Iscor minority shareholders.
5.4 Adjourned general meeting
The adjourned general meeting of the shareholders of the Company will be
held at 14:00 on Wednesday, 12 February 2003, in the Auditorium, Iscor Corporate
Centre, Roger Dyason Road, Pretoria West, where Iscor shareholders (excluding
LNM and its nominees) will have the opportunity to consider, and if deemed fit,
pass the waiver resolution.
6. IRREVOCABLE UNDERTAKINGS AND ACCEPTANCES
After discussions with institutions on the terms of the original offer, LNM
has received written irrevocable undertakings (the "irrevocable undertakings"),
inter alia, to vote in favour of the waiver resolution and to accept the revised
offer in respect of not less than 54,300,000 Iscor shares, subject to certain
exceptions.
As at the date of this announcement, LNM has received acceptances of the
original offer in respect of 500 Iscor shares.
7. CASH CONFIRMATION
The SRP has received confirmation satisfactory to it that LNM has sufficient
resources to honour its commitments under the revised offer.
8. Important dates and times
2003
- Time and date of adjourned general meeting of
Iscor shareholders, at 14h00 Wednesday, 12 February
- Last day for Iscor minority shareholders to
trade on the JSE to be eligible to
participate in the offer, up to 17h00 Friday, 14 February
- Record date for the purposes of participating
in the offer Friday, 21 February
- Offer closes, at 16h00 Friday, 21 February
- Dematerialised Iscor minority shareholders
will have their account with their Central
Securities Depository Participant ("CSDP")
or broker credited/updated Monday, 24 February
- Cheques issued in respect of those Iscor
minority shareholders who have accepted the
offer, will be mailed within three US business
days of the record date for certificated
shareholders Wednesday, 26 February
Notes:
1. If you have dematerialised your Iscor shares, notify and instruct your CSDP
or broker, as the case may be, in the manner and time stipulated in the
agreement governing your relationship with your CSDP or broker. Shares cannot be
dematerialised or rematerialised between Monday, 17 February 2003 and Friday, 21
February 2003, both days inclusive.
2. The above dates and times are subject to amendment. Any such amendment will
be published on SENS and in the press. The above dates and times are subject to
the terms and conditions precedent set out in the original offer circular, as
may be revised by LNM in its sole and absolute discretion in accordance with the
SRP Code and any other applicable laws and regulations.
Enquiries:
Aditya Mittal, Vice Chairman Adrian Coates, Eric Vemer, Director
Sudhir Maheshwari, Managing Director HSBC Investment
Chief Financial Officer HSBC Bank plc Services (Africa)(Pty)Ltd
LNM Holdings N.V. + 44 20 992 2326 + 27 11 481 4204
+ 44 20 7543 1169
28 January 2003
FORWARD-LOOKING STATEMENTS
Statements in this announcement may include "forward-looking statements" that
express or imply expectations of future events or results. These include,
without limitation, statements made in paragraph 4 (Rationale for the revised
offer) above. All forward-looking statements involve a number of risks,
uncertainties and other factors, and LNM cannot give assurances that such
statements will prove to be correct. Risks, uncertainties and other factors that
could cause actual events or results to differ from those expressed or implied
by the forward-looking statements include, without limitation, the satisfaction
of closing conditions, the acceptance or rejection of any agreement by
regulators, delays in the regulatory processes, changes in the economic or
political situation in South Africa, the European Union, the United States of
America and/or any other relevant jurisdiction, changes in the steel industry
within any such country or area or worldwide and the performance of (and cost
savings realised by) the Company. Given these and other uncertainties, you are
cautioned not to place undue reliance on any of the forward-looking statements
contained herein or otherwise. LNM does not undertake any obligation to release
publicly any revisions to these forward-looking statements (which speak only as
of the date hereof) to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events, except as may be required
under the SRP Code or applicable laws and regulations.
NO PROFIT FORECASTS
Nothing in this announcement should be construed as a profit forecast or be
interpreted to mean that the future earnings per share of Iscor will necessarily
be greater than the historic published earnings per share of Iscor.
ADDITIONAL INFORMATION
Shareholders of Iscor, holders of Iscor American depository shares and
holders of Iscor shares who are located in the United States of America or
elsewhere are urged to carefully read the revised offer circular regarding the
proposed transaction when it becomes available, together with the original offer
circular, because they contain important information relevant to the revised
offer.
NO OFFER OF SECURITIES
This announcement does not constitute an offer or an invitation to purchase
any securities.
GENERAL
This announcement is published on behalf of LNM and is the sole
responsibility of LNM.
HSBC is acting for LNM and no one else in connection with the revised offer
and will not be responsible to anyone other than LNM for providing the
protections afforded to customers of HSBC, nor for providing advice in relation
to the revised offer.
White & Case LLP is acting for LNM and no one else in connection with the
revised offer and will not be responsible to anyone other than LNM for providing
advice in relation to the revised offer.
Copies of this announcement are not being made, and must not be, mailed,
forwarded, transmitted or otherwise distributed or sent in or into Australia,
Canada, Japan, the Republic of Ireland or any other jurisdiction in which it is
illegal to make the revised offer and persons receiving this announcement
(including custodians, nominees and trustees) must not distribute, forward,
mail, transmit or send it in or into or from Australia, Canada, Japan, the
Republic of Ireland or any such other jurisdiction.
Financial advisers to LNM
HSBC
Corporate law advisers to LNM
White & Case
Limited Liability Partnership
Date: 28/01/2003 05:55:00 PM Produced by the JSE SENS Department
