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Gencor - Gencor and asbestos claimants sign deals which pave the way for Gencor
unbundling
Gencor Limited
Incorporated in the Republic of South Africa
Registration number 1895/001232/06
Share code: GMF
ISIN: ZAE000013066
("Gencor" or "the Company")
Gencor and asbestos claimants sign deals, which pave the way for Gencor
unbundling
Gencor has concluded two agreements which settle, without any admission of
liability, all asbestos-related claims against it for a total amount of R460,5
million. This paves the way for the unhindered unbundling of all of Gencor"s
shares in Impala Platinum Holdings (Implats) and the elimination for the
shareholders of the present discount between the market value of Gencor and the
value of its underlying investment in Implats.
The settlement agreements were signed with South African and UK lawyers
representing many thousands of alleged asbestosis sufferers who estimated that
their claims would otherwise have exceeded R2 billion. The agreements settle all
existing and potential claims referred to in the recent application for an
interdict to prevent Gencor"s unbundling.
Gencor will post a circular as soon as possible to its shareholders convening a
meeting of shareholders to consider the proposed unbundling of all of its shares
in Implats.
A feature of the settlement is the establishment of the Asbestos Relief Trust,
which will compensate present and future claimants who can show that they have
contracted asbestos-related diseases after exposure to asbestos dust at mines
owned by companies in which Gencor had an interest.
Gencor aims to complete its unbundling of its 46% shareholding in Implats by
30 June 2003. Payment of the settlement amounts is conditional on the unbundling
being completed in every respect. If the unbundling is impeded in any way,
Gencor is entitled to declare all agreements void.
The Gencor Board of directors" approach to the litigation and settlement has
been prudent and proactive. The final settlement figure agreed upon is within
touching distance of the R409 million that had been set aside last year,
particularly since it now also takes account of the additional claims made
against Gencor in the United Kingdom.
The settlements involve some 13 500 claimants. If the unbundling is successful,
Gencor will pay, without any admission of liability and in full and final
settlement of all claims, an amount of some R460,5 million, as follows:
* R378 million will be paid into the Asbestos Relief Trust in South Africa. The
Trust will provide compensation as fully, fairly and effectively as its means
allow to all persons who are able to demonstrate that they have contracted an
asbestos-related disease from working at, or living in the vicinity of, mines
owned and operated by companies during the period in which Gencor had an
interest in them;
* An additional R40 million will be paid and be retained in a separate trust
account to be kept by Gencor"s lawyers for a period of 3 years in order to cover
any potential rehabilitation claims which may be brought against Gencor by any
person, notwithstanding the Board being of the view that Gencor does not have
any liability for any such claims. After a period of three years, the
R40 million (or any balance then remaining, if any potential rehabilitation
liability is discharged) will be paid to the Trust.
* R42,5 million will be paid to the approximately 7 500 claimants who have sued
Cape Plc in the United Kingdom and have joined Gencor to those proceedings.
These claimants will not be eligible to claim from the Trust. The R42,5 million
settlement amount to be paid to them will be administered by their UK lawyers,
and will be distributed to those of them who can demonstrate that they had
material exposure to asbestos from a company in which Gencor had an interest and
have contracted an asbestos-related disease as a result.
The payments totalling R460,5 million will become payable by Gencor one day
after the Gencor shares in Implats have been distributed to Gencor shareholders.
The settlement amounts will be paid out of Gencor"s existing cash resources of
R409 million and a portion of the cash generated by dividends received from its
Implats shareholding.
The Trust Deed of the Asbestos Relief Trust is being lodged with the Master of
the High Court. The Trustees will require some time to set up their
administrative infrastructure but Gencor would hope that they would be in a
position to commence with the payment of compensation to those who qualify
within about six months.
The Griqualand Exploration & Finance Company (Gefco) and Msauli Asbes Beperk are
also parties to one of the settlement agreements. These were asbestos mining
companies in which Gencor had an interest. They will be making their own
monetary contributions to the Trust.
The Board of directors regards the outcome of the process to be in the best
interests not only of Gencor and its shareholders but also of the claimants. The
settlement is consistent with Gencor"s reasonable, responsible and prudent
approach in this matter.
J Marais
Company Secretary
13 March 2003
Merchant bank
Investec Corporate Finance
Sponsor
Investec Bank Limited
(Registration number 1969/004763/06)
Attorneys
WEBBER WENTZEL BOWENS
Communication
BAIRDS RENAISSANCE (PTY) LTD
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