| Tue 5 Aug 2003, 10:17 | | Anglogold Limited - Proposed Merger Of Anglogold L |
|
Anglogold Limited - Proposed Merger Of Anglogold Limited And Ashanti Goldfields
Release Date: 05/08/2003 19:54:56 Code(s): ANG
Anglogold Limited - Proposed Merger Of Anglogold Limited And Ashanti Goldfields
Company Limited
Anglogold Limited
(Registration number 1944/017354/06)
(Incorporated in the Republic of South Africa)
ISIN : ZAE000043485
JSE Share Code : ANG
("AngloGold")
ASHANTI GOLDFIELDS COMPANY LIMITED
(Registration number 7094, ARBN 074370862)
(Incorporated in Ghana)
ISIN : GH0000000029
GSE Share Code : AGC
("Ashanti")
This announcement does not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale or distribution of securities in any
jurisdiction in which such offer, sale or distribution is not permitted
5 August 2003
PROPOSED MERGER OF ANGLOGOLD LIMITED AND ASHANTI GOLDFIELDS COMPANY LIMITED
1. Introduction
Further to the announcements made by AngloGold and Ashanti on 16 May 2003 and
13 June 2003, the boards of directors of AngloGold and Ashanti are pleased to
announce today that they have agreed the terms of a recommended merger of the
two companies (the "Merger") to create a growth focused, leading global gold
producer. AngloGold and Ashanti have therefore entered into a transaction
agreement ("Transaction Agreement") to implement the Merger. The combined group
will be known as AngloGold Ashanti Limited and will trade as Ashanti AngloGold
in Ghana.
The combined group will have the largest reserve base of any gold company, a
significant and well diversified production base, a highly attractive
development and exploration portfolio and the financial and technical resources
to maximise organic growth from the existing asset base as well as to capitalise
on further acquisition opportunities.
Under the terms of the Merger:
Each holder of an Ashanti ordinary share ("Ashanti Share") and each holder of
an Ashanti Global Depositary Security ("Ashanti GDS") (together the "Ashanti
Shareholders") will be entitled to elect to receive, either:
0.26 AngloGold ordinary shares ("AngloGold Shares"); or
0.26 AngloGold American Depositary Shares ("AngloGold ADSs")
for each Ashanti Share or Ashanti GDS ("Exchange Ratio").
In addition, Ashanti Shareholders resident in Ghana will have the option of
receiving AngloGold Ghanaian Depositary Shares ("AngloGold GhDSs"), 100 of which
will represent one AngloGold Share, at an exchange ratio of 26 AngloGold GhDSs
per Ashanti Share or Ashanti GDS held by any such Ghanaian residents.
Based on the closing market price of AngloGold ADSs on the New York Stock
Exchange on 1 August 2003, the last practicable trading day prior to this
announcement, of US$32.15, the Merger values each Ashanti Share (and each
Ashanti GDS) at US$8.36 and amounts to aggregate consideration for Ashanti"s
issued ordinary shares of US$1,089 million. This represents a premium of
approximately 4% to the closing market price of Ashanti GDSs on the New York
Stock Exchange on 1 August 2003, the last practicable trading day prior to this
announcement, of US$8.00 and, on the bases of closing prices for AngloGold ADSs
and Ashanti GDSs on the New York Stock Exchange on 15 May 2003, the day prior to
the announcements of discussions, of US$30.63 and US$7.10 respectively, a
premium of 12%. Based on the average closing prices of Ashanti GDSs and
AngloGold ADSs on the New York Stock Exchange over the 30 trading days up to and
including 15 May 2003 these terms represent a premium of 34%.
On completion of the Merger and based on the issued ordinary share capital of
each company, existing holders of AngloGold Shares and AngloGold ADSs (together,
the "AngloGold Shareholders") will own approximately 87% and existing Ashanti
Shareholders will own approximately 13% of the combined group.
The board of directors of Ashanti ("Ashanti Board") has approved the Merger.
Lonmin Plc, which owns 27.6% of Ashanti"s issued ordinary share capital, has
agreed to support the Merger.
As described in paragraph 4 below, the Merger is conditional on the receipt
of certain approvals and undertakings from the Government of Ghana. A full list
of the conditions to the obligations of AngloGold and/or Ashanti to consummate
the Merger is set out in Appendix I.
2. Terms and Structure of the Merger
The Merger will be effected by means of a scheme of arrangement between
Ashanti and its shareholders (the "Scheme") under Section 231 of the Ghana
Companies Code and take account of the required disclosure provisions of the
Ghana Stock Exchange. Under the terms of the Merger:
* Each holder of an Ashanti Share resident in Ghana will be entitled to
elect to receive, in exchange therefor, either:
- 0.26 AngloGold Shares;
- 0.26 AngloGold ADSs; or
- 26 AngloGold GhDSs, 100 of which will represent one AngloGold Share
If no election is made, such holder will be deemed to have elected to receive
its scheme consideration in the form of AngloGold GhDSs
* Each holder of an Ashanti Share resident outside Ghana (other than the
depositary for the Ashanti GDSs and holders of Ashanti Shares resident in the
United States) will be entitled to elect to receive in exchange therefor,
either:
- 0.26 AngloGold Shares; or
- 0.26 AngloGold ADSs
If no election is made, such holder will be deemed to have elected to receive
its scheme consideration in the form of AngloGold Shares
* Each holder of an Ashanti GDS or of an Ashanti Share resident in the
United States will be entitled to elect to receive in exchange therefor, either:
- 0.26 AngloGold Shares; or
- 0.26 AngloGold ADSs
If no election is made, such holder will be deemed to have elected to receive
its scheme consideration in the form of AngloGold ADSs
* Ashanti Shareholders will be entitled to receive all dividends declared by
AngloGold with a registration date after the completion of the Merger. However,
the Merger will not be implemented prior to the registration date for the
payment of AngloGold"s final dividend. AngloGold has agreed to use reasonable
endeavours to set a registration date for the 2003 final dividend so as not to
delay the consummation of the Merger. Consequently, Ashanti shareholders will
not be entitled to receive AngloGold"s 2003 interim or final dividends
* No fractional AngloGold Shares or AngloGold ADSs will be issued in respect
of any fractional entitlement to an AngloGold Share or AngloGold ADS
("fractional interest"). Each holder of a fractional interest resident in Ghana
will have the right to elect to receive either (i) cash (in US dollars) or (ii)
AngloGold GhDSs in lieu of such fractional interest. Holders of a fractional
interest resident outside Ghana will be paid an amount in cash (in US dollars)
in lieu of such fractional interest. The amount of cash (in US dollars) paid in
lieu of such fractional interest will be equal to the product obtained by
multiplying (i) the fractional interest to which such holder (after taking into
account all fractional interests then held by such holder) would otherwise be
entitled by (ii) the volume-weighted average of the per share closing price on
the New York Stock Exchange of AngloGold ADSs during the ten consecutive trading
days ending on (and including) the trading day immediately preceding the
effective time of the Scheme
3. Background to and key benefits of the Merger
The Merger will allow the shareholders of AngloGold and Ashanti to benefit
from the establishment of a leading global gold producer, enhancing the
strengths of both groups. The Merger will produce a combined group with the
following attributes:
* Growth/Upside potential - an enhanced production profile is expected from
existing brownfields opportunities and a strong exploration and land holding
portfolio
- AngloGold"s proven ability in the development of deep level projects
will maximise the opportunity for the development of deep level mining at Obuasi
("Obuasi Deeps"), where a scoping study has been undertaken to review the mine"s
potential down to 100 Level as well as alternative production rates,
infrastructure options and operating and capital cost projections
- A dedicated project team will undertake a feasibility study regarding
Obuasi Deeps with anticipated exploration expenditure of US$44 million over the
next five years. Including this amount, the total capital expenditure for
Obuasi Deeps is estimated to be US$570 million in real terms over the expected
life of mine
- The combined group also intends to invest an additional US$110 million
in real terms over the next five years on underground equipment, infrastructure,
environmental and planning systems for the existing Obuasi Mine. This amount is
in addition to capital expenditure already planned by Ashanti. AngloGold
management anticipates that these initiatives will improve underground working
conditions and mine planning thereby increasing efficiencies with the objective
of reducing anticipated cash operating costs at Obuasi by US$20 per ounce in
real terms over the next five years
- The combined group intends to accelerate exploration programmes,
particularly at Obuasi
- The combined group will have extensive land positions in some of the
most prospective regions in the world
* Synergies - the combination will generate tangible synergy benefits with
approximately US$15 million per annum, before transaction expenses, expected
from the first full year after completion of the Merger
- Reduced financing costs
- Reduced administrative and procurement costs
- Consolidation of Geita ownership
- Breadth of technical capabilities to ensure the optimal development of
organic growth opportunities
* Scale - the combined group will have the production base, ore reserves and
financial resources to generate future value
- #1 in reserves - 93.2 million ounces of attributable proven and
probable reserves as at the end of 2002 (adjusted for the sales of Amapari and
Jerritt Canyon), a 31% increase in AngloGold"s current reserve base
- Production - re-enforces AngloGold"s position as one of the world"s
largest gold producers with 2002 pro forma attributable gold production of 7.3
million ounces (adjusted for the sale of Jerritt Canyon), a 27% increase on
AngloGold"s attributable production level
- US$1.0 billion EBITDA (earnings before interest, tax, depreciation,
amortisation and before unrealised non-hedge derivatives) on a 2002 pro forma
basis (International Financial Reporting Standards, ("IFRS"))
* Operating strength - the combined group will have a portfolio of long-
life, low-cost assets and different ore body types in the key gold producing
regions
- Cash operating costs - pro forma cash operating costs (including
royalties) of US$220 per ounce based on unaudited results for the six months to
30 June 2003
- Long-life assets - six operations in five countries with combined
reserves of 45.1 million ounces have current life of mine plans of 15 years or
longer
- Diversification - well diversified asset portfolio comprising a balance
of open-pit and underground production from a total of 24 operations distributed
across 11 countries in the principal gold producing regions of the world
* Investment appeal - the combined group will have the growth potential,
size, liquidity and dividend yield to enhance appeal to the investment community
- Increased size - pro forma market capitalisation of approximately
US$8.3 billion (based on AngloGold"s closing price on 1 August 2003, the last
practicable trading day prior to this announcement, and the issued ordinary
share capital of each company), meriting greater attention from major global
generalist and specialist investment institutions
- Share trading liquidity - increased liquidity, particularly in North
America, which represents some two thirds of AngloGold and Ashanti"s combined
share turnover
* Hedging - The combined hedge book would have had a net delta of 14.7
million ounces, as at 30 June 2003
- The combined group will continue AngloGold"s and Ashanti"s record of
active hedge management and will follow the same pattern of hedge reduction.
Delivering into maturing contracts over the balance of this year will likely see
the delta hedge position reduce to 13.5 million ounces assuming market rates as
at 30 June 2003
- As at 30 June 2003, AngloGold"s and Ashanti"s hedge books had negative
marked-to-market valuations of US$179.3 million and US$147.6 million
respectively, including in each case, each company"s 50% interest in the US$78.8
million negative marked-to-market value of the Geita hedge book
4. Major shareholders
An undertaking to support the Merger has been received from Lonmin Plc, the
largest shareholder of Ashanti, in relation to its shareholding in the issued
ordinary share capital of approximately 27.6%. Lonmin Plc can withdraw its
support for the Merger only if the Ashanti Board publicly announces the
withdrawal of its recommendation or if the Transaction Agreement is terminated.
Morgan Stanley is acting as financial adviser to Lonmin Plc.
The Government of Ghana, holder of 16.9% of Ashanti"s issued ordinary share
capital, is currently considering the terms of the transaction and has appointed
a consortium of advisers, led by Societe Generale, in order to assist it in this
process. The Merger is conditional on receiving undertakings from the
Government of Ghana to vote in favour of and support the Merger and is also
subject to receiving certain regulatory and other approvals and undertakings,
that have been requested by AngloGold and Ashanti from the Government of Ghana.
This includes an agreement to use reasonable endeavours to extend, in 2004, the
Obuasi lease for an additional 30 years from 2024 and to enter into a stability
agreement to ensure that the Ghanaian operations are not adversely affected by
changes in royalties, taxes and custom duties for a specified period of time.
The Transaction Agreement will terminate if these conditions are not satisfied
(or waived by AngloGold) on, or before, 30 September 2003 or such later date as
may be agreed by Ashanti and AngloGold.
5. Conditions and other key terms of the Transaction Agreement
In addition to the conditions relating to the Government of Ghana outlined
above, completion of the Merger is conditional on, amongst other things, the
approval of the Merger by Ashanti Shareholders, receipt of other regulatory
approvals, third party consents and the confirmation of the Scheme by the High
Court of Ghana prior to 31 March 2004. A complete list of the conditions to the
obligations of AngloGold and/or Ashanti to consummate the Merger is set forth in
Appendix I.
Upon the implementation of the Scheme, Ashanti Capital (Second) Limited, a
subsidiary of Ashanti, will redeem all its issued and outstanding Mandatorily
Exchangeable Notes ("MENs") for US$75,000,000 plus accrued and unpaid interest
thereon in cash. The MENs are held entirely by Lonmin Plc.
The board of AngloGold has agreed to recommend a change of name of the
combined group to AngloGold Ashanti Limited and AngloGold has agreed to convene
an extraordinary general meeting to present a special resolution to this effect.
Anglo American plc, which currently owns 51.4% of AngloGold, has confirmed that
it will vote in favour of such resolution.
6. Information on AngloGold
AngloGold, headquartered in Johannesburg, South Africa, is a global gold
producer with 19 operations in eight countries, on four continents, and has
extensive and focused exploration activities in 11 countries.
AngloGold Shares are listed and traded on the JSE Securities Exchange South
Africa, the Australian Stock Exchange in the form of "CHESS" depositary
interests, the London Stock Exchange and Euronext Paris and are quoted on
Euronext Brussels in the form of International Depositary Receipts. AngloGold
ADSs are listed and traded on the New York Stock Exchange.
Based on the closing market price of US$32.15 per AngloGold ADS on 1 August
2003, the last practicable trading day prior to this announcement, AngloGold had
a market capitalisation of approximately US$7.2 billion.
For the six months to 30 June 2003 AngloGold reported (in accordance with
IFRS):
* Gold production of 2.8 million ounces (attributable)
* Cash operating costs of US$217 per ounce (attributable)
* Revenue of US$977 million
* Headline earnings before unrealised non-hedge derivatives of US$140
million
* Headline earnings per share before unrealised non-hedge derivatives of
US$0.63
* An interim dividend per share of US$0.51 has been declared in 2003. In 2002
dividends per share of US$1.46 were declared
7. Information on Ashanti
Ashanti, headquartered in Accra, Ghana, is engaged in the mining and
processing of gold ores and the exploration and development of gold properties
in four African countries - Ghana, Guinea, Tanzania and Zimbabwe. Ashanti also
has an extensive exploration programme in Africa.
Ashanti Shares are listed on the Ghana Stock Exchange and the London Stock
Exchange. Although Ashanti has a primary listing on the London Stock Exchange,
it is not subject to the City Code on Takeovers and Mergers. Ashanti GDSs are
listed and traded on the New York Stock Exchange and on the London Stock
Exchange and Ashanti Shares and Ashanti Zimbabwe Depositary Receipts are listed
on the Zimbabwe Stock Exchange.
Based on the closing trading price of US$8.00 per Ashanti GDS on 1 August
2003, the last practicable trading day prior to this announcement, Ashanti has a
market capitalisation of approximately US$1.0 billion.
For the six months to 30 June 2003 Ashanti reported (in accordance with UK
GAAP):
* Gold production of 0.7 million ounces (attributable)
* Cash operating costs (including royalties) of US$232 per ounce
(attributable)
* Revenue of US$257 million
* Pre-exceptional net earnings of US$14.6 million
* Pre-exceptional net earnings per share of US$0.11
* Net assets of US$478 million
Ashanti did not pay any dividend for the year ended 31 December 2002, neither
has it announced any dividends in respect of its interim earnings in 2003.
8. Financial effects of the Merger
The financial effects of the Merger on AngloGold Shareholders are set out
below. These financial effects have been determined from unaudited consolidated
financial information for the combined group assuming that the Merger was
implemented on 1 January 2003 for the purposes of the income statement and on 30
June 2003 for the purposes of the balance sheet.
AngloGold believes that the pro forma historical information is not
necessarily indicative of the future financial performance of the combined
group. The Merger is expected to be accretive to headline earnings per share
before unrealised non-hedge derivative adjustments for AngloGold Shareholders
from completion of the Merger. However, for the six months ended 30 June 2003,
as a result of Ashanti having experienced an anticipated lower production
profile and higher cash operating costs over this period, which are not
anticipated to continue in the long term, the Merger is dilutive to AngloGold on
this basis, despite being accretive to headline and basic earnings per share.
The Merger is also expected to be accretive to cash flow per share from three
years after completion of the Merger following the expenditure of a significant
proportion of the proposed additional capital investment, at the existing Obuasi
Mine in particular, as well as the redemption on completion of the US$75 million
Mandatorily Exchangeable Notes held by Lonmin Plc and the payment of transaction
expenses in the first year following completion of the Merger. This should not
be interpreted to mean that earnings per share and cash flow per share in the
financial year in which the Merger becomes effective or in any subsequent
period, will necessarily be greater than those for any relevant preceding
financial period.
The pro forma historical financial effects of the Merger on AngloGold
Shareholders are as follows:
For the six months Before the After the Percentage
ended 30 June 2003 Merger Merger change
and as at 30 June 2003 (US cps) (US cps) (%)
Net asset value per share 1 728 1,060 46
Net tangible asset value per share 1 549 808 47
EBITDA per share 2 152 156 3
Headline earnings per share before
unrealised non-hedge derivatives 2 63 54 (14)
Headline earnings per share 2 62 73 18
Basic earnings per share 2 55 68 24
Net debt to total capital employed 18.6% 17.2%
NOTES:
1. Net asset and net tangible asset value per share refers to shareholders"
equity and has been determined at 30 June 2003 assuming 222,785,154 AngloGold
Shares in issue before the Merger and 257,309,569 AngloGold Shares in issue
after the Merger (the 34,524,415 AngloGold Shares issued in the Merger assumes
that the 2,496,826 outstanding Ashanti warrants are exercised and the resulting
Ashanti Shares together with the 130,289,386 Ashanti Shares currently in issue
are exchanged at the Exchange Ratio. All outstanding options over Ashanti
Shares are assumed to be cancelled for cash)
2. The pro forma consolidated income statements for the six months ended 30
June 2003 and balance sheets at 30 June 2003 have been compiled from:
* the historical unaudited consolidated income statements of AngloGold
for the six months ended 30 June 2003 and the historical unaudited consolidated
balance sheets of AngloGold at 30 June 2003, prepared in accordance with IFRS;
and
* the historical unaudited consolidated income statements of Ashanti for
the six months ended 30 June 2003 and the historical unaudited consolidated
balance sheets of Ashanti at 30 June 2003, prepared in accordance with UK GAAP,
adjusted to an IFRS basis by incorporating the differences between the two
accounting bases
For the six months ended 30 June 2003, unaudited pro forma EBITDA, headline
earnings, headline earnings before unrealised non-hedge derivatives and basic
earnings per ordinary share have been calculated based on the weighted average
number of AngloGold Shares in issue of 222,737,513 for the six months ended 30
June 2003 adjusted to reflect the issuance of 34,524,415 AngloGold Shares in the
Merger. Accordingly the adjusted pro forma weighted average number of AngloGold
Shares in issue for the six months ended 30 June 2003 is 257,261,928
3. The financial effects calculations have been based on publicly available
information only and for this reason may not incorporate all the necessary
adjustments
4. The financial effects have been calculated on the basis of an AngloGold
share price of US$32 a share
5. The financial effects, based upon the historical unaudited consolidated
income statements of AngloGold for the six months ended 30 June 2003 and the
historical unaudited consolidated balance sheets of AngloGold at 30 June 2003
have not been adjusted for the sale of Amapari or Jerritt Canyon
9. US and UK tax consequences
The exchange of Ashanti Shares or Ashanti GDSs for AngloGold Shares or
AngloGold ADSs pursuant to the Merger currently is expected to be a taxable
transaction for US federal income tax purposes. For the purposes of the UK
taxation of chargeable gains, in general, it is considered that the exchange of
Ashanti Shares or Ashanti GDSs for AngloGold Shares or AngloGold ADSs pursuant
to the Merger should not be treated as giving rise to a disposal of Ashanti
Shares or Ashanti GDSs, except in certain limited circumstances, and generally
no UK stamp duty or stamp duty reserve tax should be payable by holders of
Ashanti Shares or Ashanti GDSs on the exchange of Ashanti Shares or Ashanti GDSs
for AngloGold Shares or AngloGold ADSs pursuant to the Merger. Holders of
Ashanti Shares or Ashanti GDSs are urged to consult their own tax advisers in
determining the consequences of the Merger to such holders under US, UK or other
applicable law. Further disclosure in respect of the US and UK tax consequences
of the Merger will be made in due course.
10. Directors, management and employees
Following completion of the Merger, Russell Edey, currently Chairman of
AngloGold, will be Chairman of the combined group. Sam Jonah, in addition to
joining the Board, will play a leading role in the executive management of the
enlarged company in the position of President. His 34 years in the gold mining
industry in both an operating and a leadership capacity position him well to
help guide the further development of the new company and the industry
particularly in Africa. In this new position, Mr. Jonah will share
responsibility with the CEO Bobby Godsell for strategy formulation, the
identification and development of new business opportunities and managing the
company"s relationships with governments, shareholders and other stakeholders.
In the enlarged company, Sam will join a five person Executive Committee,
chaired by Bobby Godsell. In addition, two other Ghanaian directors to be
nominated by Ashanti will become non-executive directors of the combined group.
The board of directors of AngloGold and the AngloGold executive team will
otherwise continue in their current roles.
Following completion of the Merger, Ashanti"s head office in Accra, Ghana,
will enjoy an expanded role within the combined group"s operations.
AngloGold has entered into undertakings in the Transaction Agreement which
mean that it will observe the existing contractual and statutory employment
rights of Ashanti management and employees.
11. Ashanti options
Upon the Merger being completed, all options granted under the AGC Senior
Management Share Option Scheme will become exercisable for a period of one month
thereafter. Option holders will receive upon exercise of Ashanti options
AngloGold Shares in an amount determined by reference to the Exchange Ratio.
AngloGold has also agreed to offer to all Ashanti option holders the alternative
of either receiving cash in cancellation of their Ashanti options or rolling
over their Ashanti options into substitute options exercisable for AngloGold
Shares. AngloGold has agreed pursuant to the Transaction Agreement to make
available such proposals at least one month prior to the Merger being completed.
12. Ashanti warrants
Holders of issued and outstanding warrants of Ashanti Warrants Limited, a
wholly-owned subsidiary of Ashanti, will be treated in accordance with the
relevant deed poll.
13. Listings
Following completion of the Merger, the combined group will be listed on the
JSE Securities Exchange South Africa, the New York Stock Exchange, the London
Stock Exchange, the Australian Stock Exchange and Euronext Paris and quoted on
Euronext Brussels. Application will be made to list ordinary shares and
Ghanaian depositary shares of the combined group on the Ghana Stock Exchange.
14. Timing
AngloGold and Ashanti hope to receive the views of the Government of Ghana
in relation to the Merger by mid-September.
A request has been submitted to the Staff of the US Securities and Exchange
Commission (the "SEC") for a "no action" letter confirming the availability of
an exemption pursuant to Section 3(a)(10) of the US Securities Act of 1933, as
amended (the "Securities Act") from the registration requirements under the
Securities Act. Should the issuance of AngloGold Shares in the Scheme qualify
for such an exemption, relevant documentation will be posted to Ashanti
shareholders as promptly as reasonably practicable after the required approvals
of the Government of Ghana have been received and the relevant documentation has
been prepared. Should the issuance of AngloGold Shares not qualify for such an
exemption, AngloGold will prepare and file a registration statement with the SEC
as promptly as reasonably practicable and relevant documentation will be posted
to Ashanti shareholders upon the registration statement becoming effective,
provided that the required approvals of the Government of Ghana have been
received.
Further announcements, which will include details regarding the timetable
for the implementation of the Merger, will be made in due course.
15. Anglo American plc
If the Merger is approved, Anglo American plc"s shareholding in AngloGold
would be diluted from 51.4% to 44.5%. The Securities Regulation Panel of South
Africa has granted to Anglo American plc an exemption from making a mandatory
offer to AngloGold minority shareholders, should Anglo American acquire
AngloGold shares to restore its holding to above 50%.
16. Board recommendation and undertakings
CIBC World Markets plc, Ashanti"s financial adviser, has delivered to the
Ashanti Board its written opinion that the Exchange Ratio is fair to the Ashanti
Shareholders from a financial point of view. The Ashanti Board, consider the
terms of the Merger to be in the best interests of Ashanti Shareholders as a
whole.
The Ashanti Board has approved the Merger and will recommend that Ashanti
Shareholders vote in favour of the resolutions to be proposed at the scheme
meeting of the Ashanti Shareholders, as the directors of Ashanti intend to in
respect of their own beneficial holdings which amount in aggregate to 113,514
Ashanti Shares (representing 0.1% of the issued ordinary share capital of
Ashanti).
Chester Crocker, Lynda Chalker and Edward Haslam, being Directors of
Ashanti, have not taken part in the deliberations of the Ashanti Board relating
to the recommendation of the Merger. Chester Crocker and Lynda Chalker did not
participate because they or companies in which they have an interest have
entered into commercial contracts with AngloGold, its subsidiaries or its major
shareholder, Anglo American plc. Edward Haslam did not participate because he
is an executive director of Ashanti"s largest shareholder, Lonmin Plc which has
given an undertaking to AngloGold to support the Merger.
Ashanti has agreed not to solicit any alternate acquisition proposals but is
not prevented from receiving and considering or providing any information in
relation to new proposals provided that it notifies AngloGold of the receipt of
any acquisition proposal and the material terms thereof and discloses any
information regarding Ashanti made available to persons in connection with such
alternate acquisition proposals to AngloGold.
Except as provided below, the Ashanti Board may not withdraw, or propose to
withdraw, its recommendation. If, at any time prior to the effective time of
the Scheme, the Ashanti Board receives an acquisition proposal that the Ashanti
Board determines to be a superior proposal to the Merger, the Ashanti Board will
be permitted to withdraw its recommendation if, after notification to AngloGold
of such proposal, AngloGold does not increase the consideration offered or
otherwise improve the terms of the offer or if, after such increase or
improvement, the Ashanti Board still determines (after having received a written
opinion of a financial adviser of the fairness of the superior proposal from a
financial point of view) that the superior proposal is still superior to the
amended AngloGold proposal.
In addition, if the Ashanti Board determines, in its good faith judgement
after having received advice of outside legal counsel, that the failure to
withdraw its recommendation would constitute a breach of its fiduciary duties
under applicable law, the Ashanti Board may withdraw its recommendation, upon
notice to AngloGold; provided, however, that in making such determination, the
Ashanti Board may not take into account any acquisition proposal or inquiry that
is reasonably likely to result in an acquisition proposal.
Should the Ashanti Board receive a superior proposal and withdraw its
recommendation and either AngloGold or Ashanti terminates the Transaction
Agreement because of such withdrawal, Ashanti will be required to pay to
AngloGold, upon such termination, a termination fee of US$15,000,000 to the
extent that such payment is lawful under Ghanaian law. In addition, if (i) the
Transaction Agreement is terminated because the conditions relating to the
support of the Government of Ghana as a shareholder and its approvals and
undertakings as a regulator have not been satisfied (or waived by AngloGold) on
or before 30 September 2003 or such later date as may be agreed by Ashanti and
AngloGold and (ii) within three months after the date of such termination a
recommended acquisition proposal that constitutes a superior proposal is
announced with a third party that, during the period commencing on 16 May 2003
and ending on the date of such termination (A) made an acquisition proposal to
Ashanti, (B) entered into a confidentiality agreement with Ashanti, or (C)
engaged in substantive discussions with Ashanti regarding a possible acquisition
proposal, then Ashanti will be required to pay AngloGold a termination fee of
US$15,000,000, to the extent that such payment is lawful under Ghanaian law,
upon completion of such acquisition. Ashanti has also agreed to procure that
any third party that makes a superior proposal agrees to pay the termination fee
of US$15,000,000 upon consummation of that superior proposal if it has not been
paid earlier by Ashanti.
If AngloGold wrongfully terminates the Transaction Agreement in breach of
its obligations to complete the transaction, it will be committed to pay Ashanti
US$75,000,000 to compensate it for the damages Ashanti will have suffered as a
result of the breach. If Ashanti wrongfully terminates the agreement in breach
of its obligations, it will be liable for all damages incurred by AngloGold,
which, in that event, will not be subject to any cap. In either case no payment
will be made unless there has been a determination by the High Court of England
that a breach of the Transaction Agreement has occurred. The rights of third
parties to enforce the Transaction Agreement have been excluded.
17. Further cautionary announcement
Shareholders are reminded that there can be no assurance that the Merger
will be implemented. Consequently, holders of AngloGold and Ashanti securities
are advised to continue to exercise caution when dealing in relevant securities
until a further announcement is made.
Johannesburg and Accra
5 August 2003
AngloGold"s JSE Sponsor: UBS
For further information contact:
AngloGold Ashanti
Steve Lenahan +27 83 308 2200 Kweku Awotwi +233 21 77 2331
Peta Baldwin +27 11 637 6647 Corinne Gaisie +44 20 7256 9938
Charles Carter +1 212 750 7999
Tomasz Nadrowski +44 7958 749555
+1 917 912 4641
Andrea Maxey +61 8 9425 4604
UBS Investment Bank CIBC World Markets
James Hartop +44 20 7567 8000 Andy Quinn +44 20 7234 6000
First Africa
Kofi Adjepong-Boateng +27 11 327 3666
Citigate Sard Verbinnen Golin/Harris International
(US Media) (US investors and Media)
Paul Verbinnen +1 212 687 8080 Kevin Kirkeby +1 212 697 9191
Citigate Dewe Rogerson Grandfield
(UK Media) (UK investors and Media)
Patrick Donovan +44 20 7638 9571 Matthew Jervois +44 20 7417 4170
Channel TWO
(Ghanaian Media)
David Ampofo +233 21 666 643
CONFERENCE CALL DETAILS
An analysts" conference call will take place on 5 August 2003 at 13:00 Accra
time, 15:00 Johannesburg time, 14:00 London time, 09:00 New York time. The
conference ID number is 2138069.
The dial in numbers, by country, are:
North America +1 800 267 9155 or +1 706 634 0083,
United Kingdom +44 800 953 0406,
United Kingdom and Europe +44 1452 560 299,
Australia +61 800 766 788 or +61 28 228 7000,
South Africa +27 800 99 4050, and
Ghana +44 1452 560 299
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements in this announcement are forward-looking within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, including without
limitation, those statements concerning (i) timing, fulfillment of conditions,
tax treatment and completion of the Merger, (ii) the value of the transaction
consideration, (iii) expectations regarding production and cost savings at the
combined group"s operations and its operating and financial performance and (iv)
synergies and other benefits anticipated from the Merger. Although AngloGold
and Ashanti believe that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such expectations will
prove to have been correct.
For a discussion of important terms of the Merger and important factors and
risks involved in the companies" businesses, which could cause the combined
group"s actual operating and financial results to differ materially from such
forward-looking statements, refer to AngloGold"s and Ashanti"s filings with the
US Securities and Exchange Commission (the "SEC"), including AngloGold"s annual
report on Form 20-F for the year ended 31 December 2002, filed with the SEC on 7
April 2003 and Ashanti"s annual report on Form 20-F for the year ended 31
December 2002, filed with the SEC on 17 June 2003 and any other documents in
respect of the Merger that are furnished to the SEC by AngloGold or Ashanti
under cover of Form 6-K.
Neither AngloGold, Ashanti nor the combined group undertakes any obligation
to update publicly or release any revisions to publicly update any forward-
looking statements discussed in this announcement, whether as a result of new
information, future events or otherwise.
ADDITIONAL INFORMATION
In connection with the Merger, AngloGold will file with, or otherwise furnish
to, the SEC a scheme document/prospectus. Investors and security holders are
urged to carefully read the scheme document/prospectus regarding the Merger when
it becomes available, because it will contain important information. Investors
and security holders may obtain a free copy of the scheme document/prospectus
(when it is available) and other documents containing information about
AngloGold and Ashanti, without charge, at the SEC"s website at www.sec.gov.
Copies of the scheme document/prospectus together with any SEC filings that may
be incorporated by reference in the scheme document/prospectus may also be
obtained free of charge by directing a request to: AngloGold Limited, 11
Diagonal Street, Johannesburg 2001, PO Box 62117, Marshalltown 2107, South
Africa, Attention: Chris R. Bull, Company Secretary, telephone +27 11 637 6000,
fax: +27 11 637 6624.
UBS Investment Bank and First Africa Group Holdings (Pty) Limited ("First
Africa") are acting for AngloGold and no one else in connection with the Merger
and will not be responsible to anyone other than AngloGold for providing the
protections afforded to clients of UBS Investment Bank or First Africa or for
providing advice in relation to the Merger.
CIBC World Markets plc is acting for Ashanti and no one else in connection
with the Merger and will not be responsible to anyone other than Ashanti for
providing the protections afforded to clients of CIBC World Markets plc or for
providing advice in relation to the Merger.
APPENDIX I
Conditions to the Scheme
The Transaction can only become effective if all the conditions to the
implementation of the Scheme have been satisfied (or waived) in accordance with
paragraph 4 of this Appendix I. Relevant definitions to terms used in this
Appendix are set out in Appendix II.
The Scheme will become effective upon the delivery of the Scheme Order to the
Registrar of Companies for registration and publication in the Gazette. Unless
the Scheme becomes effective by not later than 31 March 2004 or such later date
as AngloGold and the Company may agree and the High Court may permit, the Scheme
will not become effective and the Transaction will not proceed.
The conditions that must be satisfied (or waived) for the Scheme to be
implemented are set out below:
1. The Scheme is conditional upon:
1.1 the approval of the Scheme by not less than three-fourths of the votes
cast by holders of Ashanti Shares present at the Scheme Meeting in person or by
proxy and entitled to vote and voting;
1.2 (i) the confirmation of the Scheme by the High Court and (ii) the
delivery of an office copy of the Scheme Order to the Registrar of Companies;
1.3 in the event that the No-Action Letter is not received, the Registration
Statement having been declared effective by the SEC under the Securities Act and
no stop order suspending the effectiveness of the Registration Statement having
been issued by the SEC and no proceeding for that purpose having been initiated
by the SEC;
1.4 (i) the admission to the Official List of the UKLA of the AngloGold
Shares having become effective in accordance with the UKLA Listing Rules, and
the admission of the AngloGold Shares to trading on the LSE"s market for listed
securities having become effective, or the UKLA having agreed and confirmed its
decision to admit the AngloGold Shares to the Official List of the UKLA, and the
LSE having agreed to admit the AngloGold Shares to trading subject only to (A)
the allotment of the AngloGold Shares and/or (B) the Scheme having become
effective in all respects, and (ii) the AngloGold Shares to be issued in the
Scheme having been authorised for listing on the JSE, authorised for listing on
the NYSE, subject to official notice of issuance, authorised for listing on the
GSE, approved for official quotation by the ASX, and approved for official
quotation by the Euronext Paris.
1.5 no Governmental Authority having taken, instituted or implemented any
action, proceeding, suit, investigation, enquiry, decision or order that would
prohibit or prevent the consummation of the Scheme or otherwise make the Scheme
or its implementation void, illegal or unenforceable; and
1.6 the receipt by AngloGold of the approval of the Bank of Ghana for the
issuance of AngloGold Shares to members of the Company resident in Ghana.
2. The Transaction will also be conditional upon, and accordingly, the necessary
action to make the Scheme effective will not be taken, unless the following
conditions are satisfied or waived by AngloGold on the basis described in
paragraph 4 below:
2.1 the approval of the Special Resolution by the requisite vote of the
members of the Company at the Extraordinary General Meeting;
2.2 no amendment or modification of any of the terms and conditions of the
Scheme in a manner detrimental to AngloGold without the prior written consent of
AngloGold;
2.3 the warranties of the Company contained in the Transaction Agreement
being true and correct as of the Confirmation Date as though made on and as of
the Confirmation Date;
2.4 the performance or compliance by the Company in all material respects
with the covenants required by the Transaction Agreement to be performed or
complied with by the Company prior to the Confirmation Date;
2.5 the Company not having commenced a rights offering for Ashanti Shares or
other securities of the Company;
2.6 the European Commission having either:
(i) indicated that the Scheme and its implementation does not give rise
to a concentration falling within the scope of Council Regulation (EEC) 4064/89
concerning the control of concentrations between undertakings, as amended (the
"EC Merger Regulation"); or
(ii) taken a decision, without imposing any conditions or obligations
that are not reasonably satisfactory to AngloGold under Article 6(1)(b) or
Article 8(2) of the EC Merger Regulation, declaring the Scheme or its
implementation compatible with the common market, or being deemed to have done
so under Article 10(6) of the EC Merger Regulation; or
(iii) referred the whole or part of the Scheme or its implementation to
the competent authorities of one or more member states of the European Union
under Article 9(3) of the EC Merger Regulation or having been deemed to have
done so under Article 9(5) of the EC Merger Regulation; and
(a) each such authority having granted a clearance without imposing
any conditions or obligations that are not reasonably satisfactory to AngloGold
in respect of all of those parts of the Scheme or its implementation that were
referred to it, or being deemed to have granted such a clearance; and
(b) the requirements of paragraph (ii) above being satisfied with
respect to any part not referred to the competent authority of any member state
of the European Union;
2.7 receipt by AngloGold and the Company of the approval from either the
Competition Commission in terms of Section 14(1) of the Competition Act, 1998
(Act 89 of 1998) (as amended) of the Republic of South Africa (the "SA
Competition Act"), the Competition Tribunal in terms of Section 15(2) of the SA
Competition Act or the SA Competition Appeal Court in terms of Section 17 of the
SA Competition Act which is unconditional or which only requires disposal of (i)
Tameng or (ii) other businesses, assets and properties (other than the Savuka
property) with an aggregate value of less than US$50 million;
2.8 receipt of the approvals of Governmental Authorities and third party
consents set forth in Exhibit 1 to this Appendix I;
2.9 other than as set forth in paragraph 2.16 or Exhibit 1 of this Appendix
1, all authorisations, orders, grants, consents, clearances, certificates,
licences, permissions, waivers and approvals necessary to implement the
Transaction having been obtained from any appropriate Governmental Authority
(other than any antitrust or merger control authority) or from any third party
with whom any member of the Company Group has entered into contractual
arrangements (in each case, where the absence of any such authorisation, order,
grant, consent, clearance, certificate, licence, permission, waiver or approval
would have a Company Material Adverse Effect) and such authorisations, orders,
grants, consents, clearances, certificates, licences, permissions, waivers and
approvals remaining in full force and effect and there being no intimation of
any intention to revoke or not renew, or to withdraw, suspend, withhold, modify
or amend any of these (in each case, where such revocation, failure to renew,
withdrawal, suspension, withholding, modification or amendment would have a
Company Material Adverse Effect) and all necessary legal, statutory or
regulatory obligations or court orders or judgements in any jurisdiction in
respect of the Scheme or the Transaction having been complied with (other than
as would not have a Company Material Adverse Effect);
2.10 no Governmental Authority having taken, instituted, implemented or
threatened any action, proceeding, suit, investigation, enquiry, decision or
order that could or might:
(i) require the divestiture by any member of the AngloGold Group or any
member of the Company Group of all or any portion of their respective
businesses, assets or properties other than (A) Tameng or (B) other businesses,
assets and properties (other than the Savuka property) with an aggregate value
of less than US$50 million, or impose any limitation on the ability of any of
them to conduct their respective businesses (or any of them) or to own any of
their respective assets or properties or any part thereof; or
(ii) require, prevent or delay the transfer of any Ashanti Shares to
AngloGold in accordance with the Transaction Agreement;
2.11 Except as set forth in the corresponding section of the Company
Disclosure Schedule (or other section of the Company Disclosure Schedule
referring to Appendix I) or as would not have a Company Material Adverse Effect,
there being no provision of any agreement, arrangement, licence, permit or other
instrument to which any member of the Company Group is a party or by or under
which any of its assets may be bound, entitled or subject, that as a result of
the Transaction could or might result in:
(i) any monies borrowed by, or any other indebtedness or liability (actual
or contingent) of, any member of the Company Group, being repayable or capable
of being declared repayable immediately or earlier than their or its stated
maturity date or repayment date;
(ii) any such agreement, arrangement, licence, permit or other instrument
being breached, terminated or adversely modified or affected, or any obligation
or liability arising thereunder;
(iii) any assets or interests of any member of the Company Group being or
falling to be disposed of or charged or any right arising under which any such
asset or interest could be required to be disposed of or charged, in each case,
otherwise than in the ordinary course of business;
(iv) the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business, property or assets
of any member of the Company Group or any such mortgage, charge or security
interest being enforced;
(v) the rights, liabilities, obligations or interest of any member of the
Company Group in, or the business of any member of the Company Group with, any
person, firm or body (or any arrangement or arrangements relating to any such
interest or business) being terminated, adversely modified or affected;
(vi) the value of any member of the Company Group or its financial or
trading position or prospects being prejudiced or adversely affected;
(vii) any member of the Company Group ceasing to be able to carry on
business under any name under which it currently does so; or
(viii) the creation of any liability, actual or contingent, by any member
of the Company Group;
2.12 AngloGold not having discovered on or after the date of the Transaction
Agreement (and, for purposes of this condition, any matter set forth in the
corresponding section of the Company Disclosure Schedule (or other section of
the Company Disclosure Schedule referring to Appendix I) shall be deemed to have
been previously discovered by AngloGold):
(i) any adverse financial, business or other information in relation to
circumstances existing prior to the date of the Transaction Agreement that has
not been disclosed in any document filed with the SEC to which access is
publicly available or publicly announced through the Regulatory News Service of
the LSE by any member of the Company Group prior to such date and that would
have a Company Material Adverse Effect;
(ii) that any member of the Company Group is subject to any liability
(contingent or otherwise) that has not been disclosed or reflected in the
documents filed by the Company with the GSE, UKLA or SEC prior to the date of
the Transaction Agreement and that would have a Company Material Adverse Effect;
(iii) that any financial, business or other information that has been
disclosed in any document filed with the SEC to which access is publicly
available or publicly announced through the Regulatory News Service of the LSE
by any member of the Company Group prior to the date of the Transaction
Agreement contains any misrepresentation of fact or omits to state a fact
necessary to make the information contained therein complete and not misleading,
and that would have a Company Material Adverse Effect;
(iv) that any member of the Company Group has failed to comply with any
and/or all applicable legislation or regulation, of any jurisdiction with regard
to the disposal, spillage, release, discharge, leak or emission of any waste of
hazardous substance or any substance likely to impair the environment or harm
human health or animal health or otherwise relating to environmental matters, or
that there has otherwise been any such disposal, spillage, release, discharge,
leak or emission by any such member (whether or not the same constituted a non-
compliance by any person with any such legislation or regulations, wherever the
same may have taken place) any of which disposal, spillage, release, discharge,
leak or emission would be likely to give rise to any liability (actual or
contingent) on the part of such member of the Company Group and that would have
a Company Material Adverse Effect; or
(v) that there is any liability (actual or contingent) of any member of
the Company Group to make good, repair, reinstate or clean up any property or
any controlled waters now or previously owned, occupied, operated or made use of
or controlled by such member of the Company Group, under any environmental
legislation, regulation, notice, circular or order of any government,
governmental, quasi-governmental, state or local government, supranational,
statutory or other regulatory body, agency, court, association or any other
person or body in any jurisdiction and that would have a Company Material
Adverse Effect;
2.13 since 31 December 2002 (and other than as disclosed in the accounts for
the year then ended or in any document filed with the SEC to which access is
publicly available or publicly announced through the Regu
