| Wed 3 Sep 2003, 12:21 | | DETAILED CAUTIONARY ANNOUNCEMENT |
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ZENITH CONCESSIONS LIMITED - DETAILED CAUTIONARY ANNOUNCEMENT
ZENITH CONCESSIONS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1994/009012/06)
Share code: ZNT
ISIN: ZAE000009064
("Zenith" or "the company")
DETAILED CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcement dated 4 August 2003 and on account of the
unusual trading activity in Zenith"s securities on 2 September 2003, Radagast
Capital is authorised to announce that the company has, subject to the
fulfilment of certain conditions precedent, entered into an agreement with the
shareholders of Jigmining (Proprietary) Limited ("Jigmining") ("the vendors"),
in terms of which it will acquire the entire authorised and issued share capital
of Jigmining ("the acquisition"). The consideration for the acquisition is R9
622 075 and will be settled by the issue of 481 103 768 shares in the company at
an issue price of 2 cents per share.
The agreement between Zenith and the vendors is subject, inter alia, to the
suspensive conditions set out in paragraph 7 below and implementation of the
acquisition will entail a transfer from the Venture Capital Market of the JSE
Securities Exchange South Africa ("JSE") to the Alternative Exchange ("AltX"),
which is expected to start trading on or about 27 October 2003. Shareholders
are, however, advised that the transfer of the company to AltX is in the
discretion of the JSE.
2. Rationale for the acquisition
Zenith listed on the Venture Capital Market of the JSE in 1995. After a
tumultuous history, including the suspension of the company from the JSE for a
lengthy period, the company was recapitalised, acquired new assets and was re-
instated on the JSE lists with effect from 14 October 2002. However, adverse
market conditions and the strengthening Rand contributed to continued cash flow
and profitability problems for the company with the result that the controlling
shareholders considered it prudent to negotiate a change in control.
Accordingly, it was announced on 4 August 2003 that corporate restructuring
specialists, Gandalf Trust, had acquired control of the company, reconstituted
the board of directors, restructured the balance sheet and embarked on fresh
negotiations on behalf of the company.
3. New nature of business of Zenith
Subject to the fulfilment of the conditions precedent, Zenith will operate as a
mining holding company with its subsidiary, Jigmining, continuing to provide
economically viable solutions for the recovery of commodities from discard dumps
through the manufacturing and leasing of its double pulse action ("DPA") jigs.
The DPA jig concept was designed and patented by Mr Cicero Combrink of Jigmining
and provides mining companies with the ability to economically beneficiate
discarded mined ore. The DPA jig has been successfully tested on coal, diamond
and ferrochrome discards. There are currently 8 DPA jig units in operation and
Jigmining has received orders for another 6 units. The prime market for the
establishment of DPA jigs is currently the local coal mining industry, where the
DPA jig offers a unique opportunity for the beneficiation of discard coal to
power station quality saleable coal. Opportunities exist for the establishment
of a number of processing plants for the recovery of dump material with
sufficient discard material being available to provide a sustained and growing
revenue stream for at least the next 10 years.
The operating model is based on the negotiation of contracts with mining
companies for the processing of discarded or run of mine material on a toll
basis and an operating company is then appointed to manage the contract. The
operating company employs suitable personnel from the area to operate the plant,
but the management of the operating company remains the responsibility of
Jigmining. Revenue is generated through the leasing of DPA jigs to these
operating companies, which ensures continuous revenue streams over longer
periods and has the advantage of providing further protection for the unique DPA
patent.
4. Restructuring of the share capital of the company
In order to give effect to the acquisition, shareholders will be requested to
approve the restructuring of the company"s share capital on the following terms:
* the consolidation of the authorised and issued share capital on a 1:2 basis,
resulting in an authorised capital of 200 000 000 ordinary shares with a par
value of 2 cents and an issued capital of 120 275 942 shares (post the
cancellation of the 25 000 000 shares referred to in the announcement dated 4
August 2003) with a par value of 2 cents;
* an increase in the authorised share capital to 800 000 000 ordinary shares
with a par value of 2 cents; and
* an increase in the issued share capital to 601 379 710 shares with a par value
of 2 cents each, reflecting the issue of 481 103 768 shares to the vendors as
payment for the acquisition.
5. Financial effects of the acquisition
The financial effects of the acquisition, which will include a profit forecast,
will be announced simultaneously with the conclusion of the reciprocal due
diligence procedures and the securing of the funding agreement referred to in
paragraph 7 below.
6. Change of control and waiver of mandatory offer
Approval and implementation of the transaction will result in a change of
control of Zenith, which would, in the normal course, give rise to a mandatory
offer to the minority shareholders of the company in terms of the Securities
Regulation Code on Takeovers and Mergers ("the Code"). Application will be made
to the Securities Regulation Panel ("SRP") for dispensation to request a waiver
of this obligation by the independent minority shareholders in terms of Rule 8.7
of the Code.
7. Conditions precedent
The acquisition is subject to the normal conditions precedent applicable to a
transaction of this nature, which conditions are indivisible and include, inter
alia, the following:
* approval by the requisite regulatory authorities, including the JSE and the
SRP to the extent required;
* the completion of reciprocal due diligence investigations by both the company
and the vendors by no later than Friday, 12 September 2003;
the securing of a R15 million funding agreement to finance the future expansion
of the acquisition; and
* the approval of the requisite majority of Zenith shareholders at a general
meeting convened for the purpose, of resolutions relating, inter alia, to:
* the specific repurchase and cancellation of shares; the consolidation of
the company"s share capital, an increase in the authorised and issued share
capital and the acquisition and the issue of shares to the vendors.
9. Further cautionary announcement
As the conclusion of the acquisition may have a material effect on the price at
which the company"s securities trade on the JSE, shareholders are advised to
continue exercising caution when dealing in the company"s securities until a
further announcement is made.
Pretoria
3 September 2003
Corporate advisor Sponsor
Radagast Capital (Proprietary) Limited LPC Manhattan Sponsors (Pty) Ltd
Date: 03/09/2003 11:59:37 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
