| Tue 19 Oct 2004, 8:57 | | Initial Response By Board Of Directors |
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Gold Fields - Initial Response By Board Of Directors Of Gold Fields To Offer
By Harmony Gold Mining Company (Pty) Ltd For Gold Fields
Gold Fields Limited
Registration number: 1968/004880/06
ISIN: ZAE000018123 JSE Code: GFI
(`Gold Fields` or the `company`)
INITIAL RESPONSE BY BOARD OF DIRECTORS OF GOLD FIELDS TO OFFER BY HARMONY GOLD
MINING COMPANY LIMITED FOR GOLD FIELDS
Introduction
Shareholders of Gold Fields (`shareholders`) are referred to the announcement
published yesterday, Monday, 18 October 2004, by Harmony Gold Mining Company
Limited (`Harmony`) in which it announced the terms of a proposed merger
between the two companies, subject to the fulfilment of certain conditions
precedent (the `Announcement`). Through making the Announcement, Harmony has
stated that it has irrevocably committed to offer to acquire the entire issued
share capital of Gold Fields in terms of Section 440 of the Companies Act,
1973 (Act 61 of 1973), as amended, in return for the issue of new ordinary
shares in Harmony (`Harmony consideration shares`). In order to implement the
offer, Harmony is extending two consecutive offers, the early settlement offer
and the subsequent offer (collectively, the `Offer`) to shareholders to
acquire all of their ordinary shares in Gold Fields (`Gold Fields shares`).
Terms of Offer
In terms of:
the early settlement offer, Harmony has made an initial offer to acquire up to
34.9% of the entire issued share capital of Gold Fields subject to:
- the passing and, where applicable, registration, of the ordinary and
special resolutions required, inter alia, to increase Harmony`s share
capital, to enable Harmony to implement the Offer and to issue the
Harmony consideration shares (the `Harmony resolutions`); and
- the registration statement with respect to the Harmony consideration
shares to be issued in the United States in pursuance of the Offer having
been declared effective by the Securities and Exchange Commission
(`SEC`);
- the subsequent offer, being an immediate follow-on offer on the same
terms as the early settlement offer, Harmony has made an offer for the
balance of the entire issued share capital of Gold Fields not already
acquired by Harmony under the early settlement offer subject to:
- the passing and, where applicable, registration of the Harmony
resolutions;
- Harmony receiving valid acceptances of the subsequent offer from
shareholders in respect of in excess of 50% of the entire issued share
capital of Gold Fields (including those Gold Fields shares acquired by
Harmony under the early settlement offer and those Gold Fields shares in
respect of which Norilsk Nickel has irrevocably undertaken to accept the
subsequent offer);
- the proposed transaction with IAMGold Corporation Inc (`IAMGold`
transaction) not being implemented for whatever reason including, inter
alia, shareholders failing to approve the proposed IAMGold transaction at
the general meeting convened for such purpose;
- the proposed merger being approved by the South African Competition
Authorities under the Competition Act, 1998 (Act 89 of 1998), as amended;
- the registration statement with respect to the Harmony consideration
shares in the US Offer having been declared effective by the SEC; and
- the approval of all regulatory authorities whose approval is required for
the implementation of the proposed merger.
The consideration payable by Harmony in terms of the Offer is:
for each Gold Fields share 1.275 new Harmony shares,
for each Gold Fields ADS 1.275 new Harmony ADSs,
(the `proposed share exchange ratio`).
Shareholders are advised that the Board of Directors of Gold Fields will
consider the advice to be received from its independent financial advisors,
Goldman Sachs International and JPMorgan, and is currently forming its own
view and recommendation regarding the Offer, the substance of which will be
made known to shareholders in due course. The preliminary view of the Board of
Directors however is that the Offer is not in line with Gold Fields` stated
strategy or in the interest of Gold Fields` shareholders. In coming to these
conclusions the following considerations, amongst others, have been taken into
account:
Harmony has stated that it`s proposal will be subject to Gold Fields not
proceeding with the proposed merger of its international assets with IAMGold
Corporation Inc.. The Board of Gold Fields continues to firmly believe that
the IAMGold transaction is in the best interests of shareholders as it
provides an international platform for aggressive growth with full access to
international debt and capital markets. It unlocks the intrinsic value of
Gold Fields` international assets and places control of a global growth
vehicle firmly in South African hands. The see through value of Gold Fields`
International assets has increased by more than USD0.5bn from announcement of
the IAMGold transaction till Friday 15th October close.
- The implied premium in the proposal, based on the closing price of Gold
Fields` ADSs in New York on Friday 15 October was 7%. The implied
premium based on current trading levels is negligible. Based on the
Board of Gold Fields` perception of relative fundamental value the
proposed exchange ratio vastly overvalues Harmony`s asset contribution to
any potential combination. Over the past year the cost per Kilogram
performance of Harmony has significantly lagged that of Gold Fields.
The Board of Gold Fields therefore believes that the proposal significantly
undervalues Gold Fields` high quality portfolio of assets and completely
disregards the significant value that will be created from the IAMGold
transaction.
The Board of Gold Fields urges shareholders to continue to support Gold
Fields` stated strategy of pursuing the IAMGold transaction.
Further Announcements
The views of the company`s independent financial advisors and of the Board of
Directors will be made known to shareholders shortly. Shareholders will be
advised accordingly, inter alia, by means of SENS and press announcements.
Johannesburg
19 October 2004
Joint Financial Advisors to Gold Fields Sponsor to Gold Fields
Goldman Sachs International JPMorgan
JPMorgan
Corporate law advisors and consultants to
Gold Fields
Edward Nathan & Friedland (Pty) Limited
Corporate Law Advisors and Consultants
(Registration number 1999/026464/21)
