| Mon 8 Nov 2004, 12:25 | | GOLD FIELDS - LETTER TO HARMONY SHAREHOLDERS |
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GOLD FIELDS LIMITED - GOLD FIELDS - LETTER TO HARMONY SHAREHOLDERS
Gold Fields Limited
Registration number: 1968/004880/06
ISIN: ZAE000018123 JSE Code: GFI
(`Gold Fields` or the `company`)
Letter to Harmony shareholders
PROTECT YOUR INVESTMENT
Vote against the Resolutions Proposed by the Harmony Board
Stop Harmony`s offer for Gold Fields
November 8, 2004
Dear Harmony Shareholder
We are writing to urge you to vote AGAINST the ordinary and special resolutions
proposed by the Board of Directors of Harmony Gold Mining Company Limited
(`Harmony`) at the general meeting of Harmony shareholders that will be held at
Harmony`s corporate office on Friday 12 November 2004 at 11h00 (South African
time).
If you have already voted for Harmony`s proposals, YOU SHOULD REVOKE YOUR VOTE
by completing, signing and returning the proxy form and vote AGAINST the
ordinary and special resolutions proposed by the Harmony Board of Directors.
Remember, your last dated proxy is the only one, which counts.
YOU SHOULD VOTE AGAINST
THE RESOLUTIONS PROPOSED BY HARMONY`S BOARD
On October 18, 2004, Harmony announced an unsolicited and hostile proposal to
merge with Gold Fields. Harmony is offering to acquire Gold Fields shares and
ADSs in return for 1.275 new Harmony shares and ADSs. Harmony cannot fulfil the
conditions of its hostile offer for Gold Fields without your approval of a share
capital increase. The Harmony Board is proposing that you approve:
a risky two-step offer to purchase all of the shares of Gold Fields in a
transaction where Harmony would first attempt to acquire up to 34.9% of Gold
Fields` shares and then, subject to numerous conditions, including receipt of
regulatory approvals and approval by competition authorities, attempt to acquire
all of the Gold Fields shares it does not already own; and
a capital increase that would dilute your investment in Harmony and give Harmony
the means to purchase Gold Fields.
YOU SHOULD REJECT THESE RESOLUTIONS BECAUSE HARMONY`S OFFER TO ACQUIRE GOLD
FIELDS PRESENTS HIGH RISKS AND FEW REWARDS FOR HARMONY SHAREHOLDERS
You should vote AGAINST the ordinary and special resolutions being proposed by
Harmony because:
THE TRANSACTION IS VALUE DESTRUCTIVE FOR HARMONY SHAREHOLDERS
We believe the structure of the combined company as envisaged by Harmony will
destroy value for both Harmony and Gold Fields shareholders. Since the
announcement, Harmony shareholders have already lost R3.7bn of value through the
decline in market capitalisation from market close on 15th October 2004 to 1st
November 2004. This loss in value already discounts the announced synergies.
HARMONY`S TWO STEP OFFER STRUCTURE IS VERY RISKY - THE SUBSEQUENT OFFER COULD
FAIL
Harmony`s strategy to acquire Gold Fields is based on a two-step offer. First,
Harmony intends, through its `early settlement offer` to acquire up to 34.9% of
Gold Fields. There is no `minimum condition` on Harmony`s early settlement
offer. This means that regardless of the number of shares tendered in the early
settlement offer, Harmony will have to purchase all of those shares up to 34.9%
of Gold Fields. If only 10% of the Gold Fields shares are tendered, Harmony
will be left holding a minority stake in Gold Fields. Such a complex ownership
structure will not give Harmony the ability to effectively extract synergies or
have direct access to Gold Fields` cash flows.
Harmony has undertaken to commence a `subsequent offer` for all remaining shares
in Gold Fields following the early settlement offer. The subsequent offer is
subject to conditions including, a minimum condition of 50%, the approval of
competition authorities and other unspecified regulatory approvals. South
African or other regulatory authorities may decide to block the transaction
leaving Harmony with a minority stake in Gold Fields, at the expense of dilution
to its shareholders.Squared This is a waste of Harmony`s corporate assets by
your Board.
What will the Harmony Board do if the subsequent offer fails? Why has this
point not been addressed in the otherwise detailed circular to Harmony
shareholders?
The Harmony Board is undertaking a very risky acquisition strategy at your
expense.
HARMONY`S TWO STEP OFFER IS VERY RISKY - THE SUBSEQUENT OFFER COULD FAIL TO
ACHIEVE 90% OWNERSHIP
The greatest risk to Harmony shareholders occurs if Harmony fails to acquire in
excess of 90% of Gold Fields: a likely outcome given the coercive offer
structure and the negative reaction of many Gold Fields shareholders to the
offer.
Less than 90% of Gold Fields will mean that Harmony:
- Cannot squeeze out disgruntled Minority Shareholders
- Does not get direct access to the cash flows of Gold Fields
- Will find it difficult to extract value from the investment in Gold Fields
HARMONY`S TWO STEP OFFER IS VERY RISKY - IT IS THE SUBJECT OF LEGAL CHALLENGE
AND MAY BE UNLAWFUL
- The Competition Tribunal of South Africa may prohibit the implementation of
the offer because it was not properly notified.
- The High Court may stop the offer because it is not in compliance with the
South African Companies Act.
- The High Court may find Harmony in breach of criminal provisions in the
Companies Act.
- The Securities Registration Panel may rule that the offer fails to comply with
the Securities Regulation code.
IF HARMONY`S OFFER FOR GOLD FIELDS SUCCEEDS, HARMONY WILL BE INFLUENCED BY
NORILSK NICKEL- NORILSK HAS NOT REVEALED ITS FUTURE PLANS FOR HARMONY
If the bid succeeds, Harmony shareholders should be aware that a large
shareholder with no explicit strategy for the new entity may have significant
influence over a merged Harmony and Gold Fields. Depending on the outcome,
Norilsk Nickel could own between 13% - 20% (based on 50% - 100% acceptance) of
the new entity after the completion of the offer.
THE HARMONY BOARD ARE HIGHLY UNLIKELY TO CREATE A NEW SOUTH AFRICAN CHAMPION
THROUGH THE PROPOSED ACQUISITION OF GOLD FIELDS.
It is rare indeed that a hostile takeover bid has combined such value
destructive potential with such little merit. The Gold Fields` Board will
continue to fight Harmony`s offer, which is coercive and which will put the fate
of these two South African companies largely in the hands of opportunistic
arbitrageurs with no long term investment intentions.
The Harmony Board needs 75% of the votes at the shareholders meeting on 12
November to approve the special resolutions it has proposed, so your vote is
very important, no matter how many or how few shares you hold. To protect your
investment you should vote AGAINST the special resolution to increase Harmony`s
Authorized share capital at the Extraordinary General Meeting.
Yours sincerely,
Ian Cockerill
Chief Executive Officer
1 As per Harmony`s circular dated October 20, 2004.
2 Alternatively, competition authorities could condition their approval on
Harmony`s disposal of certain assets. Harmony would then be forced to sell
assets, potentially at very low valuations, in order to close the Gold Fields
acquisition, which would be highly detrimental to the value of your investment.
If you have any questions or need assistance in voting your shares, please call:
FROM SOUTH AFRICA,
Call Computershare Investor Services 2004 (Proprietary) Limited
Toll Free at: 0800 202 361
OUTSIDE OF SOUTH AFRICA,
Call Innisfree M&A Incorporated:
From Countries in the European Union
Call Toll Free at: 00-800-7710-9971
From the U.S. and Canada
Call Toll Free at: 1-877-687-1871
IF YOU ARE OUTSIDE THE TOLL-FREE AREAS:
Shareholders Call Collect (reverse charges): + 1 646-822-7436
Banks and Brokers Call Collect (reverse charges): +1 212-750-5833
In the United States, Gold Fields has filed a Solicitation/Recommendation
Statement with the US Securities and Exchange Commission (the `SEC`) on Schedule
14D-9 on November 3, 2004 and holders of the Ordinary Shares and American
Depositary Shares are advised to read it as it contains important information.
Copies of the Schedule 14D-9 and other related documents filed by Gold Fields
will be available free of charge on the SEC`s website at http://www.sec.gov.
Any documents filed by Harmony Gold Mining Company Limited, including its
registration statement on Form F-4 (which includes a preliminary prospectus), as
amended or supplemented from time to time, and related exchange offer materials
as well as its Tender Offer Statement on Schedule TO, will also be available
free of charge on the SEC`s website.
Joint Financial Advisors Sponsor to Gold Fields
to Gold Fields JPMorgan
Goldman Sachs
International
JPMorgan
Corporate law advisors Legal Advisors to Gold Fields
and consultants to Gold Edward Nathan & Friedland (Pty) Limited
Fields Linklaters
Edward Nathan & Friedland Skadden, Arps, Slate, Meagher & Flom (UK)
(Pty) Limited LLP
Corporate Law Advisors
and Consultants
(Registration number
1999/026464/21)
Date: 08/11/2004 12:14:07 PM
Produced by the JSE SENS Department
