| Wed 20 Apr 2005, 17:45 | | ARM - Acquisition by the ARM Broad-Based Economic |
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ARM - Acquisition by the ARM Broad-Based Economic Empowerment Trust of shares in
ARM
AFRICAN RAINBOW MINERALS LIMITED
(Formerly Anglovaal Mining Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1933/004580/06)
Share code: ARI LSE Share code: AGM
ISIN: ZAE000054045
(`ARM`)
Acquisition by the ARM Broad-Based Economic Empowerment Trust of shares in ARM
1. Introduction
ARM shareholders are advised that an agreement (`acquisition agreement`) has
been entered into between the ARM Broad-Based Economic Empowerment Trust (`BBEE
Trust`), Harmony Gold Mining Company Limited and a wholly-owned subsidiary of
Harmony (collectively referred to as `Harmony`), in terms of which the BBEE
Trust has acquired approximately 14% of the issued share capital of ARM (`sale
shares`) from Harmony (`acquisition`).
2. Rationale for the acquisition
ARM is committed to the spirit and the objectives of the Mineral and Petroleum
Resources Development Act, 2002 (`MPRDA`) and the Broad-based Socio-economic
Empowerment Charter for the South African Mining Industry, dated 11 October 2002
(`Mining Charter`) and has been seeking ways to introduce additional broad-based
black economic empowerment groupings into ARM. The BBEE Trust has been
established for the benefit of Historically Disadvantaged South Africans
(`HDSA`s`) as defined in the Mining Charter.
The trustees of the BBEE Trust will hold the sale shares for the benefit of
HDSA`s, who are to be identified and selected by the trustees.
3. Background
During 2004 African Rainbow Minerals & Exploration Investments (Proprietary)
Limited (`ARMI`), Harmony and Anglovaal Mining Limited (`Avmin`) (as ARM was
then called) entered into a series of merger transactions with one another, to
merge certain of their interests into Avmin (`merger transactions`). One of the
main objects of the merger transactions was to establish Avmin as a black
controlled mineral resources company under the control of ARMI, which was, and
still is itself an HDSA.
After the merger transactions were duly implemented, Avmin`s name was changed
to African Rainbow Minerals Limited (`ARM`) with ARMI holding approximately 43%
and Harmony holding approximately 19% of ARM`s issued shares. As part of the
merger transactions Harmony and ARMI entered into a voting agreement on
16 February 2004 (`voting agreement`).
The main feature of the voting agreement was that Harmony transferred all of
the voting rights of the ARM shares held by it to ARMI for a limited period, to
give ARMI the degree of `control` required by the parties for the purposes of
the Mining Charter. Harmony retained the right to vote on any special
resolution, any ordinary resolution in terms of section 228 of the Companies
Act, 1973 (`Companies Act`), any resolution to approve a scheme of arrangement
in terms of section 311 of the Companies Act or any other resolution which, if
approved, would result in a disposal of Harmony`s ARM shares. The period of the
voting agreement was limited to a maximum of 3 years from when the merger
transactions were implemented in 2004, to allow ARM and Harmony enough time to
convert their `old order` mining rights into `new order` mining rights under the
MPRDA.
The result of the voting agreement was that ARMI owned and voted 43% of ARM`s
issued shares and had the voting rights, save as qualified above, of Harmony`s
19% holding in ARM, giving ARMI the right to vote, approximately 62% of ARM`s
total voting securities.
All the necessary regulatory approvals for the merger transactions, including
the approval of the Securities Regulation Panel (`SRP`), were obtained at the
time.
Since the voting agreement was entered into, Harmony has, with ARMI`s consent,
disposed of part of its holding of ARM shares, free of any further restrictions,
to transferees who are entirely unconnected with ARMI. However, the sale shares
were sold to the BBEE Trust subject to the voting restrictions contained in the
voting agreement.
Accordingly, following the acquisition, ARMI will still have voting rights
over approximately 57% of the issued share capital of ARM.
4. Terms of the acquisition
In terms of the acquisition agreement, the BBEE Trust acquired from Harmony 28
614 740 ARM shares, representing approximately 14% of the issued share capital
of ARM, at a price of R29 per ARM share, for an aggregate purchase consideration
of R829 827 460. The acquisition is unconditional and the sale shares have been
transferred to the BBEE Trust.
It is intended that HDSA`s will be introduced as beneficiaries of the BBEE
Trust as soon as practically possible.
5. SRP ruling
The SRP has ruled that the acquisition does not constitute an affected
transaction in terms of the SRP Code on Takeovers and Mergers and has waived any
requirement for a mandatory offer as a result of the acquisition. In terms of
the SRP ruling, the parties must report back to the SRP on or before 18 October
2005 on the progress with the allocation of the sale shares to the selected
beneficiaries.
Johannesburg
20 April 2005
Investment Bank and Corporate Advisor to the Transaction
Nedbank Capital
Attorneys to the Transaction
Deneys Reitz Attorneys
Lead Arranger and Underwriter
Nedbank Capital
Attorneys to ARM and ARMI
Bowman Gilfillan Attorneys
Sponsor to ARM
Deutsche Securities
Member of the Deutsche Bank Group
