| Thu 10 Nov 2005, 17:39 | | Assore Limited - The Proposed Introduction Of 15% |
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Assore Limited - The Proposed Introduction Of 15% Direct Black Share Ownership
In Assore
Assore Limited
(Incorporated in the Republic of South Africa)
(Registration number 1950/037394/06)
Share code: ASR
ISIN: ZAE000017117
("Assore")
Shanduka Resources (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/017835/07)
("Shanduka Resources")
THE PROPOSED INTRODUCTION OF 15% DIRECT BLACK SHARE OWNERSHIP IN ASSORE
1.INTRODUCTION
Assore is pleased to announce that agreements have been concluded which,
subject to the fulfilment of the conditions precedent set out in paragraph 7
below, will facilitate the acquisition of 15% of the issued ordinary share
capital of Assore ("Assore shares") by two black economic empowerment ("BEE")
entities (collectively "Assore"s BEE partners"), namely:
* Shanduka Resources, a subsidiary of Shanduka Group (Proprietary) Limited
("Shanduka"), which will purchase an 11.76% equity interest in Assore ("the
Shanduka transaction"); and
* a community trust ("the Community Trust"), which has been formed to benefit
community groupings and which will purchase a 3.26% equity interest in Assore
("the Community transaction"),(collectively "the BEE transaction").
Based on the closing share price for Assore on the JSE Limited ("the JSE") on
Wednesday, 9 November 2005 of R127 per share, the total value of the Assore
shares included in the BEE transaction is approximately R534 million.
2.RATIONALE
Assore is committed to broad-based BEE in South Africa and is of the opinion
that meaningful participation at an equity level by historically disadvantaged
South Africans ("HDSAs") is a business imperative for all South African
companies, particularly those in the mining sector, and is essential to
sustain South Africa"s economic and democratic structures.
In May 2004, the Mineral and Petroleum Resources Development Act, 2002 (No. 28
of 2002), came into effect, placing all mineral rights under the curatorship
of the Government of South Africa. This Act requires, inter alia, that "old
order" mineral rights be converted to "new order rights" based on performance
as measured against the BEE scorecard set out in the Mining Charter ("the
scorecard").
The criteria used in the scorecard include a BEE objective which provides for:
* the substantial and meaningful expansion of opportunities for HDSAs to enter
the mining industry; and
* the promotion of employment and the advancement of social and economic
welfare for HDSAs in the mining community.
The BEE transaction addresses one element of the scorecard criteria, being the
direct ownership of Assore shares by HDSAs, and underscores Assore"s
commitment to BEE in South Africa by broadening economic participation in the
mining industry. Assore will continue to actively address the other aspects of
the scorecard with the assistance of Assore"s BEE partners on an ongoing
basis.
3. ASSORE"S BEE PARTNERS
3.1 Shanduka Resources
Shanduka Resources is a subsidiary of Shanduka, a black-owned and managed
investment holding company founded by Cyril Ramaphosa, James Motlatsi and
several other black professionals. Shanduka encompasses its own element of
broad-based BEE through community development trusts that have equity
ownership in Shanduka. These trusts are part of the Shanduka Foundation which
was launched in 2004 as the vehicle through which Shanduka channels its social
and community investment initiatives. Shanduka has committed to spend in excess
of R100 million in upliftment programmes over ten years.
The Shanduka Foundation is committed to supporting initiatives aimed at:
* developing women led small businesses and new entrepreneurs;
* providing scholarships for deserving, previously disadvantaged students at
accredited tertiary institutions enabling them to continue their studies in
business related courses; and
* assisting underprivileged schools to acquire basic facilities through the
Adopt-a-School programme.
Shanduka Resources has a long-term strategy to develop a diversified resources
house with operational capabilities and has investments in the coal, diamond,
paper and gold industries.
Shanduka Resources will provide leadership for Assore"s BEE partners and
strategic support to Assore in achieving its BEE objectives.
3.2 Community Trust
The Community Trust has been established for the benefit of community
groupings in the areas in which the mines and beneficiation
plants are located. Assore will initiate a process through which it will
identify and negotiate with certain community groupings for their
participation in the Community Trust.
4. MECHANICS OF THE BEE TRANSACTION
The BEE transaction will be executed in two separate transactions that will
transfer a total of 15% of Assore"s shares to Assore"s BEE partners.
4.1 The Shanduka transaction
The Shanduka transaction will result in Shanduka Resources acquiring 3 292 890
Assore shares, or approximately 11.76% of Assore"s issued share capital,
through a wholly-owned, special purpose vehicle ("Shanduka BEECo"), which has
been created by Shanduka Resources for the sole purpose of acquiring the
11.76% equity interest in Assore.
Shanduka BEECo will acquire the 11.76% equity interest in Assore as follows:
* 5.70% of Assore"s issued share capital will be acquired from Old Mutual Life
Assurance Company (South Africa) Limited ("Old Mutual") in exchange for a
combination of Shanduka Resources equity and cash; and
* Assore will issue and Shanduka BEECo will subscribe for a 6.06% interest in
Assore"s issued share capital at a price of R85 per Assore share.
4.2 The Community transaction
The Community transaction will result in the Community Trust acquiring 913 710
Assore shares, or approximately 3.26% of Assore"s issued share capital,
through a special purpose vehicle ("Community BEECo"), which has been created
for the sole purpose of acquiring the 3.26% equity interest in Assore at an
average price of R85 per Assore share.
4.3 Assore facilitation
Standard Bank will provide preference share funding in both the Shanduka
transaction and the Community transaction in order to allow Shanduka BEECo and
Community BEECo to acquire the Assore shares.
The Standard Bank preference share funding will be facilitated by Assore in
that Assore has undertaken to repurchase 11.24% of Assore"s shares at a price
equal to the outstanding balance on the two preference share facilities
provided by Standard Bank, including all capital and outstanding preference
share dividends owing and unpaid ("the conditional share repurchase"), should
a default occur on the facilities.
Assore has provided a further R25 million vendor financing to the Community
Trust to purchase the 3.26% equity interest in Assore.
5. THE RELATIONSHIP AGREEMENTS
Assore has concluded a relationship agreement with Shanduka Resources and
Shanduka BEECo to regulate the relationships between the parties and, insofar
as is possible, to ensure the continued compliance by Shanduka Resources and
Shanduka BEECo with the direct ownership requirements of the Mining Charter.
Assore has entered into a similar relationship agreement with the Community
Trust and Community BEECo.
6. RESULTANT STRUCTURE
Subsequent to the conditions precedent set out in paragraph 7 below being
fulfilled, the resultant shareholding of Assore will be as follows:
See press release for diagram
7.CONDITIONS PRECEDENT
The BEE transaction will be implemented on fulfilment of various conditions
precedent, including, inter alia:
* the following resolutions being approved by Assore"s shareholders at a
general meeting to be held to approve the BEE transaction ("the general
meeting"):
- the specific issue of 6.06% of Assore"s shares to Shanduka BEECo;
- the specific repurchase and cancellation of 7.91% of Assore"s shares held by
Standard Bank in terms of section 85 of the Companies Act;
- the specific repurchase of 1.42% of Assore"s shares held by Standard Bank by
a wholly-owned subsidiary of Assore, namely Community BEECo, in terms of
section 89 of the Companies Act;
- the disposal of 100% of the ordinary shares in Community BEECo to the
Community Trust;
- the specific issue of 1.85% of Assore"s shares to Community BEECo; and
- the conditional share repurchase referred to in paragraph 4.3 above;
* the registration of the special resolution by the Registrar of Companies;
and
* the approval of the documentation to be sent to shareholders by the JSE.
8. IMPORTANT DATES AND TIMES
The expected dates and times in relation to the BEE transaction are set out
below.
2005
Expected date of posting of circular
to Assore shareholders on Thursday, 8 December
2006
Last day to lodge forms of proxy for
the general meeting by 10:00 on Thursday, 26 January
General meeting of Assore shareholders
to be held at 10:00 at
Assore House, 15 Fricker Road,
Illovo Boulevard, Johannesburg on Monday, 30 January
Announcement of the results of the
general meeting released on SENS on Monday, 30 January
Announcement of the results of the general
meeting published in the press on Tuesday, 31 January
Special resolution lodged with the
Registrar of Companies on or about Wednesday, 1 February
Notes:
1. The abovementioned times and dates are South African times and dates and
are subject to change. Any such change will be released on SENS and published
in the press.
2. If the general meeting is adjourned or postponed, forms of proxy must be
received by no later than 48 hours prior to the time of the adjourned or
postponed general meeting, provided that, for the purpose of calculating the
latest time by which forms of proxy must be received, Saturdays, Sundays and
South African public holidays will be excluded.
9. ASSORE BOARD OPINION AND RECOMMENDATION
The board of directors of Assore ("the Assore Board") is of the opinion that
the terms and conditions of the BEE transaction are in the best interests of
Assore"s shareholders and unanimously support the transactions. Accordingly,
the Assore Board recommends that Assore"s shareholders vote in favour of all
the resolutions proposed at the general meeting.
In respect of their holdings in Assore"s shares under their control, the board
members of Assore have undertaken to vote in favour of all the resolutions to
be proposed at the general meeting.
10. FAIR AND REASONABLE OPINION
In terms of the JSE Listings Requirements, the conditional share repurchase by
Assore referred to in paragraph 4.3 above requires a fair and reasonable
opinion from an independent adviser.
KPMG Services (Proprietary) Limited ("KPMG") has been appointed by the Assore
Board to provide advice to Assore shareholders as to the fairness and
reasonableness of the conditional share repurchase in the context of the
overall BEE transaction and its opinion will be included in the circular to be
sent to Assore shareholders as set out in paragraph 11 below.
11. GENERAL MEETING AND CIRCULAR
The general meeting to approve the resolutions relating to the BEE transaction
will be held at 10:00 at Assore House, 15 Fricker Road, Illovo Boulevard,
Johannesburg, on Monday, 30 January 2006.
A circular providing additional information on the BEE transaction and
containing, inter alia, a notice of general meeting and a form of proxy, will
be posted to Assore shareholders on or about Thursday, 8 December 2005.
Illovo
Johannesburg
10 November 2005
Investment bank and sponsor to Assore
Standard Bank
Transaction sponsor
Ernst & Young
Attorneys to Assore
Webber Wentzel Bowens
Independent professional expert to Assore
KPMG
Legal adviser to Shanduka Resources
Prinsloo, Tindle & Andropoulos Inc.
Lead funder to the BEE transaction
Standard Bank
Date: 10/11/2005 05:39:36 PM Produced by the JSE SENS Department
