| Mon 2 Oct 2006, 9:12 | | Anglogold Ashanti |
|
ANG
ANANO
Anglogold Ashanti, Num, Solidarity, UASA and Izingwe Holdings announce Employee
Share Ownership Plan and BEE Transaction and cautionary announcement
AngloGold Ashanti Limited
Incorporated in the Republic of South Africa
Registration Number: 1944/017354/06)
ISIN Number:ZAE000043485
JSE Share Code: ANG
("AngloGold Ashanti/Company")
AGA18.06
2 October 2006
ANGLOGOLD ASHANTI, NUM, SOLIDARITY, UASA and IZINGWE HOLDINGS ANNOUNCE EMPLOYEE
SHARE OWNERSHIP PLAN AND BLACK ECONOMIC EMPOWERMENT TRANSACTION AND CAUTIONARY
ANNOUNCEMENT
AngloGold Ashanti Limited (AngloGold Ashanti or the company), the National Union
of Mineworkers (NUM), Solidarity, UASA - The Union (UASA) and Izingwe Holdings
(Proprietary) Limited (Izingwe Holdings) are pleased to announce the imminent
finalisation of an empowerment transaction with two related components. This
transaction is still subject to, among other things, approval by AngloGold
Ashanti shareholders.
With regard to the first component, the three unions and the company have agreed
the architecture of an employee share ownership plan (ESOP), to be known as the
Bokamoso ESOP - "harvesting for the future". All employees at AngloGold
Ashanti"s South African operations, including the corporate office, who are not
participants in any current share incentive scheme, will qualify as
beneficiaries of the Bokamoso ESOP. This will involve just over 30,000
employees. It is envisaged that approximately 91.5% of eligible employees will
be historically disadvantaged South Africans in terms of the Mining Charter.
In terms of the Bokamoso ESOP, a trust will be established to acquire and
administer the shares to be issued to the trust on behalf of the eligible
employees (Bokamoso Trust). The company will issue approximately 3,840,000
shares to the Bokamoso Trust, representing approximately 1.4% of AngloGold
Ashanti"s issued share capital.
The shares issued to the Bokamoso Trust will be a combination of ordinary shares
(free shares) and a new class of shares (loan shares). The shares will be
allocated to eligible employees such that each eligible employee will be
allocated 30 free shares and 90 loan shares at a 10% discount to market value at
the commencement of the scheme. Both classes of shares will effectively have
full voting and dividend rights.
The shares issued to the Bokamoso Trust will vest annually in five equal
tranches in each eligible employee, with the first tranche vesting on the third
anniversary of the Bokamoso ESOP"s launch, and the last on the seventh
anniversary (vesting dates).
On each vesting date, eligible employees will receive the full benefit of the
free shares that will have vested. As regards the loan shares, the benefit due
to eligible employees will be calculated on the basis of the difference between
the exercise price and the share price on the relevant vesting date, taking into
account an escalation factor accruing at 7% per annum, and reduced by any
applicable dividend flow described below.
The Bokamoso Trust will be managed by a nine-person board of trustees whose
functions will include managing the Bokamoso ESOP in the interests of eligible
employees and exercising the rights attaching to the shares issued to the trust
on behalf of the eligible employees.
Further details of the Bokamoso ESOP are set out in the accompanying "Note to
Editors".
The unions and company have been engaged in consultation on this matter for the
past several months. As is noted in the collective agreement to be signed
today, it has been a process characterised by consensus-seeking between the
unions and management. The parties were committed from the outset to delivering
the best share ownership solution for AngloGold Ashanti employees, the company
and its shareholders.
The joint responsibility for the design and implementation of the scheme between
AngloGold Ashanti and the unions ensures that the Bokamoso ESOP addresses a
number of potentially conflicting interests by promoting broad share ownership
and long-term financial planning as well as the opportunity for shorter term
cash returns and also by ensuring that trustees will have full voting rights on
the shares in the ESOP.
With regard to the second component, in a transaction designed to further
enhance AngloGold Ashanti"s empowerment profile, it has been agreed that Izingwe
Holdings will acquire an equity interest in the company. This transaction will
be structured in a similar manner to the loan shares issued in terms of the
Bokamoso ESOP. Izingwe Holdings is a BEE investment company chaired by Sipho
Pityana.
Izingwe Holdings will acquire approximately 1,400,000 AngloGold Ashanti loan
shares at par value, which represents approximately 0.5% of the company"s issued
share capital. These shares will have full voting and dividend rights.
It is proposed that Izingwe Holdings Chairman, Sipho Pityana, will be invited to
join the board of directors of AngloGold Ashanti.
Again, further details of this transaction are set out in the "Note to Editors".
The free share element to the Bokamoso ESOP was introduced by agreement between
the company and the unions to give greater assurance of value to employees. In
terms of this agreement, approximately half the originally envisaged loan shares
were converted into free shares on the basis of roughly the same cost to
company. The original scheme therefore envisaged approximately 5,760,000 loan
shares which, combined with Izingwe"s 1,400,000 shares, is equivalent to 2.6% of
the company"s equity. Basing the calculation on units of production, and with
South African production at 43% of the company"s total ounces in 2005, the 2.6%
is the equivalent of just over 6% of the production attributable to the
company"s South African operations. .
A key feature of this transaction is the intended conclusion of a co-operation
agreement between Izingwe Holdings and the Bokamoso Trust following a series of
consultations between Izingwe Holdings and the three unions. This can only be
finalised after the establishment of the Bokamoso ESOP Trust. However, it is
envisaged that the agreement could include commitments on shareholder co-
operation, with Izingwe Holdings acting as a channel of communication between
the Bokamoso Trust and the company"s governance structures on transformation and
other operational issues. By agreement, Izingwe Holdings may provide any other
services to the Bakamoso Trust.
For AngloGold Ashanti, these empowerment transactions follow those concluded
earlier between the company and ARMgold involving various of the company"s Vaal
River and Free State assets.
Bobby Godsell, AngloGold Ashanti"s CEO said, "I am delighted to be giving effect
to the undertakings we made at the time we gained our mineral rights conversion,
and to be doing this in a way that aligns future rewards to our employees with
the share performance of our company. The combination of loan shares and free
shares in this ESOP will ensure future returns to our South African workforce,
leaving benefits not dependent solely on the dollar gold price or the rand
exchange rate."
NUM general Secretary Frans Baleni said: "The NUM believes that there are better
ways of turning workers into assets than the old traditional view of looking at
them as a cost factor .Thus we lay praise to the breakthrough between organised
labour and Anglo-Gold Ashanti on the conclusion of the ESOP which should see 6%
of South African assets committed to the development of this initiative. In line
with the mining charter expectations, our members laud the development of the
Employee Share Ownership Programme (ESOP). We also wish to acknowledge the
stakeholder involvement and participatory approach that underpinned the process
coupled with frank openness to an extent that parties crafted the Trust Deeds
word by word.
Izingwe chairman Sipho Pityana said "We share the enthusiasm of AngloGold
Ashanti and the unions for the structure of the deal and the constructive
approach taken by all parties in the process to its conclusion. We believe this
transaction will create meaningful economic value for everyone. We are also
proud to be associated with AngloGold Ashanti. For us, this transaction cements
a new strategic partnership with a company that has been and will always be one
of the most important companies in South Africa."
Solidarity"s general secretary, Flip Buys, said that the transaction created a
blueprint for similar transactions in future at other companies. "AngloGold
Ashanti has taken the lead by investing in its own future and that of its
workers. The future will show that this was the right thing to do. Solidarity
welcomes the job security that will result from the deal," Buys said.
It is hoped that this transaction will be implemented before the end of the
year, though there remain various regulatory and legal matters to be finalised,
including the approval of the transaction by the company"s shareholders. A
circular setting out the details of the transaction will be posted to
shareholders in due course.
Ends.
Queries
South Africa Tel: Mobile:
Alan Fine +27 (0) 11 637 6383 / +27 (0) 83 250 0757
E-mail: afine@AngloGoldAshanti.com
Cheryl Landman +27 (0) 11 6376317 / +27 (0) 82 774 5097
E-mail: cjlandman@AngloGoldAshanti.com
Elbie Lamprecht +27 (0) 11 784 3886 / +27 (0) 82 370 7837
E-mail: elbie@izingwe.com
Jeff Magida +27 (0) 11 377 2065 / +27 (0) 72 665 5618
E-mail: jmagida@num.org.za
Reint Dykema +27 (0) 82 898 0997
E-mail: reint@solidariteit.co.za
Disclaimer
Except for historical information contained herein, there are matters discussed
in this news release that are forward-looking statements. Such statements are
only predictions and actual events or results may differ materially. For
discussion of important factors including, but not limited to development of the
Company"s business the economic outlook in the gold mining industry,
expectations regarding gold prices and production, and other factors, which
could cause actual results to differ materially from such forward-looking
statements, refer to the Company"s annual report on the Form 20-F for the year
ended 31 December 2005, dated 17 March 2006 and which was filed with the
Securities and Exchange Commission (SEC) on 20 March 2006. AngloGold Ashanti
undertakes no obligation to update publicly or release any revisions to these
forward-looking statements to reflect events or circumstances after today"s date
or to reflect the occurrence of unanticipated events.
Note to Editors
1. The Bokamoso ESOP
1.1 The Bokamoso ESOP will apply to all employees at
AngloGold Ashanti"s South African operations,
including the corporate office, who are not
participants in any current share incentive scheme.
About 91.5% of participants will be historically
disadvantaged South Africans, as defined in the
Mining Charter.
1.2 The Bokamoso ESOP will involve two kinds of shares.
1.2.1 E ordinary shares (loan shares)
1.2.1.1 Approximately 2,880,000 AngloGold
Ashanti E ordinary shares will be
issued to the Bokamoso ESOP Trust for
the benefit of eligible employees.
Each eligible employee (who currently
number just over 30,000) will be
allocated 90 E ordinary shares.
Excess E ordinary shares will be
allocated to new, eligible employees
in the four years following the
launch of the scheme. These
employees will receive a fewer number
of shares than the employees who
joined the ESOP at its inception.
1.2.1.2 The E ordinary shares are referred to
as loan shares as the economics of
the transaction mimic the economics
of a loan advanced by the company to
the Bokamoso Trust, on which a 7% per
annum escalation factor (similar to
interest on a loan) will apply.
These shares will be acquired at a
10% discount to market value.
1.2.1.3 The loan shares will have the same
voting rights as the voting rights on
AngloGold Ashanti ordinary shares and
will receive 50% of the dividends
that accrue on AngloGold Ashanti
ordinary shares.
1.2.1.4. A fair and reasonable opinion regarding, inter alia,
the issue of the loan shares will be included in the
circular to be posted to shareholders in due course.
1.2.2 AngloGold Ashanti ordinary shares (free
shares)
Approximately 960,000 AngloGold Ashanti
ordinary shares will be acquired at par value
by the Bokamoso Trust on behalf of eligible
employees. Each eligible employee will be
allocated 30 AngloGold Ashanti ordinary
shares, described here as "free shares".
Again, excess free shares will be allocated to
future, eligible employees.
1.3. The scheme is designed to provide both individual
economic benefits to employees and collective
ownership rights exercised through the Bokamoso
Trust.
1.3.1 Individual economic benefits
1.3.1.1 Transacting the shares
- Shares issued to the Bokamoso Trust
will vest in five equal tranches
with the first tranche vesting on
the third anniversary of the
Bokamoso ESOP"s launch and the last
on the seventh anniversary (vesting
dates).
- Eligible employees will receive the
full value of the free shares that
will have vested at each vesting
date.
- As regards the loan shares, the
benefit due to eligible employees
on each vesting date will be
calculated on the basis of the
difference between the share price
on the issue date (taking account
of the 10% discount) (exercise
price) and the share price on the
vesting date, taking into account
the escalation factor accruing at
7% per annum and offset by 50% of
the dividend flow.
- If the share price on the vesting
date is below the share price on
the issue date, eligible employees
will not benefit nor will they
incur any loss. In this
circumstance, however, the Bokamoso
ESOP rules provide for a six-month
extension of the vesting date in
anticipation that share price
increases during that period may
provide a benefit for eligible
employees.
- On each vesting date, eligible
employees will receive the benefits
due to them in AngloGold Ashanti
shares. They will be able to elect
to convert these into cash or to
transfer them to their retirement
funds. In addition, the Bokamoso
ESOP Trust will be tasked with
investigating other possible
investment options for eligible
employees.
1.3.1.2 Dividends
- Employees will receive all the
dividends paid on the free shares
allocated to them.
- Employees will receive all the
dividends paid on the loan shares
(that is, 50% of the dividends
that accrue on AngloGold Ashanti
ordinary shares) allocated to them.
1.3.2 Bokamoso ESOP administration and discretionary
expenses
The company will administer the Bokamoso ESOP
on behalf of the Bokamoso Trust at no cost to
the Bokamoso Trust. Other expenses, such as
independent trustees" fees and discretionary
education and training activities will be
split so that the company bears two-thirds of
the cost, and the Bokamoso Trust one-third.
1.3.3 Collective ownership benefits
1.3.3.1 Both the free shares and the loan
shares will have full voting rights
1.3.3.2 The Bokamoso Trust will be managed by
a nine-person board of trustees whose
functions will include managing the
Bokamoso ESOP in the interests of
eligible employees and exercising the
voting rights attaching to the shares
issued to the Bokamoso Trust on
behalf of eligible employee
1.3.3.3 The board of trustees will be
appointed as follows:
- two trustees appointed by the NUM;
- one trustee appointed by UASA;
- one trustee appointed by
Solidarity; and
- one trustee appointed by AngloGold
Ashanti;
- four independent trustees nominated
by consensus between the company
and the trade unions.
2. The Izingwe Holdings transaction
2.1 This transaction will be structured in a manner
similar to the loan share structure in the Bokamoso
ESOP.
2.2 Izingwe Holdings will subscribe for and AngloGold
Ashanti will issue approximately 1,400,000 loan
shares, representing approximately 0.5% of the
company"s issued share capital.
2.3 The loan shares will have the rights, privileges and
obligations described above, including dividend
rights. The loan shares will have the same voting
rights as the voting rights on AngloGold Ashanti
ordinary shares and will receive 50% of the dividends
that accrue on AngloGold Ashanti ordinary shares.
2.4 Izingwe Holdings will have unconditional access to
its shares in five equal tranches, vesting from the
third anniversary of the implementation of the
transaction, to the seventh anniversary. On vesting,
the effective price at which Izingwe Holdings will
acquire the shares will be calculated on the basis of
the share price on the issue date (taking account of
the 10% discount) (exercise price) and the share
price on the vesting date, taking into account the
escalation factor accruing at 8% per annum and any
applicable dividend flow .
2.5 In respect of each of the five tranches, Izingwe
Holdings will have a six month extension of the
vesting date within which period it may transact the
shares as it sees fit.
3. A circular to shareholders convening a shareholders"
general meeting and setting out, inter alia, the detailed
structure of the transaction will be posted to
shareholders in due course.
4. The financial effects of the transaction are currently being finalised and
will be announced on SENS and in the press in due course. Accordingly,
shareholders are advised to exercise caution when dealing in AngloGold Ashanti
securities until the financial effects have been disclosed.
2 October 2006
Johannesburg
Merchant bank and transaction sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 02/10/2006 09:12:09 AM Produced by the JSE SENS Department
