| Mon 8 Aug 2005, 9:14 | | Kumba - Proposed Acquisition Of The Minority Share |
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Kumba - Proposed Acquisition Of The Minority Shareholdings Of Ticor Limited
KUMBA RESOURCES LIMITED
Incorporated in the Republic of South Africa
(Registration Number: 2000/011076/06)
Share Code: KMB
ISIN Number: ZAE000034310
(`Kumba`)
PROPOSED ACQUISITION OF THE MINORITY SHAREHOLDINGS OF TICOR LIMITED BY KUMBA
1. INTRODUCTION
Shareholders of Kumba (`shareholders`) are advised that Kumba and the committee
of Ticor directors who are independent of Kumba (the `Ticor Independent
Directors`) have reached agreement on, and signed an implementation agreement
relating to, the terms of a proposal whereby a wholly-owned subsidiary of Kumba
will acquire by way of a scheme of arrangement pursuant to the Australian
Corporations Act 2001 (`Corporations Act`) all of the issued ordinary shares in
Ticor that it does not already own for a cash consideration of A$1.875 per Ticor
share (the `Proposed Scheme`). Kumba, through a wholly-owned subsidiary,
currently owns 51.54% of the issued share capital of Ticor. The Proposed Scheme
is subject to the fulfilment or waiver of conditions precedent including those
described in paragraph 5 below.
Kumba understands that Ticor`s major institutional shareholders, AXA Asia
Pacific Holdings Limited (`AXA`) and Perennial Value Management Limited
(`Perennial Value`) have each informed the Ticor Independent Directors that
their institutions consider that the Proposed Scheme is reasonable. Kumba is
advised that both AXA and Perennial Value currently intend to vote in favour of
the Proposed Scheme for their holdings in Ticor of 28.6% and 8.3% respectively,
subject to reviewing the conclusions of the Independent Expert and in the
absence of a superior offer.
Kumba also notes that an independent expert, KPMG Corporate Finance
(`Independent Expert`), was commissioned by the Ticor Independent Directors to
prepare an independent expert`s report (`IER`) in relation to the Proposed
Scheme. Kumba understands that the Independent Expert has advised that it has
concluded that the Proposed Scheme is in the best interests of Ticor
shareholders, subject to confirmation by the Ticor Independent Directors as to
the factual accuracy of the information set out in the IER and subject both to
no new matters becoming known to the Independent Expert on detailed review of
the scheme documents and to no significant changes in macro-economic or company
specific issues in the period prior to finalisation of the IER.
It is also proposed that private treaty agreements (`Option Deeds`) will be
entered into between Kumba and certain option holders who hold Ticor options,
issued under employee incentive arrangements, which will not expire prior to
completion of the Proposed Scheme. Under the Option Deeds, the options will be
cancelled in exchange for a cancellation fee to be funded by Kumba.
2. DESCRIPTION OF TICOR
Ticor is incorporated in Australia and listed on the Australian Stock Exchange
(`ASX`). Its core business is the extraction, concentration and processing of
mineral sands to produce titanium dioxide (TiO2) feedstock for the pigment
industry. Ticor has two main operations, namely:
A 40% interest in Ticor South Africa (Pty) Limited (`TSA`), a heavy minerals
mining, processing and smelting facility; and
A 50% interest in the Tiwest Joint Venture in Australia, a 50/50 joint venture
with Kerr-McGee Chemical Corporation, which produces TiO2 pigment, synthetic
rutile, ilmenite, zircon, rutile and leucoxene.
3. RATIONALE FOR THE ACQUISITION
The Proposed Scheme will enable Kumba to increase the size of its heavy minerals
business whilst affording it greater geographic and commodity diversification in
general. The Proposed Scheme will also simplify the Kumba Group structure which
currently entails Kumba holding its interest in TSA both directly and indirectly
through Ticor.
4. FINANCIAL EFFECTS OF THE PROPOSED SCHEME
It is expected that the effective date of the Proposed Scheme will be in late
November 2005.
The table below sets out the illustrative financial effects of the Proposed
Scheme based on the unaudited financial information of Kumba for the 12 month
period ended 31 December 2004 and the audited financial information of Ticor for
the year ended 31 December 2004.
These financial effects are for illustrative purposes only and may not give a
true reflection of Kumba`s financial position or future results.
Pre Post %
Acquisition Acquisition Change
(1) (1)
Attributable earnings per 226 220 -2.8%
share (cents)(2)
Headline earnings per share 258 250 -2.9%
(cents)(2)
Net asset value per share 1,773 1,773 0%
(cents)(3)
Tangible net asset value per 1,746 1,771 1.4%
share (cents)(3)
Weighted average number of 300 300 0%
shares in issue (Million)
Number of shares in issue 302 302 0%
Notes:
1. Kumba`s audited financial results to December 2004 reflected an 18 month
period. In line with Kumba`s new financial year-end, the pro forma effects
have been calculated using the unaudited financial results for the 12 month
period ended 31 December 2004.
2. For the purposes of calculating the post acquisition attributable and
headline earnings per share, it is assumed that:
2.1 The Proposed Scheme was effective on 1 January 2004;
2.2 The total consideration is approximately A$235.7 million, inclusive of
the consideration in terms of the Option Deeds and estimated
transaction costs;
2.3 The total consideration has been converted to Rands at the prevailing
exchange rate of R5.03/A$ and for the 12 months ended 31 December 2004
has incurred a non-tax deductible interest charge at a rate of 10% per
annum; and
2.4 Includes 100% of Ticor`s earnings for the 12 months ended 31 December
2004.
3. The net asset value (NAV) and tangible net asset value (TNAV) per share
effects are based on the assumption that the Proposed Scheme was effective
on 31 December 2004. TNAV is the net asset value minus goodwill, intangible
assets and deferred taxation.
5. CONDITIONS PRECEDENT AND TERMINATION EVENTS
The Proposed Scheme is conditional on the fulfilment, or where appropriate
waiver, of certain conditions precedent including:
5.1 All necessary court approvals being obtained;
5.2 The Independent Expert concluding that the Proposed Scheme is in the
best interests of Ticor shareholders;
5.3 No order being issued by any court or other legal restraint or
prohibition preventing consummation of the Proposed Scheme being in
effect;
5.4 There being no material adverse change in respect of the business,
financial condition, results or operations of Ticor (or any of its
subsidiaries) before the final court hearing to approve the Proposed
Scheme;
5.5 That the representations and warranties made and provided by Ticor and
Kumba as contained in the implementation agreement are true and
correct as at the dates of the implementation agreement and the final
court hearing to approve the Proposed Scheme;
5.6 That prior to the final court hearing to approve the Proposed Scheme,
no dividend (other than the interim dividend of one Australian cent
declared on 29 July 2005) is declared or paid by Ticor;
5.7 That Option Deeds are entered into in respect of all options which
will not have expired prior to completion of the Proposed Scheme;
5.8 That certain formal consents are obtained under Ticor`s financing
arrangements;
5.9 That before the final court hearing to approve the Proposed Scheme,
the S&P ASX 200 Index does not fall below 3,500 on any trading day;
and
5.10 There being no prescribed occurrences (being similar to the events
specified in sections 652C(1) and (2) of the Corporations Act) in
relation to Ticor (or any of its subsidiaries) before the final court
hearing to approve the Proposed Scheme.
The implementation agreement can also be terminated in certain circumstances,
including:
- where action is taken or threatened by any regulatory body (other than the
Australian Securities and Investments Commission or the Australian
Takeovers Panel in exercise of the powers or discretions conferred by the
Corporations Act) which would restrain or delay the Proposed Scheme or
require the divestiture by Kumba or Ticor (or any of their subsidiaries) of
any shares or assets or impose any material limitation on the conduct of
Kumba or Ticor (or any of their subsidiaries) or ownership by Kumba or
Ticor (or any of their subsidiaries) of any asset or business;
- where Kumba or Ticor is in material breach of the implementation agreement;
- where the approval of Ticor shareholders in general meeting is not obtained
as required under section 411(4) of the Corporations Act; and
- where the independent directors of Ticor fail to recommend the Proposed
Scheme or adversely change or withdraw their recommendation.
The implementation agreement includes a timetable, which provides for completion
of the Proposed Scheme by no later than 15 December 2005 (or such later date as
agreed).
Shareholders will be advised of further developments.
Pretoria
8 August 2005
Enquiries
Trevor Arran
General Manager: Corporate Affairs & Investor Relations
Tel: +27 (0) 12 307 3292
Mobile: +27 (0) 83 609 1444
Financial Adviser and Sponsor
JPMorgan
Legal advisor as to Australian Law
Mallesons Stephen Jaques
Corporate law advisors and consultants as to South African Law
CLS Consulting Services (Proprietary) Limited
(Registration number 1999/014204/07)
Date: 08/08/2005 09:06:02 AM
Produced by the JSE SENS Department
