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YBA
YBA
YBA - Yomhlaba - Announcement and renewal of cautionary announcement
YOMHLABA RESOURCES LIMITED
(Registration number 1994/009012/06)
Share code: YBA
ISIN: ZAE000060281
("Yomhlaba" or "the Company")
CHANGE OF CONTROLLING SHAREHOLDER TO ROYAL BAFOKENG CAPITAL, THE ACQUISITION OF
TWO OPERATING COAL MINES AND RELATED MATTERS AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
The board of directors of Yomhlaba ("the Board") is pleased to announce the
proposed restructuring, an empowerment transaction which will transfer control
of Yomhlaba to Royal Bafokeng Capital (Pty) Ltd ("Royal Bafokeng Capital") and
the acquisition of two operating coal mines (collectively, "the Transactions")
and a property, all of which are discussed in detail below.
2. RESTRUCURE OF YOMHLABA`S BALANCE SHEET
The Board has negotiated with its current largest shareholders, and only
creditors, to restructure the balance sheet of Yomhlaba, which will render the
Company, prior to the acquisitions, without significant long-term debt and will
enable Yomhlaba to implement the acquisition of the two productive and
profitable coal mines and related assets in order to create an empowered coal
platform controlled by Royal Bafokeng Capital.
2.1 Restructure of the New Africa Mining Fund Nominees preference share and loan
accounts
The New Africa Mining Fund Nominees ("NAMF") holds a redeemable preference share
with a face value of R9 million and a redemption value of R26,6 million ("the
NAMF Preference Share") in Yomhlaba Coal (Pty) Ltd, a wholly-owned subsidiary of
Yomhlaba ("Yomhlaba Coal"). The NAMF Preference Share does not carry a coupon
and is redeemable after five years. NAMF also holds a claim on loan account
against Yomhlaba Coal, amounting to approximately R16.6 million ("the NAMF Loan
Account").
Yomhlaba and NAMF have entered into an agreement in terms of which Yomhlaba will
acquire the NAMF Loan Account and the NAMF Preference Share ("the NAMF Debt
Restructure"). The consideration payable by Yomhlaba to NAMF for the NAMF loan
will be R10 million. NAMF will re-invest this cash on the same basis as the
Royal Bafokeng Capital loan, as detailed below in section 6.2
2.2 Restructure of the Rotocompactors loan accounts
Rotocompactors (Pty) Ltd ("Rotocompactors") holds a claim on loan account
against Yomhlaba Coal amounting to approximately R20,9 million ("the
Rotocompactors Loan Account"). Yomhlaba has entered into an agreement with
Rotocompactors in terms of which Yomhlaba will acquire the Rotocompactors Loan
Account for a total purchase consideration of R3,75 million ("Rotocompactors
Debt Restructure"). The purchase consideration is to be settled as follows:
* Yomhlaba will transfer office equipment, computers, furniture and fittings to
the value of R250 000 (book value of R117 000) to Rotocompactors on the closing
date of the Transactions ("Closing Date");
* Yomhlaba will pay an amount of R2 million in cash to Rotocompactors on the
first anniversary of the Closing Date; and
* Yomhlaba will pay an amount of R1.5 million in cash to Rotocompactors on the
second anniversary of the Closing Date.
The effective date of the NAMF Debt Restructure and Rotocompactors Debt
Restructure (collectively, "the Balance Sheet Restructure") will be the third
business day after the Closing Date.
3. THE ACQUISITIONS
The proposed acquisitions include two operating collieries, and an adjacent
property, which will form the basis of a new Black Empowered coal mining company
with a solid earnings base. The collieries and the property are currently owned
by Risk Reduction International, who have entered into agreements, the salient
terms of which are set out below. A non-refundable deposit of R8 million is
payable before 10 March 2007, with the balance payable on the Closing Date.
3.1 ILANGA COAL MINES (PTY) LTD ("ILANGA")
3.1.1 Background to Ilanga
Ilanga owns a coal mine in the Witbank Coal Field, situated in Middelburg,
Mpumalanga, some 200km east of Johannesburg. Mining operations and coal
preparation have been taking place since 1996 under the management of Ilanga. It
is an opencast mine with an expected life of mine of two years. A coal
processing plant, weighbridge, offices and workshops are also located on the
property. The coal is of a quality suitable for export through Richards Bay.
3.1.2 Black Economic Empowerment ("BEE") transaction
Risk Reduction International ("RRI") is currently the sole shareholder of
Ilanga. Royal Bafokeng Capital, a BEE company in which the 300 000 members of
the Royal Bafokeng Nation indirectly owns 50.1%, has entered into an agreement
with RRI in terms of which Royal Bafokeng Capital will acquire 76.4705% of the
shares in Ilanga for a purchase consideration of R20 million ("the BEE
Subscription").
The effective date of the BEE Subscription is 1 October 2006.
3.1.3 Details and terms of the Ilanga acquisition
Simultaneously with the BEE Subscription, South African Coal Mining Holdings
(Pty) Ltd ("SACM"), a company with the same shareholder constituency as RRI,
will acquire 10.5882% of the shares in Ilanga from RRI ("the SACM Acquisition")
for a purchase consideration equal to 95% of the proceeds realised by SACM upon
the sale of the Yomhlaba shares SACM will receive from the Ilanga Acquisition
(which is discussed in the following paragraph).
Contemporaneously with the BEE Subscription and the SACM Acquisition, Yomhlaba
has entered into an agreement with RRI, Royal Bafokeng Capital and SACM in terms
of which it will acquire all the shares in and claims against Ilanga for a
purchase consideration of R68 million ("the Ilanga Acquisition"), effective 1
October 2006. The purchase consideration will be discharged by the issue of
340 million ordinary shares in Yomhlaba ("Yomhlaba Shares") to RRI (44 million
Yomhlaba Shares), Royal Bafokeng Capital (260 million Yomhlaba Shares) and SACM
(36 million Yomhlaba Shares).
3.2 UMLABU COLLIERY (PTY) LTD ("UMLABU")
3.2.1 Introduction
Umlabu owns a coal mine situated in the magisterial districts of Ermelo and
Middelburg, Mpumalanga. Mining operations commenced in February 2003 under the
management of Ilanga. It is an opencast and underground mine with an expected
life of mine in excess of 19 years. The coal is of a similar quality to Ilanga,
and can also supply the nearby Camden power station with much needed coal.
3.2.2 Details and terms of the Umlabu acquisition
Yomhlaba has entered into an agreement in terms of which it will acquire all the
shares in and claims against Umlabu from RRI, for a purchase consideration of
R141 million ("the Umlabu Acquisition"). The effective date of the transaction
is 1 October 2006.
The purchase consideration will be funded through R105 million medium-term loan
("the Term Loan") and the balance will be provided in the form of shareholders`
loans ("the Shareholders` Loans") as follow:
* R10 million will be provided by NAMF; and
* R26 million will be provided by Royal Bafokeng Capital.
The Shareholders` Loans will be converted into Yomhlaba Shares after 91 days at
the greater of:
* 10% discount to the 30-day volume weighted average share price; or
* 60 cents per Yomhlaba Share.
3.3 Acquisition of the property
Yomhlaba has also entered into an agreement with the Lutzkie Besigheidstrust in
terms of which a property adjacent to Umlabu will be acquired for R770 000 ("the
Property Acquisition"), subject to the suspensive conditions set out in
paragraph 6 below. The rationale for the Property Acquisition is to build a
railway siding near Umlabu in order to transport coal produced to the Richards
Bay Coal Terminal in future.
4. RATIONALE FOR THE TRANSACTIONS
4.1 Rationale for the balance sheet restructure
The restructuring of the balance sheet of Yomhlaba will result in the Company,
prior to the acquisitions, having no long-term debt and enables the Company to
pursue transactions which will create value for shareholders and restore the
financial viability of the Company.
4.2 Rationale for the BEE subscription
The implementation of the Transactions will result in Royal Bafokeng Capital
holding a controlling interest of 65% in Yomhlaba. Royal Bafokeng Nation
participation ensures that the majority shareholder of Yomhlaba is not only
black-owned, but also regarded as a broad-based economic empowerment entity.
4.3 Rationale for the Acquisitions
As a result of the Ilanga Acquisition and the Umlabu Acquisitions (collective,
"the Acquisitions"), Yomhlaba will own two productive and profitable coal mines
and related assets that will enable it to return to being a productive business.
The Acquisitions create a platform on which the Yomhlaba Group can promote
growth and development of a viable BEE coal mining operation.
5. SUSPENSIVE CONDITIONS
The NAMF Debt Restructure, the Rotocompactors Debt Restructure, BEE
Subscription, the SACM Acquisition, the Ilanga Acquisition, the Umlabu
Acquisition and the Property Acquisition are subject to, inter alia, the
following outstanding suspensive conditions:
* shareholders approval in general meeting ("General Meeting") and all required
statutory and regulatory approvals to be obtained by 30 April 2007;
* the Common Terms Agreement between RRI, Rotocompactors, Royal Bafokeng
Capital, SACM, NAMF, Yomhlaba and Yomhlaba Coal, entered into contemporaneously
with the agreements relating to the Balance Sheet Restructure, and the
Acquisitions, all becoming unconditional by 15 June 2007; and
* the fulfillment of the conditions precedent of the Term Loan from the
Company`s bankers.
7. WAIVING OF MANDATORY OFFER
The BEE Subscription will result in the change of the control of Yomhlaba. As a
result, in terms of the Securities Regulation Code on Takeovers and Mergers, a
mandatory offer must be extended to all shareholders. Shareholders of Yomhlaba
will be requested to vote on waiving this requirement at the General Meeting.
8. RECONSTITUTION OF THE BOARD
Subsequent to the change in the controlling shareholder to Royal Bafokeng
Capital, the Board will be reconstituted, subject to Shareholders` approval.
Current non-executive directors JH Jonck and DB Steyn have agreed to resign from
the Board. Shareholders will be required to approve the appointments of
TV Mokgatlha as chairman, KJ Gribnitz as acting Chief Executive Officer, and the
appointments of Lucas Ndala (representing the Royal Bafokeng Nation) and Neil
Gardyne (representing NAMF) as non-executive directors. It is the intention of
the Board to grow the number of directors serving on the Board and shareholders
will be advised of future appointments to the Board.
9. CHANGE OF NAME
The Board further proposes that the name of the company is changed from
"Yomhlaba Resources Limited" to "South African Coal Mining Holdings Limited" in
order to reflect the Company`s intended new focus on coal mining subsequent to
the Transactions.
10. LIFTING OF SUSPENSION AND TRANSFER OF LISTING TO MAIN BOARD
The Board is currently following a process set out by the JSE Limited ("the
JSE") and will, following the conclusion of this process, formally request the
JSE to lift the suspension on trading in Yomhlaba`s securities listed on the
JSE.
Shareholders are also referred to the separate announcement released on SENS
today containing Yomhlaba`s audited annual financial statements for the year
ended 30 June 2006 and the reviewed interim financial results for the six months
ended 31 December 2006.
Due to the changed nature of the Yomhlaba`s business activities, the Board
intends to also apply to the JSE to transfer the listing of the company from
AltX to the Main Board of the JSE in the Mining - "Other Mineral Extractors and
Mines" section of the JSE list.
Shareholders should note that the final listing of Yomhlaba is at the discretion
of the JSE and is contingent upon the JSE`s assessment of the suitability for
listing of the Company subsequent to the implementation of the Transactions.
11. CIRCULAR TO SHAREHOLDERS
The Transactions are collectively categorised, inter alia, as a Category 1
transaction, a related party transaction and a reverse take-over, in terms of
the Listings Requirements of the JSE. A circular, incorporating a fair and
reasonable opinion, prepared by an independent professional expert acceptable to
the JSE, and a notice of general meeting of shareholders for the purpose of
considering and, if deemed appropriate, passing of the requisite resolutions to
approve and implement the Tansactions, and revised listing particulars will be
posted to Shareholders.
12. FURTHER ANNOUNCEMENTS AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Further announcements incorporating, inter alia, the JSE`s decision with regards
to the lifting of the suspension in the trading of Yomhlaba shares, the salient
dates for implementation of the Transactions and the pro forma financial effects
of the Transactions will be made in due course. Accordingly, shareholders are
advised to continue exercising caution when dealing in Yomhlaba Shares until
further announcements are made.
7 March 2007
Pretoria
Designated Advisor
Sasfin Capital
(a division of Sasfin Bank)
Transaction sponsor
Metier Advisory (Pty) Ltd
Restructuring Advisor
Gandalf Trust
Transaction Advisor
Radagast Capital (Pty) Ltd
Independent expert
Moores Rowland Corporate Finance (Pty) Ltd
Reporting accountants and auditors
Compendium Pretoria Inc. Chartered Accountants (S.A.)
Registered Accountants and Auditors
Attorneys to RRI
MacRobert Incorporated
Date: 07/03/2007 12:51:34 Produced by the JSE SENS Department.
