Assore Limited
(Incorporated in the Republic of South Africa) (Registration
number 1950/037394/06
Share code: ASR ISIN: ZAE000146932 ("Assore")
ANNOUNCEMENT RELATING TO PHASE II OF ASSORE'S THIRD
EMPOWERMENT TRANSACTION
1. INTRODUCTION
Assore is pleased to announce the conclusion of the
agreements relating to the second phase ("Phase II") of its
third empowerment transaction ("Third Empowerment
Transaction"), which will result in 11.79% of the entire
issued ordinary share capital of Assore, being 16 464 450
Assore ordinary shares with a market value of approximately
R3.5 billion (based on the 30 day volume weighted average
price of an Assore share ("30 day VWAP") of R211.66 as at
Friday, 2 December 2011) ("BEE Shares"), being placed under
the control of broad-based black economic empowerment ("BEE")
groupings, which include the historically disadvantaged South
African ("HDSA") members of the communities surrounding
Assore's operations and non-managerial Assore employees.
After the implementation of Phase II, Assore will have BEE
ownership of
26.1%, which is required to secure and retain its mining
rights.
As communicated to shareholders in the announcement dated 28
June
2011 and the circular to shareholders dated 8 July 2011, the
Third Empowerment Transaction is being implemented in two
phases. The first phase ("Phase I") involved the acquisition
of the BEE Shares from Main Street 343 (Proprietary) Limited
("MS343"), a wholly- owned subsidiary of Shanduka Resources
(Proprietary) Limited ("Shanduka Resources"), by Main Street
904 (Proprietary) Limited ("MS904"), for an aggregate
purchase price of R2.7 billion. Phase I was approved by the
shareholders of Assore on 10 August 2011 and subsequently
implemented on 19 August 2011.
Phase II introduces sustainable, long-term vendor financing
between Assore and MS904 in relation to its holding of the
BEE Shares, as well as the amendment of the trust deeds
relating to the Fricker Road Trust ("the Fricker Road Trust
Deed") and the Assore Employee Trust ("the Assore Employee
Trust Deed") to define their respective beneficiaries and the
manner in which they will derive benefits from their
effective interests in Assore.
2. RATIONALE
Assore is supportive of the broad-based economic imperatives
contained in the Mineral and Petroleum Resources Development
Act
("MPRDA"), the Broad-Based Socio-Economic Empowerment Charter
for the South African Mining Industry ("Charter") and its
associated Scorecard. Assore is of the view that meaningful
participation at an equity level by HDSA persons is a social
and commercial imperative for all South African companies,
particularly for those in the mining industry wishing to
secure and retain their mining rights, and that it is
furthermore essential to sustain South Africa's economic and
democratic structures.
On 10 November 2005, Assore entered into its first
empowerment transaction, which was implemented during
February 2006, pursuant to which 15.02% of Assore's then
issued ordinary shares were acquired by Assore's BEE
partners, Shanduka Resources and the Bokamoso Trust (the
"First Empowerment Transaction"). The First Empowerment
Transaction marked Assore's achievement of the 2009
empowerment requirement of 15% BEE ownership.
On 1 December 2009, Assore announced its second empowerment
transaction, which resulted in an additional 11.1% of
Assore's issued ordinary shares being controlled by the
Bokamoso Trust (the "Second Empowerment Transaction").
Pursuant to the First and Second Empowerment Transactions,
Assore's resultant BEE equity ownership achieved the 26%
target set for mining companies in the MPRDA for 1 May 2014,
well ahead of this deadline.
The Third Empowerment Transaction will enable Assore to
continue to meet, up to and beyond 1 May 2014, the HDSA
equity ownership target of 26%, and will thus serve as a
cornerstone of Assore's ongoing BEE strategy.
3. OVERVIEW OF THE THIRD EMPOWERMENT TRANSACTION
3.1 Phase I
Phase I involved the acquisition by MS904, of the BEE Shares
from Shanduka Resources ("the Phase I Acquisition"). In terms
of a short-term bridge facility agreement, an amount of R2.7
billion was advanced to MS904 by The Standard Bank of South
Africa Limited ("Standard Bank") for purposes of facilitating
the Phase I Acquisition ("the Facility Agreement"). The
Facility Agreement was guaranteed by Assore, which amounted
to the provision of financial assistance by Assore to MS904
as contemplated under Section
44 of the Companies Act, 2008 (Act 71 of 2008) ("the
Companies Act"), and shareholders were required to approve
such financial assistance by way of a special resolution.
This approval was granted at a general meeting of the
shareholders of Assore held on 10 August 2011.
3.2 Phase II
Phase II introduces a long-term vendor financing structure
between Assore and MS904, to replace the funding provided by
Standard Bank in terms of the Facility Agreement, and amends
the Fricker Road Trust Deed and the Assore Employee Trust
Deed.
The Fricker Road Trust Deed has been amended to define, as
beneficiaries, the HDSA members of the communities who are
living, working or operating in and around the mining and
beneficiation operations of Assore and its subsidiaries
("Fricker Road Trust Beneficiaries"). The Fricker Road Trust
will utilise the dividends received from the Assore ordinary
shares it owns indirectly, through MS904, to fund and
facilitate projects and/or activities for the benefit of such
HDSA persons, with a focus on health and education. The
Fricker Road Trust owns 51% of MS904.
The Assore Employee Trust Deed has been amended to define, as
beneficiaries, the full-time, permanent, non-managerial
employees of Assore and its subsidiaries, who have been in
the employ of Assore for at least one year ("Assore Employee
Trust Beneficiaries"). The Assore Employee Trust will utilise
the economic benefits derived from the Assore ordinary shares
it owns indirectly, through MS904, to make distributions to
such beneficiaries, as well as to provide them with exposure
to the growth in the price of Assore ordinary shares
according to a formula. The Assore Employee Trust owns 49% of
MS904.
4. FUNDING OF THE THIRD EMPOWERMENT TRANSACTION
Phase II will be funded by way of a subscription, by Standard
Bank for preference shares in Assore to the value of R2.85
billion ("Assore Preference Shares"). The Assore Preference
Shares will confer on Standard Bank the right to receive
preferential, cumulative cash dividends at a rate equal to
75% of the prime rate.
Assore will, in turn, capitalise MS904 by subscribing for
preference shares in MS904 to the value of R2.85 billion
("MS904
Preference Shares"). This will provide MS904 with the
aggregate funding required to discharge its current
obligations to Standard Bank in respect of the Facility
Agreement, comprising the capital amount plus accrued
interest. The MS904 Preference Shares will
confer, on Assore, the right to receive preferential,
cumulative cash dividends at a rate equal to the rate in
respect of the Assore Preference Shares.
The subscription by Standard Bank for the Assore Preference
Shares, as well as the subsequent subscription by Assore for
the MS904 Preference Shares, are being implemented to enable
Assore to establish a sustainable, long-term vendor financing
structure for the Third Empowerment Transaction.
Assore shareholders will accordingly be requested to approve,
by way of special resolutions, the amendment of Assore's
Memorandum of Incorporation to record the alterations to
Assore's share capital and to include the rights, terms and
privileges attaching to the Assore Preference Shares, in
order to satisfy the requirements of section 16 of the
Companies Act. Assore is also of the view that the vendor
financing structure amounts to the provision of financial
assistance by Assore to MS904 ("the Phase II Financial
Assistance") and will require Assore shareholder approval in
terms of section 44 of the Companies Act.
5. DIVIDENDS RECEIVED BY MS904
In terms of the agreement relating to the MS904 Preference
Shares, dividends paid by Assore and received by MS904 will
be utilised as follows:
77% of the dividends received by MS904 will be used to
service and, to the extent possible, redeem the MS904
Preference Shares; and
the balance of 23% of the dividends received by MS904, will
be declared and paid as a dividend to the Fricker Road Trust
and the Assore Employee Trust, in proportion to their
respective shareholdings in MS904 to enable them in turn to
make distributions to their respective beneficiaries.
6. THE FRICKER ROAD TRUST
6.1 Shareholding
The Fricker Road Trust will indirectly own 6.0% of Assore's
issued ordinary share capital through its 51% shareholding
oin MS904. The market value of its indirect shareholding in
Assore is approximately R1.8 billion, based on the 30 day
VWAP of R211.66 as at Friday, 2 December 2011.
6.2 Beneficiaries
The Fricker Road Trust Beneficiaries include members of the
communities of HDSA persons, who are living, working or
operating in and around the mining operations of Assore and
its subsidiaries. The Fricker Road Trust Beneficiaries
specifically exclude members of the communities surrounding
Assmang Limited's ("Assmang") mining and beneficiation
operations, who benefit from a range of initiatives operated
by Assmang.
6.3 Trustees
The board of trustees of the Fricker Road Trust ("Fricker
Road Trust Trustees") will be constituted as follows:
there will, at all times, be four trustees;
the majority the Fricker Road Trust Trustees will, at all
times, be HDSAs and independent;
25% of the appointed trustees will be female; and Assore will
be entitled, but not obliged, to appoint one trustee.
6.4 Operation of the Fricker Road Trust
The Fricker Road Trust will be funded on an ongoing basis by
the dividend income received from MS904 in respect of the BEE
Shares held by it.
These dividends will enable the Fricker Road Trust to fund
and facilitate projects and activities of a sufficient scale
to meaningfully contribute to the health, education and
empowerment of the Fricker Road Trust Beneficiaries.
The Fricker Road Trust Trustees will determine the aggregate
amount available for allocation during a particular financial
year.
All of the expenses, costs, disbursements and liabilities
incurred in or arising out of the formation or administration
of the Fricker Road Trust in the ordinary course will be
borne by the trust.
The Fricker Road Trust will endure in perpetuity, or until
the date that the trust is finally wound-up and liquidated as
agreed between Assore and the Fricker Road Trust
Trustees.
7. THE ASSORE EMPLOYEE TRUST
7.1 Shareholding
The Assore Employee Trust will indirectly own 5.8% of
Assore's issued ordinary share capital through its 49%
shareholding of MS904. The market value of its indirect
shareholding in Assore is approximately R1.7 billion, based
on the 30 day VWAP of R211.66 as at Friday, 2 December
2011.
7.2 Beneficiaries
All full-time, permanent, non-managerial employees of Assore
or any of its subsidiaries regardless of whether such
employees are HDSAs or not, and who have been employed on a
permanent basis for a period of not less than one year, as
well as such other employees as may be designated as
beneficiaries by the Assore allocation committee ("Allocation
Committee") from time to time will be eligible to become
beneficiaries of the Assore Employee Trust. The Assore
Employee Trust Beneficiaries specifically exclude employees
of Assmang, who benefit from a range of initiatives operated
by Assmang.
7.3 Trustees
The board of trustees of the Assore Employee Trust
("Assore
Employee Trust Trustees") will be constituted as follows:
there will at all times be seven trustees;
it will comprise of three independent trustees, three
trustees nominated by the Assore Employee Trust Beneficiaries
and one trustee appointed by Assore;
the majority of trustees will be HDSAs and at least
25% of the trustees shall be female; and
the beneficiary trustees will be nominated by the Assore
Employee Trust Beneficiaries, from their ranks, and selected
by the Allocation Committee, and will serve in office for a
period not exceeding two years.
7.4 Allocations
Assore Employee Trust Beneficiaries will be eligible to
receive equity participation rights ("Equity Participation
Rights") and dividend participation rights ("Dividend
Participation Rights") in the Assore Employee Trust:
Equity Participation Rights will be allocated to
beneficiaries each year based on salary, so long as they
remain in the employ of Assore, and will be subject to a
forfeiture profile depending on the reason for a beneficiary
leaving the employ of Assore; and
Dividend Participation Rights will be allocated to
beneficiaries each year based on salary, so long as they
remain in the employ of Assore, and will entitle the
beneficiaries to share proportionately in the dividend income
received from MS904, and available for distribution, in
respect of the underlying Assore ordinary shares held by it.
Dividend Participation Rights will lapse one year after
allocation.
7.5 Operation of the Assore Employee Trust
The Assore Employee Trust will be funded on an ongoing basis
by the dividend income received from MS904 in respect of the
BEE Shares held by it.
80% of the total dividend income received by the Assore
Employee Trust from MS904, less trust expenses, will be paid
out to Assore Employee Trust Beneficiaries pro rata to the
Dividend Participation Rights held by them, with the
remaining 20% being used to purchase Assore shares on the
open market ("Equity Reserve Shares"), in order to effect
future payments relating to the settlement of Equity
Participation Rights, as discussed below.
Equity Participation Rights will entitle Assore Employee
Trust Beneficiaries to share in the increase in the price of
the Assore ordinary shares over time according to a
formula.
These rights will be subject to a ten year lock-in period
from the first allocation date, after which the trustees
will, in each year, dispose of such number of Equity Reserve
Shares as will be sufficient to settle any payments due as a
result of the formula applicable to the vested Equity
Participation Rights.
All of the expenses, costs, disbursements and liabilities
incurred in or arising out of the formation or administration
of the Assore Employee Trust in the ordinary course will be
borne by the Assore Employee Trust.
The Assore Employee Trust will endure in perpetuity, or until
the date that the trust is finally wound-up and liquidated as
agreed between Assore and the Assore Employee Trust
Trustees.
8. SUSPENSIVE CONDITIONS
The implementation of Phase II of the Third Empowerment
Transaction, including the provision by Assore of the Phase
II Financial Assistance, is subject to the fulfilment of
various suspensive conditions including, inter alia:
the approval of the relevant special and ordinary resolutions
by the requisite majority of votes by shareholders required
at a general meeting of shareholders; and
to the extent required, the obtaining of all approvals of any
regulatory authorities as may be required to implement Phase
II of the Third Empowerment Transaction, either
unconditionally or on terms acceptable to all parties.
9. CIRCULAR TO SHAREHOLDERS AND NOTICE OF GENERAL MEETING
Shareholders are advised that a circular providing additional
information on Phase II of the Third Empowerment Transaction
("the Circular") which includes, inter alia, a notice of
general meeting and a form of proxy, will be posted to Assore
shareholders on or about Wednesday, 14 December 2011.
The general meeting of Assore shareholders to approve the
relevant special and ordinary resolutions to implement Phase
II of the Third Empowerment Transaction ("the General
Meeting") will be held on Thursday, 19 January 2012 at 10:00
at the registered offices of Assore, being Assore House, 15
Fricker Road, Illovo Boulevard, Johannesburg.
10. SALIENT DATES AND TIMES
Record date, as determined by the board of directors of
Assore in accordance with section 59 of the Companies
Act,
to be eligible to receive the Circular
and notice of General Meeting Friday, 9 December 2011
Last day to trade Assore ordinary shares on the JSE Limited
in order to be recorded in the share register on the record
date to be eligible to vote
at the General Meeting Friday, 6 January 2012
Record date to be eligible to vote at
the General Meeting Friday, 13 January 2012
Last day for receipt of forms of proxy
for the General Meeting by 10:00 | Tuesday, | 17 | January | 2012 |
General Meeting to be held at 10:00 | Thursday, | 19 | January | 2012 |
Thursday, | 19 | January | 2012 |
Announcement of results of the General Meeting on the
Securities Exchange News Service ("SENS")
Announcement of results of the General
Meeting published in the press Friday, 20 January 2012
Anticipated implementation of Phase II
of the Third Empowerment Transaction Monday, 13 February
2012
Notes:
1. The abovementioned dates and times are South African local
times and dates, and are subject to change. Any such material
change will be released on SENS and published in the South
African press.
2. If the date of 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 purposes of calculating the
latest time by which forms of proxy must be received,
Saturdays, Sundays and South African public holidays will be
excluded.
Johannesburg
8 December 2011
Investment bank and sponsor to Assore
Standard Bank
Attorneys to Assore
Webber Wentzel Attorneys
Programme and implementation managers
Barnstone Corporate Services
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Announcement relating to Phase II of Assore's third empowerment transaction |