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Shareholders of Palabora have been advised that it is Palabora’s understanding that the Rio/Anglo Sale Agreement has become unconditional.

The Rio/Anglo Sales Agreement will be effective following the fulfilment of the final remaining suspensive conditions thereto, upon:

• the completion agreement governing the BBBEE Transaction becoming unconditional on 15 July 2013; and

• no material adverse change having occurred between the signature date of the Rio/Anglo Sale Agreement and the date of the fulfilment of the suspensive condition referred to above, being 15 July 2013.

Shareholders are referred to the announcements published on the Stock Exchange News Service of the JSE Limited (SENS) on 11 December 2012 and 28 December 2012, and the renewal of/update to cautionary announcements published on 12 February 2013, 27 March 2013, 13 May 2013, 1 July 2013 and 5 July 2013, regarding the conclusion of the Rio/Anglo Sale Agreement between Rio Tinto, Anglo American and a consortium of purchasers comprising South African and Chinese entities led by the Industrial Development Corporation of South Africa, SOC Limited and Hebei Iron & Steel Group Co. Ltd. (Consortium).

As previously advised, the Consortium will accordingly be required to extend an offer to all remaining shareholders to acquire their shares in Palabora (Mandatory Offer) upon the Rio Tinto and Anglo American Divestment being completed and the Consortium acquiring a beneficial interest in the relevant shares in Palabora. The Rio Tinto and Anglo American Divestment is presently anticipated by Rio Tinto to be completed on or about 31 July 2013, the Closing Date.

Pursuant to such Mandatory Offer, and subject to and in accordance with the requirements of the Companies Act, 2008 (Companies Act), and the Fundamental Transactions and Takeover Regulations contained in Chapter 5 of the Companies Regulations, 2011 (Companies Regulations), as amended, Palabora understands that minority Shareholders are to be offered a consideration of ZAR110 per share in Palabora, plus a non-compounding escalation of 5% per annum over the period from 1 July 2012 up until the closing date of the Rio Tinto and Anglo American Divestment, being the Closing Date.

Pursuant to a recent amendment to the Rio/Anglo Sale Agreement, such escalation is now conditional on Palabora having maintained a threshold cash balance up until 30 June 2013. Though the determination of whether such threshold cash balance has been maintained is subject to an independent audit, Palabora, to the best of its knowledge, is of the view that the threshold cash balance has been met. Should Palabora pay any dividend prior to the Closing Date, the per share consideration payable to the remaining shareholders under the Mandatory Offer will be reduced by an amount equal to the per share amount of such dividend/s.

This announcement does not constitute a firm intention announcement as contemplated in Regulation 101(1) of the Companies Regulations to the Companies Act.

In another announcement Palabora also announced that, on 15 July 2013, Palabora Copper received written confirmation of the registration of the cession of these rights in Palabora Copper’s name in the MPTRO, and that the BBBEE Transaction has accordingly become unconditional and will, in accordance with its terms, therefore be implemented on 1 August 2013.

As previously advised, Palabora’s remaining old order mining right, which has not yet been converted, will be transferred to Palabora Copper once it has been converted and the requisite consent to its transfer to Palabora Copper has been obtained from the Department of Mineral Resources (DMR). Palabora continues to engage with the DMR in order to achieve the conversion of this right and its transfer to Palabora Copper. Shareholders will be kept apprised of developments in this regard.

Shareholders are referred to the announcements regarding the BBBEE Transaction published on SENS on 1 July 2013 and 5 July 2013 wherein Palabora noted that the final suspensive condition required to be fulfilled in order for the BBBEE Transaction to become unconditional was the receipt by Palabora Copper Proprietary Limited (Palabora Copper) of written confirmation of the registration of the cession of Palabora’s seven converted mining rights in Palabora Copper’s name in the Mineral and Petroleum Titles Registration Office (MPTRO).

As part of the BBBEE Transaction, Palabora has sold and will transfer the majority of its assets and liabilities to Palabora Copper.

On 22 September 2005 Palabora entered into a facility agreement between, amongst others, Palabora (as borrower) and certain lenders (Facility Agreement). In order to give effect to the sale and transfer, the parties to the Facility Agreement have, amongst other things, agreed to a transfer and/or novation of Palabora’s rights and liabilities under the finance documents (as described in the Facility Agreement) to Palabora Copper (Transfer). Pursuant to the Transfer, Palabora is required to provide certain financial assistance to Palabora Copper in connection with Palabora Copper’s obligations under, amongst other things, the Facility Agreement and a guarantee and indemnity provided by Palabora Copper in favour of Berrywood Investments 6 Proprietary Limited (as security company for the lenders).

Shareholders are advised that a resolution of the Board of Directors of Palabora contemplated by sections 45(2) and 45(3) of the Companies Act was adopted on 24 June 2013, in terms of which Palabora is authorised to provide the financial assistance described in this paragraph of the announcement.

 

 

 

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