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WSL - Wescoal - Announcement Of Firm Intention By Wescoal To Acquire The Entire

Release Date: 29/03/2010 16:00:02      Code(s): WSL
WSL - Wescoal - Announcement Of Firm Intention By Wescoal To Acquire The Entire 
Issued Share Capital Of South African Coal Mining Holdings Limited ("SACMH") And
Cautionary Announcement                                                         
WESCOAL HOLDINGS LIMITED                                                        
(Incorporated in the Republic of South Africa)                                  
(Registration number 2005/006913/06)                                            
JSE Share code: WSL & ISIN: ZAE000069639                                        
("Wescoal" or "the Company")                                                    
1.   INTRODUCTION                                                               
Shareholders of Wescoal and shareholders of SACMH are advised that Wescoal has  
submitted to the board of directors of SACMH written notice of its firm         
intention to make an offer to acquire all the ordinary shares making up the     
entire issued ordinary share capital of SACMH ("the Transaction") on terms and  
conditions set out below.                                                       
This offer, which if concluded, will be an affected transaction as defined by   
the Securities Regulation Code and Rules ("SRP Code") of the Securities         
Regulation Panel ("SRP").                                                       
2.   BACKGROUND INFORMATION ON SACMH                                            
SACMH is a public company incorporated in South Africa, listed on the JSE       
Limited ("JSE"). SACMH` listing was suspended on 4 May 2009.                    
SACMH owns the following mines which have been placed under "care and           
maintenance" from 1 April 2009:                                                 
-    Umlabu Colliery is situated in the magisterial district of Ermelo,         
    Mpumalanga and is an opencast and close pit mine with an expected life of   
mine of 19 years.                                                           
-    Vlakfontein Coal Deposit ("VCD") comprising potentially exploitable        
    resources adjacent to the Umlabu Colliery.                                  
-    Sterkfontein Prospecting Area comprising potentially exploitable resources 
adjacent to the VCD.                                                        
SACMH has access to the Blinkpan Siding and Umlabu Siding and owns the Voorslag 
SACMH has a 207 000 tonne allocation at the Richard Bay Coal Terminal ("RBCT")  
through the Quattro Allocation and an export allocation of 500 000 tonnes in the
Phase V expansion of the RBCT.                                                  
3.   RATIONALE FOR THE TRANSACTION                                              
The Transaction would significantly accelerate Wescoal`s growth as a junior     
miner and remove current entry barriers to the export market.                   
The SACMH reserve statement includes the Vlakfontein mining asset with 35       
million total tons in situ that, following extraction and beneficiation, would  
make 13 million saleable tons available to Wescoal for the export and local     
The Quattro Allocation currently allows SACMH an export allocation of 207 000   
tons per annum that will be increased to 500 000 tons on completion of the      
Richards Bay Coal Terminal Phase V expansion project. Coupled with this, the    
SACMH owned Voorslag siding will give Wescoal immediate access to the           
strengthening export markets that would otherwise be reliant on Spoornet owned  
sidings and the remote possibility of the company securing its own export       
allocation through one of the ports.                                            
This Transaction would give Wescoal the critical mass and sustainability        
required to be a recognised player in the expanding coal mining industry.       
4.   OFFER                                                                      
Wescoal notified the Board of SACMH of its firm intention to make an offer to   
acquire all the issued shares of SACMH in exchange for the issue by Wescoal of  
11.11 Wescoal shares for every 100 SACMH ordinary shares held subject to the    
suspensive conditions set out in paragraph 4.2 below.                           
The scheme consideration will entail that 50 222 415 Wescoal shares will be     
issued by Wescoal at an issue price of 90 cents per share, for a total purchase 
consideration of R 45 200 174.                                                  
4.1  MANNER OF GIVING EFFECT TO OFFER                                           
4.1.1     Scheme of Arrangement                                                 
Wescoal will propose a scheme of arrangement between SACMH and the SACMH        
ordinary shareholders ("scheme members"), in terms of section 311 of the        
Companies Act, 1973 (Act 61 of 1973), as amended ("the Companies Act"), for the 
purpose of acquiring the entire issued share capital of SACMH ("the Scheme"), by
the issue of 11.11 Wescoal ordinary shares for every 100 SACMH ordinary shares  
held ("the scheme consideration"). The offer will be made in accordance with the
SRP Code.                                                                       
On the effective date of the scheme, Wescoal will invite two representatives of 
the former majority shareholders of SACMH to join the Wescoal board.            
If the Scheme is successful, application will be made to the JSE to terminate   
the listing of the shares of SACMH on the JSE.                                  
4.1.2     The substitute offer                                                  
In the event that the Scheme fails or does not become operative, Wescoal will   
make a conditional offer to SACMH ordinary shareholders to acquire all their    
ordinary shares by the issue of 11.11 Wescoal ordinary shares for every 100     
SACMH ordinary shares held ("the offer consideration") in terms of section 440  
of the Companies Act which will be conditional on acceptance by shareholders of 
SACMH holding no less than 50.1% of the total issued ordinary shares of SACMH   
("the substitute offer").                                                       
On the effective date of the substitute offer, Wescoal will invite two          
representatives of the former majority shareholders of SACMH to join Wescoal`s  
If the Scheme becomes operative, the substitute offer will not be implemented.  
4.2  CONDITIONS PRECEDENT TO THE TRANSACTION                                    
The Transaction will be subject to the fulfilment of inter alia the following   
conditions precedent:                                                           
-    Approval of the Transaction by the Board of SACMH by not later than 30     
    April 2010;                                                                 
-    That the four interrelated schemes of arrangement in respect of South      
    African Coal Mining (Breyten) (Pty) Limited, Ilanga Coal Mines (Pty)        
    Limited, South African Coal Mining Equipment Company (Pty) Limited and      
    South African Coal Mining Operations (Pty) Limited:                         
-    are sanctioned by the High Court and implemented by not later than 30  
         April 2010;                                                            
    -    that there is no appeal, review or threatened legal action against any 
         of the said schemes; and                                               
-    that Wescoal be satisfied with the net result of the four schemes of   
         arrangement and court orders for the SACMH group, particularly its     
         balance sheet, assets and liabilities post the schemes by no later     
         than 30 April 2010.                                                    
-    That Standard Bank of South Africa Limited, the secured financiers of SACMH
by not later than 31 May 2010:                                                  
    -    approves the Transaction in writing;                                   
-    undertakes in writing to restructure its loans to SACMH;               
    and that the terms and conditions of the revised arrangement between SACMH  
    and Standard Bank are to Wescoal`s satisfaction.                            
-    Wescoal obtaining irrevocable undertakings from two key SACMH shareholders 
    to accept the offer in terms of the Transaction by no later than 30 April   
-    Wescoal conducting a due diligence investigation into SACMH to its complete
satisfaction and concluding such investigation by not later than 31 May     
-    the approval by the shareholders of Wescoal of the Transaction and issue of
    Wescoal shares in consideration, if required by JSE Listing Requirements ;  
-    the approval of the Scheme by the scheme members of SACMH at the scheme    
    meeting convened by the Court, representing not less than 75% of the votes  
    exercisable by scheme members present and voting either in person or by     
    proxy at the scheme meeting;                                                
-    SACMH obtaining the requisite regulatory approvals;                        
-    the High Court sanctioning the Scheme in terms of the Companies Act;       
-    a certified copy of the Order of Court sanctioning the Scheme being lodged 
    with and registered by the Registrar of Companies in terms of the Companies 
-    the unconditional approval of the Scheme or the Transaction by the         
    Competition Authorities and any other regulatory approvals to the extent    
    required; and                                                               
-    in respect of the substitute offer only, acceptances being received in     
    respect of a minimum of 50.1% of the votes attached to all the issued       
    ordinary shares of SACMH and approval of the substitute offer by all        
    regulatory authorities including the Competition Authorities.               
Wescoal shall be entitled to waive any of the aforementioned suspensive         
conditions or extend the dates for fulfilment.                                  
5.   EXISTING HOLDING OF SACMH SHARES                                           
Neither Wescoal nor any of its directors currently hold or control any shares in
6.   FURTHER ANNOUNCEMENT                                                       
Shareholders will be kept up to date on all developments relating to the offer. 
Financial effects will be announced once sufficient information has been        
obtained from SACMH.                                                            
7.   CAUTIONARY ANNOUNCEMENT                                                    
Shareholders are advised to exercise caution in dealing in the company`s        
securities on the JSE until such time as a further announcement is made.        
Designated Adviser                                                              
Exchange Sponsors                                                               
29 March 2010                                                                   
Date: 29/03/2010 16:00:01 Supplied by www.sharenet.co.za                     
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