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SAH - South African Coal Mining Holdings Limited - Announcement of a Firm

Release Date: 30/03/2010 11:53:02      Code(s): SAH
SAH - South African Coal Mining Holdings Limited - Announcement of a Firm       
SOUTH AFRICAN COAL MINING HOLDINGS LIMITED                                      
(Incorporated in the Republic of South Africa)                                  
(Registration number:  1994/009012/06)                                          
Share code: SAH & ISIN: ZAE000102034                                            
1.   INTRODUCTION                                                               
1.1  Shareholders are referred to previous announcements by SACMH, the latest   
    being dated 18 February 2010, that SACMH regularly receives unsolicited     
    offers to buy or invest in its business. The SACMH board ("Board")          
    undertook that all serious offers in respect of which the Board has         
received satisfactory external proof of funding will be submitted to        
    shareholders for consideration as soon as practically possible.             
1.2  On 24 March 2010 the Board received a letter from Wescoal containing a     
    firm intention to make an offer to acquire all the issued ordinary share    
capital of SACMH, 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").                                        
1.3  Details of the offer and the conditions precedent to which it is subject   
are set out below.                                                          
1.4  This announcement summarises the information provided in the letter of     
    firm intention to make an offer addressed to the Board.                     
2.   THE OFFER                                                                  
2.1  The offeror:                                                               
    Wescoal Holdings Limited ("Wescoal") is a public company incorporated in    
    South Africa, listed on the JSE Limited.  Wescoal is a coal trader and      
    owns a coal mine. Wescoal owns no shares in SACMH.                          
2.2  The offer:                                                                 
    Wescoal notified the Board 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    
("Wescoal Offer" or "Transaction"). The Wescoal Offer was based on          
    certain assumptions. Wescoal reserved the right to either amend the offer   
    price downwards or withdraw the offer if the actual number of shares and    
    total liabilities exceeded those assumptions.                               
The scheme consideration will entail that 50 222 415 Wescoal shares will    
    be issued at an issue price of 90 cents per share, for a total purchase     
    consideration of R45 200 174.                                               
2.3  Manner of giving effect to the Wescoal Offer                               
2.3.1     To implement the Wescoal Offer, Wescoal intends to propose a scheme   
         of arrangement in terms of section 311 of the Companies Act, 1973      
         ("Act") between Wescoal and all the ordinary shareholders of SACMH     
         for Wescoal to acquire 100% of the total issued ordinary share         
capital of SACMH ("Scheme"). The purchase consideration will be        
         settled by the issue of 11.11 Wescoal shares for every 100 SACMH       
         ordinary shares held, once the Scheme becomes operative. The Wescoal   
         Offer will be made in accordance with the SRP Code.                    
2.3.2     Alternatively to the Scheme, Wescoal will make a substitute offer to  
         all SACMH`s ordinary shareholders, to acquire all of their shares in   
         exchange for 11.11 Wescoal shares for every 100 SACMH shares held,     
         on condition that in order to succeed it should it be accepted by      
shareholders in respect of 50,1% or more of the SACMH ordinary         
         shares that are the subject matter of the substitute offer.            
2.3.3.    If the Scheme is successful or the substitute offer becomes           
         unconditional, application will be made to the JSE Limited ("JSE")     
to terminate the listing of the ordinary shares of SACMH on the JSE.   
2.3.4     On the effective date of the Scheme, Wescoal will invite two          
         representatives of the former majority shareholders of SACMH to join   
         Wescoal`s board.                                                       
2.4  Conditions precedent                                                       
    The Scheme and/or the substitute offer and/or the Transaction will be       
    subject to the following suspensive conditions:                             
2.4.1     Approval of the Transaction by the Board by not later than 30 April   
2.4.2     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;                                                    
2.4.3     That Standard Bank of South Africa (Pty) Limited ("SBSA"), 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;                      
2.4.4     Wescoal obtaining irrevocable undertakings from two key SACMH         
         shareholders to accept the offer in terms of the Transaction by no     
         later than 30 April 2010;                                              
2.4.5     Wescoal conducting a due diligence investigation into SACMH to its    
complete satisfaction and concluding such investigation by not later   
         than 31 May 2010;                                                      
2.4.6     the approval by the shareholders of Wescoal of the Transaction and    
         issue of Wescoal shares in consideration, if required by JSE Limited   
Listings Requirements;                                                 
2.4.7     the approval of the Scheme by scheme members of SACMH at the scheme   
         meeting convened by the Court, representing not less than three-       
         fourths (75%) of the votes exercisable by scheme members present and   
voting either in person or by proxy at the scheme meeting;             
2.4.8     SACMH obtaining the requisite regulatory approvals, including         
         without limitation, the approval of the SRP and JSE of the             
         documentation/ circulars relating to the Scheme and/or the             
2.4.9     the High Court sanctioning the Scheme in terms of the Companies Act;  
2.4.10    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 Act;                                                     
2.4.11    the unconditional approval of the Scheme or the Transaction by the    
         Competition Authorities and any other regulatory approvals to the      
         extent required; and                                                   
2.4.12    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.              
2.5  Approvals, consents and undertakings received                              
The Board is not aware of any approvals, consents and undertakings          
    received by Wescoal at the date of making the Wescoal Offer. SBSA however   
    informed the Board that it has entered into an agreement with another       
    party ("Potential Preferred Offeror") to sell SBSA`s secured claim          
against SACMH to the Potential Preferred Offeror, to grant the Potential    
    Preferred Offeror a period of exclusivity in respect thereof. .             
3    OPINION AND RECOMMENDATIONS                                                
    On 18 March 2010 the Board received and accepted a proposal from the        
Potential Preferred Offeror. Due to the time constraints in this            
    proposal, the Board obtained telephonic approval from the SRP to evaluate   
    and recommend the proposal prior to obtaining an opinion from an external   
    adviser as required by the SRP Code.                                        
After having evaluated the terms and conditions of the proposal by the      
    Potential Preferred Offeror as well as an offer by another party (set out   
    in separate announcements), the Board believed that it was in the best      
    interests of the Company and its stakeholders to recommend the proposal     
received from the Potential Preferred Offeror to its shareholders.          
    The Board is of the opinion that the Wescoal Offer received on 24 March     
    2010 is less attractive to SACMH and its stakeholders than the offer by     
    the Potential Preferred Offeror. The Board has therefore decided not to     
recommend the Wescoal Offer to its shareholders.                            
    The Board will appoint an external adviser to evaluate all offers           
    received and to make appropriate recommendations to the Board and SACMH     
30 March 2010                                                                   
Exchange Sponsors                                                               
Date: 30/03/2010 11:53:02 Supplied by www.sharenet.co.za                     
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