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Sah - South African Coal Mining Holdings Limited - Detailed Cautionary

Release Date: 30/03/2010 17:21:02      Code(s): SAH
SAH - South African Coal Mining Holdings Limited - Detailed cautionary          
announcement regarding the acceptance of a proposal received from Shanduka Coal 
(Proprietary) Limited to acquire all of the issued ordinary share capital of    
SACMH                                                                           
SOUTH AFRICAN COAL MINING HOLDINGS LIMITED                                      
(Incorporated in the Republic of South Africa)                                  
(Registration number:  1994/009012/06)                                          
Share code:  SAH      ISIN:  ZAE000102034                                       
("SACMH" or "Company")                                                          
DETAILED CAUTIONARY ANNOUNCEMENT REGARDING THE ACCEPTANCE OF A PROPOSAL RECEIVED
FROM SHANDUKA COAL (PROPRIETARY) LIMITED TO ACQUIRE ALL OF THE ISSUED ORDINARY  
SHARE CAPITAL OF SACMH                                                          
1.   INTRODUCTION                                                               
    1.1  Shareholders are referred to previous announcements by SACMH, the      
         latest being dated 18 February 2010. In such announcements, the board  
of directors of SACMH ("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.           
    1.2  During the week commencing on 15 March 2010, the Board was informed by 
The Standard Bank of South Africa (Proprietary) Limited ("SBSA"), the  
         secured financiers of SACMH, that SBSA has entered into an agreement   
         with Shanduka Coal (Proprietary) Limited ("Shanduka") to sell a        
         portion of SBSA`s secured claim against SACMH to Shanduka (as          
described in paragraph 3 below) and to grant Shanduka a period of      
         exclusivity in respect thereof until the Final Date (as defined in     
         paragraph 2.1.1 hereto) or a period of 35 business days, whichever is  
         the longer.                                                            
1.3  On 18 March 2010 the Board received a proposal from Shanduka which,    
         subject to certain conditions precedent set out herein and which, on   
         implementation thereof, would allow for the acquisition by Shanduka of 
         the entire issued share capital of SACMH and a portion of the          
indebtedness or claims of whatsoever nature and howsoever arising      
         which may be owing by SACMH, or any of its subsidiaries, to SBSA       
         (collectively, "the Transaction").                                     
2.   THE TRANSACTION                                                            
2.1  Implementation of the Transaction:                                     
         2.1.1     Shanduka shall propose a scheme of arrangement in terms of   
                   the provisions of Section 311 of the Companies Act no 61 of  
                   1973 ("Act") to the holders of the ordinary shares in the    
issued share capital of the Company ("Scheme Shares"), but   
                   excluding the Forward Sale Participants (as defined below)   
                   ("Scheme Participants") pursuant to which Shanduka shall     
                   purchase the Scheme Shares from the Scheme Participants on   
the implementation date of the Scheme ("Final Date") for a   
                   consideration of 28 cents per Scheme Share based on the      
                   assumptions and subject to the adjustments as detailed in    
                   schedules attached to the proposal ("Scheme Consideration")  
("Scheme").                                                  
         2.1.2     Prior to the implementation of the Scheme, Shanduka will     
                   approach Royal Bafokeng Capital (Proprietary) Limited,       
                   Mainsail Trading 55 (Proprietary) Limited, New Africa Mining 
Fund (Proprietary) Limited and any of the other principal    
                   shareholders defined in the subscription agreement entered   
                   into between SACMH and Richards Bay Coal Terminal Company    
                   Limited dated 14 December 2009 ("Subscription Agreement")    
who were shareholders on the commencement date of the said   
                   agreement, or their successors-in-title ("Forward Sale       
                   Participants") to enter into a forward sale agreement in     
                   terms of which the Forward Sale Participants shall, on the   
Final Date, sell their shares ("Forward Sale Shares") to     
                   Shanduka with effect from and on the first anniversary of    
                   the commencement date of the Subscription Agreement          
                   ("Closing Date"), in consideration for which Shanduka shall  
pay the Forward Sale Participants a consideration of 28      
                   cents per Forward Sale Share plus accrued interest from the  
                   Final Date until the day prior to Closing Date at the SBSA   
                   daily call deposit rate ("Forward Sale Consideration"). The  
Forward Sale Participants shall have no entitlement to any   
                   profits earned or dividends declared by SACMH for the period 
                   up to the Closing Date.                                      
    2.2  Terms of the Transaction:                                              
2.2.1     On the Final Date, Shanduka shall pay to the Scheme          
                   Participants, the Scheme Consideration;                      
         2.2.2     On the Closing Date, Shanduka shall pay to the Forward Sale  
                   Participants, the Forward Sale Consideration; and            
2.2.3     The sum of the Scheme Consideration and the Forward Sale     
                   Consideration will amount to R126 687 177 (one hundred and   
                   twenty six million six hundred and eighty seven thousand one 
                   hundred and seventy seven rand), plus interest on the        
Forward Sale Consideration from the Final Date until the     
                   Closing Date.                                                
    2.3  Conditions precedent to the Transaction:                               
         The implementation of the Transaction is subject to the fulfillment or 
waiver, as the case may be, of, inter alia, the following conditions   
         precedent, which conditions precedent may be waived by Shanduka in its 
         sole discretion:                                                       
         2.3.1     SACMH will, on the day immediately prior to the sanctioning  
of the Scheme by the South Gauteng High Court, have no       
                   liabilities other than those disclosed by SACMH detailed in  
                   the schedules to the proposal;                               
         2.3.2     the receipt by Shanduka of irrevocable undertakings from     
Scheme Participants holding not less than 75% of the Scheme  
                   Shares given in favour of Shanduka and the Company to attend 
                   the Scheme meeting and vote in favour of the Scheme, within  
                   30 days of acceptance of the proposal by SACMH;              
2.3.3     approval of the Scheme by a majority of Scheme Participants  
                   representing not less than three-quarters of the votes       
                   exercisable by Scheme Participants present and voting,       
                   either in person or by proxy, at the Scheme meeting;         
2.3.4     the Scheme being sanctioned by the South Gauteng High Court; 
         2.3.5     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  Act;                              
2.3.6     for purposes of the Forward Sale, the approval of the        
                   Forward Sale by the Department of Mineral Resources ("DMR"), 
                   to the extent required;                                      
         2.3.7     for purposes of the Transaction, the approval of the         
Transaction by the requisite regulatory authorities within   
                   120 days of acceptance of the proposal by SACMH; and         
         2.3.8     the necessary formal agreements being concluded on terms     
                   reasonably acceptable to the parties thereto within 28       
working days of acceptance of the offer by SACMH, which      
                   agreements shall include an implementation agreement,        
                   Forward Sale Agreement, shareholders` agreement, and mining  
                   management agreement.                                        
2.4  General offer:                                                         
         Shanduka will be entitled, at any time prior to the Final Date, to     
         convert the Scheme into a general offer to Scheme Participants, in     
         terms of section 440 of the Act.                                       
2.5  Delisting:                                                             
         If the Scheme is successful or the general offer becomes               
         unconditional, application will be made to the JSE Limited ("JSE") for 
         the termination of the listing of the shares of SACMH on the JSE.      
2.6  Funding of the Transaction:                                            
    Prior to the announcement of an offer ("Offer") in terms of the Securities  
    Regulation Code on Takeover and Mergers ("SRP Code"), Shanduka will provide 
    the Securities Regulation Panel ("SRP") with confirmation that Shanduka has 
sufficient resources available to it to satisfy full acceptance of such     
    Offer.                                                                      
3.   SBSA                                                                       
    SBSA, as secured financiers to the Company, has accepted a proposal from    
Shanduka that, on implementation of the Scheme, would allow for the         
    acquisition by Shanduka of a portion of the indebtedness and claims of      
    whatsoever nature and howsoever arising which may be owing by SACMH, or any 
    of its subsidiaries, to SBSA ("SBSA Agreement") resulting in SBSA having no 
further claims against SACMH, however certain claims are being retained by  
    SBSA so as to enforce certain claims by it against third parties.           
4.   SHANDUKA AND ITS UNDERTAKINGS                                              
    Shanduka is a private company incorporated in South Africa and forms part   
of the Shanduka Group. Shanduka has various thermal and anthracite          
    collieries.                                                                 
    In addition to the terms of the Transaction, Shanduka has undertaken to:    
    4.1  provide a rehabilitation guarantee in favour of the DMR for an amount  
of approximately R34 million;                                          
    4.2  provide finance and/or procure the requisite assistance, under the     
         terms of a mining management agreement, to the Company in order to     
         recommence mining operations to ensure compliance with the             
Subscription Agreement; and                                            
    4.3  procure that the Company has sufficient cash resources to fund its     
         operating costs,                                                       
    (collectively, "Shanduka Undertakings")                                     
Shanduka currently owns no shares in SACMH.                                 
5.   OPINION AND RECOMMENDATIONS                                                
    On 18 March 2010 the majority of the Board (with the exception of Mr.       
    Gribnitz), after having evaluated the terms and conditions of the           
Transaction (including the Shanduka Undertakings) as well as an offer by    
    another party (set out in a separate announcement), believed that it was in 
    the best interests of the Company and its stakeholders to recommend the     
    proposal received from Shanduka to its shareholders based inter alia on the 
better price, better major shareholder provisions, the SBSA Agreement       
    (critical to any transaction`s success) and the Shanduka Undertakings.      
    Shanduka is the potential preferred offeror referred to in other            
    announcements and to this end, the Board agreed to a 35 business day        
exclusivity period from date of acceptance of the proposal.                 
    Due to the time constraints of the proposal, the Board obtained telephonic  
    approval from the SRP to evaluate and recommend this proposal prior to      
    obtaining an opinion from an external adviser as required by the SRP Code.  
An appropriate external adviser will be appointed to evaluate the           
    Transaction and any further proposals that may be received and to make      
    appropriate recommendations to the Board and SACMH shareholders.            
6.   DOCUMENTATION AND SALIENT DATES                                            
Pursuant to the Offer, a circular will be posted to SACMH shareholders,     
    subject to the approval of the JSE and the SRP andwithin the requisite      
    timeframes stipulated in the SRP Code.                                      
7.   CAUTIONARY ANNOUNCEMENT                                                    
Shareholders are advised to continue to exercise caution when dealing in    
    the Company`s shares until a further announcement is made.                  
Johannesburg                                                                    
30 March 2010                                                                   
Sponsor:                                                                        
Exchange Sponsors                                                               
Date: 30/03/2010 17:21:01 Supplied by www.sharenet.co.za                     
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