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Sah - South African Coal Mining Holdings Limited - Announcement Of A Revised

Release Date: 20/05/2010 12:26:02      Code(s): SAH
SAH - South African Coal Mining Holdings Limited - Announcement of a revised    
firm intention by JSW Energy Limited                                            
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 "the Company")                                                      
ANNOUNCEMENT OF:                                                                
SHAREHOLDERS OF SACMH; AND                                                  
-    RENEWAL OF CAUTIONARY ANNOUNCEMENT                                         
1    INTRODUCTION                                                               
1.1  Shareholders are referred to the previous announcement by SACMH dated 31   
March 2010 in respect of a letter received by the SACMH board ("the Board") 
    from JSW containing a firm intention to lend funds to SACMH to enable it to 
    discharge its liability to The Standard Bank of South Africa (Proprietary)  
    Limited ("SBSA"), to provide new funding to reopen the mine and to make an  
offer to acquire a stake in the issued ordinary shares of SACMH, being all  
    the shares save for those held by Royal Bafokeng Capital (Pty) Limited      
    ("RBC") and Mainsail Trading 55 (Pty) Ltd ("Mainsail"). If concluded, the   
    transaction will be an affected transaction as defined by the Securities    
Regulation Code and Rules ("SRP Code") of the Securities Regulation Panel   
1.2. On 16 April the Board and shareholders of SACMH were advised by JSW that   
    the following agreements were concluded in respect of RBC, a pyramid        
company of SACMH:                                                           
1.2.1.    a share purchase agreement between JSW and Strider Holdings (Pty)     
         Limited ("Strider") which has resulted in Strider disposing of 49.8%   
         of the entire issued share capital in RBC to JSW for a purchase price  
equal to 30 cents for each of the shares in SACMH that are indirectly  
         held by Strider; and                                                   
1.2.2.    a put and call agreement between JSW, Royal Bafokeng Ventures (Pty)   
         Limited ("RBV") and RBH Resources (Pty) Limited ("RBHR"), which if     
effected will result in:                                            RBV disposing of 50.2% of the entire issued share capital in RBC  
              to JSW for a purchase price equal to 30 cents for each of shares  
              in SACMH that are indirectly held by RBV plus interest at the     
call rate from the date on which the offer by JSW for the         
              remaining shares of the minorities is accepted by such            
              minorities, to the date on which the put or call option is        
              exercised in terms of the put and call agreement; and      RBHR disposing of the entire issued share capital in Mainsail     
              Trading 55 (Proprietary) Limited ("Mainsail") to JSW for a        
              purchase price equal to 30 cents for each of the shares in SACMH  
              that are directly held by Mainsail plus interest at the call rate 
from the date on which the offer by JSW for the remaining shares  
              of the minorities is accepted by such minorities, to the date on  
              which the put or call option is exercised in terms of the put and 
              call agreement.                                                   
RBC and Mainsail collectively hold approximately 284.6 million shares in    
    SACMH and such transactions, if implemented, will therefore result in a     
    change in the control of SACMH. It is not a foregone conclusion that the    
    parties to this put and call agreement will in fact give effect to this     
agreement in its current form or at all. Shareholders were further advised  
    that an amended firm intention to make an offer to the minority             
    shareholders of SACMH would follow shortly and will accord to the same      
    purchase principles as those set out in the transactions above.             
1.3  JSW subsequently informed SACMH that all conditions precedent in respect of
    the agreements referred to in 1.2 above have been fulfilled and that,       
    consequently, a change in control of SACMH for the purposes of rule 8.1.A   
    of the rules of the SRP Code has been effected.                             
1.4  JSW has subsequently nominated Chlorospan (Proprietary) Limited (          
    "Chlorospan"), a wholly owned subsidiary of JSW Energy Natural Resources    
    Mauritius Limited, which itself is a wholly owned subsidiary of JSW, as the 
    acquiror of the shares and the rights referred to in clause 1.2 above.      
1.5  This announcement summarises the information provided in the letter of     
    revised firm intention to make an offer for control of SACMH and            
    supplementary firm intention to make a mandatory offer to all remaining     
    shareholders of SACMH addressed to the Board by JSW`s and Chlorospan`s      
attorneys dated 19 May 2010. Details of the revised and supplementary       
    offers and the condition precedent to which they are subject are set out    
2    THE REVISED OFFER                                                          
2.1  The offeror:                                                               
2.1.1     Chlorospan is a wholly owned subsidiary of JSW Energy Natural         
         Resources Mauritius Limited, which itself is a wholly owned subsidiary 
         of JSW. Both of these companies are special purpose vehicles utilised  
to give effect to this transaction.                                    
2.1.2     JSW itself is a public company incorporated in India, listed on both  
         the Bombay Stock Exchange and the National Stock Exchange. It is part  
         of the JSW Group which operates in the steel, power, cement, software  
and infrastructure sectors. Its revenue for the year ended 31 March    
         2009 was in excess of USD 3.6 billion. JSW has since 2000 developed,   
         constructed and operated power plants. It is a coal-off taker and not  
         a coal trader. JSW owns no shares in SACMH. The offer is extended by a 
wholly owned subsidiary of JSW, Chlorospan (Proprietary) Limited,      
         which will change its name to JSW Energy and Natural Resources South   
         Africa (Proprietary) Limited.                                          
2.1.3     JSW and Chlorospan advised SACMH that:                                
-    it is no longer their intention to compel the minority shareholders in 
         SACMH to dispose of their shares in SACMH by way of section 311 or     
         section 440(K) of the Act, or to delist SACMH from the JSE Limited     
-    approval has been obtained from the Indian Securities Regulators, and  
         the obtaining of such approval is no longer a condition precedent to   
         this offer;                                                            
    -    it has waived the condition precedent requiring delivery of the        
audited financial accounts of SACMH and all of its subsidiaries for    
         the financial years ended 2008 and 2009;                               
    -    given the completion of the transactions referred to in 1.2 above, it  
         is the intention of JSW or Chlorospan to seek the approval of SACMH to 
appoint two or more directors to the Board to give direction to the    
         company, and to second members of its own management to SACMH to       
         assist in restoring SACMH to financial and operational heath; and      
    -    JSW and the Royal Bafokeng Holdings Limited are in earnest discussion  
with a view to mapping out their future relationship.  This may result 
         in the amendment or scrapping of the put and call agreement referred   
         to in clause 1.2.2 above.                                              
2.1.4     JSW and SBSA have reached agreement in principle for JSW or its       
nominees to discharge the debt of SACMH to SBSA.                       
2.2  The revised firm intention:                                                
    JSW and Chlorospan have notified the Board of the revised firm intention:   
2.2.1     to make a mandatory offer to acquire all the ordinary shares in the   
         issued share capital of SACMH from all of the shareholders of SACMH    
         who wish to dispose of their shares, save for RBC and Mainsail         
         ("Remaining Shareholders"), for a purchase consideration equal to 30   
cents for each share ("the JSW Offer");                                
2.2.2     to discharge SACMH`s liability to SBSA. Such discharge shall be on the
         basis that SBSA is not required to convert any of its debt into        
         equity, nor shall such discharge be subject to the conclusion of any   
of the s311 processes which had been undertaken by the Company. It is  
         also expected that the Bank`s relationship as a funder of SACMH shall  
         continue into the future.                                              
2.3  Rationale for and benefits of the JSW Offer                                
The rationale and intention of the JSW Offer is inter alia, in the short    
    term, to enable JSW to assist in the management and operations of SACMH     
    and, in the long term, to manage and control coal and coal mining assets in 
It is JSW`s view that the JSW Offer, if implemented, may also result in the 
    following benefits for SACMH:                                               
    *    The close working relationship between JSW and SACMH will facilitate   
         the transfer of know-how, technology and expertise, and the            
undertaking of joint development and marketing initiatives.            
    *    JSW will bolster the management of SACMH by seconding staff to SACMH   
         and engaging new employees and service providers for SACMH.            
    *    It will provide SACMH with greater access to international markets and 
an opportunity to leverage off JSW`s international infrastructure.     
    *    JSW will procure a significant portion of SACMH`s quantum of export    
         coal adhering to the RB-1 specification.                               
    *    The financial ability and capability of SACMH will be strengthened as  
JSW will assist SACMH in discharging its liability to SBSA and it will 
         introduce fresh working and expansion capital to SACMH to enable it to 
         resume mining operations.                                              
SACMH will be placed on its road to recovery once it resumes mining operations  
during May or June 2010, and JSW will support SACMH in this regard. It is       
expected that SACMH will be operating the mines at full production capacity by  
the end of December 2010.                                                       
It is JSW`s view that the JSW Offer, if implemented, may result in the following
benefits for the shareholders:                                                  
    -    the suspension of the company by the JSE could be lifted;              
    -    the shares in SACMH will once again be tradable by shareholders; and   
    -    once SACMH has been restored to full health, shareholders can          
anticipate to receive value by virtue of their shareholding in the     
2.4  Manner of giving effect to the JSW Offer                                   
2.4.1     JSW and SBSA have agreed, in principle, to the discharge of the sum of
the liability of SACMH to SBSA.                                        
2.4.2     JSW shall commence normalising the position of SACMH so that it is    
         able to resume mining operations forthwith upon acquiring shares as    
         set out below.                                                         
2.4.3     JSW undertakes, subject to the condition precedent set out in 2.5     
         below, to make a mandatory offer ("Mandatory Offer") to all of the     
         Remaining Shareholders to acquire all of their shares in SACMH ("SACMH 
         Shares"), insofar as they wish to sell those shares, free from all     
encumbrances and together with all rights attaching thereto, for a     
         purchase consideration of 30 cents per share. Should the Mandatory     
         Offer be accepted by any of the Remaining Shareholders, then the       
         purchase consideration payable to such Remaining Shareholders will be  
paid once the Mandatory Offer becomes unconditional.                   
2.5  Condition precedent                                                        
    The JSW Offer is subject to the following remaining condition precedent:    
    -    receipt of all approvals required from the SRP and the JSE.            
2.6  SRP funding confirmation                                                   
    The Industrial Development Bank of India ("IDBI") has provided written      
    confirmation to the SRP that the necessary resources are available to JSW   
    for the purposes of satisfying the purchase consideration necessary in      
order for them to acquire all of the SACMH Shares from the Remaining        
    Shareholders insofar as this is applicable. JSW gave an undertaking to the  
    SRP that such written confirmation from IDBI will be replaced shortly with  
    a bank guarantee from a member of the First Rand Group of Companies.        
2.7  Period                                                                     
    The JSW Offer will be open for acceptance by SACMH shareholders for a       
    period of 21 days from the date of issue of the circular to shareholders of 
    SACMH containing the offer document.                                        
2.8  Approvals, consents and undertakings received                              
    The Board is not aware of any approvals, consents and undertakings received 
    by JSW in respect of the JSW Offer, save for approval from the Indian       
    Securities Regulators.                                                      
3    OPINION AND RECOMMENDATIONS                                                
    The Board has appointed an external adviser to evaluate all offers received 
    and to make appropriate recommendations to the Board and SACMH              
4.   RENEWAL OF CAUTIONARY ANNOUNCEMENT                                         
    Shareholders are advised to continue to exercise caution when dealing in    
    the Company`s shares until a further announcement is made.                  
20 May 2010                                                                     
Exchange Sponsors                                                               
Date: 20/05/2010 12:26:02 Supplied by www.sharenet.co.za                     
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