Go Back Email this Link to a friend


Keh - Keaton Energy Holdings Limited - Keaton Energy To Acquire 74% Of Leeuw

Release Date: 14/02/2011 16:31:02      Code(s): KEH
KEH - Keaton Energy Holdings Limited - Keaton Energy to acquire 74% of Leeuw    
Mining and exploration withdrawal of cautionary announcement                    
Keaton Energy Holdings Limited                                                  
(Incorporated in the Republic of South Africa)                                  
(Registration number 2006/011090/06)                                            
JSE share code: KEH ISIN: ZAE000117420                                          
("Keaton Energy" or "the Company")                                              
Leeuw Mining and Exploration (Pty) Limited                                      
(Incorporated in the Republic of South Africa)                                  
(Registration number 2002/000483/07)                                            
("Leeuw Mining and Exploration" or "LME")                                       
Keaton Energy to acquire 74% of Leeuw Mining and Exploration                    
Withdrawal of cautionary announcement                                           
1    Introduction                                                               
    Keaton Energy announces that it has entered into a suite of agreements,     
details of which are set out in paragraph 3 below, that will, subject to    
    the relevant regulatory approvals and fulfilment or waiver of conditions    
    precedent set out in paragraph 4 below, result in the acquisition by Keaton 
    Energy of:                                                                  
*    preference shares in the share capital of LME and various loans and    
         claims against LME ("the Refinancing");                                
    *    a 64% interest in the ordinary share capital of LME("the               
         Acquisition"); and                                                     
*    an additional 10% interest in the ordinary share capital of LME        
         pursuant to the settlementof a R10 millionconvertible loan recently    
         provided by Keaton Energy to LME("the Conversion"),                    
    collectively, "the Transaction".                                            
2    Information on LME and rationale for the Transaction                       
    LME is a privately held coal exploration, development and mining company.   
    It owns and operates the Vaalkrantz Anthracite Colliery near Vryheid,       
    Kwazulu-Natal ("Vaalkrantz Colliery") and holds a number of new order       
prospecting rights and mining rights over other coal properties in Kwazulu- 
    Natal.                                                                      
    LME`s objective is to remain a long-term participant in the coal industry,  
    within a group that can provide financial and technical resources and a     
portfolio of complimentary projects.                                        
    Keaton Energy`s longer term objective is to grow to become a mid-tier coal  
    producer with a robust, sustainable business across a portfolio of domestic 
    and export coal projects at different stages of development.  The           
combination of Keaton Energy`s Vanggatfontein and Sterkfontein projects and 
    LME`s Vaalkrantz Colliery, with its export allocation, and LME`s            
    Braakfontein and Koudelager projects, will provide a platform for Keaton    
    Energy to achieve this objective.                                           
Since its establishment in 2002, LME has developed the Vaalkrantz Colliery  
    and advanced the Braakfontein and Koudelager projects to the point that     
    they have, or are about to be granted, mining rights in terms of the        
    Minerals and Petroleum Resources Development Act ("MPRDA").                 
LME is, however, undercapitalised and is in need of funds to optimally      
    utilize its Vaalkrantz Colliery and to continue the development of its      
    other projects.  The task of recapitalising the Vaalkrantz Colliery and the 
    raising of development capital for the Koudelager and Braakfontein projects 
will be better achieved within a listed group, which has both access to     
    capital markets and a combination of producing and development projects.    
    As a consequence of the Refinancing and Acquisition, LME will reschedule    
    the repayment terms of its existing preference share and debt facilities    
with theIndustrial Development Corporation of South Africa Limited ("IDC"). 
3    Details of the Transaction                                                 
3.1  The Refinancing                                                            
3.1.1     As the first stage of the Transaction, Keaton Energy will immediately 
acquire from Anglo Operations Limited, acting through its Anglo        
         American Thermal Coal division ("AOL"), various loans and claims in    
         LME for a total consideration of R46 999 998 to be satisfied by the    
         issue of 10 444 444 new Keaton Energy ordinary shares at a price of    
R4.50 per share.                                                       
3.1.2     Keaton Energy will also acquire 40 preference shares in the share     
         capital of LME from the Anglo Khula Mining Fund (Proprietary) Limited  
         ("AKMF"), representing 40% of LME`s issued preference share            
capital("AKMF preference shares"),for a total consideration of R8 000  
         001 to be satisfied by the issue of 1 777 778 new Keaton Energy        
         ordinary shares at a price of R4.50 per share.  The balance of the     
         preference shares in the share capital of LME are held by the IDC.     
3.1.3     The total purchase consideration for the loans, claims and preference 
         shares is R54 999 999, which will be satisfied through the issue of 12 
         222 222 new Keaton Energy ordinary shares at a price of R4.50 per      
         share.                                                                 
3.1.4     The Refinancing is expected to be implemented on 20 February 2011,    
         with an effective date of 30 September 2010.                           
3.1.5     AOL and AKMF intend to enter into agreements with Plusbay Limited     
         ("Plusbay") to dispose of the abovementioned 10 444 444 and 1 777 778  
new Keaton Energy ordinary shares,received by them as a result of the  
         Refinancing, to Plusbay.Plusbay currently holds 5 555 556 (3.8%)       
         Keaton Energy ordinary shares.  Plusbay is currently classified as a   
         "public shareholder" in terms of paragraph 4.25 of the JSE Limited     
("JSE") Listings Requirements and is not a related party.  Plusbay     
         will acquire a further 28 844 444 Keaton Energy ordinary shares as a   
         consequence of the Refinancing and the Acquisition (see paragraph      
         3.2.4 below), which will result in Plusbay holding a 19.2% interest in 
Keaton Energy.  Plusbay is an affiliate of Gunvor Group Limited        
         (www.gunvorgroup.com), a Geneva-based energy trading group.  It is     
         expected that Plusbay will nominate a representative to the Keaton     
         Energy board.                                                          
3.2  The Acquisition                                                            
3.2.1     In the second stage of the Transaction, Keaton Energy will acquire 64%
         of the ordinary shares in LME from existing shareholders, being 54%    
         from JPI Leeuw and Associates (Proprietary) Limited ("JPI") and 10%    
from Anglo American Zimele Limited ("Anglo Zimele"), respectively.     
3.2.2     Once all regulatory approvals have been received and conditions       
         precedent fulfilled or waived, Keaton Energy will issue 14 177 778new  
         Keaton Energy ordinary shares to JPI and 2 444 444 new Keaton Energy   
ordinary shares to Anglo Zimele in consideration for the LME ordinary  
         shares acquired.                                                       
3.2.3     The new Keaton Energy ordinary shares will be issued at a price of    
         R4.50 per share, resulting in an aggregate purchase consideration of   
R74 799 999.                                                           
3.2.4     Anglo Zimele and JPI intend to enter into agreements with Plusbay to  
         dispose of the 16 622 222 new Keaton Energy ordinary shares, received  
         by them as a result of the Acquisition, to Plusbay.  JPI will placethe 
cash proceeds from the sale of the Keaton Energy ordinary shares to    
         Plusbay into an escrow account for a period of 3 months after the      
         closing date,as defined in the agreement concluded between JPI and     
         Keaton Energy, to secure any warranty or other claims which may arise  
under theagreement with JPI contemplated in paragraph 3.2.1 above.     
3.2.5     The effective date of theAcquisition will be determined by the        
         fulfilment or waiver of the last of the conditions precedentset out in 
         paragraph 4 below which include, inter alia, regulatory approvals.     
3.3  The Conversion                                                             
                                                                                
    10% of LME`s issued ordinary share capital is presently held as treasury    
    shares by a wholly-owned subsidiary of LME.  In addition to the             
Acquisition, Keaton Energy will acquirethese shares from LME`s subsidiary,  
    LeeuwBraakfontein Colliery (Proprietary) Limited ("LBC"),through the        
    settlement of a R10 millionconvertible loan recently provided by Keaton     
    Energy to LME.                                                              
4    Conditions precedent                                                       
4.1  The Refinancing is subject to the fulfilment or waiver, as the case may be,
    of the following conditions precedent:                                      
4.1.1     the pre-emptive rights of IDC to acquire the AKMF preference shares   
are waived;                                                            
4.1.2     the board of directors of LME and AKMF pass such resolutions as are   
         necessary to approve and implement the Refinancing;                    
4.1.3     the ordinary shareholders of LME and LME consent to the cession of all
the rights and delegation of all of the obligations of AKMF, in terms  
         of the preference share subscription agreement concluded between the   
         relevant parties thereto in relation to the AKMF preference shares, to 
         Keaton Energy;                                                         
3.1.4     the shareholders of JPI consent to AOL waiving its rights arising from
         the option agreement concluded between JPI, AOL and the shareholders   
         of JPI on 4 June 2010.                                                 
4.1.5     special resolutions are passed by each of the ordinary and preference 
shareholders of LME in order to amend the articles of association of   
         LME, which set out the rights and privileges attaching to the          
         preference shares in LME held by IDC and AKMF, respectively ("the LME  
         preference shares") and such special resolutions are registered with   
the Companies and Intellectual Property Registration Office ("CIPRO"); 
         and                                                                    
4.1.6     the conclusion of agreements relating to the rescheduling of the      
         repayment terms of LME`s preference shares on the terms approved by    
the IDC credit committee, so as to accord with the amendments to be    
         made to the articles of association of LME.                            
4.1.7     the agreement referred to in 3.1.5 above is concluded and becomes     
         unconditional.                                                         
4.1.8     the agreement relating to the acquisition by JPI of the ordinary      
         shares held by certain minority shareholders in JPI, is concluded.     
4.2       The Acquisition is subject to the fulfilment or waiver, as the case   
         may be, of the following conditions precedent by no later than the     
dates stated below, or such other date as may be agreed to between     
         Keaton Energy, JPI and Anglo Zimele in accordance with the terms       
         contained in the agreements giving effect to the Acquisition:          
4.2.1     by no later than 31 March 2011:                                       
4.2.1.1   the pre-emptive rights of the ordinary shareholders of LME to acquire 
         any of the ordinary shares in LME referred to in paragraphs3.2.1 and   
         3.3, are waived in order to give effect to the Acquisition;            
4.2.1.2   the written consent of IDC is obtained for the Acquisition;           
4.2.1.3   the release by IDC of the ordinary shares in LME which have been      
         pledged to it by the ordinary shareholders of LME and the cancellation 
         of the relevant suretyships provided by the ordinary shareholders of   
         LME in favour of IDC, in order to give effect to and implement the     
Acquisition;                                                           
4.2.1.4   the board of directors of the respective parties to the Acquisition   
         pass such resolutions as are necessary to approve and implement the    
         Acquisition,                                                           
4.2.1.5   special resolutions are passed by the shareholders of JPI in order to 
         give effect to the disposal of JPI`s 54% equity interest in LME to     
         Keaton Energy, and sale of the resulting new Keaton Energy shares to   
         Plusbay, and such special resolutions are registered with CIPRO;       
4.2.1.6   special resolutions are passed by each of the ordinary shareholders   
         and preference shareholders of LME in order to give effect to the sub- 
         division of the authorised and issued share capital of LME, which sub- 
         division is required in order to give effect to the Acquisition and    
such special resolutions are registered with CIPRO;                    
4.2.1.7   special resolutions are passed by each of the ordinary shareholders   
         and preference shareholders of LME and by LME, the sole shareholder of 
         LBC, in order to amend the articles of association of LME and LBC to   
comply with Schedule 10 of the JSE Listing Requirements and such       
         special resolutions are registered with CIPRO;                         
4.2.1.8   Keaton Energy obtains undertakings on terms acceptable to it from at  
         least 50% (fifty percent) of the shareholders of Keaton Energy,        
registered as such as at 31 March 2011, who are entitled to attend and 
         vote at a general meeting of shareholders in terms of which they       
         undertake to vote in favour of all resolutions required to be passed   
         in order to approve and implement the Acquisition;                     
4.2.2     by no later than 30 June 2011:                                        
4.2.2.1   the approval of the competition authorities established under the     
         South African Competition Act, 89 of 1998, as amended, to the          
         Acquisition is obtained;                                               
4.2.2.2   the approval, to the extent necessary, of the JSE to the Acquisition  
         is obtained;                                                           
4.2.2.3   the approval of the shareholders of Keaton Energy, to the extent      
         necessary, in general meeting, approving the Acquisition (alone, or if 
aggregated by the JSE with any other transaction to which Keaton       
         Energy is or may become a party, the approval of such other            
         transactions); and                                                     
4.2.2.4   the shareholders of Keaton Energy pass a resolution placing sufficient
authorised but unissued ordinary shares in the share capital of Keaton 
         Energy at the disposal, and under the control, of the directors of     
         Keaton Energy in order to give effect to and implement the             
         Acquisition;                                                           
4.2.3     by no later than 30 December 2011:                                    
4.2.3.1   the consent of the Minister of Mineral Resources in terms of Section  
         11 of the MPRDA is obtained; and                                       
4.2.3.2   the agreements referred to in paragraph 3.2.4 above are concluded and 
become unconditional.                                                  
4.3  While Keaton Energy`s right to exercise the Conversion is not subject to   
    any conditions precedent, it is presently Keaton Energy`s intention not to  
    convert its loan in LME into ordinary shares in LME until the Acquisition   
is unconditional.                                                           
5    Categorisation                                                             
    The Transaction, which includes the Refinancing, the Acquisition and the    
    Conversion, has been aggregated in terms of Section 9 of the JSE Limited    
("JSE") Listings Requirements and falls within the requirements of a        
    Category 2 transaction, which requires an announcement containing the       
    details set out herein.  In addition, as the Transaction requires the issue 
    of a maximum of 28 844 444 new Keaton Energy ordinary shares (being 19.2%   
of Keaton Energy`s current issued share capital), and Keaton Energy`s       
    shareholders have only granted authority to the directors to issue up to    
    10% of Keaton Energy`s ordinary shares in issue from time to time, Keaton   
    Energy will seek shareholder approval to enable it to issue the proposed    
new Keaton Energy ordinary shares to fulfill its obligations in terms of    
    the Acquisition.                                                            
6    Unaudited pro forma financial effects of the Transaction ("financial       
    effects")                                                                   
Based on Keaton Energy`s reviewed interim condensed group results for the   
    six months ended 30 September 2010, the financial effects of the            
    Transaction on Keaton Energy`s earnings per share ("EPS"), headline EPS     
    ("HEPS"), diluted EPS and net asset value per share ("NAV") are set out     
below.                                                                      
    The financial effects are prepared for illustrative purposes only, and      
    because of their nature, may not give a fair presentation of Keaton         
    Energy`s financial position or the effect and impact of the Transaction.    
The financial effects are the responsibility of Keaton Energy`s board.      
                Published      Effect         %     Effect  % Change            
                   Before   after the    Change  after the                      
                      (1)   Refinanci            Refinanci                      
ng(2)(3)(              ng, the                      
                                   4)            Acquisiti                      
                                                    on and                      
                                                       the                      
Conversio                      
                                                 n(2)(3)(5                      
                                                         )                      
                                                                                
NAV (cents)                                                                    
                    313.0       331.8       6.0      361.9      15.6            
                                                                                
                                                                                
1.7         9.5     458.8        8.1     376.5            
 EPS (cents)                                                                    
                      1.7         2.5      47.1        1.8       5.9            
 HEPS (cents)                                                                   
1.7         9.5     458.8        8.1     376.5            
 Diluted EPS                                                                    
 (cents)                                                                        
                                                                                
Number of        144 841     157 063                  173                      
 shares in            293         515       8.4    685 737     19.91            
 issue                                                                          
 Weighted         144 841     157 063                  173                      
average number       293         515       8.4    685 737     19.91            
 of shares in                                                                   
 issue                                                                          
                                                                                

 Notes:                                                                         
    1.   Based on Keaton Energy`s reviewed interim condensed group              
        results for the six months ended 30 September 2010.                     
2.   In calculating the financial effects on EPS, diluted EPS and              
 HEPS, it was assumed that the Transaction was implemented on 1                 
 April 2010 for consolidated statement of comprehensive income                  
 purposes.                                                                      
3.   In calculating the financial effects on NAV and TNAV, it was              
 assumed that the Transaction was implemented on 30 September 2010              
 for consolidated statement of financial position purposes.                     
4.   The Refinancing entails the acquisition of various loans and               
claims in LME from AOL and 40 preference shares in the share                    
capital of LME from AKMF as described in paragraph3.1above.  The                
book values of the loans and claims, and the preference shares are              
R55.76 million and R11.6 million, respectively. They will be                    
acquired through the issue of new Keaton Energy ordinary shares                 
equivalent to R47 million and R8 million, respectively, yielding an             
illustrative profit of R12.365 million on the acquisition of the                
instruments.                                                                    
5.   The Acquisition and the Conversion are described in paragraphs 3.2 and     
3.3above and involve the acquisition by Keaton Energy of a 64% interest in LME  
for an aggregate purchase consideration of R74 799 999 and the conversion of a  
R10million loan to LME into a 10% equity interest in LME for a total investment 
of R84 799 999.                                                                 
7    Withdrawal of cautionary announcement                                      
    Keaton Energy shareholders are referred to the cautionary announcement and  
    renewals of cautionary announcement dated 7 October 2010, 18 November 2010  
and 4 January 2011 respectively, and are advised that they are no longer    
    required to exercise caution when dealing in Keaton Energy ordinary shares. 
Bryanston                                                                       
14 February 2011                                                                
Investment bank and sponsor                                                     
Nedbank Capital                                                                 
Attorneys to Keaton Energy                                                      
Eversheds                                                                       
Attorneys to LME                                                                
Deneys Reitz                                                                    
Attorneys to Anglo Operations Limited                                           
Glyn Marais                                                                     
Attorneys to Anglo Zimele and Anglo Khula Mining Fund                           
Cliffe Dekker Hofmeyer                                                          
Attorneys to Plusbay                                                            
Webber Wentzel                                                                  
Date: 14/02/2011 16:31:01 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
The SENS service is an information dissemination service administered by the    
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or            
implicitly, represent, warrant or in any way guarantee the truth, accuracy or   
completeness of the information published on SENS. The JSE, their officers,     
employees and agents accept no liability for (or in respect of) any direct,     
indirect, incidental or consequential loss or damage of any kind or nature,     
howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.                                          



                                        
Email this JSE Sens Item to a Friend.

Send e-mail to
© 2017 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.