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Wescoal Holdings Limited - Acquisition Of Shares In Proudafrique And Cautionary Annoucement

Release Date: 28/11/2013 13:16:00      Code(s): WSL     
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?)


  ACQUISITION OF SHARES IN PROUDAFRIQUE AND CAUTIONARY ANNOUNCEMENT


1. INTRODUCTION

    Wescoal currently only owns 60% of Wescoal Exploration (Pty) Ltd (?Wescoal Exploration?) via its
    wholly owned subsidiary Wescoal Mining (Pty) Ltd (?Wescoal Mining?).

    The shareholder of the 40% remaining issued shares of Wescoal Exploration is Proudafrique
    Trading 147 (Pty) Ltd (?Proudafrique?).

    An opportunity has arisen for Wescoal to purchase all the issued shares of Proudafrique, thereby
    indirectly acquiring the remaining 40% shareholding in Wescoal Exploration.

2. BACKGROUND ON WESCOAL EXPLORATION AND PROUDAFRIQUE
    2.1 Wescoal Exploration

    Wescoal Exploration was created in 2008 as a joint venture company between Proudafrique and
    Wescoal Mining and currently owns the following coal reserves:
    - Silverbank Prospect covering the entire farm Silverbank 611 IR excluding Portions 1,10, 12 and
      14 with a reconnaissance resource of 67,45m tons;
    - Verblyden Prospect covering the entire farm Verblyden 387 IS excluding Portions 18 and 35
      with a reconnaissance resource of 54,3m tons.
    In addition to the 40% shareholding owned by Proudafrique in Wescoal Exploration, Proudafrique
    is also entitled to the following royalty fee:
    - R 4,0 per saleable ton if coal has a Calorific value (?CV?) of less than 24.50 CV;
    - R 6,0 per saleable ton if coal has a CV value of between 24.50 CV and 26.00 CV;
    - R 8,0 per saleable ton if coal has a CV value above 26.00.

    2.2 Proudafrique

    Proudafrique currently owns the following assets in addition to the 40% shareholding in Wescoal
    Exploration:
           - 14 285 714 Wescoal ordinary shares;
           - Amount owed on dividend from Wescoal Exploration of R 8,0 million;
           - A royalty fee of R 5 per ton of salelable coal mined at Wescoal Mining?s Elandspruit
               Mining area, which royalty will escalate annually with the published producer price
               index.
3. RATIONALE FOR ACQUISITION OF PROUDAFRIQUE

    The acquisition of Proudafrique will enable Wescoal to effectively own 100% of Wescoal Exploration
    and the two coal reserves of Silverbank and Verblyden.
4. ACQUISITION OF AN INITIAL 30% OF PROUDAFRIQUE

    4.1. Agreement entered into

            Wescoal Mining (?the purchaser?) entered into an agreement to purchase 30% of the total issued
            share capital (?sale shares?) of and all its claims against (?the claims?) Proudafrique from
            Minoscape (Pty) Limited (?Minoscape?) (?the seller?) (?the initial acquisition?).

    4.2. Rationale for the initial acquisition

            Proudafrique owns 40% of the shares in Wescoal Exploration. The rationale for the initial
            acquisition is set out in 3 above.

    4.3. Terms and conditions of the initial acquisition

    4.3.1. Wescoal Mining purchased the sale shares and the claims of the seller from the seller for R18
           million.

    4.3.2. The purchase price will be payable as follows:

              4.3.2.1. R13 million of the purchase price will be paid by the issue of 6 500 000 Wescoal
                       ordinary shares at 200 cents per share, within 30 days of the effective date;

              4.3.2.2. R3 million in cash payable within 3 days of delivery of the seller?s share certificates in
                       respect of the sale shares;

              4.3.2.3 R1 million payable on 1 February 2014; and

              4.3.2.4 R1 million payable on 1 March 2014.

    4.3.3     Certain restrictions have been placed on the sale, transfer and further encumbrance of the
              Wescoal shares.

    4.3.4     The seller gave certain warranties that are customary in a transaction of this nature.


     4.4 Categorisation of the initial acquisition

            The initial acquisition category calculation is below the 5% threshold and therefore the above
            information is provided for information purposes only.

5     ACQUISITION OF A FURTHER 70% SHAREHOLDING IN PROUDAFRIQUE

      5.1       Agreement entered into

               Wescoal Mining (?the purchaser?) entered into an agreement to purchase the remaining 70%
               of the total issued share capital (?sale shares?) of and all its claims against (?the claims?)
               Proudafrique from Minoscape (?the seller?) (?the Minoscape acquisition?).

      5.2       Rationale for the Minoscape transaction

               Proudafrique owns 40% of the shares in Wescoal Exploration. The rationale for the Minoscape
               acquisition is set out in 3 above.

      5.3       Terms and conditions of the Minoscape acquisition

                5.3.1      Wescoal Mining purchased the sale shares and the claims of the seller and the
                     purchase price will be payable as follows:

                     5.3.1.1   R 20.0 million of the purchase price will be paid by the issue of 10 000
                               000 Wescoal ordinary shares at 200 cents per share, within 30 days of
                               the effective date;

                     5.3.1.2   R5.6 million in cash, within 3 days of the effective date;

                     5.3.1.3   in addition, Minoscape will be paid a royalty of R3.50 per ton of saleable
                               coal mined at Elandspruit Mining Area, which royalty will escalate
                               annually with the published producer price index.

           5.3.2     Certain restrictions have been placed on the sale, transfer and further encumbrance
                     of the Wescoal ordinary shares.

           5.3.3     The seller will provide effective date financial statements of Proudafrique.

           5.3.4     The seller gave certain warranties that are customary in a transaction of this nature.

           5.3.5     The agreement is subject to the suspensive condition that the Minoscape
                     acquisition be approved by shareholders of Wescoal by 31 March 2014, to the
                     extent required by the JSE Listings Requirements.


    5.4 Unaudited pro forma financial effects of the Minoscape acquisition

          The unaudited pro forma financial effects of the Minoscape acquisition will be published in due
          course.

    5.5 Categorisation of the Minoscape acquisition

          The Minoscape acquisition is a category 1 transaction and has to be approved by shareholders
          of Wescoal. A circular to shareholders will be issued in due course.

6   CAUTIONARY ANNOUNCEMENT

    Shareholders are advised to exercise caution in dealing in the company?s securities on the JSE
    until such time as the financial effects of the Minoscape acquisition are published.

7   FURTHER ANNOUNCEMENT

    Shareholders will be notified once the circular in respect of the Minoscape acquisition has been
    posted to shareholders.

    Corporate adviser & Sponsor to Wescoal                         Legal Adviser to Wescoal

    Exchange Sponsors                                              KWA Attorneys

    28 November 2013
    Johannesburg

Date: 28/11/2013 01:16:00 Supplied by www.sharenet.co.za                     
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