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Mapochs Mine Business Rescue Update
EVRAZ Highveld Steel and Vanadium Limited
(Incorporated in the Republic of South Africa)
(Registration No: 1960/001900/06)
Share code: EHS ISIN: ZAE000146171
(“Highveld” or “the Company”)
MAPOCHS MINE BUSINESS RESCUE UPDATE - REPORT IN TERMS OF SECTION
132(3)(A) OF THE COMPANIES ACT 71 OF 2008
Highveld is the majority shareholder of the Mapochs Mine Proprietary
Limited “(Mapochs” or “the Company” in below report), which declared
business rescue on 20 April 2015.
Shareholders are advised that despite efforts to complete the Business
Rescue Proceedings of Mapochs within three months of the date of
commencement thereof, the proceedings have not been concluded and
therefore, as required, the Business Rescue Practitioners have prepared
a report in terms of Section 132 (3) (a) of the Companies Act 71 of
2008 (“Act”)(“the Report”) for submission. The Report is also available
on the Company’s website:
http://www.evrazhighveld.co.za/businessrescue.asp
The Report
The content of the Report is as follows:
Report to the Companies and Intellectual Property Commission and to all
Affected Persons in terms of Section 132 (3) (a) of the Companies Act
71 of 2008.
Prepared by: John Lightfoot and John Evans – Joint Business Rescue
Practitioners
1. Introduction
1.1. The Business Rescue Proceedings of the Company have not been
concluded within three months of the date of commencement thereof,
and therefore as required, this report is being tabled in terms of
Section 132 (3) (a) of the Companies Act 71 of 2008 (“Act”).
2. Background
2.1. The Board of Directors signed and filed a resolution placing the
Company into business rescue on 20 April 2015, which resolution was
confirmed by the Companies and Intellectual Property Commission
(“CIPC”) on 20 April 2015.
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2.2. John Lightfoot (Matuson & Associates) and John Evans (RS Advisors)
were appointed as the joint business rescue practitioners (“BRPs”)
and their appointments were confirmed by the CIPC on 21 April 2015.
2.3. In a letter addressed to the directors of the Company, the BRPs
advised as follows:
? The duties of the BRPs during business rescue proceedings;
? The duties and responsibilities of the directors during
business rescue proceedings; and
? Documentation to be furnished by the directors to the BRPs.
2.4. After an initial review of the affairs of the Company, and in
accordance with Section 147 of the Companies Act, the BRPs convened
a meeting of creditors on 6 May 2015, at which the BRPs presented
initial findings in support of their expressed opinion, that there
was a reasonable prospect of the business rescue proceedings being
successful, as defined. At this meeting, a Creditors Committee was
established. The Creditors’ Committee has met on one occasion, 26
May 2015.
3. Business Rescue Process
3.1. The following summary sets out the salient dates on which certain
events have/will take place:
EVENT DATE
1 Board Resolution to commence BRP filed 20 April 2015
at the CIPC
2 Appointment of BRPs 21 April 2015
3 First Meeting of Employees 28 April 2015
4 First Meeting of Creditors 6 May 2015
5 First Meeting of Creditors’ Committee 26 May 2015
6 Consent for Extension 28 May 2015
8 Last day to Publish Business Rescue 30 September
Plan 2015
9 Meeting to Consider the Business Rescue Within 14 days
Plan
4. Update on Business Rescue Proceedings
4.1. Together with management, the BRPs identified areas where crucial
actions were required.
4.2. The BRPs actions since the commencement of Business Rescue
Proceedings include the following:
4.2.1. Discussions with Governmental departments, including:
? Department of Environmental Affairs
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? Department of Water and Sanitation
? Department of Mineral Resources
4.2.2. Discussions with the Representative Trade Unions, including
NUMSA and Solidarity.
4.2.3. Attending to Environmental issues.
4.2.4. Attending to correspondence with SARS.
5. Post Commencement Finance and funding of trading
The BRP’s have not as yet secured any post commencement financing.
The Company’s two customers, Evraz Highveld Steel and Vanadium Limited
(in business rescue) (“Highveld”) and Vanchem Vanadium Products
(Pty) Limited (“VVP”) have assisted in providing funding during
business rescue by way of prepayment for ore and transportation
costs.
6. Sales Process
6.1. The Company is a majority owned subsidiary of Highveld.
6.2. Highveld and Mapochs commenced an accelerated sale of business
process with a view to concluding a transaction with a purchaser
that will facilitate the rescue of Mapochs.
6.3. The key timelines of the sales process are detailed below:
EVENT DATE
1 Indicative Offer Submission Deadline 15 July 2015
2 Selection and Notification of Preferred 17 July 2015
Bidders
3 Proof of USD 10 million 27 July 2015
4 Opening of Virtual Data Room (VDR) to 27 July 2015
Bidders
5 Due Diligence Finalisation and Close of 21 August 2015
VDR
6 Binding Offer Submission Deadline 21 August 2015
7 Evaluation of Binding Offers Received 24 – 27 August
2015
8 Announcement of Successful Bidder 28 August 2015
6.4. Several of the bidders have met the requirement of the USD 10
million and have proceeded to the due diligence phase, which
includes:
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6.4.1. Access to the VDR.
6.4.2. Scheduled site visits.
6.4.3. Discussions with management team and other relevant
stakeholders.
6.5. Final binding offers must be submitted by 21 August 2015.
6.6. Further to the above, the BRPs have commenced negotiations with VVP
regarding the potential rescue of Mapochs in the event that a sale
of the group is not possible and Highveld cannot be rescued.
7. Proof of Claims
7.1. A reminder to submit claims was sent to all creditors on 10 July
2015. To date, there remains a large number of claims outstanding
and creditors who have yet to submit their claims are encouraged to
do so before the publication of the Plan.
7.2. Total claims received to date amount to approximately R177 million.
All claims are currently being reviewed by the BRPs and compared to
the Company’s ledger.
7.3. A mechanism for the resolution of disputed claims will be included
in the Plan.
8. Liquidation vs. Business Rescue
8.1. KPMG, as independent experts, are currently in the process of
completing their liquidation dividend calculation. In terms of
Section 150 of the Act, the liquidation dividend calculation will
be included in the business rescue plan where readers will be able
to compare this to the proposed business rescue dividend.
9. Conclusion
9.1. The BRPs remain of the view that there is a reasonable prospect of
the Company being rescued as contemplated in Section 128 of the
Act.
19 August 2015
Sponsor: J.P. Morgan Equities South Africa (Pty) Ltd
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