Wrap Text
Anglogold Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1944/017354/06)
ISIN Number: ZAE000014601 JSE Share Code: ANG
("AngloGold")
ANGLOGOLD MAKES A SUPERIOR OFFER FOR NORMANDY
The Board of AngloGold is pleased to announce that it has revised its
takeover offer for Normandy Mining Limited ("Normandy"), by adding a cash
consideration of 20 Australian cents per Normandy share to its original
offer of 2.15 AngloGold shares per 100 Normandy shares ("AngloGold's revised
offer").
On 5 September 2001, AngloGold announced that it was to make a takeover
offer for Normandy, Australia's largest listed gold mining company. The
offer to Normandy shareholders comprised 2.15 AngloGold shares for every 100
Normandy shares. On the date of the announcement, the offer valued Normandy
at US$0.74 per Normandy share (R6.30 or A$1.42 per Normandy share), and at
US$1.65 billion (R14.1 billion and A$3.16 billion), based on the exchange
rate on the date of the announcement of R4.46 to A$1 and US$0.52 to A$1.
On Wednesday, 14 November 2001, Newmont, Mining Corporation ("Newmont") the
Denver-based gold mining company, announced that it intended to make a
competing takeover offer for Normandy ("the Newmont offer"), and a Canadian
plan of arrangement with Franco-Nevada, Normandy's largest shareholder.
Under the Newmont offer, Newmont intends to make a recommended offer of
0.0385 shares of Newmont common stock for each Normandy share. In addition,
Newmont will pay A$0.05 per Normandy share in cash if the Newmont offer is
accepted by holders of at least 90% of the Normandy shares. The implied
value of the Newmont offer on 16 November 2001, (the valuation date used in
the response document issued by Normandy to the AngloGold offer ("response
statement')) was A$1.46, (excluding the A$0.05 cash payment). The implied
value of the AngloGold offer was also A$1.46 on that date.
AngloGold's revised offer values Normandy at A$1.65 per share based on
AngloGold's closing share price on 28 November 2001 on the New York Stock
Exchange ("NYSE") and an exchange rate of US$0.5226 to A$1. The Newmont
offer is A$1.45 per share (with a possible additional 5 cents per share,
payable in the event of a 90% acceptance of the Newmont offer) based on
Newmont's closing share price on the NYSE on the same date and an exchange
rate of US$0.5226 to A$1. Based on the weighted average AngloGold and
Newmont share prices since the announcement of the Newmont offer on 14
November 2001 and relevant US$:A$ exchange rates over this period,
AngloGold's revised offer is equivalent to A$1.66 per share compared with
the Newmont offer of A$1.46 per Normandy share (with a possible additional 5
cents per share, payable in the event of a 90% acceptance of the offer).
SUPERIOR OFFER
AngloGold believes that its revised offer is far superior to the Newmont
offer for the following reasons:
- Premium: AngloGold's revised offer represents a 10% premium to the
Newmont offer based on the closing share prices of both companies on the
NYSE on 28 November 2001 and a 10% premium based on both companies' share
prices in the period from the announcement of Newmont's offer on 14 November
2001 to 28 November 2001.
- Cash Consideration: AngloGold's offer incorporates a significant cash
payment of 20 Australian cents per Normandy share. This compares to
Newmont's cash payment of 5 Australian cents per Normandy share which is
conditional on receiving at least 90% acceptance of the Newmont offer.
- Certainty: AngloGold's offer is open, free from defeating conditions and
capable of immediate acceptance. This compares with Newmont's highly
conditional and complex offer. Normandy shareholders have certainty today
with AngloGold's offer.
- Accelerated Payment: Under AngloGold's revised offer payment will be
provided within five business days of receipt of acceptances, with first
payments commencing on 20 December 2001, compared with payment only in late
February 2002 under the Newmont offer.
- Fair and Reasonable: AngloGold's revised offer is fair and reasonable and
within the range at which the independent expert's report in the Normandy
response statement valued Normandy shares.
- Performance: AngloGold is financially superior to Newmont, as has been
demonstrated by its higher earnings and lower production costs.
- Dividend: AngloGold has a track record of a high dividend yield.
AngloGold's final dividend for the year ended 31 December 2001 will be
declared early in 2002. Normandy shareholders who accept AngloGold's
revised offer and are on the register on the record date, will qualify to
receive this dividend. Acceptance of Newmont's offer could result in a
substantial reduction in dividends for Normandy shareholders.
- Re-rating potential: AngloGold shares currently trade at significantly
lower multiples than North American companies of similar size. AngloGold
believes that there is significant upside potential from a re-rating of its
share price.
RATIONALE FOR ANGLOGOLD'S REVISED OFFER
AngloGold's decision to increase its offer comes after a careful review of
its initial offer in the light of the Normandy response statement, including
the detailed independent expert's report (incorporating a 116 page technical
review by Australian Mining Consultants) which values Normandy at A$1.48 to
A$1.88 per share, and information published by Normandy in its annual report
for the year ended 30 June 2001 and in its results for the September quarter
2001. These reports were published following the announcement of
AngloGold's initial offer. Whilst AngloGold does not agree with all the
assumptions made, or the values derived, in the independent expert's report,
the company considers that its increased offer is fully supported by the
underlying value of Normandy's assets and the synergies which will be
realisable from a combination of the management and assets of Normandy and
AngloGold.
AngloGold has identified a number of sources of additional value:
- AngloGold has reassessed the after tax synergies which should be able to
be realised and has increased its estimate from US$25 million per annum to
US$40 million per annum. AngloGold's revised estimate includes the cost
savings that are likely to be achieved from increased scale in Australia
through purchasing and procurement and leveraging regional services between
operations which are in close proximity to AngloGold's existing operations.
- Recent changes to South African tax legislation regarding controlled
foreign entities has enabled AngloGold to reduce its effective tax rate in
Australia.
- Normandy has recently announced extremely encouraging exploration results
from the Favona deposit at Martha Hill in New Zealand. The Favona system is
likely to lead to a significant underground mining operation, which will
extend the mine life of the Martha Hill operations.
- Australian Mining Consultants have identified upside potential at
Normandy's Tanami operations. In particular, they have identified
significant underground potential at Callie below the current cut off depth
for reserves and the likelihood for further open pit discoveries.
- Australian Mining Consultants have provided significant information on
Golden Grove and confirmed that the recent exploration results are likely to
significantly extend the mine life. The valuation of Golden Grove is
substantially more optimistic than AngloGold's previous assessment.
- Normandy has recently announced some encouraging exploration results from
the Martabe prospect in Indonesia.
- Normandy continues to announce encouraging results from the Yamfo-
Sefwi/Ntotoroso area in Ghana and optimisation studies are continuing. All
government approvals to develop the project are in place.
- Normandy has assumed responsibility for mining and gold recovery at
Midas. This step, combined with a new mining fleet and workforce, should
lead to improved maintenance practices and operating efficiencies. This
value was previously discounted until some evidence of improvement could be
shown. The 17% increase in gold production recently announced for the
September quarter has led AngloGold to increase its valuation of Midas.
- The completion of the capital raising for Australian Magnesium
Corporation Limited (AMC) has significantly reduced the risk of this
investment. In its initial offer AngloGold had determined a downside
potential exposure to Normandy in relation to the indemnities and guarantees
provided by Normandy to AMC, which may have been triggered if the capital
raising for AMC had not proceeded. Following the completion of the capital
raising AngloGold considers that the value of Normandy's investment in AMC
is reflected by the current market value of Normandy's investment in AMC and
the loans provided by Normandy to AMC.
The combination of AngloGold and Normandy offers a compelling strategic fit
of assets, significant geographical and operational diversification, the
potential for growth through maximising opportunities available to both
companies and is a major step in the further consolidation of the gold
industry. Furthermore, the combination of these two strong companies will
allow high dividend payments to be maintained and the potential of
significant share price growth. For these reasons, AngloGold believes that
the revised offer will deliver demonstrable value for shareholders.
DETAILS OF THE REVISED OFFER AND ITS CONDITONS
AngloGold has revised the offer to Normandy shareholders, from 2.15
AngloGold shares for every 100 Normandy shares, to 2.15 AngloGold shares for
every 100 Normandy shares (including Normandy shares represented by Normandy
ADRs) which Normandy shareholders may elect to receive in the form of
AngloGold shares (to be quoted on the JSE, the LSE and Euronext Paris),
AngloGold CDIs (to be quoted on the ASX) or AngloGold ADSs (to be quoted on
the NYSE), plus a cash consideration of A$0.20 per Normandy share (A$20 per
100 Normandy shares).
The revised offer period has been extended from an earliest closing date of
14 December 2001 to 27 December 2001, or to any other date to which the
revised offer period may be extended.
AngloGold has declared the revised offer free of all defeating conditions.
Anglogold's revised offer is subject to the approval of a simple majority of
the shares held by AngloGold shareholders in accordance with JSE
requirements, which is expected to be received at general meeting to be held
on 19 December 2001. Anglo American plc, and its subsidiaries, the holders
of 53.4% of the issued share capital of AngloGold, have committed to vote in
favour of the revised offer.
The principal conditions of AngloGold's initial offer as previously included
in the circular to members dated 26 October 2001 have now been satisfied,
including:
- the approval of the Australian Foreign Investment Review Board;
- AngloGold shareholder approval; and
- other governmental and regulatory filings, including those under Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other
competition and foreign investment approval or filings in Australia and
Canada.
AngloGold has waived the conditions that the offer is subject to a minimum
acceptance level and that the offer is subject to no prescribed occurrences.
AngloGold will also accelerate the payment terms under the offer from 30
days to 5 business days. For acceptances received by AngloGold by the close
of business on 17 December 2001 AngloGold intends to provide the relevant
consideration on 20 December 2001. For acceptances received after 17
December 2001 AngloGold intends to provide the relevant consideration within
5 business days of receipt of such acceptance by AngloGold. The earliest
closing date for the revised AngloGold offer is Thursday, 27 December 2001,
or any other date to which the revised offer period may be extended.
ANGLOGOLD TOP - UP FACILITY
AngloGold has increased the maximum subscription under the AngloGold top-up
facility from A$5,000 to A$7,500. The AngloGold top-up facility will enable
all Normandy shareholders (including Normandy shareholders and Normandy
Shareholders holding Normandy ADSs representing Normandy shares, located in
the United States) to acquire additional AngloGold shares at a 7.5% discount
to market prices. The top-up facility will remain subject to a maximum
issue of 7.0 million AngloGold shares, or approximately 4.3% of AngloGold's
expanded issued capital following the acquisition of Normandy and the issue
of the maximum number of shares under the top-up. The top-up facility has
also been extended to shareholders in the United States. Normandy
shareholders located in the United States and who apply for AngloGold shares
under the AngloGold top-up facility will receive ADSs representing the
AngloGold shares issued to such Normandy shareholders under the AngloGold
top-up facility. Other than these changes, the terms of the top-up facility
will otherwise remain as previously published.
Normandy shareholders, who have already accepted the offer and elected to
utilise the AngloGold top-up facility, will be entitled to increase their
subscription up to the revised maximum.
AngloGold believes that the top-up facility is highly attractive for retail
investors and should promote further trading liquidity for AngloGold shares
in Australia.
The proceeds received from the AngloGold top-up facility may in part be used
to fund the cash consideration payable to Normandy shareholders.
FUNDING THE REVISED ANGLOGOLD OFFER
In the short term, AngloGold will bridge the cash component of the revised
offer using currently available borrowing facilities. This will adequately
meet the maximum of A$450 million required to fund the cash component.
AngloGold would also anticipate that a significant amount of this should be
offset by the top up facility which is effectively a concurrent capital
raising. In the medium term the remaining additional debt will be refinanced
together with other AngloGold debt maturing in 2002 or repaid out of the
proceeds from the possible sale of non-core assets.
FINANCIAL EFFECTS OF ANGLOGOLD'S REVISED OFFER
The table below shows the pro forma per share effects of the acquisition of
100% of Normandy based on the revised offer and the disposal of the Free
State assets as announced on 21 November 2001, for the six months ended 30
June 2001. These financial effects are based on the pro forma consolidated
income statement and balance sheet.
Amounts in rands per share
Pro forma Pro forma(1) %
before after Change
Normandy Normandy
and after and after
Free State Free State
Net asset value (2) 104.38 161.10 54
Net asset value (excluding goodwill) (2) 76.36 111.97 47
EBITDA (3) 20.98 23.34 11
Basic earnings (4) 4.32 (11.46) n.a
Diluted earnings (5) 4.26 (11.35) n.a
Headline earnings (6) 9.43 (0.31) n.a
Headline earnings before unrealized
gain/(loss) on hedging activities (7) 9.07 7.42 (18)
Weighted average number
of shares in issue (8) 107,041,537 145,873,659
Weighted average diluted
number of shares in issue (9) 108,544,987 147,377,109
Number of shares in issue (10) 107,167,837 155,140,649
Amounts in US dollars per share
Pro forma Pro forma(1) %
Before after Change
Normandy Normandy
and after and after
Free State Free State
Net asset value (2) 12.97 19.50 50
Net asset value (excluding goodwill) (2) 9.49 13.50 42
EBITDA (3) 2.65 2.96 12
Basic earnings (4) 0.54 (1.47) n.a
Diluted earnings (5) 0.53 (1.46) n.a
Headline earnings (6) 1.19 (0.04) n.a
Headline earnings before unrealized
gain/(loss) on hedging activities (7) 1.14 0.93 (18)
Weighted average number
of shares in issue (8) 107,041,537 145,873,659
Weighted average diluted
number of shares in issue (9) 108,544,987 147,377,109
Number of shares in issue (10) 107,167,837 155,140,649
Notes:
1. It is assumed for the purposes of the above pro forma calculations that
100% of Normandy shareholders accept the offer by AngloGold of 2.15 shares
and A$20 cash consideration for each 100 Normandy shares held.
2. Computed by dividing shareholders' equity by the number of shares in
issue.
3. EBITDA is the earnings before exceptional items, net interest, realised
and unrealised gain/(loss) on hedging activities, taxation, depreciation and
amortisation. The EBITDA per share computation has been based on the
weighted average number of shares in issue.
4. The pro forma basic earnings per share is after exceptional items and
goodwill amortisation of R1,627 million (US$209 million) and unrealised
losses on hedging activities of R1,128 million (US$142 million), net of
taxation. Included in the R1,627 million (US$209 million) is an exceptional
loss resulting from the sale of the Free State assets of R380 million (US$48
million). The exceptional items in Normandy include a write down of A$206
million for an impairment in the carrying value of Normandy's interest in
its Yandal assets, Kasese, its non Australian exploration assets and TVX
Gold Inc. to reflect fair value. The basic earnings per share is computed by
dividing net profit by the weighted average number of shares in issue.
5. The pro forma diluted earnings per share is after exceptional items and
goodwill amortisation of R1,627 million (US$209 million) and unrealised
losses on hedging activities of R1,128 million (US$142 million), net of
taxation. Included in the R1,627 million ($209 million) is an exceptional
loss with the sale of the Free State assets of R380 million (US$48 million).
The exceptional items in Normandy include a write down of A$206 million for
an impairment in the carrying value of Normandy's interest in its Yandal
assets, Kasese, its non Australian exploration assets and TVX Gold Inc. to
reflect fair value.The diluted earnings per share is computed by dividing
net profit by the weighted average diluted number of shares in issue.
6. The pro forma headline earnings per share is before exceptional items
and goodwill amortisation of R1,627 million (US$209 million). Included in
the R1,627 million (US$209 million) is an exceptional loss with the sale of
the Free State assets of R380 million (US$48 million). The exceptional
items in Normandy include a write down of A$206 million for an impairment in
the carrying value of Normandy's interest in its Yandal assets, Kasese, its
non Australian exploration assets and TVX Gold Inc. to reflect fair value.
Headline earnings removes items of an exceptional nature and goodwill
amortisation from the calculation of earnings per share. Headline earnings
per share is computed by dividing headline earnings by the weighted average
number of shares in issue.
7. Computed by dividing headline earnings before unrealised losses of
R1,128 million (US$142 million) on hedging activities by the weighted
average number of shares in issue.
8. The weighted average number of AngloGold shares in issue was 107,041,537
and 1,806,145,187 Normandy shares for the six months ended 30 June 2001. At
the ratio of the exchange of 2.15 AngloGold shares for each 100 Normandy
shares, the weighted average number of shares in issue for the enlarged
group would have been 145,873,659.
9. The weighted average diluted number of AngloGold shares in issue for the
six months ended 30 June 2001 was 108,544,987. At the ratio of the exchange
of 2.15 AngloGold shares for each 100 Normandy shares, the weighted average
diluted number of shares in issue for the enlarged group would have been
147,377,109.
10. The number of shares in issue is based on 107,167,837 AngloGold shares
and 2,231,293,599 Normandy shares in issue as at 30 June 2001. At the ratio
of the exchange of 2.15 AngloGold shares for each 100 Normandy shares
47,972,812 shares will be issued to Normandy shareholders giving a total of
155,140,649 AngloGold shares for the enlarged group.
The financial effects set out above exclude any funds from the AngloGold top
up facility or shares issued in respect of this facility.
DOCUMENTATION, NEXT STEPS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
A circular to AngloGold shareholders requesting approval for the revised
terms of the acquisition and the revised offer documents to Normandy's
shareholders have been prepared and have been filed with the regulatory
authorities in the various jurisdictions today. Subject to the approval of
these regulatory authorities these documents will be posted to the
respective shareholders in the near future.
The cautionary announcement dated 24 October 2001 is hereby withdrawn.
Johannesburg
29 November 2001
Financial advisers to the transaction
Deutsche Bank AG
Legal advisers in Australia
Freehills
Legal advisers in Canada
Fasken Martineau DuMoulin LLP
Legal advisers in South Africa
Tabacks
Legal advisers in the United States
Shearman and Sterling
Auditors and Reporting Accountants
Ernst and Young
JSE Sponsors and co-adviser in relation to market implications
UBS Warburg
Disclaimer
Except for the historical information contained herein, there are matters
discussed in this news release that are forward-looking statements. Such
statements are only predictions and actual events or results may differ
materially. For a discussion of important factors including, but not
limited to, development of the Company's business, the economic outlook in
the gold mining industry, expectations regarding gold prices and production,
and other factors, which could cause actual results to differ materially
from such forward-looking statements, refer to the Company's annual report
on the Form 20-F for the year ended 31 December 2000 which was filed with
the Securities and Exchange Commission on 23 April 2001.
Holders of Normandy shares and Normandy ADSs located in the United States
are strongly advised to read the F4 registration statement regarding the
offer referred to in this presentation and other documents to be filed with
the US Securities and Exchange Commission when they become available,
because they will contain important information. Holders of Normandy shares
and Normandy ADSs may read and copy these statements, when available, at the
US Securities and Exchange Commission's pubic reference rooms. Please call
the US Securities and Exchange Commission at +1-800-SEC-0330 for further
information on the public reference rooms. These US Securities and Exchange
Commission filings are also available to the public from commercial document
retrieval services.
Sharenet Sites 
