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LONRHO PUBLIC LIMITED COMPANY
DEMERGER OF LONRHO AFRICA PLC
ON 12TH FEBRUARY, 1998 LONRHO ANNOUNCED ITS INTENTION TO DEMERGE ITS AFRICAN
NON-MINING BUSINESSES ("LONRHO AFRICA"). LONRHO IS TODAY ANNOUNCING FULL
DETAILS OF THE DEMERGER AND POSTING DOCUMENTS RELATING TO THE DEMERGER TO
SHAREHOLDERS. LONRHO IS ALSO PROPOSING TO CONSOLIDATE EVERY FOUR EXISTING
LONRHO ORDINARY SHARES HELD ON 24TH APRIL, 1998 INTO ONE CONSOLIDATED LONRHO
ORDINARY SHARE. IF ALL CONDITIONS OF THE DEMERGER ARE MET, QUALIFYING LONRHO
SHAREHOLDERS WILL, IN EFFECT, RECEIVE ONE LONRHO AFRICA SHARE FOR EACH
CONSOLIDATED LONRHO ORDINARY SHARE HELD.
THE DEMERGER IS BEING IMPLEMENTED BY WAY OF CAPITAL REPAYMENT AND IS SUBJECT TO
COURT APPROVAL. ASSUMING THE RELEVANT RESOLUTIONS ARE PASSED BY SHAREHOLDERS
AND THE APPROVAL OF THE COURT RECEIVED, DEALINGS IN LONRHO AFRICA SHARES ARE
EXPECTED TO COMMENCE ON 7TH MAY, 1998.
LONRHO AFRICA'S OPERATIONS, WHICH SPAN 14 AFRICAN COUNTRIES, ARE FOCUSED ON
FIVE CORE DIVISIONS: MOTORS, AGRI-BUSINESS, DISTRIBUTION, HOTELS. AND PROPERTY
AND CONSTRUCTION.
LONRHO AFRICA WILL BE MANAGED BY ITS EXISTING MANAGEMENT TEAM, ALL OF WHOM HAVE
EXTENSIVE EXPERIENCE IN AFRICA. THE EXECUTIVE DIRECTORS WILL BE CHRIS PARVIN,
MARK NEWMAN AND KEITH ATKINSON. THE BOARD BELIEVES THAT THERE IS NO OTHER
LONDON STOCK EXCHANGE LISTED GROUP OF A SIMILAR SIZE OPERATING IN SUB-SAHARAN
AFRICA THAT COMPRISES SUCH A COMMERCIALLY AND GEOGRAPHICALLY DIVERSIFIED
BUSINESS AS LONRHO AFRICA.
AN EXTRAORDINARY GENERAL MEETING OF LONRHO WILL BE HELD ON 27TH MARCH, 1998 TO
SEEK APPROVAL FOR THE DEMERGER, CONSOLIDATION AND OTHER RELATED MATTERS.
COMMENTING ON THE DEMERGER, SIR JOHN CRAVEN, CHAIRMAN OF LONRHO, SAID:
"WE ARE DELIGHTED TO BE IN THE POSITION TO PUT THE DEMERGER TO OUR
SHAREHOLDERS. THIS WILL BE A FURTHER SIGNIFICANT STEP TOWARDS OUR AIM OF
BECOMING A FOCUSED, INTERNATIONAL MINING GROUP."
COMMENTING ON THE DEMERGER, MARK NEWMAN, CHIEF EXECUTIVE OF LONRHO AFRICA, SAID
"WE BELIEVE THAT LONRHO AFRICA WILL BE A STRONG, INDEPENDENT COMPANY GOING
FORWARD. INDEPENDENCE, COMBINED WITH THE PROPOSED NET CAPITAL INJECTION OF
GBP48.0 MILLION AND MANAGEMENT'S EXTENSIVE LOCAL KNOWLEDGE AND EXPERIENCE WILL
ENABLE US TO OPERATE MORE EFFECTIVELY AS A FOCUSED BUSINESS, FOR THE BENEFIT OF
SHAREHOLDERS".
LONRHO PUBLIC LIMITED COMPANY
DEMERGER OF LONRHO AFRICA PLC
THE BOARD OF LONRHO ANNOUNCES THAT IT IS TODAY SENDING TO SHAREHOLDERS A
CIRCULAR SETTING OUT DETAILS OF THE DEMERGER OF LONRHO AFRICA, WHICH COMPRISES
ITS AFRICAN NON-MINING BUSINESSES, TOGETHER WITH TWO ASSOCIATED UK BUSINESSES.
LONRHO IS ALSO SENDING LISTING PARTICULARS TO SHAREHOLDERS TODAY. THE CIRCULAR
CONTAINS A NOTICE OF AN EXTRAORDINARY GENERAL MEETING TO BE HELD ON 27TH MARCH,
1998, AT WHICH RESOLUTIONS TO APPROVE THE CONSOLIDATION AND THE DEMERGER AND
CERTAIN RELATED ARRANGEMENTS WILL BE PROPOSED. THIS MEETING WILL COMMENCE AT
L0.15 A.M. ON 27TH MARCH, 1998 (OR, IF LATER, AT SUCH TIME AS IS TEN MINUTES
AFTER THE ANNUAL GENERAL MEETING OF THE COMPANY CONVENED FOR THE SAME DATE
SHALL HAVE BEEN CONCLUDED OR ADJOURNED).
UNDER THE CONSOLIDATION SHAREHOLDERS WILL RECEIVE ONE CONSOLIDATED LONRHO
ORDINARY SHARE FOR EVERY FOUR LONRHO ORDINARY SHARES HELD AT THE CONSOLIDATED
RECORD TIME (EXPECTED TO BE AT MIDNIGHT ON 24TH APRIL, 1998).
UNDER THE DEMERGER SHAREHOLDERS WILL RECEIVE ONE LONRHO AFRICA SHARE FOR,
EFFECTIVELY, EACH CONSOLIDATED LONRHO ORDINARY SHARE HELD AT THE BONUS ISSUE
RECORD TIME (EXPECTED TO BE AT MIDNIGHT ON 5TH MAY, L998).
BACKGROUND TO AND REASONS FOR THE DEMERGER AND CONSOLIDATION
HAVING DECIDED THAT IT WAS DESIRABLE TO SEPARATE THE AFRICAN TRADING INTERESTS
FROM THE CORE MINING ACTIVITIES OF LONRHO, THE BOARD CONSIDERED HOW THIS
OBJECTIVE COULD BE BEST ACHIEVED. THE ALTERNATIVES AVAILABLE INCLUDED
FLOTATION, TRADE SALE AND DEMERGER. THE BOARD DECIDED AFTER CAREFUL
CONSIDERATION THAT THE BEST COURSE OF ACTION WAS DEMERGER. UNDER THE DEMERGER,
SHAREHOLDERS WHO ARE ON THE REGISTER AT THE BONUS ISSUE RECORD TIME, WILL BE
ALLOTTED SHARES IN LONRHO AFRICA AND WILL CONTINUE TO OWN THE ASSETS AND
UNDERTAKINGS OF THE EXISTING LONRHO AFRICA GROUP, ALTHOUGH IN A DIFFERENT FORM
THROUGH A HOLDING OF LONRHO AFRICA SHARES.
IN THE ANNOUNCEMENT OF OUR RESULTS FOR THE FINANCIAL YEAR TO 30TH SEPTEMBER,
1997, THE BOARD REPORTED THAT ONLY TWO MAJOR TRANSACTIONS REMAINED BEFORE
LONRHO ACHIEVED ITS OBJECTIVE OF BECOMING A FOCUSED MINING COMPANY; NAMELY, THE
DEMERGER AND THE DISPOSAL OF PRINCESS HOTELS. SHAREHOLDERS' APPROVAL FOR THE
DEMERGER IS NOW BEING SOUGHT AND DISCUSSIONS ON THE DISPOSAL OF PRINCESS HOTELS
CONTINUE WITH A NUMBER OF POTENTIAL PURCHASERS.
THE BOARD BELIEVES THAT LONRHO AFRICA WILL BENEFIT FROM OPERATING ON A
STANDALONE BASIS WITH A DEDICATED AND FOCUSED MANAGEMENT TEAM. IN ADDITION, THE
DEMERGER WILL ENABLE A CONSIDERED VALUATION TO BE PUT UPON THE COMPONENT PARTS
BY INVESTORS. THE BOARD BELIEVES THAT THE INCREASED FOCUS OF ITS MINING ASSETS,
TOGETHER WITH THE QUALITY OF SUCH ASSETS, SHOULD PROVIDE AN IMPROVED BASE FOR
THE DEVELOPMENT AND EXPANSION OF A GEOGRAPHICALLY DIVERSIFIED AND STRONG MINING
GROUP. FOLLOWING THE DEMERGER, BOTH LONRHO AFRICA AND LONRHO WILL BE LISTED
SEPARATELY ON THE LONDON STOCK EXCHANGE. LONRHO WILL ALSO RETAIN ITS LISTING ON
THE JOHANNESBURG STOCK EXCHANGE.
THE DEMERGER WILL REDUCE THE CAPITAL BASE OF THE COMPANY AND, ACCORDINGLY, THE
BOARD CONSIDERS THAT A ONE FOR FOUR SHARE CONSOLIDATION SHOULD BE IMPLEMENTED.
THIS WILL REDUCE THE NUMBER OF SHARES IN ISSUE AND SHOULD LEAD TO NARROWER
TRADING SPREADS AND GREATER MARKETABILITY IN BOTH CONSOLIDATED LONRHO ORDINARY
SHARES AND LONRHO AFRICA SHARES FOLLOWING THE DEMERGER.
THE CONSOLIDATION WILL NOT ADVERSELY AFFECT SHAREHOLDERS' RIGHTS IN ANY WAY. IN
PARTICULAR, IT WILL NOT ADVERSELY AFFECT THE PROPORTION OF THE SHARE CAPITAL OF
LONRHO WHICH INDIVIDUAL SHAREHOLDERS CURRENTLY HOLD, IGNORING FRACTIONS ON
CONSOLIDATION, WHICH WILL BE ROUNDED UP. NOR WILL IT AFFECT THE CURRENT LONRHO
FREE SHARE DEALING FACILITY WHICH IS BEING OFFERED BY LONRHO'S REGISTRARS UNTIL
19TH MARCH 1998.
DESCRIPTION OF THE LONRHO AFRICA GROUP
FOLLOWING THE DEMERGER, THE LONRHO AFRICA GROUP WILL COMPRISE ALL OF LONRHO'S
AFRICAN NON-MINING BUSINESSES, TOGETHER WITH TWO ASSOCIATED UK BUSINESSES.
LONRHO AFRICA GROUP'S OPERATIONS, WHICH SPAN 14 SUB-SAHARAN AFRICAN COUNTRIES
(INCLUDING MAURITIUS), ARE FOCUSED IN FIVE CORE DIVISIONS.
MOTORS : THE MOTORS DIVISION HOLDS A WIDE RANGE OF DISTRIBUTORSHIPS AND
DEALERSHIPS IN TEN AFRICAN COUNTRIES, IMPORTING, DISTRIBUTING, SELLING AND
SERVICING MOTOR VEHICLES, MOTOR CYCLES, GENERATOR SETS AND SMALL AIRCRAFT.
AGRI-BUSINESS: OPERATING IN SEVEN AFRICAN COUNTRIES, THE AGRI-BUSINESS DIVISION
CARRIES OUT PRINCIPALLY THE DOWNSTREAM PROCESSING OF PRIMARY AGRICULTURAL
PRODUCTS, WITH INCREASING FOCUS ON PRODUCTS FOR EXPORT. THE PRINCIPAL
ACTIVITIES OF THE DIVISION ARE COTTON GINNING IN AFRICA, COTTON MERCHANTING IN
THE UK, TIMBER PROCESSING, FOOD PROCESSING AND THE BREWING OF OPAQUE BEER
DISTRIBUTION: THE PRINCIPAL ACTIVITY OF THE DISTRIBUTION DIVISION IS THE
PURCHASE OF GOODS FROM INTERNATIONAL AND LOCAL SUPPLIERS FOR SALE THROUGH THE
LONRHO AFRICA GROUP'S EXTENSIVE DISTRIBUTION NETWORK IN NIGERIA. THE DIVISION
ALSO ARRANGES TRADE FINANCE FOR THE LONRHO AFRICA GROUP FROM ITS UK OFFICE.
HOTELS: THE LONRHO AFRICA GROUP OPERATES ELEVEN HOTELS AND LODGES AT THE HIGHER
END OF THEIR RESPECTIVE MARKETS IN KENYA, GHANA, MOZAMBIQUE, MAURITIUS AND
ZIMBABWE. THE HOTELS IN MAURITIUS AND ZIMBABWE ARE OPERATED UNDER MANAGEMENT
CONTRACTS. THE LONRHO AFRICA GROUP ALSO OWNS A HOTEL IN ZAMBIA WHICH IT INTENDS
TO SELL.
PROPERTY AND CONSTRUCTION : THE PROPERTY AND CONSTRUCTION DIVISION IS
RESPONSIBLE FOR THE DEVELOPMENT AND MANAGEMENT OF THE LONRHO AFRICA GROUP'S
PROPERTY INTERESTS THROUGHOUT AFRICA. IN ADDITION, THE DIVISION CONSTRUCTS,
DEVELOPS AND MANAGES THIRD PARTY PROPERTY.
LONRHO AFRICA WILL BE MANAGED BY ITS EXISTING MANAGEMENT TEAM, ALL OF WHOM HAVE
EXTENSIVE EXPERIENCE IN AFRICA. THE BOARD BELIEVES THAT THERE IS NO OTHER
LONDON STOCK EXCHANGE LISTED GROUP OF A SIMILAR SIZE OPERATING IN SUB-SAHARAN
AFRICA THAT COMPRISES SUCH A COMMERCIALLY AND GEOGRAPHICALLY DIVERSIFIED
BUSINESS AS LONRHO AFRICA.
TO PROVIDE LONRHO AFRICA WITH AN APPROPRIATE CAPITAL STRUCTURE TO OPERATE ON A
STANDALONE BASIS, THE DEMERGER AGREEMENT PROVIDES FOR A NET CAPITAL PAYMENT OF
GBP48.0 MILLION TO BE MADE PRIOR TO COMPLETION BY LONRHO TO LAL BY MEANS OF A
SUBSCRIPTION FOR NEW SHARES IN LAL BY LONRHO. IN ADDITION, UNDER THE TERMS OF
THE DEMERGER AGREEMENT, PRIOR TO COMPLETION, LONRHO WILL CAPITALISE OUTSTANDING
INTERCOMPANY DEBT ESTIMATED TO BE GBP39.8 MILLION.
FOLLOWING THE DEMERGER, THE LONRHO AFRICA BOARD WILL COMPRISE:
BERNARD ASHER NON-EXECUTIVE CHAIRMAN
CHRISTOPHER PARVIN EXECUTIVE DEPUTY CHAIRMAN
MARK NEWMAN CHIEF EXECUTIVE
KEITH ATKINSON FINANCE DIRECTOR
STEPHEN WALLS NON-EXECUTIVE DIRECTOR
MICHAEL WILSON NON-EXECUTIVE DIRECTOR
DESCRIPTION OF THE LONRHO GROUP FOLLOWING THE DEMERGER
FOLLOWING THE DEMERGER, THE LONRHO GROUP'S CORE ACTIVITIES, AND THE FOCUS OF
LONRHO GOING FORWARD, WILL BE ITS PLATINUM, GOLD AND COAL MINING INTERESTS.
THE LONRHO PLATINUM DIVISION, A DIVISION OF THE LONRHO GROUP, COMPRISING
LONRHO'S 73 PER CENT. INTERESTS IN EASTERN PLATINUM LIMITED AND WESTERN
PLATINUM LIMITED, OPERATES FOUR PLATINUM MINES AND THEIR ASSOCIATED
METALLURGICAL AND REFINING OPERATIONS IN SOUTH AFRICA. THE DIRECTORS BELIEVE
THAT IT IS THE LOWEST COST (IN TERMS OF COST PER KILOGRAMME OF MATTE PRODUCED)
AND THE THIRD LARGEST (IN TERMS OF PRODUCTION) PRIMARY UNDERGROUND PRODUCER OF
PLATINUM GROUP METALS IN THE WORLD. OPPORTUNITIES FOR GROWTH ARE BEING ACTIVELY
PURSUED TO CONTINUE THE EFFICIENT DEVELOPMENT OF THESE ASSETS AND TO TAKE
ADVANTAGE OF WHAT THE BOARD BELIEVES TO BE AN INCREASING SUPPLY-DEMAND GAP IN
PLATINUM.
LONRHO'S PRINCIPAL GOLD ASSET IS ITS 33 PER CENT INTEREST IN ASHANTI GOLDFIELDS
COMPANY LIMITED IN GHANA, WHICH HAS EMBARKED ON A SUBSTANTIAL EXPANSION AND
OPERATIONAL RATIONALISATION PROGRAMME OVER THE LAST THREE YEARS
LONRHO'S COAL INTEREST COMPRISES A 61 PER CENT SHAREHOLDING IN DUIKER MINING
LIMITED, A COMPANY LISTED ON THE JOHANNESBURG STOCK EXCHANGE, WHICH OWNS AND
OPERATES EIGHT COAL MINES AND A SMALL GOLD MINE, ALL IN SOUTH AFRICA.
LONRHO'S MINING ASSETS ARE IN SUB-SAHARAN AFRICA. THE BOARD'S INTENTION OVER
THE MEDIUM TERM IS TO WIDEN THE GEOGRAPHICAL DIVERSITY OF LONRHO'S MINING
BUSINESSES AND TO DEVELOP LONRHO INTO A WORLD-CLASS, INTERNATIONAL MINERAL
RESOURCES GROUP, WITH CONTROLLING INTERESTS IN QUALITY COMMODITY ASSETS. SUCH
ASSETS WILL PREDOMINANTLY COMPRISE ACTIVELY MANAGED, FOCUSED MINERAL RESOURCE
COMPANIES LONRHO INTENDS TO USE ITS EXISTING EXPERTISE TO BUILD ITS ASSET BASE
THROUGH A COMBINATION OF ORGANIC GROWTH AND ACQUISITION OPPORTUNITIES.
CURRENT TRADING AND PROSPECTS
THE LONRHO GROUP'S TRADING SINCE 1ST OCTOBER, 1997 HAS BEEN BROADLY IN LINE
WITH LAST YEAR. THE DIRECTORS BELIEVE THAT THE LONRHO GROUP'S PERFORMANCE FOR
THIS FINANCIAL YEAR SHOULD BE SATISFACTORY PROVIDED THAT THERE IS CURRENCY AND
COMMODITY PRICE STABILITY IN THE MARKETS IN WHICH THE LONRHO GROUP OPERATES.
THE DIRECTORS BELIEVE THAT POLITICAL UNCERTAINTY AND CLIMATIC CONDITIONS IN THE
PRINCIPAL COUNTRIES IN WHICH LONRHO AFRICA OPERATES HAVE MEANT THAT
TRADING CONDITIONS HAVE BEEN MORE DIFFICULT IN THE CURRENT FINANCIAL YEAR TO
DATE THAN IN THE CORRESPONDING PERIOD IN THE PREVIOUS YEAR.
DIVIDEND FORECAST
IT IS THE INTENTION OF THE DIRECTORS THAT, IN THE ABSENCE OF UNFORESEEN
CIRCUMSTANCES AND SUBJECT TO THERE BEING NO MATERIAL CHANGES IN EXCHANGE RATES
AND COMMODITY PRICES, THE CURRENT DIVIDEND WILL BE MAINTAINED FOR L998,
ADJUSTED FOR THE REDUCTION IN THE SIZE OF THE COMPANY AS A RESULT OF THE
PROPOSED DEMERGER AND, AS A RESULT OF THE DISPOSAL OF LONRHO SUGAR CORPORATION
LIMITED AND THE DEMERGER, THE REDUCED ABILITY TO PAY A FOREIGN INCOME DIVIDEND
FOR 1998.
FUTURE DIVIDEND POLICY WILL BE DETERMINED IN THE LIGHT OF THE GROUP'S
TRANSITION TO A PURE MINING OPERATION AND MARKET EXPECTATIONS FOR THAT SECTOR,
AS WELL AS THE ANTICIPATED CHANGES TO THE RULES GOVERNING ADVANCE CORPORATION
TAX AND FOREIGN INCOME DIVIDENDS IN 1999.
SHARE SCHEMES AND BONDS
IN ORDER THAT THE HOLDERS OF OPTIONS UNDER THE SHARE SCHEMES AND THE HOLDERS OF
THE BONDS ARE NOT DISADVANTAGED BY IMPLEMENTATION OF THE CONSOLIDATION AND
DEMERGER, APPROPRIATE ADJUSTMENTS WILL BE MADE TO THE TERMS OF THE OPTIONS AND
TO THE CONVERSION PRICES OF THE BONDS. IT IS ALSO PROPOSED TO MAKE MINOR
AMENDMENTS TO THE RULES OF ONE OF THE SHARE SCHEMES.
AUTHORITY TO PURCHASE OWN SHARES
AT THE ANNUAL GENERAL MEETING ON 27TH MARCH, 1998 THE COMPANY IS SEEKING THE
USUAL AUTHORITY TO PURCHASE ITS OWN SHARES. THAT AUTHORITY WILL BE IN RESPECT
OF LONRHO ORDINARY SHARES AND WILL NEED TO BE RENEWED AS A RESULT OF THE
CONSOLIDATION. ACCORDINGLY, RESOLUTION NUMBER 5 SET OUT IN THE NOTICE OF EGM IN
THE CIRCULAR IS TO AUTHORISE THE COMPANY TO MAKE MARKET PURCHASES ON THE LONDON
STOCK EXCHANGE OF UP TO 19.87 MILLION CONSOLIDATED LONRHO ORDINARY SHARES
(REPRESENTING NO MORE THAN 10 PER CENT OF THE ISSUED SHARE CAPITAL AFTER THE
CONSOLIDATION) AT A PRICE NOT EXCEEDING 105 PER CENT OF THE AVERAGE MIDDLE
MARKET QUOTATION ON THE FIVE BUSINESS DAYS PRECEDING THE DATE OF PURCHASE. THE
RESOLUTION IS CONDITIONAL UPON THE CONSOLIDATION BECOMING EFFECTIVE.
THE DIRECTORS WILL USE THE AUTHORITY ONLY IF THEY CONSIDER THAT IT WILL BE IN
THE BEST INTERESTS OF THE COMPANY AND THEY CAN FORESEE A CONSEQUENTIAL
IMPROVEMENT IN EARNINGS PER SHARE. ON 27TH FEBRUARY, 1998 (THE LATEST
PRACTICABLE DATE BEFORE THE PUBLICATION OF THE CIRCULAR) THE MIDDLE MARKET
QUOTATION FOR A LONRHO ORDINARY SHARE, AS DERIVED FROM THE OFFICIAL LIST OF THE
LONDON STOCK EXCHANGE, WAS 93.5P (AS COMPARED WITH THE HIGH FOR 1997 ON 14TH
MARCH, OF 157.5P, AS SIMILARLY DERIVED).
FREE SHARE DEALING FACILITY
FOLLOWING THE DEMERGER, LONRHO AFRICA INTENDS. TO PROVIDE, THROUGH LLOYDS
REGISTRARS, A FREE SHARE DEALING FACILITY FOR ITS SMALL SHAREHOLDERS. THIS
FACILITY WILL ONLY BE AVAILABLE TO THOSE SHAREHOLDERS IN LONRHO AFRICA WHO ARE
RESIDENT IN THE UK, WHO HOLD 250 OR FEWER LONRHO AFRICA SHARES, AND WHO WISH TO
SELL THEIR ENTIRE SHAREHOLDINGS IN LONRHO AFRICA.
FURTHER DETAILS OF THIS FACILITY, INCLUDING THE TERMS AND CONDITIONS ON WHICH
IT WILL BE PROVIDED, TOGETHER WITH A FORM WHICH WILL ENABLE ELIGIBLE
SHAREHOLDERS TO TAKE ADVANTAGE OF THE FACILITY, WILL BE SENT TO ELIGIBLE
SHAREHOLDER AT THE SAME TIME AS THE LONRHO AFRICA SHARE CERTIFICATES ARE
DESPATCHED, WHICH IS EXPECTED TO BE BY 14TH MAY, 1998.
TAXATION
LONRHO HAS BEEN ADVISED THAT THE CONSOLIDATION AND DEMERGER SHOULD NOT GIVE
RISE TO AN INCOME DISTRIBUTION FOR UK TAX PURPOSES, ALTHOUGH THE INLAND REVENUE
HAS PROFFERED A DIFFERENT OPINION.IF THE INLAND REVENUE'S OPINION WERE CORRECT,
SHAREHOLDERS WOULD BE TREATED, ON THE DEMERGER BECOMING EFFECTIVE, AS IF THEY
HAD RECEIVED INCOME FOR UK TAX PURPOSES AND WOULD BE TAXED IN THE SAME WAY AS
IF THEY BAD RECEIVED A CASH DIVIDEND EQUAL TO THE VALUE OF THEIR LONRHO AFRICA
SHARES. IN ADDITION, LONRHO WOULD HAVE A SUBSTANTIAL LIABILITY TO ACCOUNT FOR
ADVANCE CORPORATION TAX. THE UNEQUIVOCAL ADVICE WHICH LONRHO HAS RECEIVED FROM
LEADING TAX COUNSEL IS THAT THE INLAND REVENUE'S OPINION IS INCORRECT IN LAW
AND WOULD NOT ULTIMATELY BE UPHELD IF THE MATTER WERE LITIGATED. AS TO THE
CAPITAL GAINS POSITION, LONRHO HAS BEEN ADVISED THAT THE CONSOLIDATION AND
DEMERGER SHOULD NOT GIVE RISE TO A DISPOSAL BY HOLDERS OF LONRHO ORDINARY
SHARES OR CONSOLIDATED LONRHO ORDINARY SHARES FOR UK CAPITAL GAINS TAX
PURPOSES. LONRHO HAS ALSO RECEIVED AN OPINION FROM ITS US TAX ADVISERS (I) THAT
THE CONSOLIDATION WILL BE TAX-FREE TO US HOLDERS OF CONSOLIDATED LONRHO
ORDINARY SHARES AND LONRHO ADSS AND (II) THAT THE DEMERGER SHOULD BE TREATED AS
A TAX-FREE DISTRIBUTION TO US HOLDERS OF CONSOLIDATED LONRHO ORDINARY SHARES
AND LONRHO ADSS. FOR SOUTH AFRICAN RESIDENT SHAREHOLDERS THE PROPOSALS SHOULD
NOT HAVE ANY TAX CONSEQUENCES PROVIDED THAT THEY ARE NOT REGARDED AS
"SHAREDEALERS" FOR SOUTH AFRICAN TAX PURPOSES.
THE TAX POSITION OF LONRHO SHAREHOLDERS IN OTHER JURISDICTIONS WILL DEPEND UPON
THE RELEVANT LOCAL TAX REGIME AND THE TERMS OF ANY RELEVANT DOUBLE TAXATION
TREATY. LONRHO SHAREHOLDERS WHO ARE IN ANY DOUBT AS TO THEIR TAXATION POSITIONS
SHOULD OBTAIN ADVICE FROM THEIR OWN PROFESSIONAL ADVISERS.
IMPLEMENTATION OF THE DEMERGER
UNDER THE DEMERGER, SHAREHOLDERS WILL RECEIVE ONE LONRHO AFRICA SHARE FOR,
EFFECTIVELY, EACH CONSOLIDATED LONRHO ORDINARY SHARE HELD AT THE BONUS ISSUE
RECORD TIME.
IMPLEMENTATION OF THE DEMERGER IS CONDITIONAL ON:
(A) THE PASSING OF THE RESOLUTIONS NUMBERED 1, 2 AND 3 SET OUT IN THE NOTICE OF
EGM IN THE CIRCULAR AS SPECIAL RESOLUTIONS;
B) THE LONDON STOCK EXCHANGE AGREEING TO ADMIT THE LONRHO AFRICA SHARES TO THE
OFFICIAL LIST (SUBJECT TO THE ALLOTMENT AND ISSUE OF SUCH SHARES);
(C) THE COURT CONFIRMING THE CAPITAL REPAYMENT, AND THE COURT ORDER HAVING BEEN
REGISTERED BY THE REGISTRAR OF COMPANIES IN ENGLAND AND WALES; AND
(D) THE DEMERGER AGREEMENT AND THE INTRODUCTION AGREEMENT HAVING BECOME
UNCONDITIONAL AND NOT HAVING BEEN TERMINATED IN ACCORDANCE WITH THEIR TERMS.
THE DEMERGER WILL BE EFFECTED, SUBJECT TO CONFIRMATION BY THE COURT, BY A
CANCELLATION AND REPAYMENT OF CAPITAL TO SHAREHOLDERS IN ACCORDANCE WITH THE
ACT. IT IS EXPECTED THAT, IN ORDER TO OBTAIN THE COURT'S CONFIRMATION OF THE
CAPITAL REPAYMENT (WHICH IS A MATTER IN THE DISCRETION OF THE COURT), IT WILL
BE NECESSARY FOR THE COMPANY TO GIVE AN UNDERTAKING TO THE COURT FOR THE
PROTECTION OF THE COMPANY'S CREDITORS AT THE DATE THE CAPITAL REPAYMENT TAKES
EFFECT. IT IS ANTICIPATED THAT THE UNDERTAKING WILL REQUIRE LONRHO TO TRANSFER
A SUM (WHICH WILL BE EQUAL TO THE AMOUNT BY WHICH THE SHARE CAPITAL OF LONRHO
WILL BE REDUCED) FROM ITS DISTRIBUTABLE RESERVES INTO A SEPARATE RESERVE WHICH,
EXCEPT IN LIMITED CIRCUMSTANCES, WILL NOT BE AVAILABLE FOR DISTRIBUTION TO
LONRHO SHAREHOLDERS WHILE ANY LIABILITIES OF LONRHO ON THE DATE OF THE CAPITAL
REPAYMENT ARE STILL OUTSTANDING. THE FINAL FORM OF THAT UNDERTAKING WILL BE
SUBJECT TO AGREEMENT WITH THE COURT.
IF COMPLETION DOES NOT TAKE PLACE ON OR BEFORE 1ST JUNE, 1998, OR SUCH LATER
TIME AS LONRHO AND LONRHO AFRICA MAY AGREE, BUT THE BONUS ISSUE HAS ALREADY
TAKEN PLACE, THE LONRHO "A" SHARES WILL AUTOMATICALLY CONVERT INTO CONSOLIDATED
LONRHO ORDINARY SHARES FOR WHICH THE COMPANY WILL SEEK A LISTING ON THE LONDON
STOCK EXCHANGE AND THE JOHANNESBURG STOCK EXCHANGE.
THE DATE OF THE COURT HEARING TO CONFIRM THE CAPITAL REPAYMENT IS EXPECTED TO
BE 6TH MAY, 1998, AND IT IS EXPECTED THAT THE DEMERGER WILL BECOME EFFECTIVE AT
8.30 A.M. ON 7TH MAY, 1998, WHEN DEALINGS IN LONRHO AFRICA SHARES WILL COMMENCE
EXTRAORDINARY GENERAL MEETING
AN EXTRAORDINARY GENERAL MEETING OF THE COMPANY TO CONSIDER AND, IF THOUGHT
FIT, APPROVE THE RESOLUTIONS WILL BE HELD AT THE NINE RINGS SUITE, ROYAL
LANCASTER HOTEL, LANCASTER TERRACE, LONDON W2 2TY AT 10.15 A.M. ON 27TH MARCH,
1998 (OR, IF LATER, AT SUCH TIME AS IS TEN MINUTES AFTER THE ANNUAL GENERAL
MEETING OF THE COMPANY CONVENED FOR THE SAME DATE SHALL HAVE BEEN CONCLUDED OR
ADJOURNED).
FURTHER INFORMATION
ATTENTION IS DRAWN TO THE EXPECTED TIMETABLE OF PRINCIPAL EVENTS SET OUT IN
APPENDIX I, FINANCIAL INFORMATION ON LONRHO AND LONRHO AFRICA SET OUT IN
APPENDICES II AND III AND FURTHER INFORMATION ON THE DEMERGER SET OUT IN
APPENDIX IV.
ENQUIRIES
JOHN MCINTYRE DEUTSCHE MORGAN GRENFELL 0171 545 8000
BILL KENDALL
ANTHONY CARDEW CARDEW & CO. 0171 930 0777
(FOR LONRHO PLC)
MARK GARRAWAY COLLEGE HILL 0171 457 2020
(FOR LONRHO AFRICA PLC)
THE CONTENTS OF THIS ANNOUNCEMENT, FOR WHICH LONRHO IS RESPONSIBLE, HAVE BEEN
APPROVED BY MORGAN GRENFELL & CO. LIMITED ("DEUTSCHE MORGAN GRENFELL") WHICH IS
REGULATED BY THE SECURITIES AND FUTURES AUTHORITY LIMITED, FOR THE PURPOSES OF
SECTION 57 OF THE FINANCIAL SERVICES ACT 1986.
DEUTSCHE MORGAN GRENFELL IS ACTING FOR LONRHO AND LONRHO AFRICA IN RELATION TO
THE DEMERGER, SHARE CONSOLIDATION AND THE OTHER PROPOSALS AND FOR NO-ONE ELSE
AND WILL NOT BE RESPONSIBLE CO ANY OTHER PERSON FOR PROVIDING THE PROTECTIONS
AFFORDED TO ITS CUSTOMERS OR FOR ADVISING ANY OTHER PERSON IN RELATION THERETO.
APPENDIX I
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
LATEST TIME AND DATE FOR RECEIPT OF FORMS OF 10.15 A.M. ON 25TH MARCH, 1998
PROXY
EXTRAORDINARY GENERAL MEETING L0 15 A.M. ON 27TH MARCH, 1998
CONSOLIDATION RECORD TIME MIDNIGHT ON 24TH APRIL, 1998
DEALINGS COMMENCE IN CONSOLIDATED LONRHO 8.30 A.M. ON 27TH APRIL, 1998
ORDINARY SHARES
CREST ACCOUNTS CREDITED WITH CONSOLIDATED 27TH APRIL 1998
LONRHO ORDINARY SHARES
DESPATCH OF CERTIFICATES FOR CONSOLIDATED
LONRHO ORDINARY SHARES BY 1ST MAY, 1998
BONUS ISSUE RECORD TIME MIDNIGHT ON 5TH MAY, 1998
COURT HEARING TO CONFIRM CAPITAL REPAYMENT 6TH MAY, 1998
COMPLETION AND DEALINGS COMMENCE IN LONRHO 8 30 A.M. ON 7TH MAY, 1998
AFRICA SHARES AND IN CONSOLIDATED LONRHO
ORDINARY SHARES EX-ENTITLEMENT OF LONRHO AFRICA
SHARES
CREST ACCOUNTS CREDITED WITH LONRHO AFRICA 7TH MAY, 1998
SHARES
DESPATCH OF CERTIFICATES FOR LONRHO AFRICA BY 14TH MAY, 1998
SHARES AND LONRHO AFRICA ADRS
ALL TIMES STATED ABOVE ARE LONDON TIMES
NOTES:
1. THE PROFIT AND LOSS ACCOUNT OF THE GROUP HAS BEEN EXTRACTED FROM THE
PUBLISHED AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR
ENDED 30TH SEPTEMBER, 1997 WITH NO ADJUSTMENT.
2. THE PROFIT AND LOSS ACCOUNT OF THE LONRHO AFRICA GROUP HAS BEEN EXTRACTED
FROM THE FINANCIAL INFORMATION SET OUT IN APPENDIX III OF THIS DOCUMENT WITH NO
ADJUSTMENT
3. THE PROFIT AND LOSS ACCOUNT OF DUTTON-FORSHAW GROUP LIMITED
("DUTTON-FORSHAWN") WHICH WAS SOLD ON 17TH DECEMBER, 1997, HAS BEEN EXTRACTED
FROM THE AUDITED CONSOLIDATION SCHEDULES USED IN THE PREPARATION OF THE
PUBLISHED AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR
ENDED 30TH SEPTEMBER, 1997 WITH NO MATERIAL ADJUSTMENT.
4. ADJUSTMENTS HAVE BEEN MADE TO NET INTEREST PAYABLE TO REFLECT INTEREST WHICH
WOULD HAVE BEEN FOREGONE ON THE PROPOSED GBP48.0 MILLION NET CAPITAL PAYMENT TO
THE LONRHO AFRICA GROUP TO BE MADE BY THE LONRHO GROUP HAD IT BEEN PAID AT THE
BEGINNING OF THE FINANCIAL YEAR AND INTEREST WHICH WOULD HAVE BEEN EARNED ON
THE GBP37 MILLION PROCEEDS FROM THE SALE OF DUTTON-FORSHAW (EXCLUDING THE PRE-
SALE DIVIDEND OF GBP6 MILLION) HAD IT BEEN RECEIVED IN CASH AT THE BEGINNING OF
THE FINANCIAL YEAR, IN EACH CASE CALCULATED AT 7 PER CENT FOR THE ENTIRE
FINANCIAL YEAR.
5. THE PRO FORMA CONSOLIDATED PROFIT AND LOSS ACCOUNT TAKES NO ACCOUNT OF THE
TRADING RESULTS OF ANY PART OF THE GROUP SINCE 30TH SEPTEMBER, 1997.
6. ALL THE ADJUSTMENTS MADE WILL HAVE A CONTINUING EFFECT ON THE LONRHO GROUP.
PRO FORMA CONSOLIDATED BALANCE SHEET AS AT 30TH SEPTEMBER, 1997
LONRHO
LONRHO DUTTON GROUP
AFRICA FORSHAW PRO
GROUP GROUP ADJUSTMENTS ADJUSTMENTS FORM
NOTE 1 ADJUSTMENTS NOTE 3 NOTE 4 NOTE 5
GBPM NOTE 2 GBPM GBPM GBPM
GBPM
FIXED ASSETS
TANGIBLE ASSETS 1,164 (194) (88) 8 890
INVESTMENTS.
ASSOCIATES 138 (3) - - 135
OTHER INVESTMENTS 77 (1) - - 76
1,379 (L98) (88) 8 1,101
CURRENT ASSETS
STOCKS 238 (142) (55) - 41
DEBTORS:
AMOUNTS FALLING DUE
WITHIN ONE YEAR 245 (109) (30) - L06
AMOUNTS FALLING DUE
AFTER MORE THAN ONE
YEAR 17 (11) (2) - 4
INVESTMENTS 1 - - - 1
CASH AT BANK AND
IN HAND 260 (22) 33 (48) 223
761 (284) (54) (48) 375
CREDITORS:
AMOUNTS FALLING DUE
WITHIN ONE YEAR (669) 238 104 - (327)
NET CURRENT ASSETS 92 (46) 50 (48) 48
TOTAL ASSETS LESS CURRENT
LIABILITIES 1,471 (244) (38) (40) 1,149
CREDITORS:
AMOUNTS FALLING DUE
AFTER MORE THAN ONE
YEAR (259) 14 42 - (203)
PROVISIONS FOR LIABILITIES
AND CHARGES (27) 8 - (8) (27)
NET ASSETS 1,185 (222) 4 (48) 919
EQUITY INTERESTS 975 (192) 6 (48) 741
MINORITY INTERESTS 210 (30) (2) - 178
1,185 (222) 4 (48) 919
NET DEBT (NOTE 6) (259) 108 108 (48) (91)
NOTES :
1. THE BALANCE SHEET OF THE GROUP HAS BEEN EXTRACTED FROM THE PUBLISHED AUDITED
CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR ENDED 30TH
SEPTEMBER, 1997 WITH NO ADJUSTMENT
2. THE BALANCE SHEET OF THE LONRHO AFRICA GROUP HAS BEEN EXTRACTED FROM THE
FINANCIAL INFORMATION SET OUT IN APPENDIX III OF THIS DOCUMENT WITH NO
ADJUSTMENT.
3. THE ADJUSTMENT IN RESPECT OF DUTTON-FORSHAW, WHICH WAS SOLD ON 17TH
DECEMBER, 1997, REFLECTS THE BALANCE SHEET OF DUTTON-FORSHAW, WHICH HAS BEEN
EXTRACTED FROM THE AUDITED CONSOLIDATION SCHEDULES USED IN THE PREPARATION OF
THE PUBLISHED AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE
YEAR ENDED 30TH SEPTEMBER, 1997 WITH NO MATERIAL ADJUSTMENT, AND THE RECEIPT IN
CASH OF GBP37 MILLION, BEING THE PROCEEDS OF SALE EXCLUDING A PRE-SALE DIVIDEND
OF GBP6 MILLION.
4. THE ADJUSTMENTS HAVE BEEN MADE TO REFLECT THE PROPOSED GBP48 MILLION NET
CAPITAL PAYMENT TO THE LONRHO AFRICA GROUP PRIOR TO COMPLETION OF THE DEMERGER
AND THE ELIMINATION OF DIFFERENCES BETWEEN THE BALANCE SHEETS OF THE LONRHO
AFRICA GROUP AS PRESENTED IN APPENDIX III OF THIS DOCUMENT AND THAT
CONSOLIDATED BY THE LONRHO GROUP. THESE DIFFERENCES COMPRISE THE REVALUATION OF
TIMBER ASSETS (GBP8 MILLION) AND DEFERRED TAX ON THE PROPOSED DISPOSAL OF
CERTAIN REVALUED PROPERTIES (GBP8 MILLION).
5. THE PRO FORMA CONSOLIDATED BALANCE SHEET TAKES NO ACCOUNT OF THE TRADING
RESULTS OF EITHER THE GROUP OR THE LONRHO AFRICA GROUP SINCE 30TH SEPTEMBER,
1997, OR THE EFFECTS OF CURRENCY MOVEMENTS ON THE BALANCE SHEET OF EITHER THE
GROUP OR THE LONRHO AFRICA GROUP SINCE 30TH SEPTEMBER, 1997.
6. NET DEBT REPRESENTS GROSS BORROWINGS LESS CASH AT BANK AND IN HAND.
APPENDIX III
FINANCIAL INFORMATION ON THE LONRHO AFRICA GROUP
THE FINANCIAL INFORMATION ON THE LONRHO AFRICA GROUP SET OUT BELOW HAS BEEN
EXTRACTED WITHOUT MATERIAL ADJUSTMENT FROM THE ACCOUNTANTS, REPORT SET OUT IN
PART VI OF THE LISTING PARTICULARS BEING POSTED TO SHAREHOLDERS TODAY. THE
BASIS OF PREPARATION IS SET OUT BELOW.
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH SEPTEMBER
1995 1996 1997
GBP GBP GBP
TURNOVER 533 572 555
COST OF SALES (409) (431) (424)
GROSS PROFIT 124 141 131
DISTRIBUTION COSTS (20) (20) (22)
ADMINISTRATION EXPENSES (63) (69) (71)
OTHER OPERATING INCOME 4 3 3
SHARE OF PROFITS OF
ASSOCIATES 2 1 1
CHARGES PAYABLE TO OTHER
LONRHO GROUP COMPANIES (1) (1) -
OTHER OPERATING PROFIT 46 55 42
PROFIT ON DISPOSAL OF FIXED
ASSETS 4 6 1
LOSS ON SALE OR TERMINATION
OF OPERATIONS 1 (2) (6)
NET INTEREST PAYABLE (15) (18) (17)
PROFIT BEFORE TAXATION 36 41 20
TAXATION (10) (9) (8)
PROFIT AFTER TAXATION 26 32 12
MINORITY INTERESTS (4) (5) (3)
RESULT FOR THE YEAR 22 27 9
BALANCE SHEET AS AT 30TH SEPTEMBER
1995 1996 1997
GBP GBP GBP
FIXED ASSETS
TANGIBLE ASSETS 104 110 194
INVESTMENTS:
ASSOCIATES 6 3 3
OTHER INVESTMENTS 4 6 1
114 119 198
CURRENT ASSETS
STOCKS 146 161 142
DEBTORS:
AMOUNTS FALLING DUE WITHIN
ONE YEAR 98 117 109
AMOUNTS FALLING DUE AFTER
MORE THAN ONE YEAR 6 10 11
CASH AT BANK AND IN HAND 13 22 22
263 310 284
CREDITORS: AMOUNTS FALLING
DUE WITHIN ONE YEAR (202) (239) (238)
NET CURRENT ASSETS 61 71 46
TOTAL ASSETS LESS CURRENT
LIABILITIES 175 190 244
CREDITORS: AMOUNTS FALLING
DUE AFTER MORE THAN ONE YEAR (28) (29) (14)
PROVISION FOR LIABILITIES
AND CHARGES (1) - (8)
NET ASSETS 146 161 222
CAPITAL AND RESERVES
CALLED-UP SHARE CAPITAL 37 37 37
REVALUATION RESERVE 6 5 82
OTHER RESERVES (30) (29) (34)
PROFIT AND LOSS ACCOUNT 65 75 67
AMOUNTS DUE TO OTHER
LONRHO GROUP COMPANIES 40 47 40
EQUITY INTERESTS 118 135 192
MINORITY INTERESTS 28 26 30
146 161 222
BASIS OF PREPARATION
THE FINANCIAL INFORMATION SET OUT ABOVE IS EXTRACTED FROM THE FINANCIAL
STATEMENTS OF THE LONRHO AFRICA GROUP FOR THE THREE YEARS ENDED 30TH SEPTEMBER,
1997, WHICH HAVE BEEN PREPARED BY THE DIRECTORS OF LONRHO AFRICA FOR THE
PURPOSES OF THE LISTING PARTICULARS. THE FINANCIAL STATEMENTS ARE BASED ON
FINANCIAL INFORMATION PREPARED IN CONNECTION WITH THE PREPARATION OF THE
AUDITED CONSOLIDATED ACCOUNTS OF THE GROUP. KPMG WERE AUDITORS OF LONRHO DURING
THE YEAR ENDED 30TH SEPTEMBER, 1995. KPMG AUDIT PLC HAS BEEN THE AUDITOR OF
LONRHO SUBSEQUENTLY.
THE FOLLOWING SETS OUT THE PRINCIPLES APPLIED BY THE DIRECTORS OF LONRHO AFRICA
IN PREPARING THE FINANCIAL STATEMENTS:
1. THE FINANCIAL STATEMENTS HAVE BEEN PREPARED USING MERGER ACCOUNTING
PRINCIPLES AS IF THE COMPANIES COMPRISING THE LONRHO AFRICA GROUP HAD BEEN PART
OF THE LONRHO AFRICA GROUP FOR ALL PERIODS PRESENTED OR, IN THE CASE OF THOSE
ACQUIRED OR DISPOSED OF BY THE LONRHO AFRICA GROUP DURING THESE PERIODS, FROM
OR UP TO THE DATE CONTROL PASSED, AS APPROPRIATE;
2. THE NET INVESTMENT BY LONRHO IN THE EQUITY AND OTHER FUNDING OF THE LONRHO
AFRICA GROUP HAS BEEN TREATED AS CAPITAL AND, THEREFORE, INCLUDED WITHIN EQUITY
INTERESTS. CONSEQUENTLY, DIVIDENDS PAID DURING THE PERIOD BY ENTITIES WITHIN
THE LONRHO AFRICA GROUP TO LONRHO HAVE NOT BEEN INCLUDED IN THE LONRHO AFRICA
GROUP'S PROFIT AND LOSS ACCOUNTS BUT ARE INCLUDED WITHIN THE MOVEMENTS IN
EQUITY INTERESTS;
3. TRANSACTIONS AND BALANCES BETWEEN COMPANIES IN THE LONRHO AFRICA GROUP HAVE
BEEN ELIMINATED; AND
4. TAXATION CHARGES AND LIABILITIES FOR THE LONRHO AFRICA GROUP ARE BASED ON
AMOUNTS RECORDED IN THE HISTORICAL FINANCIAL STATEMENTS OF CONSTITUENT ENTITIES
APPENDIX IV
FURTHER INFORMATION
1. RESOLUTIONS
THE PURPOSE AND EFFECT OF THE RESOLUTIONS {WHICH ARE SET OUT IN THE NOTICE OF
EXTRAORDINARY GENERAL MEETING IN THE CIRCULAR) ARE AS FOLLOWS:
(A) RESOLUTION 1, WHICH WILL BE PROPOSED AS A SPECIAL RESOLUTION, IS TO EFFECT
THE CONSOLIDATION AND TO MAKE A CONSEQUENTIAL AMENDMENT TO THE COMPANY'S
ARTICLES OF ASSOCIATION.
(B) RESOLUTION 2, WHICH WILL BE PROPOSED AS A SPECIAL RESOLUTION, IS TO
INCREASE THE SHARE CAPITAL OF THE COMPANY BY THE CREATION OF THE LONRHO "A"
SHARES AND TO AUTHORISE THE DIRECTORS TO EFFECT THE BONUS ISSUE BY CAPITALISING
PART OF THE COMPANY'S SHARE PREMIUM ACCOUNT AND ALLOTTING THE LONRHO "A" SHARES
(C) RESOLUTION 3, WHICH WILL BE PROPOSED AS A SPECIAL RESOLUTION, IS TO APPROVE
THE CAPITAL REPAYMENT
(D) RESOLUTION 4, WHICH WILL BE PROPOSED AS AN ORDINARY RESOLUTION, IS TO
APPROVE THE AMENDMENT OF THE LONRHO SAVINGS RELATED SHARE OPTION SCHEME, AS
DESCRIBED FURTHER IN THE CIRCULAR
(E) RESOLUTION 5, WHICH WILL BE PROPOSED AS A SPECIAL RESOLUTION, IS TO
AUTHORISE THE COMPANY TO PURCHASE ITS OWN SHARES, AS DESCRIBED FURTHER IN THE
CIRCULAR.
THE RESOLUTIONS ARE (SAVE IN THE CASE OF RESOLUTION 4) SUBJECT TO CERTAIN
CONDITIONS. THE CIRCULAR CONTAINS AN EXPLANATION OF THE CONDITIONS TO WHICH THE
IMPLEMENTATION OF THE CONSOLIDATION AND DEMERGER ARE SUBJECT.
A SPECIAL RESOLUTION REQUIRES A MAJORITY OF THREE-FOURTHS OF THE VOTES OF THOSE
PERSONS WHO, BEING ELIGIBLE TO DO SO, VOTE IN PERSON OR, ON A POLL, BY PROXY.
2. CLOSING THE REGISTER, CREST, DEALINGS END SETTLEMENT
(A) CONSOLIDATION
WITH EFFECT FROM THE CONSOLIDATION RECORD TIME, EXISTING SHARE CERTIFICATES FOR
LONRHO ORDINARY SHARES WILL CEASE TO BE VALID. THE LONRHO ORDINARY SHARES
ALL SHARE CERTIFICATES WILL BE SENT BY PRE-PAID FIRST CLASS POST, AT THE RISK
OF SUCH HOLDERS, TO THE REGISTERED ADDRESS OF THE RELEVANT HOLDERS (OR, IN THE
CASE OF JOINT HOLDERS, TO THE ADDRESS OF THAT ONE OF THE JOINT HOLDERS WHOSE
NAME STANDS FIRST IN THE REGISTER IN RESPECT OF SUCH JOINT HOLDING).
SUBJECT TO INSTRUCTIONS TO THE CONTRARY, SHARE REGISTRATION DETAILS AND
INSTRUCTIONS FOR THE PAYMENT OF DIVIDENDS IN RESPECT OF HOLDINGS OF LONRHO
ORDINARY SHARES WILL BE APPLIED BY LONRHO AFRICA TO HOLDINGS OF LONRHO AFRICA
SHARES AND WILL CONTINUE TO APPLY TO CONSOLIDATED LONRHO ORDINARY SHARES.
APPENDIX V
DEFINITIONS
THE FOLLOWING DEFINITIONS APPLY THROUGHOUT THIS DOCUMENT, UNLESS THE CONTEXT
OTHERWISE REQUIRES:
"ACT" THE COMPANIES ACT 1985 (AS AMENDED)
ADMISSION ADMISSION OF THE LONRHO AFRICA SHARES TO
OFFICIAL LIST
"ADRS" AMERICAN DEPOSITARY RECEIPTS EVIDENCING
ADSS
"ADSS" AMERICAN DEPOSITARY SHARES
"BONDS" THE 6 PER CENT. GUARANTEED CONVERTIBLE
BOND
DUE 2004 AND THE 8 PER CENT. GUARANTEED
CONVERTIBLE BONDS DUE 2006 OF LONRHO
FINANCE
PUBLIC LIMITED COMPANY GUARANTEED BY
LONRHO
"BONUS ISSUE" THE PROPOSED BONUS ISSUE OF LONRHO "A"
SHARES TO SHAREHOLDERS ON THE REGISTER AT
THE BONUS ISSUE RECORD TIME, AS MORE FULLY
DESCRIBED IN THE CIRCULAR
"BONUS ISSUE RECORD
TIME" MIDNIGHT ON THE DAY IMMEDIATELY PRECEDING
THE DAY ON WHICH THE COURT FIRST HEARS THE
PETITION TO CONFIRM THE CAPITAL REPAYMENT
"CAPITAL REPAYMENT" THE PROPOSED REPAYMENT OF THE SHARE
CAPITAL OF THE COMPANY BY THE CANCELLATION
AND REPAYMENT OF THE LONRHO "A" SHARES, AS
MORE FULLY DESCRIBED IN THE CIRCULAR
"CIRCULAR" CIRCULAR SENT TO SHAREHOLDERS ON 4TH
MARCH, 1998, SETTING OUT DETAILS OF THE
DEMERGER AND RELATED PROPOSALS
"COMPLETION" COMPLETION OF THE DEMERGER
"CONSOLIDATED LONRHO
ORDINARY SHARES" THE ORDINARY SHARES OF GBP1 EACH IN LONRHO
ARISING AS A RESULT OF THE CONSOLIDATION
"CONSOLIDATION" THE PROPOSED ONE FOR FOUR CONSOLIDATION OF
LONRHO ORDINARY SHARES AT THE
CONSOLIDATION RECORD TIME, AS MORE FULLY
DESCRIBED IN THE CIRCULAR
"CONSOLIDATION RECORD
TIME" MIDNIGHT ON 24TH APRIL, 1998 (OR
SUCH LATER TIME AND DATE AS THE
DIRECTORS :SHALL DETERMINE)
"COURT" THE HIGH COURT OF JUSTICE OF ENGLAND AND
WALES
"COURT ORDER" THE ORDER OF THE COURT CONFIRMING THE
CAPITAL REPAYMENT
"CREST" THE RELEVANT SYSTEM (AS DEFINED IN THE
REGULATIONS) IN RESPECT OF WHICH CRESTCO
LIMITED IS THE OPERATOR (AS DEFINED IN THE
REGULATIONS)
"DEMERGER" THE PROPOSED DEMERGER OF THE LONRHO AFRICA
GROUP FROM THE GROUP, AS MORE FULLY
DESCRIBED IN THE CIRCULAR AND THE LISTING
PARTICULARS
"DEMERGER AGREEMENT" THE AGREEMENT DATED 4TH MARCH, 1998
ENTERED INTO BETWEEN LONRHO, LONRHO AFRICA
AND LAL, AS MORE FULLY DESCRIBED IN THE
CIRCULAR
"DEUTSCHE MORGAN
GRENFELL" MORGAN GRENFELL & CO. LIMITED
"DIRECTORS" OR "BOARD" THE DIRECTORS OF LONRHO
"EXTRAORDINARY GENERAL
MEETING" OR "EGM" THE EXTRAORDINARY GENERAL MEETING OF THE
COMPANY CONVENED FOR L0.15 A.M. ON FRIDAY
27TH MARCH, 1998 (OR, IF LATER, FOR SUCH
TIME AS IS TEN MINUTES AFTER THE ANNUAL
GENERAL MEETING OF THE COMPANY CONVENED
FOR THE SAME DATE SHALL HAVE BEEN
CONCLUDED OR ADJOURNED), INCLUDING ANY
ADJOURNMENT THEREOF, NOTICE OF WHICH IS
SET OUT IN THE CIRCULAR
"GROUP" LONRHO AND ITS SUBSIDIARY UNDERTAKINGS AND
ASSOCIATED UNDERTAKINGS (INCLUDING MEMBERS
OF THE LONRHO AFRICA GROUP)
"INTRODUCTION AGREEMENT" THE AGREEMENT BETWEEN LONRHO, LONRHO
AFRICA, THE DIRECTORS OF LONRHO AFRICA AND
DEUTSCHE MORGAN GRENFELL RELATING, INTER
ALIA, TO THE APPOINTMENT OF DEUTSCHE
MORGAN GRENFELL AS SPONSOR TO THE
APPLICATION FOR ADMISSION
"LAL" LONRHO AFRICA (HOLDINGS) LIMITED, THE
SUBSIDIARY OF THE COMPANY WHICH OWNS ALL
OF THE AFRICAN NON-MINING BUSINESSES OF
THE GROUP
"LISTING PARTICULARS" THE LISTING PARTICULARS RELATING TO LONRHO
AFRICA DATED 4TH MARCH, 1998
"LONRHO" OR "COMPANY" LONRHO PUBLIC LIMITED COMPANY
"LONRHO "A" SHARES" THE PROPOSED "A" SHARES IN LONRHO, THE
RIGHTS ATTACHING TO WHICH ARE SET OUT IN
THE RESOLUTION NUMBERED 2 IN THE NOTICE OF
EGM IN THE CIRCULAR
"LONRHO AFRICA" LONRHO AFRICA PLC, THE HOLDING COMPANY
WHICH WILL ACQUIRE LAL PURSUANT TO THE
CAPITAL REPAYMENT
"LONRHO AFRICA GROUP" LONRHO AFRICA AND ITS SUBSIDIARY
UNDERTAKINGS AND ASSOCIATED UNDERTAKINGS,
OR, IN RESPECT OF THE PERIOD PRIOR TO THE
DEMERGER BECOMING EFFECTIVE, LAL AND ITS
SUBSIDIARY AND ASSOCIATED UNDERTAKINGS
"LONRHO AFRICAN SHARES" THE ORDINARY SHARES OF 20P EACH IN LONRHO
AFRICA TO BE ISSUED TO SHAREHOLDERS
PURSUANT TO THE DEMERGER
"LONRHO GROUP" LONRHO AND ITS SUBSIDIARY UNDERTAKINGS AND
ASSOCIATED UNDERTAKINGS (EXCLUDING MEMBERS
OF THE LONRHO AFRICA GROUP)
"LONRHO ORDINARY SHARES" ORDINARY SHARES OF 25P EACH IN LONRHO
PRIOR TO THE CONSOLIDATION
"LONRHO SHAREHOLDERS" OR HOLDERS OF LONRHO ORDINARY SHARES OR
"SHAREHOLDERS" CONSOLIDATED LONRHO ORDINARY SHARES (AS
THE CONTEXT MAY REQUIRE)
"LONDON STOCK EXCHANGE" LONDON STOCK EXCHANGE LIMITED
"MATTE" A CRUDE MIXTURE OF SULPHIDES FORMED IN
SMELTING SULPHIDE ORES OF CERTAIN METALS,
ESPECIALLY COPPER AND NICKEL
"OFFICIAL LIST" THE OFFICIAL LIST OF THE LONDON STOCK
EXCHANGE
"PRINCESS HOTELS" LONRHO'S HOTEL INTERESTS IN BARBADOS,
BAHAMAS, BERMUDA, MEXICO AND THE UNITED
STATES
"PROPOSALS" THE CONSOLIDATION, THE DEMERGER, THE
PROPOSED AMENDMENTS TO THE LONRHO SAVINGS
RELATED SHARE OPTION SCHEME (DESCRIBED IN
THE CIRCULAR) AND THE PROPOSED AUTHORITY
FOR THE COMPANY TO PURCHASE ITS OWN SHARES
(DESCRIBED IN THE CIRCULAR)
"REGULATIONS" THE UNCERTIFICATED SECURITIES REGULATIONS
1995 (STATUTORY INSTRUMENT 1995/3272)
"RESOLUTIONS" THE RESOLUTIONS SET OUT IN THE NOTICE OF
EGM
"SHARE SCHEMES" THE LONRHO SHARE OPTION SCHEME 1984, THE
LONRHO SHARE OPTION SCHEME 1994, THE
LONRHO OVERSEAS AND ASSOCIATE SHARE OPTION
SCHEME, THE LONRHO OVERSEAS AND ASSOCIATE
SHARE OPTION SCHEME 1994, THE LONRHO
SAVINGS RELATED SHARE OPTION SCHEME, THE
LONRHO SAVINGS RELATED SHARE OPTION SCHEME
1994, THE LONRHO OVERSEAS AND ASSOCIATE
SAVINGS RELATED SHARE OPTION SCHEME AND
THE LONRHO OVERSEAS AND ASSOCIATE SAVINGS
RELATED SHARE OPTION SCHEME 1994
"UNITED KINGDOM" OR "UK" UNITED KINGDOM OF GREAT BRITAIN AND
NORTHERN IRELAND
"UNITED STATES" OR "US" UNITED STATES OF AMERICA
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