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MERGER AGREEMENT BETWEEN BENCO AND TRANS HEX AND FURTHER CAUTIONARY

Release Date: 19/10/1999 07:49
Code(s): BNC TSX
Wrap Text
BENGUELA CONCESSIONS LIMITED
(REGISTRATION NUMBER 88/03608/06)
("BENCO")
TRANS HEX GROUP LIMITED
(REGISTRATION NUMBER 63/07579/06)
("TRANS HEX")

MERGER AGREEMENT BETWEEN BENCO AND TRANS HEX AND FURTHER CAUTIONARY ANNOUNCEMEN 1. INTRODUCTION
FURTHER TO THE JOINT ANNOUNCEMENT DATED 20 AUGUST 1999 ISSUED BY BENCO AND TRANS HEX TOGETHER WITH MVELAPHANDA DIAMONDS (PROPRIETARY) LIMITED ("THE PREVIOUS ANNOUNCEMENT"), WHICH REFERRED TO THE INVESTIGATION OF A MERGER BETWEEN BENCO AND TRANS HEX ("THE MERGER") AND TO THE GRANTING BY BENCO OF A NEW OPTION TO TRANS HEX TO SUBSCRIBE FOR NEW ORDINARY SHARES IN BENCO ("THE NEW OPTION"), SHAREHOLDERS ARE ADVISED THAT A FORMAL AGREEMENT BETWEEN BENCO AND TRANS HEX, CONFIRMING THE TERMS OF THE MERGER AND THE NEW OPTION, WAS SIGNED ON 14 OCTOBER 1999. 2. THE OPTION
IN TERMS OF THE NEW OPTION, TRANS HEX IS ENTITLED TO SUBSCRIBE FOR SUCH NUMBER OF NEW ORDINARY SHARES IN BENCO ("BENCO SHARES") AS WILL CONFER ON TRANS HEX OWNERSHIP OF 50% PLUS ONE SHARE OF BENCO'S ISSUED SHARE CAPITAL AT A PRICE OF 40 CENTS PER NEW BENCO SHARE. THE NEW OPTION WILL LAPSE ON THE EARLIER OF THE IMPLEMENTATION OF THE MERGER OR 31 MARCH 2000.
THE OPTION IS CONDITIONAL ON THE PRIOR APPROVAL BY THE REQUISITE MAJORITY OF SHAREHOLDERS OF BENCO IN GENERAL MEETING. 3. THE MERGER
AS REFLECTED IN THE PREVIOUS ANNOUNCEMENT, THE TERMS OF THE MERGER BETWEEN BENCO AND TRANS HEX WILL BE BASED ON THEIR RESPECTIVE MARKET CAPITALISATIONS, CALCULATED IN RESPECT OF BENCO AT A PRICE OF 40 CENTS PER ORDINARY SHARE ON THE 107 504 931 BENCO SHARES IN ISSUE ON 20 AUGUST 1999, AND IN RESPECT OF TRANS HEX, AT THE VOLUME WEIGHTED AVERAGE PRICE PER SHARE CALCULATED OVER THE 30 CALENDAR DAY PERIOD ENDED ON 13 AUGUST 1999, BEING 835 CENTS PER TRANS HEX ORDINARY SHARE, ON THE 64 381 608 ORDINARY SHARES IN TRANS HEX IN ISSUE ON 20 AUGUST 1999. 4. RECENT DEVELOPMENTS
RECENT EVENTS OF RELEVANCE TO THE MERGER INCLUDE THE FOLLOWING:
* TRANS HEX HAS COMPLETED A DUE DILIGENCE INVESTIGATION INTO THE AFFAIRS OF BENCO TO ITS SATISFACTION; AND
* AGREEMENT IN PRINCIPLE HAS BEEN REACHED REGARDING THE RECAPITALISATION OF THE US$5,3 MILLION IN SECURED DEBT OUTSTANDING IN RESPECT OF BENCO'S DIAMOND RECOVERY VESSEL, THE "MOONSTAR" ("SECURED DEBT"), SUCH THAT, ONCE ALL THE REMAINING CONDITIONS PRECEDENT TO THE MERGER HAVE BEEN FULFILLED, THE DEBT WILL BE CAPITALISED TO A PRESENT VALUE OF US$4 675 417, TO BE DISCHARGED BY THE ISSUE OF SHARES IN THE MERGED COMPANY, BASED ON AN ISSUE PRICE OF 40 CENTS PER BENCO SHARE. 5. CONDITIONS PRECEDENT
THE MERGER REMAINS SUBJECT TO THE FULFILMENT OF THE FOLLOWING CONDITIONS PRECEDENT:
* CONCLUSION OF A FORMAL AGREEMENT CONFIRMING THE RECAPITALISATION OF THE US$5,3 MILLION IN SECURED DEBT;
* THE APPROVAL OF THE MERGER, INSOFAR AS MAY BE NECESSARY, BY THE COMPETITION COMMISSION, SOUTH AFRICAN RESERVE BANK, THE MINISTER OF MINERALS AND ENERGY, JOHANNESBURG STOCK EXCHANGE AND SECURITIES REGULATION PANEL;
* APPROVAL OF THE MERGER BY THE BOARDS OF BENCO AND TRANS HEX;
* THE ISSUANCE BY THE RELEVANT AUTHORITIES OF ASSURANCES IN RESPECT OF THE FISCAL STATUS OF THE MERGED COMPANY TO THE SATISFACTION OF TRANS HEX;
* THE APPROVAL OF A SCHEME OF ARRANGEMENT IN TERMS OF SECTION 311 OF THE COMPANIES ACT, 1973 (ACT 61 OF 1973), AS AMENDED, IF A SCHEME IS USED TO IMPLEMENT THE MERGER; AND
* THE PRIOR APPROVAL OF THE MERGER BY THE REQUISITE MAJORITIES OF THE
SHAREHOLDERS OF BENCO AND OF TRANS HEX IN GENERAL OR SCHEME MEETINGS. 6. FURTHER CAUTIONARY ANNOUNCEMENT
IF THE RELEVANT AUTHORITIES ISSUE ASSURANCES TO THE SATISFACTION OF TRANS HEX REGARDING THE FISCAL STATUS OF THE MERGED COMPANY, A FURTHER ANNOUNCEMENT SETTING OUT THE PROPOSED MECHANISM, FINANCIAL EFFECTS AND TIMETABLE FOR THE MERGER WILL BE MADE. SHAREHOLDERS OF BENCO AND TRANS HEX ARE ADVISED TO CONTINUE EXERCISING CAUTION WHEN DEALING IN THEIR SHARES UNTIL SUCH TIME AS A FURTHER ANNOUNCEMENT IS MADE. CAPE TOWN 19 OCTOBER 1999 FINANCIAL ADVISER TO BENCO FLEMINGS ROBERT FLEMING SOUTH AFRICA LIMITED REGISTRATION NUMBER 95/11812/06 ATTORNEYS TO BENCO CLIFFE DEKKER FULLER MOORE INC (REGISTRATION NUMBER 98/18173/21) ATTORNEYS TO TRANS HEX BRINK COHEN LE ROUX & ROODT INC ATTORNEYS REG. NO. 93/04501/21 JOINT SPONSORING BROKERS TO BENCO FLEMING MARTIN SECURITIES LTD REGISTRATION NUMBER 95/11815/06 MEMBER OF THE JOHANNESBURG STOCK EXCHANGE INCENTIVE LOWENTHAL (PTY) LTD A MEMBER OF THE JOHANNESBURG STOCK EXCHANGE SPONSORING BROKER TO TRANS HEX DEUTCHE MORGAN GRENFELL (PROPRIETARY) LIMITED (REGISTRATION NUMBER 73/06709/07) MEMBER OF THE JOHANNESBURG STOCK EXCHANGE SPONSORING BROKER TO TRANS HEX IN NAMIBIA JOLYON IRWIN

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