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LONMIN PLC

Release Date: 04/11/1999 08:04
Code(s): LON
Wrap Text
3 NOVEMBER 1999

THE BOARD OF LONMIN PLC ("LONMIN") ANNOUNCES THAT ON SUNDAY 24 OCTOBER 1999, AT THE INVITATION OF THE ASHANTI BOARD, IT MADE AN IMPROVED REFINANCING AND MERGER PROPOSAL TO ASHANTI GOLDFIELDS COMPANY LIMITED ("ASHANTI"). LONMIN'S INITIAL PROPOSAL OF 10 OCTOBER 1999 WAS ALSO MADE AT THE INVITATION OF ASHANTI'S BOARD. LONMIN HAS TODAY BEEN INFORMED BY ASHANTI THAT ITS BOARD IS UNABLE TO ACCEPT ITS IMPROVED PROPOSAL, WHICH HAS ACCORDINGLY BEEN WITHDRAWN. LONMIN'S IMPROVED PROPOSAL
- PROVIDED FOR THE POSSIBLE ISSUE OF UP TO 20M ASHANTI WARRANTS TO ITS HEDGE BANKS, IN LINE WITH THE ARRANGEMENTS BETWEEN ASHANTI AND SUCH BANKS ANNOUNCED ON 1 NOVEMBER 1999
- DESPITE THE DILUTION IMPLICIT IN THE ABOVE ARRANGEMENTS, MAINTAINED MERGER OFFER TERMS OF 16 NEW LONMIN SHARES FOR EVERY 27 ASHANTI SHARES, PLUS A WARRANT REPRESENTING A FURTHER $1 IN VALUE DEPENDENT ON THE FUTURE PROVEN AND PROBABLE RESERVES OF THE GEITA MINE IN TANZANIA. THIS VALUE PACKAGE OF $7 IN AGGREGATE PER ASHANTI SHARE REPRESENTED A PREMIUM OF 51% TO THE ASHANTI CLOSING PRICE ON 22 OCTOBER 1999 (THE LAST BUSINESS DAY BEFORE THE PROPOSAL WAS MADE)
- ENVISAGED MARGIN FREE TRADING IN RESPECT OF ASHANTI'S EXISTING HEDGE BOOK FOR 5 YEARS AND TRADING ON AN ACCEPTABLE MARGIN LIMIT THEREAFTER
- ON RECEIPT OF A UNANIMOUS BOARD RECOMMENDATION, WOULD HAVE PROVIDED $100M OF LOAN FINANCE TO ASHANTI TO PROVIDE THE ADDITIONAL FUNDING REQUIRED FOR THE NECESSARY EXPANSION OF GEITA. THIS $100M LOAN WOULD HAVE ENABLED ASHANTI TO SUBSTANTIALLY SATISFY THE FINANCING PRE-CONDITIONS SET OUT IN THE AGREEMENT WITH THE HEDGE BANKS ANNOUNCED ON 1 NOVEMBER 1999
LONMIN'S PROPOSAL TO ASHANTI REFLECTED THE VIEW THAT THERE WAS A STRONG COMMERCIAL LOGIC IN THE COMBINATION OF THESE TWO COMPANIES INTO A WORLD LEADING PRECIOUS METALS GROUP. LONMIN FURTHER BELIEVED THAT ITS PROPOSAL PROVIDED THE MOST FEASIBLE AND ATTRACTIVE SOLUTION TO ASHANTI'S ONGOING WORKING CAPITAL NEEDS AND WOULD HAVE CREATED A COMBINED GROUP WITH SIGNIFICANTLY REDUCED LEVERAGE AND FINANCIAL EXPOSURE AND, KEEPING THE ASHANTI GROUP INTACT IN ITS PRESENT FORM, AN ENHANCED OPPORTUNITY FOR THE CREATION OF SHAREHOLDER VALUE. FURTHER, LONMIN CONSIDERS THAT THE VALUE OFFERED - WHICH AT CLOSING PRICES ON 2 NOVEMBER 1999 REPRESENTED $7.04 PER ASHANTI SHARE, OR A PREMIUM OF 54% - IS FULLY REFLECTIVE IN THE CIRCUMSTANCES OF A MERGER OF ASHANTI'S EQUITY VALUE TAKING FULL ACCOUNT OF THE COMPANY'S SIGNIFICANT STANDALONE FINANCIAL DEBT BURDEN.
THE BOARD OF LONMIN REMAINS OPEN TO THE RESUMPTION OF MERGER DISCUSSIONS WITH BOTH ASHANTI AND WITH THE GOVERNMENT OF GHANA.
LONMIN UNDERSTANDS THAT IN ORDER TO MEET ITS SHORT TERM WORKING CAPITAL REQUIREMENTS AND RELATED HEDGE BANK PRE-CONDITIONS, ASHANTI IS CONSIDERING A NUMBER OF ALTERNATIVES, POTENTIALLY INCLUDING ASSET SALES. LONMIN HAS NOT BEEN INFORMED OF ANY SPECIFIC PROPOSALS. HOWEVER, LONMIN'S CURRENT VIEW IS THAT THE SALE OF CORE ASSETS IN ORDER TO ACHIEVE SHORT TERM LIQUIDITY WOULD BE UNLIKELY TO BE IN THE INTERESTS OF SHAREHOLDERS. PRESS ENQUIRIES:
ANTHONY CARDEW CARDEW & CO 0171 930 0777

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