To view the PDF file, sign up for a MySharenet subscription.

TRANS HEX, BENCO - PROPOSED SCHEME OF ARRANGEMENT BY TRANS HEX

Release Date: 01/02/2000 07:24
Code(s): TSX BNC
Wrap Text
TRANS HEX GROUP LIMITED
(REGISTRATION NUMBER 63/07579/06)
("TRANS HEX")
BENGUELA CONCESSIONS LIMITED
(REGISTRATION NUMBER 88/03608/06
("BENCO")

PROPOSED SCHEME OF ARRANGEMENT BY TRANS HEX TO CONSTITUTE BENCO AS A WHOLLY-OWNED SUBSIDIARY OF TRANS HEX 1. INTRODUCTION
FURTHER TO THE ANNOUNCEMENTS DATED 20 AUGUST 1999, 19 OCTOBER 1999 AND 1 DECEMBER 1999, THE BOARDS OF DIRECTORS OF BENCO AND TRANS HEX HAVE PLEASURE IN ANNOUNCING THAT CERTAIN KEY CONDITIONS PRECEDENT TO THE MERGER OF BENCO AND TRANS HEX HAVE BEEN FULFILLED, AND THAT TRANS HEX INTENDS TO PROPOSE A SCHEME OF ARRANGEMENT IN TERMS OF SECTION 311 OF THE COMPANIES ACT, 1973
(ACT 61 OF 1973), AS AMENDED (THE "SCHEME"), BETWEEN BENCO AND ITS ORDINARY SHAREHOLDERS ("SCHEME MEMBERS").
UPON THE SCHEME BECOMING OPERATIVE, ALL OF THE ORDINARY SHARES IN BENCO ("BENCO SHARES") WILL BE HELD BY TRANS HEX. SUBJECT TO THE FULFILLMENT OF THE REMAINING CONDITIONS PRECEDENT REFLECTED IN PARAGRAPH 7 BELOW, THE LISTING OF THE BENCO SHARES ON THE JOHANNESBURG STOCK EXCHANGE ("JSE") WILL BE TERMINATED.
ROBERT FLEMING SOUTH AFRICA LIMITED HAS BEEN APPOINTED AS INDEPENDENT FINANCIAL ADVISER TO THE BOARD OF DIRECTORS OF BENCO REGARDING THE TERMS AND
IMPLEMENTATION OF THE SCHEME AND IS OF THE OPINION THAT THE SCHEME IS FAIR AND REASONABLE TO SCHEME MEMBERS. THE COMPETITION COMMISSION HAS APPROVED THE MERGER OF BENCO AND TRANS HEX. 2. BACKGROUND INFORMATION ON TRANS HEX
TRANS HEX IS LISTED ON THE JSE AND THE NAMIBIAN STOCK EXCHANGE. THE CORE BUSINESS OF TRANS HEX IS THE MINING AND MARKETING OF HIGH QUALITY DIAMONDS FROM ALLUVIAL AND MARINE DEPOSITS IN THE NAMAQUALAND DISTRICT OF THE NORTHERN CAPE PROVINCE OF SOUTH AFRICA. TRANS HEX HOLDS EXTENSIVE MINING RIGHTS OVER PROSPECTIVE AREAS ADJACENT TO THE ORANGE RIVER AND HONDEKLIP BAY, AS WELL AS 11 MARINE MINING AND EXPLORATION CONCESSIONS ON THE WEST COAST. INTERNATIONAL DIAMOND EXPLORATION ACTIVITIES IN NAMIBIA, BRAZIL AND ZIMBABWE ARE UNDERTAKEN BY TRANS HEX INTERNATIONAL LIMITED, A SUBSIDIARY OF TRANS HEX, WHOSE SHARES ARE TRADED ON THE TORONTO STOCK EXCHANGE. TOTAL DIAMOND PRODUCTION FOR THE 1999 FINANCIAL YEAR WAS 114 502 CARATS. DIAMOND MARKETING IS UNDERTAKEN BY TRANS HEX THROUGH ITS OFFICES IN CAPE TOWN AND ANTWERP. 3. BACKGROUND INFORMATION ON BENCO
BENCO IS LISTED IN THE "MINING RESOURCES - MINING EXPLORATION" SECTOR OF THE JSE. TOGETHER WITH ITS SUBSIDIARIES AND JOINT VENTURE PARTNERS, BENCO IS FOCUSED ON MARINE DIAMOND EXPLORATION AND DEVELOPMENT OFF THE WEST COAST OF SOUTHERN AFRICA. IN THAT AREA, BENCO HOLDS SEVEN CONCESSIONS TOTALING SOME 4 400 SQUARE KILOMETRES, AND IN ADDITION IT IS THE OPERATOR OF VARIOUS JOINT VENTURES COVERING SOME 6 600 SQUARE KILOMETRES. IN NAMIBIAN WATERS, IT HOLDS A CONTROLLING INTEREST OVER APPROXIMATELY 8 600 SQUARE KILOMETRES OF CONCESSIONS. IN ADDITION, BENCO HOLDS LAND-BASED PROSPECTING LICENSES IN SOUTH AFRICA OVER SEVERAL FARMS NEAR SAXENDRIFT ON THE MIDDLE ORANGE RIVER.
BENCO HAS REPORTED NET OPERATING LOSSES IN EACH OF ITS PAST FIVE FINANCIAL YEARS AND ONGOING EXPLORATION EXPENDITURE REQUIREMENTS, AS WELL AS DEBT COMMITMENTS IN RESPECT OF A MORTGAGE HELD BY LAMBETH TRADING PTY LIMITED ("LAMBETH") OVER THE MINING VESSEL, MV MOONSTAR (THE "LAMBETH DEBT"), HAS PUT STRAIN ON BENCO'S CASH RESOURCES.
AGREEMENT WAS REACHED WITH LAMBETH ON 11 NOVEMBER 1999 THAT THE LAMBETH DEBT WILL BE SETTLED IN FULL BY THE ISSUE TO LAMBETH OF 3 416 451 ORDINARY SHARES IN TRANS HEX AFTER THE COMPLETION OF THE SCHEME ("THE RECAPITALISATION AGREEMENT") IN TERMS OF AN ISSUE OF SHARES PURSUANT TO THE TRANS HEX DIRECTORS' GENERAL AUTHORITY TO ISSUE SHARES FOR CASH GRANTED IN GENERAL MEETING. SHOULD THE SCHEME NOT BE COMPLETED, THE LAMBETH DEBT WILL BE REPAYABLE AS PER THE TERMS APPLYING PRIOR TO THE RECAPITALISATION AGREEMENT. 4. RATIONALE FOR THE SCHEME
THE COMBINATION OF THE BUSINESSES OF TRANS HEX AND BENCO IS EXPECTED TO CONFER NUMEROUS BENEFITS TO THE MERGED ENTITY, KEY ELEMENTS OF WHICH ARE THE FOLLOWING * THE COMBINATION OF BOTH PARTIES' NAMIBIAN AND SOUTH AFRICAN MARINE
CONCESSIONS COUPLED WITH EXPANDED LAND-BASED DIAMOND ASSETS WILL PROVIDE INCREASED OPPORTUNITIES FOR EXISTING DIAMOND RESOURCES TO BE EXPLOITED, AND WILL STRENGTHEN THE STRATEGIC POSITION AND LESSEN THE RISK PROFILE OF THE BUSINESSES;
* THE EXPANDED CAPITAL BASE OFFERED BY TRANS HEX WILL SUPPORT THE EXPLORATION EXPENDITURE THAT IS REQUIRED FOR BENCO'S OFFSHORE AND LAND-BASED DIAMOND DEPOSITS TO BE DEVELOPED;
* TRANS HEX WILL INVESTIGATE BENCO'S RELATIVELY UNEXPLORED LAND AND MARINE CONCESSIONS AND ITS SHAREHOLDERS WILL SHARE IN THE EXCITING POTENTIAL OF THESE PROPERTIES WITH BENCO'S SHAREHOLDERS;
* THE PROVEN TECHNICAL ABILITIES OF TRANS HEX WILL BE AVAILABLE TO THE MERGED BUSINESSES;
* THE SCHEME WILL ALLOW BENCO SHAREHOLDERS TO PARTICIPATE, THROUGH TRANS HEX, IN THE CONSOLIDATION OF THE SOUTH AFRICAN ALLUVIAL AND MARINE DIAMOND MINING INDUSTRY WHICH IS CURRENTLY UNDERWAY AND WHICH INCLUDES THE PROPOSED
ACQUISITION OF PROSPECTIVE PROPERTIES ADJOINING THOSE OF BENCO ON THE MIDDLE ORANGE RIVER; AND
* THE CRITICAL MASS ACHIEVED BY THE MERGER WILL ASSIST IN THE ENLARGED COMPANY'S INTERNATIONAL EXPANSION, PROVIDING BOTH CURRENT AND NEW SHAREHOLDERS THE OPPORTUNITY TO PARTICIPATE IN THE VALUE ENHANCEMENT CREATED BY THIS STRATEGY. 5. TERMS OF THE SCHEME
SUBJECT TO FULFILLMENT OF THE CONDITIONS PRECEDENT REFLECTED IN PARAGRAPH 7 BELOW, IN TERMS OF THE SCHEME, SCHEME MEMBERS WILL RECEIVE A CONSIDERATION OF 4,791649 ORDINARY TRANS HEX SHARES ("SCHEME SHARES") FOR EVERY 100 BENCO SHARES HELD ON THE RECORD DATE OF THE SCHEME (THE "RECORD DATE"). THE CONSIDERATION IS BASED ON:
* 40 CENTS FOR EACH OF THE 107 504 931 ORDINARY SHARES IN BENCO IN ISSUE AT 20 AUGUST 1999; AND
* THE WEIGHTED AVERAGE SHARE PRICE FOR THE 30 CALENDAR DAYS ENDED 13 AUGUST 1999, BEING 834,7857 CENTS PER SHARE, FOR THE
64 381 608 ORDINARY SHARES IN TRANS HEX IN ISSUE AT 20 AUGUST 1999. 6. ODD LOT OFFER
SCHEME MEMBERS HOLDING LESS THAN 2 087 BENCO SHARES (EQUIVALENT TO 100 SCHEME SHARES AT THE RECORD DATE), WILL IN TERMS OF THE SCHEME, BECOME ODD LOT HOLDERS IN TRANS HEX ("ODD LOT SHAREHOLDERS").
IN ORDER TO OFFER ODD LOT SHAREHOLDERS AN OPPORTUNITY TO INCREASE THEIR SHAREHOLDINGS TO 2 087 BENCO SHARES PRIOR TO THE IMPLEMENTATION OF THE SCHEME, A RENEWAL OF BENCO'S GENERAL AUTHORITY TO ISSUE SHARES FOR CASH WILL BE SOUGHT AT THE ANNUAL GENERAL MEETING OF BENCO WHICH IS EXPECTED TO TAKE PLACE ON THE SAME DAY AS THE SCHEME MEETING. IN TERMS OF THE ODD LOT OFFER, BENCO
SHAREHOLDERS HOLDING LESS THAN 2 087 SHARES ON THE RECORD DATE WILL BE AFFORDED THE OPPORTUNITY TO SUBSCRIBE FOR SUCH NUMBER OF NON-RENOUNCEABLE LETTERS OF ALLOCATION TO BENCO ORDINARY SHARES ("BENCO LETTERS') AS WILL BRING THEIR TOTAL BENCO SHAREHOLDING ENTITLEMENTS TO 2 087 BENCO SHARES, AT A PRICE OF 35 CENTS PER BENCO LETTER ("THE ODD LOT OFFER"). THE ODD LOT OFFER WILL BE SUBJECT TO AND DEPENDENT UPON THE IMPLEMENTATION OF THE SCHEME. 7. CONDITIONS PRECEDENT
THE SCHEME IS SUBJECT, INTER ALIA, TO THE FULFILLMENT OF THE FOLLOWING CONDITIONS PRECEDENT:
* THE GRANTING OF THE REQUISITE APPROVALS BY THE JSE, THE SECURITIES REGULATION PANEL ("SRP"), THE SOUTH AFRICAN RESERVE BANK AND ANY OTHER REGULATORY AUTHORITIES WHICH HAVE JURISDICTION IN THIS REGARD;
* RATIFICATION BY THE MINISTER OF FINANCE OF THE ACQUISITION OF BENCO BY TRANS HEX;
* THE HIGH COURT OF SOUTH AFRICA (THE "COURT") GRANTING AN ORDER CONVENING A MEETING OF THE SCHEME MEMBERS TO CONSIDER AND VOTE ON THE SCHEME (THE "SCHEME MEETING");
* THE APPROVAL OF THE SCHEME BY 75% OF THE SCHEME MEMBERS PRESENT IN PERSON OR REPRESENTED BY PROXY AT THE SCHEME MEETING; * THE SANCTIONING OF THE SCHEME BY THE COURT; AND
* THE REGISTRATION OF A CERTIFIED COPY OF THE ORDER OF COURT SANCTIONING THE SCHEME BY THE REGISTRAR OF COMPANIES. 8. FINANCIAL EFFECTS OF THE SCHEME ON A TRANS HEX SHAREHOLDER:
PRIOR TO THE SCHEME AFTER THE SCHEME INCREASE/(DECREASE) CENTS PER SHARE CENTS PER SHARE CENTS PER SHARE NET ASSET VALUE 424 474 50
NORMAL EARNINGS 62 20 (42)
HEADLINE EARNINGS 96 64 (32) ON A BENCO SHAREHOLDER:
PRIOR TO THE SCHEME AFTER THE SCHEME INCREASE/(DECREASE) CENTS PER SHARE CENTS PER SHARE CENTS PER SHARE NET ASSET VALUE 24 23 (1)
NORMAL (LOSS)/EARNINGS (26) 1 27
HEADLINE (LOSS)/EARNINGS (13) 3 16 NOTES:
THE PRO FORMA FINANCIAL EFFECTS OF THE SCHEME ON THE EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE ARE SET OUT IN THE TABLE AND ARE BASED ON THE FOLLOWING ASSUMPTIONS, NAMELY:
1. THAT THE SCHEME HAS BEEN IN FORCE FOR A FULL 12 MONTH PERIOD.
2. FINANCIAL INFORMATION IS STATED FOR BENCO FOR THE YEAR ENDED 31 MAY 1999 AND FOR TRANS HEX FOR THE YEAR ENDED 31 MARCH 1999.
3. BENCO'S ACCOUNTING POLICIES HAVE BEEN ADJUSTED TO CONFORM TO TRANS HEX'S ACCOUNTING POLICIES, RESULTING IN BENCO'S MINING RIGHTS BEING VALUED AT R12 569 000.
4. ALL ODD LOT SHAREHOLDERS HAVING EXERCISED THEIR RIGHT TO INCREASE THEIR SHAREHOLDING ENTITLEMENTS TO 2 087 BENCO SHARES, AND THE PROCEEDS HAVING BEEN INVESTED IN AN INTEREST BEARING BANK ACCOUNT AT 11% PER ANNUM. 9. ALTERNATIVE TO THE SCHEME
IN THE EVENT OF THE SCHEME NOT BEING IMPLEMENTED, TRANS HEX IS ENTITLED TO SUBSCRIBE FOR SUCH NUMBER OF BENCO SHARES AS WILL CONFER ON TRANS HEX OWNERSHIP OF 50% PLUS ONE SHARE OF BENCO'S ISSUED SHARE CAPITAL AT 40 CENTS PER BENCO SHARE, SUBJECT TO APPROVAL BY THE REQUISITE MAJORITY OF BENCO SHAREHOLDERS IN GENERAL MEETING. 10. DOCUMENTATION
SUBJECT TO RATIFICATION OF THE ACQUISITION OF BENCO BY TRANS HEX BY THE MINISTER OF FINANCE AND OF THE COURT GRANTING AN ORDER CONVENING THE SCHEME MEETING, DOCUMENTATION CONTAINING DETAILS OF THE SCHEME AND THE ODD LOT OFFER, WHICH IS SUBJECT TO THE APPROVALS OF THE JSE AND THE SRP, AND NOTICES CONVENING THE SCHEME MEETING WILL BE MAILED TO BENCO SHAREHOLDERS.
A FURTHER ANNOUNCEMENT GIVING SALIENT DATES AND TIMES OF THE SCHEME WILL BE PUBLISHED ON OR ABOUT THE SAME DATE. CAPE TOWN 1 FEBRUARY 2000 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) FINANCIAL ADVISER TO TRANS HEX DEUTSCHE BANK SECURITIES (SA) (PTY) LIMITED (REGISTRATION NUMBER 95/11798/07) ATTORNEYS TO TRANS HEX BRINK COHEN LE ROUX & ROODT INC ATTORNEYS (REGISTRATION NUMBER 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

Share This Story