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Lonmin/ Messina - Increase In Offer Price Announcement
Lonmin Plc Messina Limited
(Incorporated in England) (Incorporated in the Republic
(Registered in the Republic of South Africa)
of South Africa under (Registration number
registration number 1950/035912/06)
1969/000015/10) JSE code: MES
ISIN code: GB0031192486 ISIN: ZAE000004438
JSE code: LON ("Messina")
Issuer code: LOLMI
("Lonmin")
Announcement regarding:
* an increase in the offer price from ZAR 33.00 to ZAR 45.00 valuing outstanding
shares in Messina Limited at R76.5 million (US$11.4 million);
* a scheme of arrangement proposed by Lonmin between Messina and its
shareholders in terms of section 311 of the Companies Act, No. 61 of 1973, as
amended;
* the proposed delisting of Messina; and
* withdrawal of cautionary announcement
1. Introduction
Further to the announcement dated 16 September 2005 by Lonmin of its firm
intention to make an offer to the shareholders of Messina, other than Southern
Platinum Corp. ("SPC") and any other Lonmin group companies that may already
hold shares in Messina, Lonmin has today presented the board of Messina with an
offer, to be implemented through a scheme of arrangement ("the scheme") between
Messina and its shareholders, other than SPC and any other Lonmin group
companies that may already hold shares in Messina, ("scheme members") in terms
of section 311 of the Companies Act, No. 61 of 1973, as amended ("Companies
Act"), to acquire all the Messina shares not already held, directly and
indirectly, by Lonmin ("scheme shares") at an increased offer price of ZAR 45.00
per Messina share ("scheme consideration"). Upon the fulfilment of the
conditions precedent set out below, Messina will be delisted from the JSE.
The scheme consideration represents a premium of 18% to the closing JSE market
value per Messina share on 10 June 2005, the last trading day immediately
preceding publication of the Lonmin announcement regarding the offer to SPC
shareholders ("SPC transaction") becoming unconditional and a 34% premium to the
closing market value of Messina on the last trading day immediately preceding
publication of this announcement.
2. Rationale for Messina shareholders to vote in favour of the scheme
As a result of its acquisition of SPC, the Lonmin Group currently owns 91.5% of
Messina. Lonmin wishes to acquire the remaining 8.5% of Messina shares held by
the scheme members for the following reasons:
* the costs of maintaining a separate listing of Messina substantially outweigh
the benefits thereof as Lonmin is already listed on the London Stock Exchange
and the JSE;
* in the current economic environment and given the volatility of markets and
the further capital requirements of Messina, it is more appropriate for Messina
to grow under the umbrella of Lonmin"s considerable resource base;
* given the extremely low liquidity and tradability of Messina shares, it is
unlikely that scheme members will be able to realise value for their investment
if Messina remains listed; and
* the scheme consideration of ZAR 45.00 per share presents an opportunity to
scheme members to realise their investment at an attractive premium.
3. The scheme consideration
The scheme consideration is ZAR 45.00 per share and values the Messina shares
not held by Lonmin at ZAR 76 514 625.00.
4. Conditions precedent
The implementation of the scheme is subject to the fulfilment of the following
conditions precedent:
* the approval of the scheme by scheme members representing not less than 75% of
the votes exercisable by scheme members present and voting, either in person or
by proxy, at the scheme meeting;
* the Court sanctioning the scheme in terms of the Companies Act; and
* a certified copy of the Order of Court sanctioning the scheme being registered
by the Registrar of Companies in terms of the Companies Act.
5. Irrevocable undertakings to support the scheme
Irrevocable undertakings to vote in favour of the scheme at the scheme meeting
have been received from scheme members representing approximately 30% of the
scheme shares.
6. Financial effects
The table below sets out the illustrative pro forma financial effects of the
offer on scheme members, assuming that the scheme had been implemented, for
income statement purposes, from 1 January 2005 and for balance sheet purposes at
30 June 2005.
The pro forma financial effects have been prepared by the directors of Messina
using the reviewed interim results of Messina for the six months ended 30 June
2005, for illustrative purposes only to provide information about how the offer
might have affected the financial information presented and, because of their
nature, may not give a true reflection of the financial effects of the offer:
Before the After the scheme %
scheme (cents per share) change
(cents per
share)
Market value per share and 3 350 4 500 34
cash received 1 3 800 4 500 18
Market value per share and (1 066.0) 135.0 113
cash received 2 (1 066.0) 135.0 113
Earnings per share 3 0 135.0
Headline earnings per share (290.0) 4 500 1 652
3
Dividend per share 4
Net asset value per share
and cash received 5
Notes:
1. The "Before the scheme" column reflects the closing JSE market value per
Messina share on 16 November 2005, being the last trading day immediately
preceding publication of the increased offer to Messina shareholders. The "After
the scheme" column shows the consideration to be received per Messina share.
2. The "Before the scheme" column reflects the closing JSE market value per
Messina share on 10 June 2005, being the day that Lonmin"s offer to SPC
shareholders closed and was deemed successful. The "After the scheme" column
shows the consideration to be received per Messina share.
3. The "Before the scheme" column reflects the reviewed earnings and headline
earnings per share for the six months ended 30 June 2005. The "After the scheme"
column shows the interest income that a Messina shareholder would have earned
had the consideration to be received per Messina share been invested at a 6
month fixed deposit compounded interest rate of 6% per annum on 1 January 2005
for a period of 6 months.
4. The "Before the scheme" column reflects the dividend distributed per share
for the six months ended 30 June 2005. The "After the scheme" column shows the
interest income that a Messina shareholder would have earned had the
consideration to be received per Messina share been invested at a 6-month fixed
deposit compounded interest rate of 6% per annum on 1 January 2005 for a period
of 6 months. However it should be noted that Messina has not declared a dividend
in the past two years.
5. The "Before the scheme" column reflects the reviewed net asset value per
share at 30 June 2005. The "After the scheme" column shows the consideration to
be received per Messina share.
6. The possible application of Capital Gains Tax has not been taken into account
in the calculations above.
7. The substitute offer
To ensure compliance with the Securities Regulation Panel ("SRP") Code on
Takeovers and Mergers ("SRP Code") mandatory offer requirements, should the
scheme not become operative for any reason, the acquisition will be undertaken
through an unconditional cash offer at an offer price of ZAR 45.00. In such
event an announcement that the scheme has failed and that the substitute offer
becomes effective, including the salient dates and times of the substitute
offer, will be made on SENS and in the press. The terms of the substitute offer
will also be included in the scheme circular that will be posted to Messina
shareholders in terms of paragraph 10 below.
8. Opinions and recommendations
* The board has formed a separate independent sub-committee to consider the
terms of the scheme, comprising Messrs Richard Shead and John Sanders, who were
appointed as independent non-executive directors of Messina on 7 September 2005
and 14 September 2005 respectively. Mr John Sanders chairs the independent board
sub-committee. The independent sub-committee appointed PricewaterhouseCoopers as
independent financial advisers to provide it with external advice as required in
terms of the SRP Code.
* The independent sub-committee of the Messina board has considered the terms
and conditions of the scheme and, taking into account the external advice of
PricewaterhouseCoopers, is of the unanimous opinion that the terms and
conditions thereof are fair and reasonable to scheme members. The independent
sub-committee has recommended to the Messina board that it recommend to scheme
members that they vote in favour of the scheme at the scheme meeting.
* The Messina board (other than Messrs BA Mills, IP Farmer and JN Robinson, who
are also directors of Lonmin, and Messrs JF Grimbeek and AG Ross who are
employees of the Lonmin Group and have recused themselves from expressing such
an opinion) has considered the terms and conditions of the scheme and, taking
into account the opinion of PricewaterhouseCoopers and the independent sub-
committee, is of the opinion that the terms and conditions thereof are fair and
reasonable to scheme members and recommends that scheme members vote in favour
of the scheme at the scheme meeting.
* The opinion letter of the independent financial advisers will be contained in
the scheme circular that will be sent to Messina shareholders in terms of
paragraph 10 below.
9. SRP funding confirmation
The SRP has been given appropriate confirmation, in terms of the SRP Code, that
Lonmin will have sufficient cash resources available to satisfy the maximum
consideration payable in terms of the offer.
10. Documentation
A circular setting out the full details of the scheme and substitute offer will
be sent to Messina shareholders within 28 days or such later date as may be
agreed to by the SRP.
11. Withdrawal of cautionary announcement
Shareholders of Messina are advised that caution is no longer required when
dealing in their Messina shares.
If you have any questions regarding the content of this announcement, please
contact Alex Shorland-Ball of Lonmin (Vice President Investor Relations and
Communications at Lonmin) on +44 791 703 8684.
Johannesburg
18 November 2005
Investment bank and Independent financial adviser
corporate adviser to Lonmin to Messina
Nedbank Capital PricewaterhouseCoopers
(A division of Nedbank
Limited)
Attorneys to the scheme Legal adviser to the
independent sub-committee
Cliffe Dekker Inc. Webber Wentzel Bowens
Technical adviser to Messina Sponsor to Messina
Snowden Rand Merchant Bank
(A division of Firstrand Bank
Limited)
Reporting accountants
KPMG Inc.
Date: 18/11/2005 08:05:41 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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