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ACL - ArcelorMittal - A Pro Rata Buy-Back Of Arcelormittal Shares From
Shareholders By Way Of A Scheme Of Arrangement
ArcelorMittal South Africa Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1989/002164/06)
Share code: ACL
ISIN: ZAE000103453
("ArcelorMittal" or "the company")
A PRO RATA BUY-BACK OF ARCELORMITTAL SHARES FROM SHAREHOLDERS BY WAY OF A
SCHEME OF ARRANGEMENT
1. INTRODUCTION
Following the quarterly results announcement released on SENS on 29 April
2009 and the reference therein to ArcelorMittal`s intention to use its
excess cash to fund a pro rata share buy-back of ArcelorMittal ordinary
shares ("ArcelorMittal shares"), ArcelorMittal shareholders are hereby
advised that, subject to the conditions precedent listed in paragraph 3
below, Vicva Investments and Trading Nine (Proprietary) Limited (the
"Acquiror"), a wholly owned subsidiary of ArcelorMittal, will acquire, in
terms of section 89 of the Companies Act, 1973 (Act 61 of 1973), as
amended ("the Act"), approximately 10% of the issued ArcelorMittal shares
from shareholders on a pro rata basis, by way of a scheme of arrangement
in terms of section 311 of the Act ("the scheme").
None of ArcelorMittal`s subsidiaries currently hold any ArcelorMittal
shares.
2. THE TERMS OF THE SCHEME
2.1 Basic characteristics
In terms of the scheme, the Acquiror proposes to acquire, in terms
of section 89 of the Act approximately 10% of the issued
ArcelorMittal shares from shareholders on a pro rata basis, for a
consideration of R87.64 per ArcelorMittal share ("the buy-back").
The Acquiror will acquire 9.995% of the shareholding of each
shareholder registered as such at the close of business on Friday,
26 June 2009 ("scheme participants"), adjusted by the application of
the rounding principle as defined in the document to be posted to
shareholders on 8 May 2009, as detailed in paragraph 9 below
("scheme document"), it being recorded that the above percentage has
been reduced to below 10% in order to ensure that the rounding
principle does not result in the aggregate number of ArcelorMittal
shares being acquired exceeding 10% of the number of issued
ArcelorMittal shares. The proposed cash consideration of R87.64 per
ArcelorMittal share represents the 5 day volume weighted average
price ("VWAP") of an ArcelorMittal share up to the close of trade on
Monday, 20 April 2009, being the last practicable date prior to the
finalisation of the terms of the buy-back ("last practicable date").
If the scheme is implemented, it is expected that approximately
44,575,213 shares ("scheme shares") will be acquired by the Acquiror
for an aggregate consideration of approximately R3,906,571,667. As
at the last practicable date, 44,575,213 shares represent 10% of the
issued ArcelorMittal shares. Any share transfer tax payable pursuant
to the implementation of the scheme will be for the Acquiror`s
account.
The buy-back will be funded out of existing free cash resources
available to ArcelorMittal at the time of the proposal of the
scheme.
2.2 Rationale
The directors continually review the balance sheet of ArcelorMittal
and its subsidiaries (the "ArcelorMittal Group") with a commitment
to maintaining an efficient capital structure. The company currently
has excess free cash in relation to its needs and has therefore
resolved to acquire ArcelorMittal shares from its shareholders
through the scheme.
One of the primary objectives of the company is to ensure that all
shareholders are treated equally. After implementation of the
scheme, a shareholder`s effective percentage holding of
ArcelorMittal shares will not change as the buy-back will be
implemented on a pro rata basis, based on the number of
ArcelorMittal shares held by each shareholder.
Given the current ArcelorMittal share price levels, the buy-back is
believed to be an appropriate mechanism to return the excess equity
to shareholders without diluting the interests of any individual
shareholder. The scheme shares acquired will remain in issue as
treasury shares and such ArcelorMittal shares can possibly be used
by ArcelorMittal for future transactions, including inter alia a
possible black empowerment transaction and/or for purposes of the
ArcelorMittal Group`s share incentive schemes, subject to section
5.75 of the JSE Limited ("JSE") Listings Requirements.
Moreover, the reduction of the number of consolidated ArcelorMittal
shares in issue is anticipated to be earnings per share enhancing,
as shown in the pro forma financial effects set out in paragraph 4
below.
2.3 Order of Court
The High Court of South Africa (South Gauteng High Court,
Johannesburg) ("the Court") has ordered that a meeting in terms of
section 311(1) of the Act ("the scheme meeting") of ArcelorMittal
shareholders recorded in the register at the close of business on
Wednesday, 27 May 2009 ("voting record date") ("scheme members"), be
convened for the purpose of considering, and, if deemed fit,
approving, with or without modification, the scheme.
3. CONDITIONS PRECEDENT
The scheme is subject to the fulfillment of the following conditions
precedent before it becomes operative:
3.1 the special resolution approving the Acquiror`s acquisition of the
scheme shares being duly passed at a general meeting of
ArcelorMittal shareholders ("general meeting") in accordance with
the Act and the JSE Listings Requirements, and such special
resolution being registered by the Registrar of Companies
("Registrar");
3.2 the scheme being approved at the scheme meeting by a majority
representing not less than three-fourths (75%) of the votes
exercisable by scheme members present and voting in person or by
proxy;
3.3 the granting of all necessary regulatory approvals to implement the
scheme, including, without limitation, any approvals required from
the South African Reserve Bank in terms of the Exchange Control
Regulations, if required for the implementation of the scheme,
having been duly and unconditionally given, or conditionally given
on terms and conditions acceptable to the company;
3.4 the Court sanctioning the scheme; and
3.5 a certified copy of the Order of Court sanctioning the scheme being
registered by the Registrar in terms of the Act.
STANLIB Collective Investments Limited, The Public Investment Corporation
Limited, Coronation Asset Management (Proprietary) Limited and ArcelorMittal
Holdings AG, which collectively hold approximately 64.3% of the issued
ArcelorMittal shares, have irrevocably undertaken to vote in favour of the
scheme.
4. FINANCIAL EFFECTS OF THE SCHEME
The table below sets out the unaudited pro forma financial effects of the
scheme on the audited earnings, headline earnings, diluted earnings and
adjusted headline earnings per ArcelorMittal share for the year ended 31
December 2008 as well as on the net asset value and tangible net asset
value per ArcelorMittal share at that date:
Before the After the % change
scheme scheme
Per ArcelorMittal share (cents)
Earnings (Note 1) 2105 2258 7.28
Headline earnings (Note 1) 2128 2283 7.32
Diluted earnings (Note 2) 2097 2248 7.24
Diluted headline earnings (Note 2) 2120 2274 7.28
Net asset value (Note 3) 6280 6002 (4.44)
Tangible net asset value (Note 3) 6264 5984 (4.48)
The unaudited pro forma financial effects have been prepared for
illustrative purposes only, in order to provide information on how the
scheme might affect the financial results and position of a shareholder
and, because of their nature, may not give a true reflection of the
financial position, changes in equity, results of operations or cash
flows after the scheme. The pro forma financial effects have been
calculated on the basis set out below. The pro forma financial effects
are the responsibility of the directors and do not purport to be
indicative of what the financial results would have been, had the scheme
been implemented on a different date. The pro forma financial statements
and the report of the independent reporting accountants and auditors are
set out in the scheme document.
Notes
1. The "Before" column reflects the earnings and headline earnings per
ArcelorMittal share for the year ended 31 December 2008, calculated
on the basis of 445,752,132 weighted average number of ArcelorMittal
shares in issue throughout the period. The "After" column assumes
that the scheme was implemented with effect from 1 January 2008, and
is calculated on the basis of 401,176,919 weighted average number of
ArcelorMittal shares in issue and assuming interest foregone of R323
million on the consideration at an after-tax interest rate of 8.25%.
2. The "Before" column reflects the diluted earnings and diluted
headline earnings per ArcelorMittal share for the year ended 31
December 2008, calculated on the basis of 447,433,478 weighted
average number of ArcelorMittal shares in issue throughout the
period. The "After" column assumes that the scheme was implemented
with effect from 1 January 2008, and is calculated on the basis of
402,858,265 weighted average number of ArcelorMittal shares in issue
and assuming interest foregone of R323 million on the consideration
at an after-tax interest rate of 8.25%.
3. The "Before" column reflects the net asset value per ArcelorMittal
share and the tangible net asset value per ArcelorMittal share as at
31 December 2008, and is based on 445,752,132 ArcelorMittal shares
in issue. The "After" column assumes that the scheme was implemented
on 31 December 2008, calculated on the basis of 401,176,919
ArcelorMittal shares in issue.
4. Transactional costs estimated at R4,250,000 and securities transfer
tax estimated at R7,500,000 have been taken into account in arriving
at the above financial effects.
5. An ArcelorMittal share price of R87.64 per share has been taken into
account in arriving at the above financial effects.
6. The after-tax interest rate of 8.25% is based on the average of the
monthly deposit rates received over the period 1 January 2008 to 31
December 2008.
5. TAX IMPLICATIONS FOR SCHEME PARTICIPANTS
A detailed summary of the potential tax implications for scheme
participants is included in the scheme document. Shareholders are however
advised to consult their own professional advisors pertaining to the tax
consequences of the scheme and their tax positions.
6. SALIENT DATES OF THE SCHEME
The salient dates of the scheme have been finalised as follows:
2009
Last day to trade ArcelorMittal shares on the Wednesday 20 May
JSE in order to be recorded in the register on
the voting record date (see note 1 below)
Voting record date for scheme meeting Wednesday 27 May
Last day to lodge forms of proxy for the scheme Thursday 28 May
meeting (by 10:00) (see note 2 below) and the
general meeting (by 10:30)
Scheme meeting held (at 10:00) Monday 1 June
General meeting held (at 10:30 or 10 minutes Monday 1 June
after the conclusion or adjournment of the
scheme meeting, whichever is the later)
Publish results of the scheme meeting and Monday 1 June
general meeting on SENS (expected date)
Publish results of the scheme meeting and the Tuesday 2 June
general meeting in the press (expected date)
Court hearing to sanction the scheme (at 10:00 Tuesday 9 June
or as soon thereafter as Counsel may be heard)
Publish results of Court hearing on SENS Tuesday 9 June
Publish results of Court hearing in the press Wednesday 10 June
and register Court order with the Registrar
If the scheme is sanctioned and becomes
effective:
Last day to trade ArcelorMittal shares on the Friday 19 June
JSE in order to be recorded in the register on
the record date of the scheme (see note 3 below)
ArcelorMittal shares trade "ex" the scheme under Monday 22 June
the new ISIN ZAE000134961
Record date of the scheme to determine Friday 26 June
participation in the scheme
Operative date of the scheme Monday 29 June
Scheme consideration transferred or posted and Monday 29 June
new revised ArcelorMittal share certificates
reflecting the new ISIN ZAE000134961 posted to
scheme participants who hold their ArcelorMittal
shares in certificated form (if documents of
title are received on or prior to 12:00 on the
record date of the scheme) or, failing that,
within five business days of receipt of the
relevant documents of title by the transfer
secretaries
Scheme participants who hold ArcelorMittal Monday 29 June
shares that have been dematerialised will have
the scheme consideration credited to their
account and their account updated, which account
is held at their Central Securities Depository
Participant ("CSDP") or broker
Notes:
1. Shareholders should note that, as ArcelorMittal shares settle in the
Strate environment, settlement for trade takes place five business
days after trade. Therefore, shareholders who acquire ArcelorMittal
shares after Wednesday, 20 May 2009 will not be eligible to vote at
the scheme meeting.
2. If a form of proxy for the scheme is not received by the time and
date shown above, it may be handed to the chairperson of the scheme
meeting by no later than 10 minutes before the scheme meeting is due
to commence (or recommence, if adjourned).
3. ArcelorMittal shares may not be dematerialised or rematerialised
between Monday, 22 June 2009 and Friday, 26 June 2009, both days
inclusive.
4. Any material change to the above dates and times will be subject to
JSE approval and communicated to shareholders by notification on
SENS and in the press.
5. All times indicated above are South African local times.
7. OPINION AND RECOMMENDATION OF THE BOARD
The board of directors of ArcelorMittal ("board") has considered the
terms and conditions of the scheme and is of the opinion that those terms
and conditions are in the best interests of shareholders. Accordingly,
the board supports the scheme and recommends that shareholders vote in
favour of the scheme and the resolutions to be proposed at the general
meeting.
8. NOTICE OF MEETINGS
The scheme meeting has been convened for Monday, 1 June 2009 at 10:00, at
the Hilton Sandton, 138 Rivonia Road, Sandton, South Africa. The general
meeting is to be held at the same venue at 10:30, on Monday, 1 June 2009,
or 10 minutes after the conclusion or adjournment of the scheme meeting,
whichever is the later.
9. DOCUMENTATION
The scheme document, which contains, inter alia, the notice of the scheme
meeting and the notice of general meeting, will be posted to shareholders
on or about 8 May 2009.
Vanderbijlpark
6 May 2009
Merchant bank and transaction sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Sponsor
Deutsche Securities (SA) (Proprietary) Limited
Legal advisors
Cliffe Dekker Hofmeyr Inc
Reporting accountants and auditors
Deloitte & Touche
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
Date: 06/05/2009 07:06:01 Supplied by www.sharenet.co.za
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