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MTX - Metorex Limited - Joint announcement of a firm intention by Vale to make
an offer to acquire the entire issued and to be issued ordinary share capital
of Metorex and withdrawal of cautionary announcement
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
Metorex Limited
(Incorporated in the Republic of South Africa)
(Registration number 1934/005478/06)
Share code: MTX
ISIN: ZAE000022745
Issuer code: MEMTX
("Metorex" or the "Company")
Vale S.A.
(Incorporated in Brazil as a Sociedade por Acoes)
(Registration number 33.592.510/0001-54)
Share codes:
BM&F BOVESPA: VALE3, VALE5
NYSE: VALE, VALE.P
HKEx: 6210, 6230
EURONEXT PARIS: VALE3, VALE5
LATIBEX: XVALO, XVALP
JOINT ANNOUNCEMENT OF A FIRM INTENTION BY VALE TO MAKE AN OFFER TO ACQUIRE THE
ENTIRE ISSUED AND TO BE ISSUED ORDINARY SHARE CAPITAL OF METOREX ("FIRM
INTENTION ANNOUNCEMENT") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
The board of directors of Metorex (the "Board") and the board of
directors of Vale S.A. are pleased to announce that they have agreed the
terms on which Vale S.A., through a wholly-owned subsidiary ("Vale") will
make a cash offer (the "Offer") to acquire the entire issued and to be
issued ordinary share capital of Metorex (the "Shares") which, if
implemented, would result in Vale becoming the registered and beneficial
owner of the Shares.
Metorex and Vale entered into an implementation agreement on 8 April 2011
(the "Implementation Agreement") in relation to the Offer, which contains
provisions relating to the implementation of the Offer and certain
undertakings of Metorex (including terms regarding the conduct of
business of Metorex in the interim period between the date of this Firm
Intention Announcement and the completion of the Offer, the payment of a
break fee and the manner in which third party approaches will be dealt
with by Metorex). Further details of the break fee and third party
approaches are set out in paragraphs 10 and 11 of this Firm Intention
Announcement.
Vale proposes to implement the Offer by way of a scheme of arrangement
(the "Scheme"), which it envisages will be implemented in terms of
section 114 of the Companies Act, No. 71 of 2008, as amended, (the "New
Companies Act") proposed by Vale between Metorex and its shareholders
(the "Metorex Shareholders") and by way of a separate general offer to
the holders of options to acquire Metorex shares ("Options"). If the New
Companies Act does not come into force and effect prior to the High Court
of South Africa (the "Court") passing an order to convene a meeting of
Metorex Shareholders to consider and, if deemed fit, approve the Scheme,
the Offer will be implemented by way of a scheme of arrangement in terms
of section 311 of the Companies Act, No. 61 of 1973, as amended, (the
"Companies Act").
Under the terms of the Offer, if implemented, the Metorex Shareholders
will receive a cash consideration of ZAR7.35 per Share, which represents
a premium of:
- 20% to the closing price of Metorex ordinary shares on the
securities exchange operated by the JSE Limited ("JSE") as at 25
March 2011, being the last business day immediately prior to the
date of the first cautionary announcement (the "Publication Date");
- 30% to the volume weighted average price ("VWAP") of Metorex
ordinary shares on the JSE for the 30 days up to and including the
Publication Date;
- 44% to the VWAP of Metorex ordinary shares on the JSE for the 6
months up to and including the Publication Date; and
- 64% to the VWAP of Metorex ordinary shares on the JSE for the 12
months up to and including the Publication Date.
2. DETAILS OF VALE AND RATIONALE FOR THE OFFER
Vale is the second largest metals and mining company and one of the 20
largest publicly traded companies in the world, and the largest private
sector company in Latin America, with a market capitalisation of
approximately US$170 billion.
Headquartered in Brazil, Vale currently operates in 38 countries on five
continents and employs over 115,000 people. Vale was chosen by the
Boston Consulting Group, one of the leading consultancy firms in the
world, as one of the top 25 sustainable value creators on the globe, due
to its extraordinary track record over the last 10 year period.
Vale is the world`s largest producer of iron ore and iron ore pellets,
the key raw material for steelmaking, and the world`s second largest
producer of nickel, the raw material used to produce stainless steel,
aircrafts, mobile phones, batteries and other products. Vale also
produces manganese, ferroalloys, thermal and coking coal, bauxite,
alumina, aluminium, copper, cobalt, platinum group metals, fertiliser
nutrients and important raw materials for the global industrial and food
production industries.
Investment in the copper business is an important part of Vale`s
strategy. In Brazil, Vale produces copper concentrates at Sossego in
Carajas, in the state of Para. In Canada, Vale produces copper in
conjunction with nickel mining operations at Sudbury and Voisey Bay. In
Chile, Vale is ramping up the Tres Valles copper operation. In addition,
Vale is currently developing copper mines in Brazil and Africa. In
Africa, Vale is developing through a joint venture, the Konkola North
copper mine, an underground mine in the Zambian Copperbelt, and is
conducting the feasibility study for Kalumines copper mine in the
Democratic Republic of Congo (the "DRC"). The intention to acquire
Metorex is consistent with Vale`s goal to become one of the largest
copper producers in the world and is expected to create significant
shareholder value.
3. MATERIAL TERMS OF THE OFFER
Metorex Shareholders are advised that Vale has delivered notice of its
firm intention to the Board to make an offer to acquire the Shares, which
will be subject to the conditions set out in paragraph 5 below.
3.1 Offer consideration
Under the terms of the Offer, if implemented, Metorex Shareholders
will receive a cash consideration of ZAR7.35 per Share (the "Offer
Consideration"), which values the issued and to be issued ordinary
share capital of Metorex at approximately ZAR7,524 million, on the
basis of "in the money" Options being acquired on a net cash
cancellation basis as detailed in paragraph 3.3 below.
The Offer Consideration is calculated on the assumption that Metorex
does not make any distributions to Metorex Shareholders. In the
event that Metorex makes a distribution to Metorex Shareholders, the
Offer Consideration will be reduced by the amount of the
distribution on a per share basis (except in the case where a
distribution is made in respect of the shares held in Sable Zinc
Kabwe Limited ("Sable") (as defined and set out in more detail in
paragraph 6 below).
3.2 Offer structure
The Offer is to be implemented by way of the Scheme and the separate
offer to holders of Options ("Option Holders"). If the Scheme
fails, Vale shall be entitled, in its sole discretion, to implement
the Offer by way of a general offer (the "General Offer") to Metorex
Shareholders to acquire the Shares on the same terms as the Scheme
and conditional upon, inter alia, acceptance of the General Offer by
Metorex Shareholders holding not less than 90% of the shares to
which the General Offer relates.
3.3 Metorex share options
Option Holders will be offered a cash consideration equivalent to
the "in the money" value of such Options on a net cash cancellation
basis, being an amount equal to the difference between the Offer
Consideration and the strike price of the relevant Options, upon the
Scheme becoming operative.
3.4 American Depositary Receipts
Holders of Metorex American Depositary Receipts ("ADRs") will be
entitled to vote on the Offer as provided for under the terms of the
depositary agreement with the Bank of New York Mellon (the
"Depositary Agreement") and the shares in Metorex represented by the
ADRs will be acquired by Vale under the terms of the Offer upon the
Scheme becoming operative. Promptly following the completion of the
Offer, Vale intends to terminate the ADR programme and the
Depositary Agreement.
4. CONDITIONS TO THE POSTING OF THE CIRCULAR
The posting of the circular to Metorex Shareholders in relation to the
Scheme (the "Circular") is subject to the fulfilment, or waiver (in whole
or in part) by Vale, at its sole discretion, of the following conditions:
4.1 the Board unanimously recommends to the Metorex Shareholders that
they vote in favour of the Scheme or accept the General Offer (as
the case may be); and
4.2 the requisite approvals being received from the JSE, the Securities
Regulation Panel or, if the Offer is implemented under the New
Companies Act, the Takeover Regulation Panel constituted by the New
Companies Act (in each case, the "Takeover Panel") and the Financial
Surveillance Department of the South African Reserve Bank for the
posting of the Circular.
5. CONDITIONS TO COMPLETION OF THE OFFER
The completion of the Offer will be subject to the fulfilment, or waiver
(in whole or in part) by Vale, at its sole discretion, of the following
conditions, which will be fully set out in the Circular:
5.1 if the Offer is implemented under the New Companies Act, the
approval of the Scheme by a requisite majority of Metorex
Shareholders, as contemplated in section 115(2) of the New Companies
Act, and: (a) to the extent required, the approval of the
implementation of such resolution by the Court; and (b) if
applicable, Metorex not treating the aforesaid resolution as a
nullity, as contemplated in section 115(5)(b) of the New Companies
Act;
5.2 if the Offer is implemented under the Companies Act, the approval of
the Scheme by the requisite majority of Metorex Shareholders present
and voting at a meeting of Metorex Shareholders convened by the
Court, the sanctioning of the Scheme by the Court and a certified
copy of the order of the Court being lodged with and registered by
the Registrar of Companies in terms of the Companies Act;
5.3 the disposal or transfer by Metorex of the issued and to be issued
share capital of Sable, including all its assets and liabilities
("the Sable Interests"), to a third party or parties free of any
assumption or retention by Metorex, or any subsidiary of Metorex, of
any historic, present or future liability (including any liability
arising under any indemnities or warranties, other than warranties
in respect of title to the issued share capital of Sable and such
other warranties as may be agreed between Vale and Metorex) arising
in relation to the disposal of the Sable Interests and, in the event
that any funding is provided to Sable from the date of the
Implementation Agreement until such disposal, such funding not
exceeding US$5,000,000 in the aggregate;
5.4 if the Offer is implemented under the New Companies Act, within 30
business days following the Metorex Shareholders` meeting convened
to approve the Scheme (the "Scheme Meeting"), Metorex Shareholders
exercise appraisal rights, in terms of section 164 of the New
Companies Act by giving valid demands in terms of section 164(7) of
the New Companies Act, in respect of no more than 5% of the issued
ordinary share capital of Metorex, provided that, in the event that
Metorex Shareholders give notice objecting to the Scheme as
contemplated in section 164(3) of the New Companies Act and/or vote
against the resolutions proposed at the Scheme Meeting in respect of
no more than 5% of the issued ordinary share capital of Metorex,
this condition shall be deemed to have been fulfilled at the time of
the Scheme Meeting;
5.5 the receipt of unconditional approvals, consents or waivers
("Consents") from all regulatory bodies, governmental or quasi-
governmental entities or joint venture partners necessary to
implement the Offer including, but not limited to, the governments
of the DRC and the Republic of Zambia ("Zambia"), the Takeover Panel
(if the Offer is implemented under the New Companies Act, in terms
of a compliance certificate to be issued in terms of the New
Companies Act in relation to the Offer), the South African
competition authorities and the Zambian competition authorities or,
to the extent that any such Consents are subject to conditions, such
conditions being satisfactory to Vale;
5.6 to the extent necessary or required by Vale, receipt of waivers from
lenders to Metorex or any of its subsidiaries of any change of
control rights they may have or any events of default which may be
triggered by the Offer;
5.7 by the date on which each of the above conditions referred to in
this paragraph 5 have been fulfilled or waived (as the case may be),
there not having occurred an adverse effect, fact, circumstance or
any potential adverse effect, fact or circumstance which has arisen
or occurred, or might reasonably be expected to arise or occur and
which is or might reasonably be expected (alone or together with any
other such actual or potential adverse effect, fact or circumstance)
to be material with regard to the operations, continued existence,
business, condition, assets and liabilities of Metorex and its
subsidiaries (whether as a consequence of the Offer or not) and/or
any restrictive covenant or covenants or similar provision entered
into by Metorex or any of its subsidiaries which may materially
reduce the operating performance of Metorex. For the purposes of
this paragraph 5.7, to be material, the adverse effect, fact or
circumstance or covenant or position must have (or be reasonably
expected to have) an adverse impact upon Metorex`s annual
consolidated earnings before interest, tax, depreciation and
amortisation ("EBITDA") of no less than 25% when measured against
Metorex`s EBITDA for the two month period to 28 February 2011 (on an
annualised basis) or, if the adverse impact relates to Metorex`s
operating performance, no less than a 25% negative variation to
Metorex`s annual copper production when measured against the
production numbers for the two month period to 28 February 2011 (on
an annualised basis); and
5.8 all conditions to the completion of the Offer having been fulfilled
or waived, as the case may be, within 180 days of the publication of
this Firm Intention Announcement.
6. DISPOSAL OF THE SABLE INTERESTS
The Sable Interests will not be acquired as part of the Offer. In this
regard, completion of the Offer is conditional upon the disposal or
transfer of the Sable Interests by Metorex to a third party or parties or
the distribution of the shares in Sable to Metorex Shareholders as a
dividend in specie. The Board has agreed with Vale that it will explore
potential transaction structures to satisfy this condition.
Any proceeds received on the disposal of the Sable Interests (if
applicable) will be distributed to Metorex Shareholders in addition to
the Offer Consideration. Further details in respect of the disposal of
the Sable Interests will be provided to Metorex Shareholders in due
course.
7. GUARANTEE TO THE TAKEOVER PANEL
Societe Generale, financial adviser to Vale, has confirmed that
sufficient resources are available to Vale to satisfy in full the
consideration payable in relation to the Offer, and has provided an
irrevocable, unconditional bank guarantee in favour of Metorex
Shareholders to the Takeover Panel for the sole purpose of fully
satisfying the consideration payable under the terms of the Offer.
8. DE-LISTING OF METOREX
Following the implementation of the Scheme, application will be made by
Metorex to the JSE to terminate the listing of Metorex shares on the JSE,
to the Frankfurt Stock Exchange to terminate the listing of Metorex
shares on the Frankfurt Stock Exchange and to terminate the ADR
programme.
9. SHAREHOLDINGS IN METOREX AND ACTING AS PRINCIPAL
Neither Vale nor any of its directors currently hold or control any
shares or options to acquire any shares in Metorex.
Vale confirms that it is the ultimate prospective purchaser and is acting
alone and not in conjunction with, or as agent or broker for, any other
party.
10. THIRD PARTY APPROACHES
Metorex has agreed that it will not (and will procure that certain other
related persons will not) directly or indirectly:
(i) solicit or initiate any enquiries, proposals or approaches from
any person in respect of any alternative offer or proposal
("Alternative Proposal");
(ii) enter into or participate in any discussions or negotiations
relating to any Alternative Proposal unless such Alternative
Proposal is a more favourable proposal as determined by the board
acting in good faith (a "Superior Proposal"); or
(iii) approve or recommend an Alternative Proposal or enter into an
agreement in respect of an Alternative Proposal, unless it is a
Superior Proposal,
save where the Board concludes that such action is necessary to ensure
compliance with their directors` fiduciary duties in response to an
approach relating to an Alternative Proposal.
Metorex has agreed to promptly notify Vale if it or any of its directors,
employees or agents receives any approach in relation to a possible
Alternative Proposal (such notification to include details of the
conditions of the Alternative Proposal and the name of the person making
the Alternative Proposal). Further, Metorex has agreed that it shall
provide Vale with any information provided to a third party in connection
with an Alternative Proposal which has not already been provided to Vale.
Should an Alternative Proposal constitute a Superior Proposal, then,
prior to the Board approving or recommending and/or entering into an
agreement in respect of the Superior Proposal, Metorex shall provide Vale
with a copy of the document in which the Superior Proposal is made and
afford Vale eight business days to amend the Offer on financial and/or
other terms equivalent to, or more favourable than, those contained in
the Superior Proposal.
11. BREAK FEE
The Implementation Agreement includes a break fee of ZAR75,240,000 which
would be payable by Metorex if, after the publication of this Firm
Intention Announcement:
(i) the Board does not unanimously recommend the Offer;
(ii) the Board at any time withdraws, qualifies or modifies its
recommendation of the Offer;
(iii) the Board approves or recommends a Superior Proposal;
(iv) an Alternative Proposal in relation to Metorex is announced and
subsequently completes; or
(v) the Board determines not to implement the Offer as a consequence of
refusing or failing to take the necessary procedural steps to implement
the Scheme pursuant to the Companies Act or the New Companies Act (as the
case may be).
12. RECOMMENDATION AND FAIRNESS OPINION
The Board conducted a process with certain parties interested in making
an offer for Metorex. As a result of this process, the Board received
certain proposals. Having carefully evaluated these proposals, the Board
intends, based on the current information available to the Board, to make
a unanimous recommendation to Metorex Shareholders to vote in favour of
the resolutions proposed at the Scheme Meeting or to accept the General
Offer, as the case may be, provided that the Board receives a favourable
fairness opinion from the independent advisor to Metorex.
The Board will appoint an independent advisor acceptable to the Takeover
Panel to provide it with external advice in relation to the Offer and to
make appropriate recommendations to the Board for the benefit of Metorex
Shareholders.
The substance of the external advice and the views of the Board will be
detailed in the Circular to be sent to Metorex Shareholders in relation
to the Offer.
13. UNDERTAKINGS
13.1 Shareholders
Vale has received irrevocable undertakings and letters of intent
from certain Metorex Shareholders representing in aggregate 25.8%
and 1.6% respectively of the existing issued ordinary share capital
of Metorex to vote in favour of the Scheme and the resolutions to be
proposed at Scheme Meeting or to accept the General Offer, as the
case may be.
13.2 Directors
Included in the irrevocable undertakings referred to above, are
irrevocable undertakings received from certain connected person of
the directors of Metorex representing in aggregate 13.9% of the
existing issued ordinary share capital of Metorex.
14. DOCUMENTATION
Further details of the Scheme will be included in the Circular to be sent
to Metorex Shareholders, containing, inter alia, a notice of the meeting
of Metorex Shareholders, a form of proxy and a form of surrender and
transfer. Subject to the fulfilment of the conditions precedent to
posting referred to in paragraph 4 above, the Circular is expected to be
posted to Metorex Shareholders during May 2011.
The salient dates in relation to the Scheme will be published prior to
the posting of the Circular.
15. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Following the release of this announcement, the cautionary announcement
dated 28 March 2011 is hereby withdrawn and caution is no longer required
to be exercised by Metorex Shareholders when dealing in Metorex shares.
16. RESPONSIBILITY STATEMENT
Vale and the board of Metorex accept responsibility for the information
contained in this announcement. To the best of their respective knowledge
and belief, the information contained in this announcement is true and
nothing has been omitted which is likely to affect the import of the
information.
Johannesburg
8 April 2011
Lead financial adviser and investment bank to Metorex: Standard Bank
Joint financial adviser to Metorex: One Capital
Transaction Sponsor to Metorex: One Capital
Legal advisers to Metorex: Cliffe Dekker Hofmeyr
Financial advisers to Vale: Societe Generale and Investec Bank Limited
Legal advisers to Vale: Fasken Martineau and Webber Wentzel
Public relations adviser to Vale: Brunswick
Rob Pinker - +27 83 326 7794
Itumeleng Mahabane - +27 83 284 6774
Societe Generale, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting exclusively for Vale and no one
else in connection with the Offer and will not be responsible to anyone other
than Vale for providing the protections afforded to clients of Societe
Generale, nor for providing advice in relation to the Offer, the contents of
this announcement or any other matter referred to herein.
Investec Bank Limited, which is authorised and regulated by the Financial
Services Board, is acting exclusively for Vale and no one else in connection
with the Offer and will not be responsible to anyone other than Vale for
providing the protections afforded to clients of Investec Bank Limited, nor
for providing advice in relation to the Offer, the contents of this
announcement or any other matter referred to herein.
The Standard Bank of South Africa Limited, which is authorised and regulated
by the Financial Services Board, is acting exclusively for Metorex and no one
else in connection with the Offer and will not be responsible to anyone other
than Metorex for providing the protections afforded to clients of The Standard
Bank of South Africa Limited, nor for providing advice in relation to the
Offer.
One Capital Advisory (Proprietary) Limited is acting exclusively for Metorex
and no one else in connection with the Offer and will not be responsible to
anyone other than Metorex for providing the protections afforded to clients of
One Capital Advisory (Proprietary) Limited, nor for providing advice in
relation to the Offer.
General
The release, publication or distribution of this announcement in jurisdictions
other than South Africa may be restricted by law and therefore any persons who
are subject to the laws of any jurisdiction other than South Africa should
inform themselves about, and observe, any applicable requirements. This
announcement has been prepared for the purposes of complying with the
Companies Act and the Securities Regulation Code on Takeovers and Mergers
published in terms thereof and the information disclosed may not be the same
as that which would have been disclosed if this announcement had been prepared
in accordance with the laws and regulations of any jurisdiction outside of
South Africa.
This announcement is not intended to, and does not constitute, or form part
of, an offer to sell or an invitation to purchase or subscribe for any
securities or a solicitation of any vote or approval in any jurisdiction. This
announcement does not constitute a prospectus or a prospectus equivalent
document. Metorex Shareholders are advised to read carefully the formal
documentation in relation to the Offer once it has been despatched. The Offer
will be made solely through the Circular, which will contain the full terms
and conditions of the Offer. Any decision to approve the Offer or other
response to the proposals should be made only on the basis of the information
in the Circular.
Notice to U.S. investors
This announcement may include statements that present Vale`s expectations
about future events or results. All statements, when based upon expectations
about the future and not on historical facts, involve various risks and
uncertainties. Vale cannot guarantee that such statements will prove correct.
These risks and uncertainties include factors related to the following: (a)
the countries where we operate, especially Brazil and Canada; (b) the global
economy; (c) the capital markets; (d) the mining and metals prices and their
dependence on global industrial production, which is cyclical by nature; and
(e) global competition in the markets in which Vale operates. To obtain
further information on factors that may lead to results different from those
forecast by Vale, please consult the reports Vale files with the U.S.
Securities and Exchange Commission (the "SEC"), the Brazilian Comissao de
Valores Mobiliarios, the French Autorite des Marches Financiers, and The Stock
Exchange of Hong Kong Limited and, in particular, the factors discussed under
"Forward-Looking Statements" and "Risk Factors" in Vale`s annual report on
Form 20-F filed with the SEC.
Date: 08/04/2011 14:35:45 Supplied by www.sharenet.co.za
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