Wrap Text
EXX - Exxaro Resources Limited - Exxaro cash offer to territory Resources
Limited ("Territory") shareholders of A$0.46 per share
Exxaro Resources Limited
(Incorporated in the Republic of South Africa)
(Registration number 2000/011076/06)
Share code: EXX ISIN: ZAE000084992
("Exxaro")
EXXARO CASH OFFER TO TERRITORY RESOURCES LIMITED ("TERRITORY") SHAREHOLDERS OF
A$0.46 PER SHARE
The attention of shareholders is drawn to the joint announcement released by
Exxaro and Territory (ASX:TTY) on the Australian Securities Exchange (the
"Joint Announcement") that the parties have executed a Bid Implementation
Agreement under which Exxaro is offering all Territory shareholders A$0.46
cash per share, subject to certain conditions (the "Offer"). The details of
the Offer are contained in the Joint Announcement and attached hereafter for
ease of reference. The acquisition by Exxaro, as a result of the Offer, would
fall below the threshold for a Category 2 transaction as defined in terms of
the JSE Limited Listings Requirements, and accordingly this announcement is
voluntary.
Territory has an iron ore operation in the Northern Territory, Australia. It
has an operating mine at Frances Creek and is well positioned near existing
rail and port infrastructure through the port of Darwin, which is in close
proximity to China. The current mine produces approximately 1.6Mt per annum of
lump and fine direct shipping ore. Territory also owns rights to iron ore
tenements in the vicinity of Frances Creek. For further information on the
company, visit www.territoryresources.com.au.
The Offer is consistent with Exxaro`s stated objective of expanding into the
iron ore sector. Exxaro believes the fundamentals of iron ore are positive in
the medium to long term and has in house expertise and experience in mining
bulk ore commodities. Exxaro has been actively pursuing opportunities to
increase its exposure in iron ore and believes this operation in Australia, a
jurisdiction in which Exxaro has considerable operational experience, provides
an attractive platform for further growth in the commodity.
Mr Sipho Nkosi, the CEO of Exxaro, said "Territory`s assets provide an
excellent match to Exxaro`s stated objective of gaining operational exposure
in iron ore. Territory represents a reasonably sized opportunity, which will
allow Exxaro to leverage its bulk commodity and iron ore beneficiation
expertise. At the same time the Offer allows Territory shareholders the
opportunity to realise an attractive cash price at a considerable premium to
the market value."
23 May 2011
Merchant bank and advisor to Exxaro
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Greenhill Caliburn
Legal advisors
Lavan Legal
Bennet & Co
Transaction sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Sponsor to Exxaro
Deutsche Securities (SA) (Proprietary) Limited
For more information, stakeholders are invited to take part in an Exxaro
teleconference taking place today (23 May 2011) at 10h00 SA time.
To access the teleconference, dial one of the following numbers:
South Africa - Johannesburg: 011 535 3600 / 011 581 2002
South Africa - Cape Town: 021 819 0900
South Africa (Toll-Free): 0 800 200 648
Australia (Toll-Free): 1 800 350 100
UK (Toll-Free): 0 800 917 7042
Other Countries (Intl Toll): +27 11 535 3600
A playback will be available for 72 hours. Dial one of the following numbers
using Code 17763#
South Africa (Telkom): 011 305 2030
Australia (Toll-Free): 1 800 091 250
UK (Toll-Free): 0 808 234 6771
Other Countries (Intl Toll): +27 11 305 2030
ANNOUNCEMENT
23 MAY 2011
TERRITORY RESOURCES LTD RECOMMENDS A$0.46 CASH PER SHARE TAKEOVER OFFER BY
EXXARO RESOURCES LTD
* * *
HIGHLIGHTS
- Exxaro to make takeover offer for Territory at A$0.46 cash per share
- In the absence of a Superior Proposal, the Offer is recommended by a
majority of the Territory Board
- Offer price represents 64% premium to Territory`s last closing share
price of A$0.28 per share
- Total equity value of Offer is A$123 million
- Territory`s 11.2% shareholder DCM has executed a pre-bid agreement with
Exxaro
- Territory has ceased discussions with Noble in relation to the non-
binding proposal announced on 10 May 2011
Territory Resources Ltd (ASX: TTY) ("Territory") and Exxaro Resources Ltd
("Exxaro"), a South African-based mining group listed on the Johannesburg
Stock Exchange, have executed a Bid Implementation Agreement ("BIA") under
which Exxaro will offer to acquire up to 100% of the fully paid ordinary
shares in Territory by way of an off-market takeover bid (the "Offer"). The
Offer follows Exxaro completing due diligence on Territory.
In the absence of a Superior Proposal, the Offer is recommended by a majority
of the Territory Board. Furthermore and in the absence of a Superior Proposal,
each recommending Territory Director has agreed to accept the Offer with
respect to all shares owned or controlled by them.
On 22 May 2011, Exxaro also entered into a pre-bid acceptance agreement with
DCM DECOmetal ("DCM") in relation to its 11.2% holding in Territory. As a
result of this transaction, Exxaro has a relevant interest in Territory of
11.2%.
Exxaro has also agreed to provide, via FirstRand Bank Limited (acting through
its Rand Merchant Bank ("RMB") division), financing support to Territory up to
US$36 million in certain circumstances (the "Facility").
The Offer
The Offer price is A$0.46 cash per Territory share ("Offer Price") and values
Territory at approximately A$123 million (on a fully diluted basis - see note
1 below). Exxaro intends to fund the Offer consideration from internal funding
sources.
Territory and Exxaro believe the Offer provides a very attractive opportunity
for Territory shareholders to realise their investment in Territory at a
significant premium to recent share trading levels, with the Offer Price
representing a premium of:
- 64% to Territory`s last closing share price prior to this announcement of
A$0.28 per share;
- 69% to the volume weighted average price of Territory shares since it
released a market update on 19 April 2011; and
- 58% to the volume weighted average price of Territory shares since it
announced it had signed a non-binding term sheet in respect of a
conversion of debt to equity with Noble Group Limited ("Noble") on 10 May
2011 ("Noble Proposal").
The cash Offer also provides certainty of value for Territory shares and an
opportunity for shareholders to realise their investment in Territory shares
for cash.
Note : Based on 268.5m fully diluted shares on issue (265,121,141 ordinary
shares on issue, 2,406,458 performance rights on issue and 933,770 performance
rights which the Territory Board had resolved to issue prior to the Exxaro
approach but are not yet issued).
Following the execution of the BIA, the Territory Board has ceased discussions
with Noble and will not be progressing the Noble Proposal.
Territory believes that Exxaro`s Offer is a more attractive proposition for
Territory shareholders than the Noble Proposal, in particular because Exxaro`s
Offer provides a liquidity event whereby all shareholders are being given the
opportunity to receive cash at a significant premium to the prevailing market
price, thereby enabling them to capture immediate and certain value.
Importantly, Territory has been able to agree binding documents with Exxaro
which include financing arrangements that will ensure Territory has the
required capital to meet its short term funding needs if the existing Noble
facilities are withdrawn or scaled back.
Comment
Commenting on the Offer, the Managing Director of Territory, Mr Andy Haslam,
said "The Territory Board of Directors has carefully considered the offer by
Exxaro and the majority of the Board supports and recommends the offer as
being in the best interests of Territory and our shareholders, subject to
there being no Superior Proposal."
Mr Sipho Nkosi, the CEO of Exxaro, said "Territory`s assets provide an
excellent match to Exxaro`s stated objective of gaining operational exposure
in iron ore. Territory represents a reasonably sized opportunity which will
allow Exxaro to leverage its bulk commodity and iron ore beneficiation
expertise. At the same time the Offer allows Territory shareholders the
opportunity to realise an attractive cash price at a considerable premium to
the market value."
Substantial Shareholder Support
DCM DECOmetal ("DCM"), which currently owns 11.2% of Territory`s shares, is
supportive of the Offer and has executed a pre-bid agreement with Exxaro
whereby it will accept into the Offer within 2 days of it opening.
Furthermore, under this agreement Exxaro has been given voting discretion in
relation to DCM`s shareholding in Territory.
Exclusivity Arrangements and Offer Conditions
As part of the BIA executed between the parties, Territory and Exxaro have
agreed customary exclusivity arrangements including "no shop" and "no talk"
clauses. The BIA also provides Exxaro with notification and matching rights,
such that Territory must provide immediate notification of any competing
proposal to Exxaro and allow Exxaro a period of time to table a counter-offer.
A break fee of approximately A$1.557 million (excluding GST) may also be
payable by Territory under certain circumstances.
The Offer is conditional upon the satisfaction of certain conditions,
including a 60% minimum acceptance condition, no material adverse change in
relation to Territory and no prescribed occurrences in relation to Territory.
The Offer is also conditional upon Territory entering into an agreement in
relation to the termination of its outstanding loan arrangements with Swan
Gold Limited under which Territory is entitled to receive at least A$6.7
million in cash.
A summary of the key terms of the BIA, including the conditions of the Offer,
is attached to this announcement as Appendix A.
Financing Support up to US$36 million
RMB (guaranteed by Exxaro) has entered into financing arrangements under which
Exxaro (through RMB) has agreed to provide Territory with a Facility for up to
US$36 million in certain circumstances. The Facility is subject to a Facility
Agreement entered into by Territory and RMB on 22 May 2011. The period of
facility availability is conditional on a number of factors including whether
the Territory Board changes its recommendation in relation to the Offer due to
a Superior Proposal and whether Exxaro is issued an option to subscribe for up
to 15% of Territory`s issued share capital at a subscription price of A$0.46
per share. A summary of the key terms of the Facility Agreement is attached to
this announcement as Appendix B.
Timetable
Exxaro will finalise and mail out its Bidder`s Statement around early June
2011. This document will outline the full details of the Offer and
instructions about how to accept the Offer. Territory will finalise and mail
out its Target`s Statement shortly thereafter. Territory shareholders should
carefully consider these documents before deciding whether to accept into the
Offer.
Advisers
Territory is being advised by Azure Capital as financial adviser and Freehills
as legal adviser. Exxaro is being advised by Greenhill Caliburn Pty Limited
and RMB Corporate Finance as financial advisers and Bennett & Co and Lavan
Legal as legal advisers.
Ends
About Territory
Territory Resources Ltd is a Perth, Western Australia-based resources company
focused the development and operation of bulk commodity operations such as its
100%-owned Frances Creek Iron Ore Mine, located in the Northern Territory.
About Exxaro
Exxaro is one of the largest South African-based diversified resources groups,
with interests in the coal, mineral sands, base metals, industrial minerals
and iron ore commodities. Further information can be found about Exxaro at
www.exxaro.com.
Contacts
Territory
Nicholas Read
Read Corporate
T: +61 8 9388 1474
M: 0419 929 046
Geoff Rasmussen
Azure Capital Limited
T: +61 8 6263 0888
Exxaro
Riaan Koppeschaar
Corporate Finance & Treasury
Exxaro Resources
T:+ 27 12 307 4145
M :+27 836091047
Ernst Venter
Executive GM Business Growth
Exxaro Resources
T:+27 12 307 4322
M:+27 83 6091313
Richard Phillips / Jonathan Farrer
Greenhill Caliburn Pty Ltd
+61 3 9935 6806 / +61 3 9935 6809
Carel Vosloo / Nicola Harris
Rand Merchant Bank
+27 11 282 4143 / +27 11 282 1258
Appendix A - Summary of Key Terms of Bid Implementation Agreement
Exxaro and Territory entered into a Bid Implementation Agreement on 22 May
2011 under which Exxaro and Territory have agreed to co-operate with each
other in relation to the Bid. A summary of the terms of the Bid Implementation
Agreement is set out below. This summary is not exhaustive and does not
constitute a definitive statement of the rights and liabilities of each of
Exxaro and Territory under the Bid Implementation Agreement.
Under the Bid Implementation Agreement:
1 The Bid and recommendation
1.1 Exxaro has agreed to make the Offer to all Territory Shareholders in
respect of all of their Territory Shares.
1.2 Territory represented and warrants to Exxaro that a majority of the
Territory Board will recommend that, in the absence of a Superior
Proposal, Territory Shareholders accept the Offer.
1.3 Territory will procure the members of the majority of the Territory Board
who recommend the bid to accept the Offer in relation to any Territory
Share held by them, in the absence of a Superior Proposal.
2 Facilitating the Bid
2.1 For purposes of item 6 of section 633(1) of the Corporations Act,
Territory agrees that Exxaro may despatch offers under the Bid to
Territory Shareholders on the day on which the Bidder`s Statement as
lodged with ASIC is served on Territory or within 28 days after that day.
2.2 In the absence of a Superior Proposal, Territory and a majority of its
directors will support the Bid and participate in efforts reasonably
required by Exxaro to promote the merits of the Bid, but only to the
extent that the majority of the Territory Board or the relevant director
considers they may do so without breaching their duties as a director of
Territory.
2.3 Territory agrees to use its reasonable endeavours to ensure satisfaction
of the Bid Conditions.
2.4 Within 5 Business Days of the Offer becoming unconditional, Exxaro must
make a private treaty offer to acquire all of the Territory Options
(outstanding as at that date) from each holder of Territory Options. If
accepted, the acquisition must be completed within 21 days of receipt of
the acceptance.
2.5 Subject to any agreement between the parties, Territory must procure that
the Territory Board will:
2.5.1 take all actions necessary to ensure the nominees of Exxaro (Exxaro
Nominees) are lawfully appointed as directors of Territory and that non
Exxaro Nominees resign such that the Exxaro Nominees represent:
(a) three out of six directors of the Territory Board if Exxaro acquires
a Relevant Interest in excess of 50% of the Territory Shares and the
Bid has become or is declared free from all Bid Conditions; and
(b) a majority of the Territory Board once Exxaro has paid for
those acceptances of the Bid which resulted in it acquiring a
Relevant Interest of 50% of the Territory Shares; and
2.5.4 as soon as practicable after Exxaro acquires a Relevant Interest in
90% of the Territory Shares and the Bid has become or is declared free
from all Bid Conditions, ensure that all except one of the directors on
the Territory Board, other than the Exxaro Nominees, resign (provided the
proper board is constituted at all times) and the continuing director
resigns upon Territory being delisted,
provided that Exxaro procures that the Exxaro Nominees do not participate
in decisions of Territory in relation to the Bid until after the end of
the Offer Period.
2.6 Exxaro currently wishes to continue the employment of the existing non-
director employees of Territory on terms no less favourable than their
existing terms of employment.
2.7 In the event that Exxaro obtains control (as defined in section 50AA of
the Corporations Act) of Territory under or as a consequence of the Bid,
Exxaro will not take any action, for a period of 6 months from the date
that Exxaro obtains control of Territory, to:
2.7.1 terminate the existing employment agreement of any Territory
employee as at the Announcement Date (except as permitted for cause under
the terms of employment for such employee);
2.7.2 make any position held by an employee of Territory as at the
Announcement Date redundant; or
2.7.3 reduce or adversely vary the terms and conditions of employment of
any employee as at the Announcement Date (except in respect of the job
title of such employee).
4 Compensation amount
4.1 Territory undertakes to pay Exxaro a compensating amount of A$1,557,050
plus the amount of any GST payable, if:
4.1.2 Territory accepts or enters into or offers to accept or enter into,
any agreement, arrangement or understanding regarding a Competing
Proposal, or declares an intention to do any of these things;
4.1.3 a majority of the Territory Board does not recommend the Bid or
withdraws, qualifies or adversely modifies an earlier recommendation or
approves or recommends or makes an announcement in support of a Competing
Proposal or announces an intention to do any of these acts;
4.1.4 before the date that is 6 months after the Offer Period ends, a
person (other than Exxaro or an Associate of Exxaro) and that person`s
Associates increases its Relevant Interest to more than 40% of Territory
Shares pursuant to a Competing Proposal that was announced (or such
intention was announced) before the end of the Offer Period;
4.1.5 Territory or any of its directors does (or omits to do) anything
(whether or not it may be permitted by the terms of this document) which
results in:
(a) any of the Bid Conditions not being satisfied or becoming incapable of
being satisfied and Exxaro does not declare the Bid free of the breached
condition (which Exxaro is under no obligation to do); or
(b) a Territory Prescribed Occurrence occurring other than with the consent
of Exxaro; or
4.1.6 Territory breaches certain provisions of the Bid Implementation
Agreement.
4.2 Following receipt by Exxaro of the compensation amount, Exxaro will not
have any other claim under the Bid Implementation Agreement in respect of
the matter that gave rise to such payment.
5 Exclusivity
5.1 From the date of the Bid Implementation Agreement until the earlier of
the close of the Bid or termination of the Bid Implementation Agreement
(the Bid Exclusivity Period), Territory must not except with the prior
written consent of Exxaro, directly or indirectly solicit or invite any
Competing Proposal or initiate or encourage discussions with any third
party which may reasonably be expected to lead to a Competing Proposal or
with a view to obtaining any expressions of interest, offer or proposal
from any person in relation to a Competing Proposal.
5.2 During the Bid Exclusivity Period, Territory must not, and must ensure
that its Representatives do not, except with prior written consent of
Exxaro:
5.2.1 participate in any negotiations in relation to a Competing Proposal
or which may reasonably be expected to lead to a Competing Proposal;
5.2.2 enter into any relevant agreement in connection with a Competing
Proposal;
5.2.3 provide any information to a third party for the purposes of
enabling that party to make or consider making a Competing Proposal or in
circumstances where the provision of information may reasonably be
expected to lead to a Competing Proposal;
5.2.4 communicate any intention to do the things in paragraph 5.2.1 -
5.2.3;
save where the Territory Board, acting in good faith, determines that any
Competing Proposal may reasonably be expected to lead to a Superior
Proposal and that failing to respond to the Competing Proposal would be
likely to constitute a breach of the Territory Board`s fiduciary or
statutory duties.
5.3 Territory warrants that, as at the date of the Bid Implementation
Agreement, it has ceased any existing discussions or negotiations with
any party in relation to any Competing Proposal.
5.4 During the Bid Exclusivity Period, Territory must promptly notify Exxaro
in writing of and approach in relation to a Competing Proposal which
notice must include reasonable details of the applicable matter
(including the identity of the third person and, if applicable, all
material terms of the Competing Proposal) save where the Territory Board,
acting in good faith, after having obtained written advice from its legal
advisers, determines that providing such details would be likely to
constitute a breach of the Territory Board`s fiduciary or statutory
duties.
5.5 If, during the Bid Exclusivity Period, the Territory Board has determined
that a Competing Proposal may reasonably be expected to lead to a
Superior Proposal, the following provisions apply:
5.5.1 Territory must promptly give Exxaro notice in writing of that fact
and that notice must provide all material details of the Superior
Proposal, including details of the proposed acquirer and any other
material details;
5.5.2 if Territory gives Exxaro such a notice, Territory agrees that it
will not, until the end of 4 Business Days following the receipt of that
notice by Exxaro, enter into any legally binding agreement, whether
conditional or not, with respect to the Superior Proposal;
5.5.3 if Territory gives Exxaro a notice, Exxaro will have the right, but
not the obligation, at any time until the end of 4 Business Days
following receipt of the notice to:
(a) offer to amend the terms of the Bid; or
(b) propose any other transaction,
(each a Counterproposal), and if Exxaro does so, the Territory Board must
promptly review the Counterproposal in good faith and do what the
Territory Board considers is required to comply with its fiduciary or
statutory duties, to determine whether the Counterproposal is equal to or
more favourable to Territory Shareholders than the Superior Proposal;
5.5.4 if the Territory Board determines, in good faith and in order to
satisfy what the Territory Board considers to be its fiduciary or
statutory duties, that the Counterproposal is equal to or more favourable
to Territory Shareholders than the Superior Proposal, then:
(a) if the Counterproposal contemplates an amendment to the Bid, the parties
must enter into a document amending the Bid Implementation Agreement to
reflect the Counterproposal;
(b) if the Counterproposal contemplates any other transaction, Territory must
make an announcement as soon as reasonably practicable recommending the
Counterproposal, in the absence of a more favourable proposal, and the
parties must pursue the implementation of the Counterproposal in good
faith;
(c) each material successive modification of any Competing Proposal in
relation to a Superior Proposal made during the Bid Exclusivity Period
will be deemed to constitute a new proposal and the provisions of this
clause will apply to each such new proposal; and
(d) the terms of the Bid Implementation Agreement apply to any
Counterproposal as if such proposal constitutes the Bid.
5.6 The exclusivity obligations apply to a "Competing Proposal",
being a proposal that would, if completed, result in:
5.6.1 any person other than Exxaro acquiring an interest in all or part of
the assets of Territory, increasing its relevant interest in
Territory above 20% (or if already above 20%, increasing its
relevant interest, other than subject to the ability to `creep`
under the Corporations Act), or otherwise acquiring control (as
defined in the Corporations Act) of Territory; or
5.6.2 Territory and another person or persons operating under a dual
listed company or similar structure.
7 Termination
7.1 Either party to the Bid Implementation Agreement may terminate
that agreement:
7.1.1 if the other party is in material breach of this document and that
breach is not remedied by that other party within 10 Business Days;
7.1.2 if a court or other Public Authority issues a final and non-
appealable order or ruling or takes an action which permanently
restrains or prohibits the Offer; or
7.1.3 if the Bid lapses for any reason including non-satisfaction of a
condition of the Bid.
7.2 Exxaro may terminate the Bid Implementation Agreement if:
7.2.1 Territory is in breach of the exclusivity obligations outlined
above;
7.2.2 the majority of the Territory Board changes its recommendation in
relation to the Bid following or as a result of the Board
determining that it has received a Superior Proposal;
7.2.3 a majority of the Territory Board does not recommend the Bid be
accepted by Territory Shareholders or, having recommended the Bid,
changes, qualifies or adversely modifies its recommendation in
relation to the Bid;
7.2.4 a Territory Prescribed Occurrence occurs; or
7.2.5 a Territory Material Adverse Change occurs; or
7.2.6 there is an Event of Default under the Facility Agreement.
Bid Conditions
The Offer will be subject to the following conditions:
1 Minimum acceptance condition
During, or at the end of, the Offer Period the number of Territory
Shares in which Exxaro and its associates together have Relevant
Interests is at least 60% of all the Territory Shares (on a fully
diluted basis).
2 No material adverse change to Territory
- During the Condition Period, no matter, event, change, condition,
circumstance or thing occurs, is discovered by Exxaro or becomes
public (in any such case, individually or when aggregated with all
such matters, events, changes, conditions, circumstances and things
and whether or not becoming public) which would result in or would
reasonably be likely to result in:.
2.1.1 the value of consolidated net assets of Territory being reduced by
at least A$5.8 million;
2.1.2 the future consolidated net profit after tax of Territory in any
year reducing by at least A$5.0 million;
2.1.3 Territory being unable to carry on its business in substantially the
same manner as at the date of this agreement;
2.1.4 any creditor demanding payment of a debt of A$1.0 million or more
other than as contemplated in clause 2.1.8; or
2.1.5 a combined 35% decrease in the AUD effective price for 58% Fe fines
CFR China (based on Bloomberg codes TSIPIO58 for iron ore price and
AUDUSD Curncy for AUD:USD exchange rate at 1700 hrs Australian
Western Standard Time each Business Day) from the level on the date
of the Bid Implementation Agreement for 5 consecutive Business Days,
including without limitation:
2.1.6 any person accelerating or adversely modifying the performance of
any obligations of Territory or any of its subsidiaries under any
material agreements, contracts or other legal arrangements,
but does not include any change:
2.1.7 occurring as a result of any matter, event or circumstance required
by this document, the Bid or the transactions contemplated by them;
2.1.8 occurring as a consequence of Noble calling in any outstanding debt
owed to it by Territory;
2.1.9 occurring as a result of any matter, condition, circumstance or
thing fully and fairly disclosed in the Territory Due Diligence
Material or in an announcement made to ASX or a document lodged with
ASIC before the date of the Bid Implementation Agreement;
2.1.10 approved in writing by Exxaro; or
2.1.11 in respect of clauses 2.1.1 and 2.1.2 only, occurring as a result of
spot iron ore prices or foreign exchange movements.
- During the Condition Period, the S&P/ASX 200 Index not falling more
than 15% below the closing level on the date of the Bid
Implementation Agreement (or where the Bid Implementation Agreement
is signed on a day that is not a trading day on ASX, the closing
level on the trading day immediately following the date of the Bid
Implementation Agreement) and staying below that level for 3
consecutive Trading Days.
3 No prescribed occurrences
None of the following events happens during the Condition Period:
- Territory converts all or any of its shares into a larger or smaller
number of shares;
- Territory or a subsidiary of Territory resolves to reduce its share
capital in any way;
- Territory or a subsidiary of Territory:
3.3.1 enters into a buy-back agreement; or
3.3.2 resolves to approve the terms of a buy-back agreement under section
257C(1) or 257D(1) of the Corporations Act;
- Territory or a subsidiary of Territory issues shares (other than on
exercise of Territory Options or on vesting of Territory Performance
Rights), or grants an option over its shares, or agrees to make such an
issue or grant such an option (other than the issue of the 933,770
Territory Performance Rights the Board has previously resolved to issue);
- Territory or a subsidiary of Territory issues, or agrees to issue,
convertible notes;
- Territory or a subsidiary of Territory disposes, or agrees to dispose, of
the whole, or a substantial part, of its business or property;
- Territory or a subsidiary of Territory charges, or agrees to charge, the
whole, or a substantial part, of its business or property;
- Territory or a subsidiary of Territory resolves to be wound up;
- a liquidator or provisional liquidator of Territory or of a subsidiary of
Territory is appointed;
- a court makes an order for the winding up of Territory or of a subsidiary
of Territory;
- an administrator of Territory, or of a subsidiary of Territory, is
appointed under section 436A, 436B or 436C of the Corporations Act;
- Territory or a subsidiary executes a deed of company arrangement;
- a receiver, or a receiver and manager, is appointed in relation to the
whole, or a substantial part, of the property of Territory or of a
subsidiary of Territory;
- Territory pays, declares, distributes or incurs a liability to make or
pay a dividend, bonus or other share of its profits, income, capital or
assets by way of dividend or other form of distribution;
- Territory makes any change to its constitution or convenes a meeting to
consider a resolution to change a constitution of Territory or a
subsidiary of Territory;
- Territory or a subsidiary of Territory ceases, or threatens to cease to,
carry on the business conducted as at the date of this agreement;
- Territory or a subsidiary of Territory (other than a dormant, non-
operating entity) being deregistered as a company or being otherwise
dissolved;
- any disposal of shares or securities by Territory or a subsidiary of
Territory in relation to a subsidiary of Territory other than to another
subsidiary of Territory;
- an action taken by a Public Authority in consequence of, or in connection
with, the Bid, which restrains or prohibits the making of the Bid or the
completion of any transaction contemplated by the Bidder`s Statement or
requires the divestiture by Exxaro of any Territory Shares, or the
divestiture of any assets by Territory or by any subsidiary of Territory
or by any company within the Exxaro Group;
- Territory, or any subsidiary of Territory:
3.20.1 acquires, offers to acquire or agrees to acquire one or more
companies or assets (or an interest in one or more companies or assets)
for an amount in aggregate greater than A$1.0 million or makes an
announcement about such an acquisition;
3.20.1 disposes, offers to dispose or agrees to dispose of, or creates, or
offers to create an equity interest in one or more companies or assets
(or an interest in one or more companies or assets) for an amount in
aggregate greater than A$1.0 million or makes an announcement about such
a disposal;
3.20.3 enters into, offers to enter into or announces that it proposes to
enter into any joint venture or partnership or dual listed company
structure, or makes an announcement about such a commitment; or
3.20.4 incurs or commits to, or grants to another person a right the
exercise of which would involve Territory or any subsidiary of Territory
incurring or committing to any capital expenditure or liability for one
or more related items of greater than A$1.0 million or makes an
announcement about such a commitment,
- Exxaro becomes aware that any document filed by or on behalf of Territory
with ASX or ASIC contains a statement which is incorrect or misleading in
any material particular or from which there is a material omission (in
such circumstance, materiality being determined by reference to the
business and assets of Territory taken as a whole); or
- Territory, or its subsidiary, releases, discharges or modifies any
substantial obligation to it of any person, firm or corporation or agrees
to do so;
- Territory appoints any additional director to its board of directors
whether to fill a casual vacancy or otherwise;
- Territory, or a subsidiary of Territory, enters or agrees to enter into
any contract of service or varies or agrees to vary any existing contract
of service with any director or manager, or pays or agrees to pay any
retirement benefit or allowance to any director, manager or other
employee, or makes or agrees to make any substantial change in the basis
or amount of remuneration of any director, manager or other employee
(except as required by law or provided under any superannuation,
provident or retirement scheme as in effect on the date of this agreement
and except relating to the Territory Board exercising its discretion to
allow any Territory Performance Rights to vest where permitted by their
terms);
- Territory has threatened or commenced against it any material claims or
proceedings in any court or tribunal; or
- Territory or a subsidiary of Territory directly or indirectly
authorising, committing or agreeing to take or announcing any of the
actions referred to in paragraphs 3.1 to 3.25 above insofar as it applies
to Territory or the subsidiary of Territory the subject of such direct or
indirect authorisation, commitment, agreement or announcement.
provided that it will not include any occurrence:
- fairly disclosed to Exxaro before the Announcement Date in the Territory
Due Diligence Material or as a result of disclosures made to ASX or
documents lodged with ASIC;
- occurring as a result of any matter, event or circumstance required by
this document, the Takeover Bid or the transactions contemplated by them;
or
- approved in writing by Exxaro.
4 No exercise of change of control rights by a third party
No person exercises any right (whether subject to conditions or not) as a
result of Exxaro acquiring Territory Shares to:
- acquire, or require Territory or a subsidiary of Territory to dispose of,
or offer to dispose of, any material asset of Territory or a subsidiary
of Territory;
- terminate or vary any material agreement with Territory or a subsidiary
of Territory; or
- accelerate or adversely modify the performance of any obligations of
Territory or any of its subsidiaries in a material respect under any
material agreements, contracts or other legal arrangements,
save that this condition does not apply to the Marketing and Offtake
Agreement between Territory and Noble Resources Limited executed on or
about August 2007 and any financing agreements with Noble in existence at
the date of the Bid Implementation Agreement.
5 Swan Gold Limited loan termination
During the Condition Period Territory enters into an agreement in
relation to the termination of its loan arrangements with Swan Gold
Limited under which Territory is entitled to receive no less than
$6,700,000 in cash.
6 Definitions
In this Schedule:
Agreed Announcement means the joint announcement agreed by the parties in
relation to the Bid substantially in the form set out in Schedule 4.
Announcement Date means the date of release of the Agreed Announcement.
ASIC means the Australian Securities and Investments Commission.
ASX means ASX Limited or the Australian Securities Exchange, as appropriate.
AUD means Australian dollars.
Bid Implementation Agreement means the Bid Implementation Agreement entered
into by Exxaro and Territory on or prior to the Announcement Date.
Bidder`s Statement means the bidder`s statement to be issued by Exxaro with
respect to the Bid Offer.
Business Day means a day (other than Saturday, Sunday or public holiday) on
which banks are open for general banking business in Perth, Western Australia.
CFR means Cost and Freight and, with respect to a named port of destination:
(b) Carriage of goods is to be arranged by the seller;
(c) Risk transfers from the seller to the buyer when the goods pass the
ship`s rail; and
(d) Cost transfer at port of destination, buyer paying such costs as are not
for the seller`s account under the contract of carriage.
Condition Period means the period beginning on the date of this agreement and
ending at the end of the Offer Period.
Corporations Act means the Corporations Act 2001 (Cth).
Exxaro means Exxaro Resources Limited Registration Number 2000/011076/06 (a
public company duly incorporated in South Africa) of Roger Dyason Road,
Pretoria West 0183, South Africa.
Exxaro Group means Exxaro and its related bodies corporate (as defined in the
Corporations Act).
Noble means Noble Group Limited (a company duly incorporated in Bermuda) of
Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and its related
bodies corporate (as defined in the Corporations Act).
Offer means the offer to acquire Territory Shares to be made by Exxaro to
Territory shareholders.
Offer Period means the period during which the Offer is open for acceptance.
Public Authority means any government or any governmental, semi-governmental,
administrative, statutory or judicial entity or authority, or any minister,
department, office or delegate of any government, whether in Australia or
elsewhere. It also includes any self-regulatory organisation established under
statute and any stock exchange.
Register Date means the date set by Exxaro pursuant to section 633(2) of the
Corporations Act.
Relevant Interest has the same meaning as given in sections 608 and 609 of the
Corporations Act.
Territory means Territory Resources Limited ACN 100 552 118 of Ground floor,
23 Ventnor Avenue, West Perth, Western Australia 6005.
Territory Data Room means the virtual data room established by Territory to
provide Exxaro access to information about Territory.
Territory Due Diligence Material means all information (including in
electronic form) relating to the business, assets, liabilities, operations,
profits and losses, financial position and performance and prospects of
Territory provided by Territory to Exxaro in the Territory Data Room.
Territory Option means an option to subscribe for a Territory Share granted by
Territory.
Territory Performance Right means a right granted under Territory`s
performance right plan to acquire by way of issue a Territory Share subject to
the terms of such plan.
Territory Share means a fully paid ordinary share in the capital of Territory
which is on issue as at the Register Date together with any Territory Share
that is issued during the Offer Period as a result of the exercise of a
Territory Option or the vesting of a Territory Performance Right.
Trading Day has the meaning given in the Listing Rules of the ASX.
USD means United States of America Dollars.
Appendix B - Summary of Key Terms of Facility Agreement
Exarro (acting through FirstRand Bank Limited (acting through its Rand
Merchant Bank Division (RMB)) and Territory entered into a Facility Agreement
on 22 May 2011 under which RMB has agreed to provide financing support to
Territory of up to US$36 million (Facility) to satisfy moneys owning to Noble
Resources Ltd and for other working capital purposes (Facility Agreement). A
summary of the terms of the Facility Agreement is set out below. This summary
is not exhaustive and does not constitute a definitive statement of the rights
and liabilities of each of RMB and Territory under the Facility Agreement.
Under the Facility Agreement:
1 The Facility Agreement contains usual commercial terms for a Facility of
this nature.
2 The Facility is to be secured by the provision of:
(a) a mining mortgage over certain mining tenements held by Territory;
(b) a fixed and floating charge over all of the assets and undertakings of
Territory and Territory Iron Pty Ltd;
(c) a share mortgage over the share held by Territory in Territory Iron Pty
Ltd and Territory Land Holdings Pty Ltd; and
(d) a guarantee and indemnity granted by Territory Iron Pty Ltd.
3 The Facility is available for drawing following the satisfaction of usual
conditions precedent for a Facility of this nature until the earlier of:
(a) the Bid lapsing due to the non-satisfaction of conditions or the Bid
being withdrawn;
(b) a Superior Proposal being announced;
(c) if, on or before 10 June 2011, Territory has not offered to Exxaro or its
nominee an unconditional option to subscribe for up to the maximum number
of shares that Territory is able to issue pursuant to any applicable law
at an offer price of $0.46 per share exercisable by Exxaro at any time
within 6 months after the offer of the option (Exxaro Options); and
(d) the final repayment date.
RMB has agreed that the conditions precedent to drawing have been
satisfied, subject to the satisfaction of certain conditions subsequent.
4 The Facility is interest only payable monthly and must be repaid as a
bullet in full at the earlier of
(a) 12 months from the date of first drawdown; and
(b) 15 months from the date of the Facility Agreement.
5 The Facility is also repayable in full in the following circumstances:
(a) if the Bid lapses due to non-satisfaction of the conditions or the Bid is
withdrawn, Territory must repay the Facility in full in 90 days;
(b) if a Competing Proposal is made which is:
(1) not recommended by the board of Territory within 5 Business Days of the
announcement, Territory must repay the Facility in full in a further 90
days;
(2) recommended by the board of Territory, Territory must repay the Facility
in full in 14 days;
(c) if, on or before 10 June 2011, the Exarro Options have not been offered,
Territory must repay the Facility in full 14 days.
(d) if the board of Territory does not recommend the Bid or withdraws,
qualifies or adversely modifies their recommendation of the Bid,
Territory must repay the Facility in full in 14 days.
Date: 23/05/2011 07:10:15 Supplied by www.sharenet.co.za
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