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DRD - DRDGOLD Limited - DRDGOLD suspends financial assistance to Blyvoor

Release Date: 23/06/2011 16:00
Code(s): DRD
Wrap Text

DRD - DRDGOLD Limited - DRDGOLD suspends financial assistance to Blyvoor DRDGOLD LIMITED (Incorporated in the Republic of South Africa) (Registration number 1895/000926/06) JSE share code: DRD ISIN: ZAE000058723 Issuer code: DUSM Nasdaq trading symbol: DROOY ("DRDGOLD") DRDGOLD SUSPENDS FINANCIAL ASSISTANCE TO BLYVOOR DRDGOLD shareholders are advised that the board of directors of DRDGOLD ("DRDGOLD Board") has decided to suspend financial assistance to DRDGOLD`s 74%-owned subsidiary, Blyvooruitzicht Gold Mining Company Limited ("Blyvoor"). The decision follows the promulgation of the new Companies Act, No. 71 of 2008, as amended ("the Act") that requires directors of parent companies to seek the consent of the parent company shareholders and then to consider the effects on the solvency and liquidity of the parent company as conditions precedent to the provision of financial assistance to subsidiaries. Blyvoor`s production has been trending down as a result of a drop in grade, public holiday interruptions and seismicity-related work stoppages, while costs have increased due mainly to higher electricity charges, and particularly power utility Eskom`s winter tariff which adds R11 million a month to overhead costs. Blyvoor requires an estimated R80 million in financial assistance through to December 2011. DRDGOLD has maintained an internal revolving credit facility for Blyvoor since it came out of judicial management in April 2010, but this facility is now fully drawn down. The board of directors of Blyvoor ("Blyvoor Board") has, in response to the DRDGOLD Board`s decision, resolved to begin business rescue proceedings for Blyvoor in terms of Chapter 6 of the Act. The business rescue process provided for in Chapter 6 of the Act replaces the judicial management process in the previous Companies Act, No. 61 of 1973, as amended. The DRDGOLD Board supports the decision of the Blyvoor Board, and expressed the view that the business rescue proceedings are an improvement on judicial management in a number of key respects. Most notable is the fact that the business rescue practitioner is a professional appointed by the distressed company from a pool of certified rescue practitioners, whose function it is to rescue the business. Judicial managers, by contrast, were appointed by the Master of the High Court from a pool of people whose main business involved the liquidation of companies. The Act also provides clear guidelines on the business rescue process, which is designed to run for a pre-determined three-month period, unless extended by a court application. During this time, the rescue practitioner must formulate and implement a rescue plan with the co-operation of the distressed company`s board of directors. Blyvoor would enjoy a moratorium against civil claims while under rescue proceedings. Blyvoor`s Board will appoint the rescue practitioner as soon as it receives a list from the Commissioner of Companies of accredited practitioners. Commenting on DRDGOLD`s previously-announced intention to dispose in whole or in part of its 74% interest in Blyvoor, Chief Executive Officer Niel Pretorius said that discussions are ongoing with three parties, and that business rescue proceedings will not interfere with these. "In fact the business rescue process will preserve the asset while it seeks a solution for its cash flow issues. It will also provide Blyvoor with an opportunity to make submissions to The Industrial Development Corporation for development capital, canvass Eskom to reconsider cancellation or deferral of winter tariffs, and continue negotiations with neighbouring mines on the development of shared opportunities," Pretorius said. Roodepoort 23 June 2011 Sponsor One Capital Date: 23/06/2011 16:00:03 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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