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MTX - Metorex Limited - Joint announcement of a firm intention by Jinchuan to
make an offer to acquire the entire issued and to be issued ordinary share
capital of Metorex ("Jinchuan Firm Intention Announcement") and withdrawal of
cautionary annoucement
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 "Company")
Jinchuan Group Limited
(Registration number 620300000000923)
("Jinchuan")
JOINT ANNOUNCEMENT OF A FIRM INTENTION BY JINCHUAN TO MAKE AN OFFER TO ACQUIRE
THE ENTIRE ISSUED AND TO BE ISSUED ORDINARY SHARE CAPITAL OF METOREX ("JINCHUAN
FIRM INTENTION ANNOUNCEMENT") AND WITHDRAWAL OF CAUTIONARY ANNOUCEMENT
1 INTRODUCTION
Further to the cautionary announcement published on the Securities Exchange
News Service ("SENS") of the JSE Limited ("JSE") on Friday, 17 June 2011
("Second Cautionary Announcement"), the board of directors of Metorex
("Board") has now received a firm intention from Jinchuan to make a cash
offer, which offer may be implemented directly by Jinchuan or through a
wholly-owned subsidiary of Jinchuan ("Bidco"), ("Jinchuan Offer") to
acquire the entire issued and to be issued ordinary share capital of
Metorex ("Shares") which, if implemented, would result in Jinchuan becoming
the registered and beneficial owner of the Shares. Jinchuan is acting as
principal in relation to the Jinchuan Offer and is not acting in concert
with any party.
Jinchuan proposes that the Board implement the Jinchuan Offer by way of a
scheme of arrangement ("Jinchuan Scheme"), which will be implemented in
terms of section 114 of the Companies Act, No. 71 of 2008, as amended,
("Companies Act") and by way of a separate offer to the holders of options
to acquire Metorex shares in terms of the Metorex Share Incentive Scheme
("Options").
Under the terms of the Jinchuan Offer, if implemented, the Metorex
shareholders ("Shareholders") will receive a cash consideration of R8.90
per Share ("Jinchuan Offer Consideration"), which represents a premium of:
- 46% to the closing price of the Shares on the securities exchange operated
by the JSE as at 25 March 2011, being the last business day immediately
prior to the date of publication of the first cautionary announcement
wherein Metorex announced it had entered into discussions ("First
Cautionary Announcement");
- 58% to the volume weighted average price ("VWAP") of the Shares on the
securities exchange operated by the JSE for the 30 trading days up to and
including 25 March 2011, being the last business day immediately prior to
the date of publication of the First Cautionary Announcement;
- 22% to the closing price of the Shares on the securities exchange operated
by the JSE as at 15 June 2011, being the last business day immediately
prior to the date of publication of the Second Cautionary Announcement; and
- 24% to the VWAP of the Shares on the securities exchange operated by the
JSE for the 30 trading days up to and including 15 June 2011, being the
last business day immediately prior to the Second Cautionary Announcement.
2 VALE`S OPPORTUNITY TO MATCH
Shareholders are referred to the joint firm intention announcement of the
Company and Vale S.A. ("Vale") published on SENS on 8 April 2011 ("Vale
Firm Intention Announcement") and the announcement published on SENS on 17
June 2011 announcing the posting of the offer circular ("Vale Offer
Circular") relating to the scheme of arrangement proposed by the Board in
terms of which Vale intends acquiring the issued and to be issued share
capital of Metorex ("Vale Offer").
The independent directors of Metorex ("Independent Board") has retained
KPMG Services (Proprietary) Limited ("KMPG") as independent expert, as
required under section 114(2) and (3) of the Companies Act. KPMG was
retained as the independent expert for the purposes of providing a report
and opinion on the Vale Offer. KPMG has furnished a preliminary opinion
("Preliminary Opinion") to the Independent Board that it considers the
Jinchuan Offer to be fair and reasonable to Shareholders and that the
separate offer to the holders of options to acquire Metorex shares ("Option
Holders") is comparable to the offer to Shareholders. The Preliminary
Opinion, which may be subject to change, is based on information available
to KPMG up to and including 1 July 2011 and is subject to the limitations
and conditions to be set out in the formal opinion to be contained in the
circular to Shareholders in relation to the Jinchuan Offer ("Jinchuan Offer
Circular").
The Board (and the Independent Board), acting in good faith and through the
exercise of their fiduciary responsibilities, and after due consideration
of the Preliminary Opinion prepared by KPMG, have determined that the
Jinchuan Offer would, if implemented in accordance with its terms, result
in a transaction more favourable to Shareholders than the Vale Offer and
accordingly have deemed it a superior offer in relation to the Vale Offer
("Superior Proposal").
Metorex has notified Vale of the Jinchuan Offer and that the Independent
Board has considered it to be a Superior Proposal in relation to the Vale
Offer. Vale has been afforded an opportunity for a period of eight business
days ("Matching Period") to match or better the terms of the Jinchuan
Offer, and it may or may not decide to make an amended offer (such offer if
made, an "Amended Vale Offer").
The Matching Period shall close by no later than 17h00 on Friday, 15 July
2011, whereafter the Board and the Independent Board intend to reconsider
its recommendation of the Vale Offer or, if applicable, consider any
Amended Vale Offer and the Jinchuan Offer. A further announcement to
Shareholders regarding the recommendation of the Independent Board and the
non-independent members of the Board will be made following this meeting.
Shareholders are advised that Jinchuan retains the right to improve the
Jinchuan Offer.
Metorex has not yet approved, recommended or entered into any agreement in
relation to the Jinchuan Offer.
3 DETAILS OF JINCHUAN AND RATIONALE FOR THE JINCHUAN OFFER
Headquartered in Jinchang City, Gansu Province, Jinchuan is China`s largest
producer of nickel, cobalt and platinum group metals, as well as one of the
top three producers of refined copper. Globally, Jinchuan is currently the
fourth largest producer of nickel and the second largest producer of
cobalt.
Jinchuan has an integrated business in non-ferrous metals from mining,
refining and marketing to project engineering and mining equipment
manufacturing, which helps achieve a competitive cost structure and rapid
project development capabilities in the industry. Jinchuan currently
conducts exploration, development and production of non-ferrous metals in
more than 20 countries through subsidiaries, joint-venture companies
and co-operative projects worldwide.
Copper and Africa have been Jinchuan`s two strategic focuses. With copper
smelting and refining capacity already reaching 600,000 tons, Jinchuan
is in the process of increasing its copper production base in Guangxi
Province in Southern China, which is specifically designed to receive and
process imported materials in order to meet the rapidly growing Chinese
market demand. In Africa, Jinchuan has established its Johannesburg
office as its regional headquarters to support investments and operations
in the Republic of South Africa ("South Africa"), the Republic of Zambia
("Zambia"), the Democratic Republic of Congo ("DRC") and other countries.
If the Jinchuan Offer is implemented, Jinchuan plans to establish Metorex
as Jinchuan`s integrated platform for the acquisition, exploration,
development and operation of copper and cobalt projects in Africa.
4 MATERIAL TERMS OF THE JINCHUAN OFFER
The firm intention of Jinchuan to make the Jinchuan Offer, is subject to
the terms and conditions set out in this paragraph 4 and paragraphs 5 to
7 below.
4.1 Jinchuan Offer consideration
Under the terms of the Jinchuan Offer Shareholders will receive a cash
consideration of ZAR8.90 (eight rand ninety cents) per Share and Option
Holders will receive a separate offer from Jinchuan to waive their rights
under their Options, for a consideration equal to the Jinchuan Offer
Consideration per Share which is the subject of the Option, less the strike
price payable upon exercise of the Option, for each Option which is "in
the money", on a net cash cancellation basis. The Jinchuan Offer
Consideration values the issued and to be issued ordinary share capital
of Metorex at ZAR9 111.99 million.
The Jinchuan Offer Consideration is calculated on the assumption that
Metorex will not conduct any capital reduction, make any distributions,
dividends or similar payments for the benefit of Shareholders ("Metorex
Distribution") between 5 July 2011 and the settlement date of the Jinchuan
Offer Consideration. In the event that the Company makes any Metorex
Distribution, the Jinchuan Offer Consideration will be adjusted downwards
by the amount of the Metorex Distribution on a per share basis.
4.2 Jinchuan Offer structure
Jinchuan proposes that the Board implement the Jinchuan Offer by way of
the Jinchuan Scheme and a separate offer to Option Holders.
4.3 Offer to Option Holders
Option Holders will be offered, as consideration for waiving their options,
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 Jinchuan Offer Consideration and the strike price under the
relevant Options, upon the Jinchuan Scheme becoming operative.
4.4 Metorex American Depositary Receipts ("ADRs")
Holders of ADRs will be entitled to vote on the Jinchuan Offer, if
implemented, as provided for under the terms of the depositary agreement
with the Bank of New York Mellon ("Depositary Agreement") and the shares
in Metorex represented by the ADRs will be acquired by Jinchuan under the
terms of the Jinchuan Offer upon the Jinchuan Scheme becoming operative.
Promptly following the completion of the Jinchuan Offer, Jinchuan intends
to terminate the ADR programme and the Depositary Agreement.
4.5 Sable Zinc Kabwe Limited ("Sable")
The disposal or transfer by Metorex of the issued and to be issued share
capital of Sable to a subsidiary of Glencore International plc ("Glencore")
as published on SENS on 8 June 2011, or to any other third party, is not a
condition to the completion of the Jinchuan Offer. In the event that Sable
is disposed of to Glencore, Metorex will retain the proceeds and will not
distribute the proceeds to Shareholders.
5 RIGHT TO IMPROVE THE JINCHUAN OFFER
Jinchuan retains the right to improve the Jinchuan Offer.
6 CONDITIONS PRECEDENT TO COMPLETION OF THE JINCHUAN OFFER
The completion of the Jinchuan Offer will be subject to the fulfilment or
waiver, in whole or in part, (provided, however that the conditions set
forth in paragraphs 6.1.1 to 6.1.5 inclusive may be waived by Jinchuan
unilaterally) of the following conditions by not later than:
6.1.1 17h00 on 19 July 2011 (or any extension of such period by
Jinchuan), Metorex provides Jinchuan with written notice that the
Independent Board has withdrawn its recommendation to
Shareholders that they vote in favour of the scheme of
arrangement proposed by the Board between Metorex and its
Shareholders as set out in the Vale Offer Circular ("Vale
Scheme") and has published such withdrawal on SENS;
6.1.2 17h00 on 19 July 2011 (or any extension of such period by
Jinchuan), Metorex provides Jinchuan with written notice that the
non-independent members of its Board have withdrawn their
recommendation to Shareholders that they vote in favour of the
Vale Scheme and has published such withdrawal on SENS;
6.1.3 24h00 on 23 July 2011 (or any extension of such period by
Jinchuan) (i) Metorex provides Jinchuan with written notice that
the Vale Implementation Agreement has lawfully terminated and
(ii) Metorex has accepted the implementation agreement proposed
by Jinchuan ("Jinchuan Implementation Agreement") by way of a
duly authorised representative of Metorex executing the Jinchuan
Implementation Agreement and providing a copy thereof to Jinchuan
or its legal advisers;
6.1.4 24h00 on 23 July 2011 (or any extension of such period by
Jinchuan), the general meeting of Shareholders convened at 10h00
on Friday 22 July 2011 to consider and if deemed fit, approve
the Vale Scheme ("Vale Scheme Meeting") has been held (and not
adjourned to a later day) and the special resolution proposed to
approve the Vale Scheme has been put to the vote and not adopted
as a result of a failure to procure the required majority,
provided that if Vale makes an Amended Vale Offer on or before 22
July 2011, then should the Vale Scheme Meeting be adjourned to a
date no later than 10 August 2011, in order to provide Jinchuan
with an opportunity to consider whether to improve the terms of
its offer, the date for fulfilment of this condition shall
automatically be extended to the same time on the day immediately
following the date of the reconvened Vale Scheme Meeting and all
references to the Vale Scheme Meeting shall be read in relation
to this condition as such reconvened Vale Scheme Meeting;
6.1.5 the date Metorex enters into the Jinchuan Implementation
Agreement, the Board and the majority of the Independent Board
having undertaken to recommend in the Jinchuan Offer Circular
that Shareholders vote in favour of the resolutions proposed to
implement the Jinchuan Scheme;
6.1.6 the date of the posting of the Jinchuan Offer Circular, the
requisite approvals have been received from the JSE, the Takeover
Regulation Panel ("Takeover Panel") and the Financial
Surveillance Department of the South African Reserve Bank for the
Jinchuan Offer and posting of the Jinchuan Offer Circular;
6.2 In addition to the above conditions the completion of the
Jinchuan Offer will also be subject to the fulfilment or waiver,
in whole or in part, of the following conditions by not later
than:
6.2.1 90 days after the date of publication of this Jinchuan Firm
Intention Announcement (or such later date as Jinchuan or Metorex
may agree in writing), the approval of the Jinchuan Scheme by the
requisite majority of Shareholders, as contemplated in section
115(2) of the Companies Act, and to the extent required in terms
of the Companies Act, the approval by the Long Stop Date (as set
out in paragraph 6.3 below) of the implementation of such
resolution by the High Court of South Africa;
6.2.2 the Long Stop Date, the receipt of all necessary approvals,
consents or waivers ("Consents") from all regulatory bodies,
governmental or quasi-governmental entities or joint venture
shareholders (including waivers of pre-emptive and other rights
that would be triggered by the Jinchuan Scheme) necessary to
implement the Jinchuan Offer and any other Consents from any
third party the failure to obtain which would result in a
Material Adverse Change as more fully detailed in paragraph 6.2.4
below, unconditionally or, to the extent that any such Consents
are subject to any condition, the party or parties adversely
affected by the condition confirming in writing that the
condition is acceptable to it or them, which confirmation shall
not be unreasonably withheld or delayed. Such Consents include,
but are not limited to, the governments of the People`s Republic
of China, the DRC and Zambia, the Takeover Panel, the Chinese,
South African and Zambian competition authorities;
6.2.3 the Long Stop Date, to the extent necessary or required by
Jinchuan, 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 Jinchuan
Offer ("Lender Waivers"); and
6.2.4 by the date on which each of the above conditions referred to in
this paragraph 6 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 Jinchuan 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 or its
subsidiaries. For the purposes of this paragraph 6.2.4, 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)
("Material Adverse Change"), excluding a Material Adverse Change
which can in any way, directly or indirectly, be attributed to
the actions or omissions of Jinchuan including the unilateral
waiver of the conditions set out in 6.2.2.
6.3 The "Long Stop Date" for fulfilment of the above conditions is a
date which is 90 days after the date of publication of this
announcement (or such later date as the Metorex and Jinchuan may
agree in writing), provided that -
6.3.1 if, within the aforesaid period of 90 days (or extension
thereof), the approval of the Jinchuan Scheme by the Shareholders
has occurred, and either Jinchuan or Metorex, acting in good
faith, gives notice in writing to the other of such extension,
then the Long Stop Date will be extended to a date which is 190
days after the publication of this announcement; and
6.3.2 if, within the aforesaid period of 190 days, the only conditions
precedent which remain outstanding are the obtaining of the
Consents relating to the regulatory Consents required, either
Jinchuan or Metorex may, upon notice in writing to the other,
extend the Long Stop Date to a date which is 210 days after the
publication of this announcement, provided that the guarantee
referred to in paragraph 7 is extended or replaced so as to
continue to guarantee Jinchuan`s obligation to pay the Jinchuan
Offer Consideration until the last practical date for
implementation of the Jinchuan Scheme.
6.4 At any time prior to Metorex`s acceptance of the Jinchuan
Implementation Agreement, Jinchuan can extend the date for fulfilment
or waiver any of the conditions to the Jinchuan Offer. After
acceptance of the Jinchuan Implementation Agreement, all of the
conditions can be waived by Bidco on notice to Metorex except for the
conditions in paragraph 6.1.6 and paragraph 6.2.2 in respect of the
regulatory Consents only. Bidco can, after consulting with Metorex
and in accordance with Metorex`s reasonable requests as to the manner
in which such waiver is notified, unilaterally waive third party
Consents.
7 GUARANTEE TO THE TAKEOVER PANEL
Jinchuan has furnished an irrevocable and unconditional bank guarantee from
Bank of China Limited, Johannesburg Branch, a registered South African
bank, for the payment of the Jinchuan Offer Consideration which is in form
and substance acceptable to the Board and which complies with regulation
111(4) and (5) of the Companies Regulations.
8 UNDERTAKINGS
Jinchuan has received irrevocable undertakings from certain Shareholders
representing in aggregate 8.02% of the existing issued ordinary share
capital of Metorex to vote in favour of the Jinchuan Offer.
As at the date of this announcement, providers of irrevocable undertakings
detailed in the Vale Offer Circular are precluded from supporting the
Jinchuan Offer in terms of the irrevocable undertakings provided in respect
of the Vale Scheme ("Vale Irrevocable Undertakings").
The Vale Irrevocable Undertakings shall terminate automatically and with
immediate effect from the earlier of:
- the date upon which all written agreements entered into between Vale
and Metorex relating to the implementation of the Vale Offer have been
terminated;
- ten business days from the date of this announcement in the event that
Vale does not make a revised offer for the entire issued and to be
issued share capital of Metorex for an equivalent or improved
consideration in relation to the Jinchuan Offer Consideration.
9 DE-LISTING OF METOREX
Should the Jinchuan Scheme be implemented, application will be made by
Metorex to the JSE to terminate the listing of Metorex shares on the JSE
and to terminate the ADR programme.
10 SHAREHOLDINGS IN METOREX
Neither Jinchuan, Bidco nor any of their respective directors currently
hold or control any Metorex shares or any options to acquire Metorex
shares.
11 VALE OFFER AND PROCESS
The Vale Offer Circular posted to Shareholders on 17 June 2011 sets out
details of the Vale Offer and Vale Scheme. Shareholders are advised that
the Vale Scheme Meeting has not been postponed and shall proceed as
detailed in the Vale Offer Circular.
12 POSTING OF THE JINCHUAN OFFER CIRCULAR
If Vale does not propose an Amended Vale Offer, or if the proposed Amended
Vale Offer does not result in the Jinchuan Offer ceasing to be considered
to be a Superior Proposal, it is anticipated that the Jinchuan Offer
Circular will be posted to Shareholders within 20 business days of the date
of this Jinchuan Firm Intention Announcement in terms of regulation 102(2)a
of the Companies Regulations, 2011, subject to any extension thereto
granted upon application to the Takeover Panel.
13 WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Following the release of this announcement, the Second Cautionary
announcement is hereby withdrawn and caution is no longer required to be
exercised by Shareholders when dealing in Metorex shares.
14 RESPONSIBILITY STATEMENT
Jinchuan and the Independent Board of Metorex accept responsibility for the
information contained in this announcement insofar as it relates to
Jinchuan and Metorex respectively. 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 contained herein.
Johannesburg
5 July 2011
Lead financial advisor and investment bank to Metorex: Standard Bank
Joint financial advisor and Transaction Sponsor to Metorex: One Capital
Legal advisor to Metorex: Cliffe Dekker Hofmeyr
Financial advisors to Jinchuan: Goldman Sachs International
Joint legal advisors to Jinchuan: Allen & Overy and Edward Nathan Sonnenbergs
Inc.
The Standard Bank of South Africa Limited, which is authorised and regulated
in South Africa by the Financial Services Board, is acting exclusively for
Metorex and no one else in connection with the Jinchuan 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 Jinchuan Offer.
One Capital Advisory (Proprietary) Limited is acting exclusively for Metorex
and no one else in connection with the Jinchuan 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 Jinchuan Offer.
Goldman Sachs International, acting through its Johannesburg branch, which
is authorised and regulated in the United Kingdom by the Financial Services
Authority and authorised and regulated in South Africa by the Financial Services
Board, is acting for Jinchuan and no one else in connection with the transaction
referred to herein and will not be responsible to any person other than Jinchuan
for providing the protections afforded to clients of Goldman Sachs International
or for advising any other person in relation to such transaction or any
agreement or transaction referred to in this document.
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 Takeover Regulations 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. Shareholders are advised to read carefully the formal documentation
in relation to the Jinchuan Offer once it has been dispatched. The Jinchuan
Offer will be made solely through the Jinchuan Offer Circular, which will
contain the full terms and conditions of the Jinchuan Offer. Any decision to
approve the Jinchuan Offer or other response to the proposals should be made
only on the basis of the information in the Jinchuan Offer Circular.
Date: 05/07/2011 15:09:29 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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