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Supplementary Target Statement 31 May 2013
FIRESTONE ENERGY LIMITED
(Incorporated in Australia)
(Registration number ABN 058 436 794)
Share code on the JSE Limited: FSE
Share code on the ASX: FSE
ISIN: AU000000FSE6
(SA company registration number 2008/023973/10)
("FSE" or "the Company")
About Firestone Energy
Firestone Energy Limited is an
independent, Australian exploration and
development company listed on the
Australian Stock Exchange Ltd (ASX) and
the Johannesburg Stock Exchange (JSE).
31 May 2013 Firestone Energy has entered into a Joint
Venture with Sekoko Resources (Pty) Ltd
Takeover bid by Waterberg Coal Company Limited – through which Firestone Energy has
acquired the right to 60% participation
Supplementary Target's Statement interests in the Waterberg Coal Project
located in Lephalale area, Limpopo Province,
We attach, by way of service pursuant to item 14 of section 633(1) of South Africa.
the Corporations Act 2001 (Cth) a copy of the first Supplementary
The first stage of the project is to develop the
Target's Statement of Firestone Energy Limited in response to the off-
Smitspan mine which has a substantial
market takeover bid by Waterberg Coal Company Limited (formerly measured thermal coal resource and to
known as Range River Gold Limited) (Bidder). develop the Vetleegte mine which is a
substantial metallurgical coal deposit.
The Supplementary Target's Statement was lodged with the
Australian Securities and Investments Commission and provided to Firestone Energy is committed to becoming a
the Bidder today. profitable independent coal and energy
producer at its projects in South Africa,
thereby making a substantial contribution to
Yours sincerely,
the social and economic development of the
Lephalale area and South Africa.
Corporate Details
ASX: FSE
JSE: FSE
David Knox Issued Capital:
Chief Executive Officer 3,549 million ordinary shares
www.firestoneenergy.com.au
Major Shareholders:
Tel: Australia (+61 08 9287 4600) Waterberg Coal Company
South Africa (+27 11 706 3548) Sekoko Resources (Pty) Ltd
Linc Energy Ltd
BBY Nominees Pty Ltd
Directors and Officers
Non Executive Directors:
Mr Tim Tebeila (Chairman)
David Perkins (Deputy Chairman)
Dr Pius Kasolo
Ben Mphahlele
Kobus Terblanche
Oren Zohar
Jack James
Officers:
Mr David Knox CEO
Ms Amanda Matthee CFO
Mr Jerry Monzu Company Secretary
Contact:
Suite B9, 431 Roberts Road
Subiaco, Western Australia 6008
Tel: +61 (08) 9287 4600
FIRESTONE ENERGY LIMITED
SUPPLEMENTARY
TARGET'S STATEMENT
The Board maintains their recommendation that you REJECT the Offer
and DO NOTHING in relation to any documents received from the
Waterberg Coal Company Limited (formerly known as Range River Gold
Limited).
This Supplementary Target's Statement supplements, and is to be read together with,
the Target's Statement issued by Firestone Energy Limited in response to the off-
market takeover bid made by the Waterberg Coal Company Limited (formerly known
as Range River Gold Limited) for all the ordinary shares in Firestone Energy Limited.
THIS DOCUMENT IS IMPORTANT
This is an important document and requires your immediate attention. If you are in doubt as to
the course of action you should follow, you should consult your accountant, solicitor, investment
adviser or other professional adviser immediately.
Corporate Adviser Legal Adviser JSE Sponsor
BBY Limited Kelly & Co. Lawyers River Group
IMPORTANT NOTICES & DISCLAIMERS
Nature of this document
This document is the first Supplementary Target's Statement (Supplementary Target's
Statement) to the Target's Statement dated 18 March 2013 (Target's Statement) issued by FSE
and lodged with ASIC and the Waterberg Coal Company Limited (WCC) (formerly known as
Range River Gold Limited) on the same date. This Supplementary Target's Statement is in
response to the Offer made by WCC pursuant to the first supplementary bidder's statement issued
on 19 March 2013, the second supplementary bidder's statement and the Notice of Revised Offer
issued on 27 March 2013, and the third supplementary bidder's statement dated 24 May 2013
which were served on FSE on the same dates respectively.
On 17 May 2013, the Takeovers Panel made a declaration of unacceptable circumstances in
relation to WCC and declared that its original and supplementary bidder's statements are deficient.
The Takeovers Panel ordered, among other things, WCC to issue the third supplementary bidder's
statement to address corrective disclosure as required by the Takeovers Panel. This Supplementary
Target's Statement supplements, and is to be read together with, the Target's Statement.
Defined terms
Unless the context requires otherwise, defined terms in the Target's Statement have the same
meaning in this Supplementary Target's Statement. This Supplementary Target's Statement
prevails to the extent of any inconsistency with the Target's Statement.
Responsibility for information
Except as otherwise stated, the information that is contained in this Supplementary Target's
Statement, including information as to the opinions and decisions of the Directors of FSE, has
been prepared and provided by FSE and is the responsibility of FSE.
No account of personal circumstances
This Supplementary Target's Statement does not take into account your individual objectives,
financial situation or particular needs. It does not contain personal advice. The Directors
encourage you to seek independent financial and taxation advice before making a decision as to
whether or not to accept the Offer.
ASIC and ASX
A copy of this Supplementary Target's Statement has been lodged with ASIC and given to the
ASX. None of ASIC, ASX or any of their respective officers take any responsibility for the
content of this Supplementary Target's Statement.
Foreign jurisdictions
The release, publication or distribution of this Supplementary Target's Statement in jurisdictions
other than Australia may be restricted by law or regulation in such other jurisdictions and persons
who come into possession of it should seek advice on and observe any such restrictions. Any
failure to comply with such restrictions may constitute a violation of applicable laws or regulations.
This Supplementary Target's Statement has been prepared having regard to Australian disclosure
requirements and Australian accounting standards. These disclosure requirements and accounting
standards may be different from those in other countries.
Date of this Supplementary Target's Statement
This Supplementary Target's Statement is dated 31 May 2013.
Key Dates
Event Date
Date of Bidder's Offer 14 February 2013
Date of the Target's Statement 18 March 2013
Date of First Supplementary Bidder's Statement 19 March 2013
Date of Second Supplementary Bidder's Statement 27 March 2013
Date of Third Supplementary Bidder's Statement 24 May 2013
Reinstatement to official quotation of FSE securities 28 May 2013
Date of this Supplementary Target's Statement 31 May 2013
Closing of Offer Period (unless extended or withdrawn) 7 June 2013
FSE Shareholder Information
FSE has established a shareholder information line which Shareholders may call if they have any
queries in relation to the Offer. The telephone number for the shareholder information line is 1800
532 564 or for international calls +61 2 8256 3252.
REJECT the Offer
The Board of Firestone maintains their recommendation that shareholders REJECT WCC’s inadequate, unsolicited and
opportunistic Offer.
You should do nothing in relation to any
documents received from WCC.
How to REJECT the Offer
Simply do nothing
Ignore the documents sent to you by WCC
Ignore the phone calls, e-mails and correspondence that you
may receive from WCC
REASONS TO REJECT THE OFFER
The Board recommends that you REJECT the inadequate, unsolicited and opportunistic Offer
for the following key reasons:
The Independent Expert Report has re-iterated the Independent Expert's conclusion
1 that the Offer is NOT Fair and NOT Reasonable for non-associated FSE
shareholders
The Offer does NOT compensate Firestone's Shareholders for the strategic nature and
2 the inherent value of Firestone’s assets
WCC paid a significantly higher price to acquire its interest in FSE and FSE’s assets
3 from Sekoko
The Offer will dilute existing FSE shareholders in their effective ownership of the
assets of Firestone
Based on the Third Supplementary Bidder’s Statement issued by WCC on [insert] May
2013, the dilution impact of the Offer for FSE shareholders in their indirect economic
interest in the Waterberg Project is illustrated below:
Indirect Economic Interest in
4 the Waterberg Project
Current Status (without the Takeover) 60.00%
If WCC completes 100% Takeover of FSE 36.00%
If WCC then issue 89,625,000 WCC Shares as 29.00%
intended
If the SASA facility is then converted into 14.50%
WCC Shares
The Board believes that the FSE share price will re-rate over the longer term as FSE
5 moves closer to production of the Waterberg Project
6 WCC’s Offer is a scrip bid which is an inadequate form of consideration
WCC’s Offer has been timed opportunistically to destabilise and distract FSE and to
7 transfer the value in FSE to WCC at a time just prior to FSE achieving critical
milestone events
WCC’s Offer involves listing WCC on the JSE AltX board. FSE believes that the JSE
8 main board provides better access to capital, more corporate credibility and better
liquidity for shareholders than being listed on the AltX
9 WCC’s Offer may have adverse taxation implications for FSE Shareholders
1. REVISED OFFER
1.1 Offer Consideration
WCC 1 has revised its Offer to 1.25 pre-consolidation WCC share for every 2 FSE Shares you own
(Revised Offer). Following the consolidation of WCC's issued securities, the consideration is 1
post-consolidation WCC share for every 16 FSE Shares you own.
The form of consideration, being the offer of WCC shares remains unchanged.
1.2 Conditions
The second supplementary bidder's statement declared the Revised Offer free from all defeating
conditions. Therefore, the Revised Offer is free from all conditions set out in section 1.9(a) of
Annexure A of the first bidder's statement dated 14 February 2013 and the additional condition set
out in section 5.3 of the first supplementary bidder's statement dated 19 March 2013.
We note that pursuant to the Corporations Act, the condition with respect to WCC obtaining a
secondary listing on the AltX of JSE Limited cannot be waived. Accordingly, the Revised Offer is
still subject to that condition.
2. OVERVIEW OF RECENT DEVELOPMENTS
20 March 2013 WCC issued a substantial shareholder notice showing that WCC's voting
power in FSE is 5.670%.
2 April 2013 WCC announced that it completed its acquisition of Ariona on 28 March
2013. WCC also announced that it waived all of the outstanding conditions
precedent to completion occurring under the heads of agreement for the
acquisition of Ariona.
5 April 2013 WCC announced to the market that the Share Purchase Agreement (SPA)
between Ariona, Sekoko Resources (Proprietary) Limited, Sekoko Coal
(Proprietary) Limited and WCC was varied to provide that the number of FSE
Shares that Ariona acquired from Sekoko was reduced (from 800 million for a
purchase price of $8 million) to 480 million FSE Shares for a purchase price
of $4.8 million. We note that 480 million FSE Shares equates to 13.52% of
the ordinary shares on issue in FSE.
WCC issued a substantial shareholder notice showing that WCC's voting
power in FSE is 19.203%.
9 April 2013 WCC issued a substantial shareholder notice showing that WCC's voting
power in FSE is 23.356%.
Range River Group Limited changed its name to the Waterberg Coal Company Limited. Its ASX code has also
changed from ASX:RNG to ASX:WCC.
10 April 2013 WCC announced that it has completed the SPA between Ariona, Sekoko Coal
and Sekoko Resources and is now a fully owned subsidiary of Ariona. As a
result, Ariona also acquired a 10% interest in the Waterberg Coal Project.
11 April 2013 WCC issued a substantial shareholder notice showing that WCC's voting
power in FSE is 24.622%.
15 April 2013 WCC issued a substantial shareholder notice showing that WCC's voting
power in FSE is 27.420%.
16 April 2013 FSE announced an update on funding negotiations with third parties
17 April 2013 WCC issued a substantial shareholder notice showing that WCC’s voting
power in FSE is 42.07%.
17 April 2013 Sekoko Resources Pty Ltd issued a substantial shareholder notice showing
that Sekoko’s voting power in FSE is 16.13%.
19 April 2013 FSE made Application to the Takeovers Panel
17 May 2013 The Takeovers Panel made a declaration of unacceptable circumstances with
respect to WCC and made a number of final orders.
28 May 2013 FSE announced that it had requested to the ASX that the voluntary
suspension of its securities be lifted, as negotiations with investors were
unlikely to conclude until the outcome of the takeover offer by WCC is
known.
28 May 2013 Reinstatement to official quotation of FSE securities.
28 May 2013 FSE announced the results of an interim Resource Statement and confirmed
that the Bankable Feasibility Study is scheduled to be completed by the end of
June 2013.
3. REJECT WCC'S OFFER
The Board continues to believe that the Revised Offer is materially inadequate and opportunistic.
Accordingly, your Board maintains their recommendation that you REJECT the Revised Offer
and DO NOTHING in relation to any documents received by WCC.
4. REASONS FOR RECOMMENDATION
Directors Jack James (James) and Oren Zohar (Zohar) agree with the recommendation of the
Board to REJECT the Revised Offer. In addition, James and Zohar note the following:
1. During the period from 17 December 2012 (the date that WCC announced its Offer) to
the date of this document, no firm competing proposal has emerged either in respect of
the funding or control of FSE or the development of the Waterberg Project.
2. Funding for the Waterberg Project will involve the further issue of equity including
convertible notes, shares or other equity instruments which will likely dilute current
shareholders' interests in FSE in any event.
3. In respect of Item 5 of "Reasons to Reject the Offer" above, James and Zohar believe that
it is unlikely that the FSE share price will re-rate in the absence of changes to the funding
structure and financial position of FSE.
4. Given the current share price of FSE, it is uncertain as to whether FSE will be able to fund
any equity component of the project financing required to develop the Waterberg Project.
5. HOW TO WITHDRAW YOUR ACCEPTANCE
If you have accepted WCC's Offer, you now have the right to withdraw your acceptance. The
Board recommends that if you have accepted WCC's Offer, you should withdraw your acceptance.
You may give notice of your withdrawal pursuant to clause 10 of, and in the form attached to
WCC's third supplementary bidder's statement. We note that any acceptances must be withdrawn
within 10 days of the date of dispatch of WCC's third supplementary bidder’s statement.
6. OTHER MATERIAL FSE ANNOUNCEMENTS
6.1 Termination of the Investment Agreement
On 2 April 2013, FSE announced that the second stage completion did not occur under
the Restated Investment Agreement with Ariona, BBY Nominees Pty Ltd (BBY) and
Jaguar Funds Management Limited. The second stage completion failed to occur because
Ariona (which was acquired by WCC on 27 March 2013) did not have funds available at
second completion to enable the completion of the Investment Agreement.
The WCC Offer states that WCC will raise over $65 million of funding for the Waterberg
Coal Project. Whilst the Offer is not conditional on raising these funds, the ability of
WCC to raise these funds (or not) will impact the capitalisation and funding pressures of
WCC to advance the Waterberg Coal Project.
6.2 Financial Statements
On 8 March 2013, FSE announced its 2012 half-year financial report. FSE holders should
consider the financial report in considering whether to accept or reject the Revised Offer.
6.3 Independent Expert's Opinion on Revised Offer
On 7 March 2013, Deloitte Corporate Finance Pty Limited (Independent Expert) issued
an independent experts report in relation to the Offer (IER). The IER was included with
the Target’s Statement.
On 11 April 2013, FSE announced that the Independent Expert had considered and
analysed the effect of the new information set out in the first and second supplementary
bidder's statements, in particular, the Revised Offer.
The Independent Expert concluded that its original opinion set out in the IER has not
changed and that the Revised Offer is neither fair nor reasonable to FSE's holders.
6.4 BBY rejects WCC Revised Offer
On 11 April 2013, FSE announced BBY Nominees Pty Ltd's intention to reject the
Revised Offer.
BBY on behalf of its clients is a major shareholder of FSE holding 16.9% of the ordinary
shares on issue in FSE. BBY also holds 16 million convertible notes issued by FSE.
FSE notes that, should BBY continue to reject the Revised Offer, WCC will be unable to
proceed to a compulsory acquisition of FSE as it would be unable to obtain a full
beneficial interest in at least 90% of the shares in FSE.
6.5 Update on Funding Negotiations
On 1 May 2013, FSE announced an update on Funding Negotiations with third parties.
FSE has entered into discussions with interested parties and is currently in the early stages
of formulating offers. We note that interested parties have indicated that they would prefer
to wait until the outcome of the takeover offer with WCC is known and an investment
path is clear and understood before Funding Negotiations proceed.
6.6 Application to the Takeovers Panel
On 19 April 2013, FSE announced that it had lodged an application with the Takeovers
Panel in relation to the WCC Offer.
The Takeovers Panel decided to conduct proceedings and on 17 May 2013, the Takeovers
Panel issued its final orders and made a declaration of unacceptable circumstances in
relation to WCC.
Shareholders may obtain further information about FSE’s Takeover Panel proceedings by
visiting www.takeovers.gov.au.
7. CONSENTS
7.1 Consents
The following persons have given and have not, before the date of this Supplementary Target’s
Statement, withdrawn their consent to the inclusion of the information in this Supplementary
Target’s Statement in the form and context in which it is included, and to all references in this
Supplementary Target’s Statement to that information in the form and context in which they
appear:
(a) each Director of FSE – to be named in this Supplementary Target’s Statement and to the
inclusion of statements made by them;
(b) Kelly & Co. Lawyers has given and has not, before the date of this Supplementary Target’s
Statement, withdrawn its consent to the inclusion of its name in this Supplementary
Target’s Statement as legal adviser to FSE;
(c) BBY Limited has given and has not, before the date of this Supplementary Target’s
Statement, withdrawn its consent to the inclusion of its name in this Supplementary
Target’s Statement as corporate adviser to FSE;
(d) River Group has given and has not, before the date of this Supplementary Target’s
Statement, withdrawn its consent to the inclusion of its name in this Supplementary
Target’s Statement;
(e) Deloitte Corporate Finance Pty Limited has given and has not, before the date of this
Supplementary Target’s Statement, withdrawn its consent to the inclusion of its name in
this Supplementary Target’s Statement as Independent Expert to FSE; and
(f) Each person named above as having given its consent to the inclusion of a statement or to
being named in this Supplementary Target’s Statement:
(a) does not make, or purport to make, any statement in this Supplementary Target’s
Statement or any statement on which a statement in this Supplementary Target’s
Statement is based other than, in the case of a person referred to above as having
given their consent to the inclusion of a statement, a statement included in this
Supplementary Target’s Statement with the consent of that person; and
(b) to the maximum extent permitted by law, expressly disclaims and takes no
responsibility for any part of this Supplementary Target’s Statement, other than a
reference to its name and, in the case of a person referred to above as having given
their consent to the inclusion of a statement, any statement or report which has
been included in this Supplementary Target’s Statement with the consent of that
party.
7.2 Date of Supplementary Target’s Statement
This Supplementary Target’s Statement is dated 31 May 2013, which is the date on which it
was lodged with ASIC and sent to the ASX.
7.3 Approval of Supplementary Target’s Statement
This Supplementary Target’s Statement has been approved by a resolution of the Directors
of FSE on 30 May 2013.
Johannesburg
31 May 2013
Sponsor
River Group
Date: 31/05/2013 10:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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