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Update on Acquisition, proposed specific issue, waiver of offer and renewal of cautionary.
Miranda Mineral Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/001940/06)
Share code: MMH ISIN: ZAE000074019
(“Miranda” or “the Company”)
ANNOUNCEMENT REGARDING:
- AN UPDATE ON ACQUISITION BY MIRANDA OF AN EFFECTIVE 50% PARTICIPATION IN
BENICON COAL PROPRIETARY LIMITED (“BENICON”) WHICH IN TURN HOLDS 60% OF
THE ENTIRE ISSUED SHARE CAPITAL OF NKOMATI ANTHRACITE PROPRIETARY LIMITED
(“NKOMATI”);
- A PROPOSED SPECIFIC ISSUE OF SHARES FOR CASH;
- A WAIVER OF A MANDATORY OFFER TO SHAREHOLDERS; AND
- A RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders are referred to the various announcements regarding the proposed acquisition by the
Company of an effective 50% participation in Benicon (“the Benicon Acquisition”), which in turn
holds 60% of Nkomati, the most recent of which being that of 3 March 2014. Since then, the
directors have been considering various related ideas and proposals the objective being to
revitalise and strengthen both the business case and capital fortitude of the Company.
Shareholders are aware that Miranda is a company in the process of transition. The first leg of
such transition has seen the acquisition of near term production assets. The directors believe that
implementation of the Benicon Acquisition by means of and in conjunction with the specific share
issue (“Specific Share Issue”) dealt with in paragraph 3 below, coupled with production delivered
over the longer term from such assets, will establish the Miranda group as an emerging supplier of
high-quality anthracite in KwaZulu-Natal, South Africa, thereby positioning it as a serious player in
that region.
The purpose of this announcement is to provide shareholders with an update of the Benicon
Acquisition as well details of the Specific Share Issue and matters associated therewith (the
Transactions”).
2. The Benicon Acquisition
The detailed terms of the Benicon Acquisition as embodied in the “the Sale of Shares and Claims
Agreement” (concluded on 26 February 2014 between Sentula Mining Limited (“Sentula”), Miranda,
Mochiba Investments Proprietary Limited (“Mochiba”), Benicon and Kutlwano Investment Holdings
Proprietary Limited (“Kutlwano”)) as amended by a first addendum thereto concluded on 27
February 2014, have already been disclosed to shareholders in the announcement of 3 March
2014.
The Specific Share Issue will allow for Miranda and Kutlwano to fulfil their obligations in terms of the
Sale of Shares and Claims Agreement and ensure that the Benicon Acquisition is implemented in
accordance with its terms. Shareholders will recall that Kutlwano is the special purpose joint
venture company established for purposes of the Benicon Acquisition and is equally owned and
controlled by Miranda and Mochiba, a Black Female Economic Empowerment company.
As a consequence, inter alia, of the Specific Share Issue and its interconditionallity with the Benicon
Acquisition, the Transactions are classified as a category 1 transaction in terms of the Listings
Requirements of the JSE Limited (“JSE”) necessitating the need for shareholder approval.
Shareholders are referred to paragraph 5 for an update on the various conditions precedent to the
Benicon Acquisition.
3. Specific Share Issue to Valinger Resources Limited (“Valinger”) and information on Valinger
At the date of the 3 March 2014 announcement referred to in paragraph 1 above, the directors had
intended to procure third party debt financing for purposes of funding the settlement of Miranda’s
50% portion of the amount owed by Nkomati to Sentula under an existing loan facility agreement
being R50 000 000. However, the directors have since resolved to rather pursue a specific issue of
shares for cash to targeted identified prospective investors. Accordingly, on 13 May 2014
agreement was reached with Valinger, a company incorporated in Isle of Man, whereby, subject to
the conditions precedent referred to in paragraph 5 below (which it is important to note includes the
provision by Valinger of a bank guarantee to Miranda’s satisfaction for the full Subscription Price, as
defined below, within 10 business days of the signature date of the Valinger Subscription
Agreement, as defined below), Valinger will subscribe for 760 000 000 shares in Miranda at a
subscription price of 12.5 cents per share (“Subscription Price”) thereby raising R95 000 000 for the
Company (“Valinger Subscription Agreement”). The Subscription Price was determined relative to
the 30 day volume weighted average price (“VWAP”) of a Miranda share on the JSE as at 28
February 2014 and equates to a 11.31% discount to this VWAP.
Valinger is part of the Valinger Group of companies focused on the development of mineral and
energy resources and the marketing of the commodities produced from the said resources. Subject
to and post implementation of the Transactions, Valinger will own 51.66% of Miranda’s issued
share capital and will accordingly become the Company’s controlling shareholder.
Valinger was founded by Marc Veitch who is the current president of the group. Valinger has
developed its business by entering into bespoke agreements with select junior miners who require
their financial, technical, operational and marketing input to develop their resources.
By making a substantial investment into Miranda, Valinger is expressing confidence in the future
prospects for the Miranda group as well as in the ability of management to unlock and to deliver to
shareholders and other stakeholders the inherent value in the Miranda group.
In terms of the Valinger Subscription Agreement, which contains various terms and conditions
typical to and inherent in agreements of such nature, details of which will be set out in the circular to
shareholders referred to in paragraph 6 below, the monies so raised by the Company will be utilised
as follows:
- R50 000 000 towards the acquisition costs for the Nkomati mine project and/or any obligation
arising in terms of the Sale of Shares and Claims Agreement;
- R20 000 000 towards the working capital required to ensure that the Nkomati mine project is in
full operation and producing marketable product within 6 months of the closing date of the
Valinger Subscription Agreement, or such later date as the Company notifies Valinger in writing;
- R5 000 000 towards the working capital required to evaluate what is required to develop the
Sesikhona mine project to full operation within 6 months of the closing date of the Valinger
Subscription Agreement, or such later date as the Company notifies Valinger in writing;
- R2 000 000 towards the working capital required to evaluate what is required to develop the
Burnside mine project within 12 months of the closing date of the Valinger Subscription
Agreement, or such later date as the Company notifies Valinger in writing; and
- R18 000 000, or remaining balance towards the Company’s head office and company
administration costs for the period of 12 months after the closing date of the Valinger
Subscription Agreement, or such later date as the Company notifies Valinger in writing.
The Valinger Subscription Agreement also makes provision, for subject to the Companies Act, 2008
(Act No. 71 of 2008), as amended (“Companies Act”), the Listings Requirements of the JSE and the
Company’s MOI, for Valinger being granted representation on the board of directors of the Company
as from the issue date of the shares comprising the Specific Share Issue as well as Valinger’s right,
but not obligation, to participate in all future financings by Miranda so as to maintain its pro rata
shareholding in Miranda, post the Specific Share Issue.
The Valinger Subscription Agreement also provides that Miranda will become liable for a break fee
equal to 1% (one percent) of the total proposed proceeds of the Specific Share Issue i.e. R950 000
should the Valinger Subscription Agreement fail to be implemented as a direct result of Miranda
failing to use its reasonable endeavours to procure the fulfilment of the conditions precedent listed in
5.2.1, 5.2.2 and 5.2.7 below as well as any condition precedent listed in the Sale of Shares and
Claims Agreement. For the avoidance of doubt, should any condition precedent fail but it can be
shown that Miranda did use its reasonable endeavours and did co-operate in good faith in attempting
to procure its fulfilment it shall not be liable for the break fee.
4. Waiver of mandatory offer to shareholders and Takeover Regulation Panel (“TRP”)processes
The Specific Share Issue will result in Valinger, post the implementation of the Transactions,
holding 51.66% of Miranda’s issued share capital. Accordingly, in terms of section 123 of the
Companies Act Valinger will be required to make a mandatory offer to all shareholders of the
Company (other than Valinger) offering to acquire their shares at the Subscription Price, namely
12.5 cents per share.
Regulation 86(4) of the Companies Act Regulations, 2011, as amended (“Companies
Regulations”), states that independent holders of more than 50% of the general voting rights of all
of the issued securities of an affected company may resolve to waive the benefit of such a
mandatory offer to be made in terms of section 123 of the Companies Act (“Waiver of Offer to
Shareholders”). In this regard, the Valinger Subscription Agreement contains a condition precedent
such that Valinger will not proceed with and partake in the Specific Issue unless the required
Waiver of Offer to Shareholders is obtained.
In conjunction with Regulation 86(4), Regulation 86 (7) of the Companies Regulations requires that
a fair and reasonable opinion be provided to shareholders when an approach to shareholders is
pursued seeking their approval for a Waiver of Offer to Shareholders. In this regard BDO, as
independent financial expert, has been appointed by the Company to provide the required fair and
reasonable opinion.
The substance of BDO’s opinion will be made known to shareholders as soon as possible and will
be included in the circular to shareholders referred to in paragraph 7 below.
In terms of TRP processes as regards the sought after Waiver of Offer to Shareholders, Guideline
2/2011 issued by the TRP sets out the process to be followed by a company when seeking such
waiver. In this regard, the circular to shareholders will provide comprehensive details of and the
time frames for the required action by shareholders.
5. Conditions precedent
As explained above, the various agreements in respect of the Benicon Acquisition, and the Valinger
subscription, and/or addenda thereto, each have their own distinct terms and conditions typical to
and inherent in agreements of such nature. As a consequence it is neither practicable nor of value
to describe each and every one of them in this announcement. Accordingly, what follows below, are
considered by the directors to be the main conditions attached to the Transactions.
5.1 Conditions precedent and other approvals required specific to the Benicon Acquisition
As of even date, implementation of the Benicon Acquisition remains subject to the fulfillment of
or, where possible, waiver of the following conditions precedent and/or other approvals
required, namely:
5.1.1 shareholders ratifying and approving, by ordinary resolution, the Benicon Acquisition
and associated agreements;
5.1.2 as a provision of the Benicon Acquisition agreement, the “Bankfontein Disposal”,
has been completed being the registration of transfer at the applicable deeds
registries office of South Africa of the Bankfontein Property (as defined in the Sale
of Shares and Claims Agreement) into the name of Benicon Mining Proprietary
Limited (“Benicon Mining”), pursuant to a sale agreement entered into or to be
entered into between Benicon and Benicon Mining in terms of which Benicon will sell
the Bankfontein Property to Benicon Mining for a consideration of R1 187 143.42,
which consideration will be paid by way of a reduction of Benicon Mining’s loan
account against Benicon to nil;
5.1.3 the Guarantee, Pledge and Cession Agreement having become unconditional in
accordance with its terms, save for any condition which requires the Benicon
Agreement to become unconditional;
5.1.4 shareholders of Sentula in general meeting, to the extent required, approving the
Benicon Acquisition;
5.1.5 all regulatory approvals, including approvals, as required, from the Financial
Surveillance department of the South African Reserve Bank (the "South African
Reserve Bank"), the TRP and the JSE, will have been obtained and/or complied
with; and
5.1.6 Sentula has received a copy of a special resolution passed by the shareholders of
Miranda approving the granting by Miranda of financial assistance to Nkomati.
5.2 Conditions precedent specific to the Specific Issue
As of even date, implementation of the Specific Issue remains subject to the fulfillment of or,
where possible, waiver of the following conditions precedent, namely:
5.2.1 shareholders ratifying and approving by special resolution the Valinger Subscription
Agreement and the Specific Share Issue;
5.2.2 independent holders of more than 50% of the general voting rights of the Company
have agreed to waive the benefit of the Specific Issue to the extent that it qualifies as
a mandatory offer, as contemplated in section 125(3)(b)(ii) of the Companies Act and
Valinger has declared in writing to the TRP that it has not acquired any Miranda
shares during the period between the announcement of the Specific Issue and the
date of the Waiver of Offer to Shareholders;
5.2.3 Valinger furnishing Miranda with a bank guarantee in the amount of R95 000 000
within 10 business days of the signature date of the Valinger Subscription Agreement;
5.2.4 Miranda providing an undertaking in favour of Valinger to use reasonable endeavours
to procure that its two subsidiary companies, namely, Street Spirit Trading 54
Proprietary Limited and Sesikhona Klipbrand Colliery Proprietary Limited will grant to
Valinger exclusive marketing rights to all products derived from their respective mine
projects, subject to quarterly review by the parties, all on the terms and conditions
contained in the Valinger Subscription Agreement;
5.2.5 Miranda and Kutlwano providing an undertaking in favour of Valinger to use
reasonable endeavours to procure, subject to the implementation of the Sale of
Shares and Claims Agreement, that Nkomati will grant to Valinger exclusive marketing
rights to all products;
5.2.6 Valinger confirming in writing that it has satisfied itself that no third party has any
entitlement to the marketing rights referred to in 5.2.4 and 5.2.5 above.
5.2.7 all regulatory approvals, including approvals, as required, from the South African
Reserve Bank, the TRP and the JSE necessary for the implementation of the Specific
Issue, will have been obtained and/or complied with; and
5.2.8 Miranda has passed all required board and/or shareholders’ resolutions which are
necessary for the implementation of the Valinger Subscription Agreement and the
Specific Share Issue.
With regard to the Transactions and the above-mentioned listed conditions precedent it
should be noted that:
- all conditions precedent must be fulfilled and/or, where capable, be waived by the relevant
parties by not later than the closing date, namely, 31 July 2014; and
- implementation of the Benicon Acquisition, in the form as described in the various
announcements (i.e as a category 1 acquisition in terms of the Listings Requirements) can
only be proceeded with if the conditions referred to in the Benicon Acquisition itself are
fulfilled and/or waived as the case may be as well as the conditions to the Specific Share
Issue itself have been fulfilled and/or waived and same has been implemented prior
thereto.
As regards voting on the resolutions to be considered at the general meeting of the Company,
the directors have secured the irrevocable support of shareholders holding a total of 407 102
627 shares representing 56,93% of the Company’s issued shares. Such shareholders are
considered to be ‘independent’ for purposes of the resolution referred to in 5.2.2 above.
6. Circular to shareholders and convening of general meeting
A circular to shareholders dealing with all matters set out in this announcement and convening a
general meeting of shareholders to deal with all such matters is in the course of preparation (“the
Circular”).
Furthermore, in terms of the JSE Listings Requirements, as the 760 000 000 new shares to be
issued to Valinger in terms of the Specific Issue exceeds 25% of Miranda’s present issued number
of shares, the Circular will also include information pursuant to revised listings particulars.
It is expected, subject to the prior approvals of the JSE and TRP that the Circular will be posted to
shareholders during or about mid June 2014.
7. Pro forma financial effects of the Transactions and renewal of cautionary announcement
Due to the fact that the pro forma financial effects on Miranda of the Transactions are still to be
finalised and disclosed to shareholders, shareholders are advised to continue exercising caution
when dealing in Miranda’s securities until the publication of a further announcement reporting, inter
alia, the pro forma financial effects of the Transactions.
Johannesburg
14 May 2014
Corporate Adviser and Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Limited
Corporate Adviser and Capital Raiser
Qinisele Resources Proprietary Limited
Legal advisers
Edward Nathan Sonnenbergs Inc.
Date: 14/05/2014 01:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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