Wrap Text
Detailed cautionary announcement in respect of an acquisition of 39.2% in Iron Mineral Beneficiation Services Pty Lt
MINE RESTORATION INVESTMENTS LIMITED
Incorporated in the Republic of South Africa
(Registration Number: 1987/004821/06
Share code: MRI
ISIN: ZAE000164562
("MRI" or the "Company")
DETAILED CAUTIONARY ANNOUNCEMENT IN RESPECT OF AN AQUISITION OF
UP TO 39.2% IN IRON MINERAL BENEFICIATION SERVICES PROPRIETARY
LIMITED ("IMBS"), AN EQUITY CAPITAL RAISE AND AN UPDATE ON
EXISTING OPERATIONS
1. INTRODUCTION
1.1 Building on MRI's commitment to providing innovative mine
rehabilitation and restoration solutions, the board of
directors of the Company is pleased to announce the salient
terms of a transaction in terms of which MRI will acquire
up to 39.2% of the issued share capital of IMBS ("IMBS
Acquisition").
1.2 In terms of a memorandum of agreement which has been
concluded this week between, inter alia, MRI, IMBS and its
shareholders –
– MRI will acquire certain ordinary shares in IMBS ("IMBS
Shares"), constituting c.25.8% of the total issued share
capital and certain shareholder loan claims against IMBS
("Sale");
– Immediately following the Sale, all IMBS shareholders,
including MRI, will convert their shareholder loan claims
into additional IMBS Shares, such that MRI will acquire a
further c.3% interest in IMBS (“Conversion”); and
– MRI will thereafter acquire up to a further 10.4% in IMBS
pursuant to an underwritten rights offer to be conducted
by IMBS, ("Subscription").
1.3 The IMBS Transaction will be effective on the first business
day following the fulfilment or waiver of the conditions to
be specified in a detailed terms announcement ("Effective
Date").
1.4 In order to part fund the IMBS Acquisition, MRI will raise
up to R200,000,000 through an issue of new MRI shares at 7
cents per share (“Private Placement”).
1.5 The IMBS Acquisition and the Private Placement are
collectively referred to herein as the “IMBS Transaction”.
2. OVERVIEW OF IMBS
IMBS is a South African company founded in 2006 that has
developed a proprietary, cost-efficient technology for the
processing and conversion of super-fine iron ore into
metallic iron units for use in the steel and foundry
industry. IMBS’s current shareholders comprise management
and strategic investors Jonah Capital (Pty) Ltd (“Jonah
Capital”), Severstal (global, leading Russian steel maker),
Oreport (Pty) Ltd (“Oreport”) and Katleho Capital GmbH
(“Katleho”). IMBS owns a 62.7% interest in its operating
company Masorini Iron Beneficiation Proprietary Limited
("MIB") alongside the Industrial Development Corporation
(IDC) whom own 37.3%. MIB processes iron or fines at MIB's
plant at Phalaborwa. MIB's anticipated annual production
capacity is in excess of 500,000 tons of metallic iron.
Additional information on IMBS can be found on its website
www.imbsworld.com.
3. RATIONALE FOR THE IMBS AQUISITION
MRI was listed on the Alternative Exchange of the
Johannesburg Stock Exchange (“JSE”) in [2010] with the aim
of developing and implementing mine rehabilitation and waste
management solutions. The IMBS Acquisition represents an
attractive strategic acquisition opportunity, with
compelling synergies with MRI's existing coal fines business
and the opportunity to benefit from MRI's expertise in the
processing of minerals and commercialisation of projects.
The Company is of the view that the IMBS Acquisition will
accordingly not only strengthen MRI’s position within the
mine rehabilitation and minerals processing markets, but
will also allow for a more diversified service and product
offering.
4. THE IMBS ACQUISITION
The Sale
MRI will acquire 35 211 IMBS Shares ("Sale Shares") and
claims against ("Sale Claims") IMBS from John Peter Beachy
Head, Paul Louis Yammin, Peter Miles Baker, Derek Roy
Oldnall, Katleho, Jonah Capital and Oreport (collectively
the "Vendors").
The consideration payable by MRI to the Vendors in respect
of the (i) Sale Shares, shall be an aggregate amount of R170
228 002, and (ii) the Sale Claims, shall be the face value
thereof, which at the date of this announcement, is an
aggregate amount of R54 260 100 ("Sale Consideration"). The
face value of the Sale Claims may increase prior to the
Effective Date owing to the accrual of interest and/or
subsequent advances made by the Vendors.
The Sale Consideration shall be settled, partly though the
issue of new ordinary shares in MRI ("MRI Shares") at an
issue price of R0.07 per MRI Share and partly in cash ("Cash
Consideration"), provided that, to the extent that any part
of the Sale Consideration is settled in cash, a 50% discount
shall be applicable.
Immediately following the Sale, MRI and the remaining IMBS
shareholders shall subscribe for such number of IMBS Shares
the value of which is equal to the value of their respective
outstanding shareholder loan claims at a subscription price
of R4,834.512 per IMBS Share (the "IMBS Share Price").
The Conversion
In terms of the Conversion, with effect from the Effective
Date, but immediately subsequent to the Sale, MRI and the
other IMBS shareholders shall subscribe, at the IMBS Share
Price, for such number of IMBS Shares ("Conversion Shares"),
the value of which is equal to the face value of their loans,
including accrued interest and fees, provided that, in terms
of the IMBS shareholders agreement, certain loans shall
convert into IMBS Shares at a discount.
The Subscription
Immediately following the Conversion, but with effect from
the Effective Date, IMBS will conduct a rights offer to its
shareholders to raise up to R150,000,000 ("IMBS Rights
Offer").
MRI will follow its rights to in terms of the IMBS Rights
Offer to subscribe for a minimum of R41,638,640 IMBS shares
such that MRI will hold, in aggregate, no less than 28.8%
in IMBS following the subscription ("Subscription"). The
maximum consideration payable by MRI in respect of the
Subscription will be an aggregate amount of R65 112 658
("Subscription Consideration").
In addition, MRI shall underwrite the IMBS Rights Offer,
such that to the extent that the other shareholders of IMBS
decline to follow their rights in terms of the IMBS Rights
Offer (i.e. decline to subscribe for the available IMBS
Shares (the "Unallocated IMBS Shares"), MRI shall subscribe
for the Unallocated IMBS Shares at the IMBS Share Price per IMBS Share on the same terms as the Subscription
("Underwriting").
Should no other IMBS shareholders follow their rights in
terms of the IMBS Rights Offer, it is anticipated that MRI
will hold approximately 39.2% of the issued share capital
of IMBS following closing of the Sale, Subscription,
Conversion and the IMBS Rights Offer.
Categorisation of the IMBS Acquisition
It is likely that the IMBS Acquisition will result in a
Reverse Takeover in terms of the Listings Requirements in
which case the IMBS Acquisition will be subject to the JSE
confirming that MRI complies with all the requirements for
a new listing on the AltX. The Company is engaging with the
JSE as to the appropriate process, disclosure and approvals
required. MRI will keep shareholders updated on this.
To the extent that the IMBS Acquisition is implemented, in
accordance with section 10 of the JSE Listings Requirements,
MRI will review the Memorandum of Incorporation (“MOI”) and
shareholders agreement of IMBS to ensure that it neither
frustrates nor relieves MRI in any way from compliance with
its obligations in terms of the Listings Requirements.
5. THE PRIVATE PLACEMENT
In order to settle the Cash Consideration and to participate
in the IMBS Rights Offer, MRI plans to raise up to
R200,000,000 through the placement of new MRI Shares at 7
cents per share, to selected investors. MRI has commenced
discussions with potential investors but has not yet
finalised the placement.
The Private Placement is a specific issue of shares in terms
of the JSE Listings Requirements and accordingly will
require approval from 75% of MRI Shareholders eligible and
entitled to vote at a general meeting.
The Private Placement and the IMBS Acquisition will require
that MRI increase its authorised share capital requiring an
amendment to the MOI and accordingly approval from 75% of
MRI Shareholders eligible and entitled to vote will be
required.
6. CONDITIONS PRECEDENT TO THE PRIVATE PLACEMENT
The Private Placement will be subject to the fulfilment or
waiver, inter alia, of the following conditions precedent
by no later than 1 October 2015 or such later date as agreed
to by the parties:
- JSE approval of a circular to shareholders;
- Approval by 75% of MRI shareholders entitled to vote on
resolutions;
- Approval of the IMBS Acquisition; and
- Shareholder approval of the increase of MRI's authorised
share capital.
7. IRREVOCABLE UNDERTAKINGS
Shareholders holding, collectively, 75% of the issued share
capital of MRI have provided their preliminary indicative
support for the IMBS Transaction and intend voting in favour
of all the resolutions required for its implementation.
Written undertakings will be secured in due course.
8. FURTHER COMMUNICATION
Once all the terms of the IMBS Transaction have been
finalised, a detailed terms announcement will be published.
Shareholders are advised to exercise caution when dealing
in MRI’s securities until further information has been
published.
9. UPDATE ON OPERATIONS AT VAALKRANTZ
The Company's efforts to improve productivity and
profitability at its coal fines processing operations at the
Vaalkrantz Colliery have been impacted by adverse operating
conditions, including, in particular, the severe droughts
in Kwa-Zulu Natal which has affected water supply to the
project and accordingly reduced production levels. MRI is
therefore considering all possible alternatives, including
placing the project on care and maintenance. Consequently,
in order to minimise the level of losses over the period MRI
will evaluate alternatives to efficiently operate the
project. MRI will continue to provide updates on material
developments in this regard as they occur.
Johannesburg
26 June 2015
Designated Adviser: AfrAsia Corporate Finance (Pty) Ltd
Date: 26/06/2015 03:59:00 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.
Sharenet Sites 
