Wrap Text
Posting Of Circular And Notice Of General Meeting
DiamondCorp plc
AIM share code: DCP & JSE share code: DMC
ISIN: GB00B183ZC46
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
("DiamondCorp", “the Group” or "the Company")
POSTING OF CIRCULAR AND NOTICE OF GENERAL MEETING
DiamondCorp, the Southern African diamond mining, development and exploration company,
announces that, further to the Company's announcement of 20 October 2016, a circular
(“Circular”) is being posted to shareholders convening a General Meeting of the Company to
be held at the offices of City Group plc, 6 Middle Street, London EC1A 7JA at 11.00 a.m. (UK
time, 1.00 p.m. South Africa time) on 16 November 2016.
The purpose of the General Meeting is to:
(i) grant the Directors of the Company the necessary authorities to issue such new
Ordinary Shares sufficient to fulfil DiamondCorp's obligations to issue new
Ordinary Shares to Rasmala should they opt, pursuant to the terms of the Facility,
to convert the outstanding principal amounts under the Facility;
(ii) seek approval of Shareholders, pursuant to Rule 21.1 of the Code, for the
repayment of the Facility to Rasmala on an Early Repayment Event and/or the
conversion of the Facility into new Ordinary Shares; and
(iii) grant the Directors of the Company increased general authorities to allot and
issue further equity securities and to dis-apply statutory pre-emption rights in
addition to those required for the purposes of the Facility.
Certain sections of the Chairman's letter from the Circular have been included below. A copy
of the Circular will also be available shortly on the Company's website
(www.diamondcorp.plc.uk).
Unless otherwise stated, terms and expressions defined in the Circular have the same
meaning in this announcement.
Contact details:
DiamondCorp plc
Paul Loudon, Chief Executive
Tel: +27 56 216 1300
Chris Ellis, Interim Non-Executive Chairman
Tel: +44 (0) 20 3151 0970
UK Broker & Nomad
Panmure Gordon (UK) Limited
Adam James/Karri Vuori/Atholl Tweedie
Tel: +44 20 7886 2500
JSE Designated Advisor
Sasfin Capital (a division of Sasfin Bank Limited)
Megan Young
Tel: +27 11 445 8068
SA Corporate Advisor
Qinisele Resources Proprietary Limited
Dennis Tucker/Andrew Brady
Tel: +27 11 883 6358
The information communicated in this announcement is inside information for the purposes of
Article 7 of Market Abuse Regulation 596/2014 ("MAR").
Approval of the issue of Ordinary Shares pursuant to the Facility under Rule 21.1 of the
City Code on Takeovers and Mergers
and
Notice of General Meeting
1. Introduction
The Company announced on 20 October 2016 that it had entered into a Shariah-compliant
secured convertible financing facility with Rasmala, a leading independent investment
manager and shareholder in the Company pursuant to which Rasmala will advance to the
Company the sum of £700,000 in 2 tranches, being Tranche 1 and Tranche 2 as described in
section 3 below.
Further details on the background to the Facility are set out in section 2 below.
It is a condition of the continued availability of the Facility that the Company obtains requisite
approval from its shareholders at general meeting to allow the Company to issue the new
Ordinary Shares sufficient to fulfil its obligations to issue new Ordinary Shares to Rasmala
should they opt, pursuant to the terms of the Facility, to convert the outstanding principal
amounts under the Facility. If such resolutions are not passed, Rasmala may, at its option,
cancel the Facility and demand immediate repayment in full of any principal sums outstanding
thereunder.
Further details as to the terms and conditions of the Facility are set out in sections 3 and 4
below.
2. Background to, and reasons for, the Facility
As Shareholders will be aware from recent announcements made by the Company, the
Company has been actively seeking immediate funding to cover working capital requirements
to allow the Company to continue to operate as a going concern in the immediate term. The
proceeds of the Facility will satisfy the Company's immediate term funding requirement of not
less than approximately £500,000, and shall be utilised for working capital purposes.
3. Terms of the Facility
The Facility is structured as a Shariah-compliant commodity murabaha agreement with the
option to convert (at the Conversion Price) pursuant to which the Company and Rasmala
have agreed to the drawdown by the Company of two tranches under the Facility, for a total
principal amount of £700,000. The first tranche in the amount of £400,000, has already been
drawn down. The second tranche, in the amount of £300,000, is to be drawn down at the
request of the Company subject to the satisfaction of certain conditions. It is anticipated that
Tranche 2 will be drawn down in the near term.
The Facility shall terminate and becomes repayable on 15 December 2016 and is convertible,
at Rasmala's option and subject to Rasmala giving written notice to the Company, into
Ordinary Shares on 15 December 2016 (or earlier in certain circumstances as detailed below)
at the equivalent of a 30 per cent. discount to the average daily volume weighted average
price of the Ordinary Shares across each trading day from the date of the agreement of the
Facility to the date of conversion. The Facility may also be repaid by the Company prior to
termination at DiamondCorp's discretion.
Under the terms of the Facility, the Company will pay a mark-up on the commodities
underpinning the Facility (whose value is equal to the principal amount drawn down) at an
equivalent rate of 15 per cent per annum during the Term (payable in either cash or new
Ordinary Shares at Rasmala's discretion). In the event of a delayed payment, the Company
must pay a daily delay payment from the due date to the date of actual payment on the
overdue amount at a rate of 2 per cent. per annum in addition to the Facility rate of 15 per
cent. per annum. This penalty is structured in a Shariah-compliant manner.
The Company is required pursuant to the terms of the Facility to publish a circular on or
before 31 October 2016 in order to convene a General Meeting to seek to obtain shareholder
approval to increase authorities to a level considered sufficient to fulfil the Company's
obligations to issue new Ordinary Shares to Rasmala should they opt, pursuant to the terms
of the Facility, to convert the outstanding principal amounts under the Facility.
Rasmala shall be precluded from issuing a conversion notice for any number of new Ordinary
Shares as shall (i) exceed the current issued share capital of the Company unless and until
increased by way of the passing of the requisite resolutions at a general meeting of the
Company; (ii) result in Rasmala holding in excess of 29.99 per cent. of the issued Ordinary
Shares of the Company as at the conversion date; and/or otherwise trigger an obligation to
make a mandatory offer of the Company.
The outstanding principal amounts of the Facility drawn down by the Company under the
Facility may become repayable (in either cash or new Ordinary Shares at Rasmala's
discretion) ahead of maturity of the Facility in the event that the Company: (i) has released
one or more announcements pursuant to Rule 2.4 of the Code ("the announcement of a
possible offer") and/or (ii) has released one or more announcements pursuant to Rule 2.7 of
the Code ("the announcement of a firm intention to make an offer"), in each case an
announcement in respect of a potential offer or an offer other than the announcement
commencing the Formal Sale Process. In the event that either such Rule 2.4 or Rule 2.7
announcements have been released, Rasmala is entitled to elect for the Facility to be repaid
in cash, or to exercise its conversion option and be issued with Ordinary Shares (an “Early
Repayment Event”).
Rasmala shall put in place appropriate confidentiality provisions to ensure that members of its
board and staff who, under all applicable rules and regulations, are classified as insiders for
the purpose of inside information in relation to the Company are appropriately segregated
from the team authorised to deal with the Facility and the arrangements arising thereunder.
An administration fee of £25,000 in respect of Tranche 1 has become payable to Rasmala,
and a further administration fee of £25,000 in respect of Tranche 2 will be paid by the
Company pro rata to the total amount drawn down under the Facility relative to the total
principal amount. The Company shall also reimburse appropriate legal and other costs and
expenses incurred.
Tranche 1 is collateralised against 2,800 carats of the Company's current diamond inventory.
Tranche 2 is to be collateralised against an additional 2,200 carats, in aggregate, of the
Company's future diamond inventory, to be supplied in instalments every week from Lace
mine production.
The Murabaha Agreement provides for customary events of default. On and at any time after
the occurrence of an event of default, Rasmala may at its absolute discretion by written notice
to the Company, declare all outstanding amounts under the Facility to be immediately due
and payable, together with any other sums then owed by the Company to Rasmala.
The Murabaha Agreement also provides for the following changes in the Board:
Euan Worthington, former Chairman of the Company, resigned from the Board, effective
on execution of the Murabaha Agreement, but shall remain as an employee of the
Company for the immediate future in order to ensure an orderly handover of his
responsibilities.
Chris Ellis, Non-Executive Director of the Company, to be appointed as Independent
Interim Non-Executive Chairman. Chris was formally appointed as Independent Interim
Non-Executive Chairman on 27 October 2016 and it is currently intended that Mr Ellis?
appointment shall be on an interim basis to oversee the Formal Sale Process.
the Rasmala Representative to be appointed to the Board. Neil McDougall was formally
appointed as Non-Executive Director on 27 October 2016
As noted above, it is a condition of the continued availability of the Facility that the Company
obtains requisite approval from its shareholders at general meeting to allow the Company to
issue the new Ordinary Shares sufficient to fulfil its obligations to issue new Ordinary Shares
to Rasmala should they opt, pursuant to the terms of the Facility, to convert the outstanding
principal amounts under the Facility.
The Company's existing share authorities (of up to 11,207,667 new Ordinary Shares) are not
considered sufficient to satisfy a conversion notice should Rasmala elect to convert the
Facility in full into new Ordinary Shares. For this reason the Company is proposing
Resolutions 1 and 2 at the General Meeting. The passing of the requisite resolutions are a
condition of the Facility.
In addition, the Company is required to obtain Rule 21.1 Approval, as is further described in
paragraph 5 below, and accordingly the Company is proposing Resolution 3 at the General
Meeting.
Tranche 2 of the Facility cannot be drawn down unless and until the Shareholders have
passed Resolutions 1, 2 and 3. Additionally, if Resolutions 1, 2 and 3 are not passed,
Rasmala may, at its option, cancel the Facility and demand immediate repayment in full
of any principal sums outstanding thereunder. In the absence of any alternative,
immediately available funding, this would result in the Company being unable to pay
its debts as they fall due, and the Company would be insolvent and a receiver would
need to be appointed. Accordingly it is important that Shareholders vote in favour of
Resolutions 1, 2 and 3.
4. Future Funding and Formal Sale Process
As also previously announced, and notwithstanding the Facility, the Company currently
estimates an additional equity and/or debt financing requirement of approximately £2.5 to
£3.0 million in the near term to cover the anticipated cash required to fund operations through
to commercial production, although there can be no certainty that the Company will
subsequently secure the necessary funding solutions to meet its longer term financial
requirements.
Pursuant to the Formal Sale Process, as entered into on 18 October 2016, the Board
continues to explore all options available to the Company in parallel with its discussions to
secure additional funding, including a corporate transaction such as a merger with or offer for
the Group by a third party or a sale of the Group's businesses. As at the date of this
document, no such acceptable proposal has been put forward to the Board. The Company
has also received early stage expressions of interest in respect of potential additional funding.
However, there can be no certainty that any such proposal(s) will be made nor as to the terms
on which any such proposal(s) might be made.
Consequently it is the Board's intention at the General Meeting to seek shareholders?
approval to provide the Board with increased authorities to allot and issue further equity
securities and to dis-apply statutory pre-emption rights in addition to those required for the
purposes of the Facility.
5. Rule 21.1 Approval
Pursuant to the Formal Sale Process as announced on 18 October 2016, the Company is
now in an "offer period" as defined in the Code. Pursuant to Rule 21.1 of the Code, the Board
must not, without the approval of the Shareholders, take any action which may result in any
offer or bona fide possible offer being frustrated or in Shareholders being denied the
opportunity to decide on its merits or take certain actions, including issuing any shares. The
repayment of the Facility to Rasmala on an Early Repayment Event and/or the conversion of
the Facility into new Ordinary Shares is deemed to be 'frustrating action' and will therefore
require Shareholder approval pursuant to Rule 21.1 of the Code.
In addition, the dealing disclosure requirements under Rule 8 of the Code that apply to
shareholders of a company in an offer period also apply. Such requirements are outlined in
paragraph 6 below.
6. Dealing disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of
relevant securities of an offeree company or of any securities exchange offeror (being any
offeror other than an offeror in respect of which it has been announced that its offer is, or is
likely to be, solely in cash) must make an Opening Position Disclosure following the
commencement of the offer period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening Position Disclosure must contain
details of the person's interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any securities exchange
offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be
made by no later than 3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time)
on the 10th business day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant securities of the offeree
company or of a securities exchange offeror prior to the deadline for making an Opening
Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of
any class of relevant securities of the offeree company or of any securities exchange offeror
must make a Dealing Disclosure if the person deals in any relevant securities of the offeree
company or of any securities exchange offeror. A Dealing Disclosure must contain details of
the dealing concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities
exchange offeror(s), save to the extent that these details have previously been disclosed
under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made
by no later than 3.30 pm (London time) on the business day following the date of the relevant
dealing.
If two or more persons act together pursuant to an agreement or understanding, whether
formal or informal, to acquire or control an interest in relevant securities of an offeree
company or a securities exchange offeror, they will be deemed to be a single person for the
purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror
and Dealing Disclosures must also be made by the offeree company, by any offeror and by
any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening
Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure
Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of
the number of relevant securities in issue, when the offer period commenced and when any
offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44
(0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening
Position Disclosure or a Dealing Disclosure.
7. General Meeting
A notice convening the General Meeting to be held at 6 Middle Street, London EC1A 7JA, at
11:00 a.m. (UK time) and 1.00 p.m. (South Africa time) on 16 November 2016 is set out at the
end of this document. At the General Meeting, the following Resolutions will be proposed:
1. an ordinary resolution to grant authority to the Directors to allot new Ordinary Shares
or to grant rights to subscribe for or convert any security into shares in the capital of
the Company pursuant to section 551 of the 2006 Act up to an aggregate nominal
amount of £50,000. The Directors will limit this authority to the issue of any new
Ordinary Shares to be issued pursuant to a conversion of the Facility or any part
thereof. This authority will expire at the conclusion of the next Annual General
Meeting of the Company to be held after the passing of the resolution, or if earlier, 18
months from the passing of the resolution;
2. a special resolution to disapply the statutory pre-emption rights contained in section
561(1) of the 2006 Act in respect of the allotment for cash of new Ordinary Shares
with an aggregate nominal amount of up to £50,000. The Directors will again limit
this authority to the issue of any new Ordinary Shares to be issued pursuant to a
conversion of the Facility or any part thereof. This authority will expire at the
conclusion of the next Annual General Meeting of the Company to be held after the
passing of the resolution, or if earlier, 18 months from the passing of the resolution;
3. an ordinary resolution to approve the issue of Ordinary Shares pursuant to the
Facility, for the purposes of Rule 21.1 of the Code in circumstances where the
Company remains in an offer period (as defined in the Code).
4. an ordinary resolution to grant a general authority, in addition to that granted pursuant
to paragraph 1 above, to the Directors to allot shares or to grant rights to subscribe
for or convert any security into shares in the capital of the Company pursuant to
section 551 of the 2006 Act up to an aggregate nominal amount of £319,160. This
authority will expire at the conclusion of the next Annual General Meeting of the
Company after the passing of the resolution, or if earlier, 18 months from the passing
of the resolution. This authority will be in addition to the authority referred to in
Resolution 1; and
5. a special resolution to disapply the statutory pre-emption rights contained in section
561(1) of the 2006 Act in respect of the allotment for cash of equity shares with an
aggregate nominal amount of up to £200,000. This authority will expire at the
conclusion of the Annual General Meeting of the Company to be held in 2017 after
the passing of the resolution, or 18 months from the passing of the resolution. This
authority will be in addition to the authority referred to in Resolution 2.
Resolutions 1, 3 and 4 are to be proposed as ordinary resolutions and Resolutions 2 and 5
are to be proposed as special resolutions.
8. Action to be taken
Shareholders will find accompanying this circular a Form of Proxy for use at the General
Meeting. Whether or not Shareholders intend to be present at the General Meeting, they are
requested to complete, sign and return the Form of Proxy in accordance with the instructions
printed on it to Computershare Investor Services plc, at The Pavilions, Bridgwater Road,
Bristol, BS13 8AE, UK or to Computershare Investor Services (PTY) Limited at their
registered office at 70 Marshall Street, Johannesburg 2001 or P.O. Box 61051, Marshaltown
2017, South Africa, as soon as possible and, in any event, so as to arrive no later than 11:00
a.m. (UK time) and 1.00 p.m. (South Africa time) on 14 November 2016. Completion and
return of the Form of Proxy will not affect Shareholders' right to attend and vote in person at
the General Meeting if they so wish. Further information regarding the appointment of proxies
can be found in the notes to the Notice of General Meeting. In the case of non-registered
Shareholders who receive these materials through their broker or other intermediary, the
Shareholder should complete and send a letter of direction in accordance with the instructions
provided by their broker or other intermediary.
Tranche 2 of the Facility cannot be drawn down unless and until the Shareholders have
passed Resolutions 1, 2 and 3. Additionally, if Resolutions 1, 2 and 3 are not passed,
Rasmala may, at its option, cancel the Facility and demand immediate repayment in full
of any principal sums outstanding thereunder. In the absence of any alternative,
immediately available funding, this would result in the Company being unable to pay
its debts as they fall due, and the Company would be insolvent and a receiver would
need to be appointed. Accordingly it is important that Shareholders vote in favour of
Resolutions 1, 2 and 3.
9. Responsibility
The Company and the Directors accept responsibility for the information contained in this
Circular. To the best of the knowledge and belief of the Company and the Directors (which
has and who have taken all reasonable care to ensure that such is the case) the information
contained in this circular for which they accept responsibility is in accordance with the facts
and does not omit anything likely to affect the import of such information.
10. Directors’ Recommendation and Intention
The Directors consider the Resolutions to be proposed at the General Meeting to be in the
best interests of the Company and the Shareholders as a whole. Consequently, the Directors
unanimously recommend that you vote in favour of the Resolutions, as they intend to do
themselves in respect of their beneficial interests amounting, in aggregate, to 10,111,166
Ordinary Shares representing approximately 2.11 per cent. of the Existing Ordinary Shares.
Yours faithfully,
Christopher Ellis
Interim Non-Executive Chairman
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Posting of this circular and Form of Proxy 28 October 2016
Last date to trade in order to vote for 08 November 2016
purposes of the shareholders on the South
African register
Record date to be registered in the share 11 November 2016
register in order to vote for the purposes of
the shareholders on the South African
register
Record date to be registered in the share 14 November 2016
register in order to vote for the purposes of
the shareholders on the UK register
Latest time and date for receipt of Forms 11.00 a.m. (UK time) and 1.00 p.m. (South
of Proxy Africa time) on 14 November 2016
General Meeting 11.00 a.m. (UK time) and 1.00 p.m. (South
Africa time) on 16 November 2016
Expected date of announcement of the 16 November 2016
results of the General Meeting
Notes:
(1) If any of the details contained in the timetable above should change, the revised times
and dates will be notified by means of an announcement through a Regulatory
Information Service.
(2) All times above and throughout the Circular are London times and each of the times and
dates are subject to change.
DEFINITIONS
The following definitions apply, unless the context requires otherwise:
2006 Act the UK Companies Act 2006
AIM the market of that name operated by the London Stock
Exchange
AIM Rules the AIM Rules for Companies, published by the London
Stock Exchange from time to time
Board the board of directors of the Company
Code The City Code on Takeovers and Mergers
Company or DiamondCorp DiamondCorp plc
Conversion Price the price at which the Facility (or part thereof) may be
converted into Ordinary Shares, being a 30% discount to
the VWAP of the Ordinary Shares over the period
commencing on 20 October 2016 and ending on the
date of conversion
Existing Ordinary Shares the existing Ordinary Shares in issue as at close of
business on 27 October 2016 being the last practicable
date prior to the issue of this circular
Facility a Shariah-compliant secured convertible financing
facility in the maximum sum of £700,000 provided to the
Company by Rasmala pursuant to the Murabaha
Agreement
FCA the Financial Conduct Authority
FMA the Financial Markets Act, 19 of 2012 of South Africa
Form of Proxy the form of proxy for use by Shareholders in connection
with the General Meeting
Formal Sales Process The formal sales process currently being undertaken by
the Company in accordance with Note 2 on Rule 2.6 of
the Code
FSMA the Financial Services and Markets Act 2000 (as
amended)
GBP or £ the lawful currency of the United Kingdom
General Meeting the general meeting of the Company convened for 11:00
a.m. (UK time) and 1.00 p.m. (South Africa time) on 16
November 2016 (or any adjournment or postponement
thereof), notice of which is set out at the end of the
Circular
Group the Company, together with its subsidiary undertakings
JSE the JSE Limited (registration number 2005/022939/06),
a public company duly registered and incorporated with
limited liability under the company laws of South Africa,
licensed as an exchange under the FMA
Lace Lace Diamond Mines (Pty) Limited, a subsidiary of the
Company
London Stock Exchange the London Stock Exchange plc
Maturity Date 15 December 2016
Murabaha Agreement the Convertible Master Murabaha Agreement dated 20
October 2016 between the Company (1) and Rasmala
(2)
Notice of General Meeting the notice convening the General Meeting, set out at the
end of the Circular
Ordinary Shares ordinary shares of £0.001 each in the capital of the
Company
Official List the official list of the UK Listing Authority
Panmure Panmure Gordon (UK) Limited
Rasmala Rasmala plc, a company registered in England and
Wales with registered number 05328847
Rasmala Representative Neil McDougall, or such other individual as may be
nominated by Rasmala from time to time
Resolutions the resolutions set out in the Notice of General Meeting
Rule 21.1 Approval the approval by Shareholders of the issue of Ordinary
Shares pursuant to the Facility for the purposes of Rule
21.1 of the Code
Shareholders holders of Ordinary Shares
Term the term of the Facility, commencing on 20 October
2016 and ending on the Maturity Date
Tranche 1 the sum of £400,000 that was drawn down against the
Facility upon execution of the Murabaha Agreement
Tranche 2 the additional sum of £300,000 that is able to be drawn
down against the Facility
UK Listing Authority the FCA acting in its capacity as the competent authority
for the purposes of FSMA
United States or US means the United States of America, its territories or
possessions, any state of the United States and the
District of Columbia
USD or US$ the lawful currency of the United States
VWAP volume weighted average price
31 October 2016
United Kingdom
Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
Date: 31/10/2016 07:05:00 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.
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