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EXX - Detailed terms of the Replacement BEE Transaction and Renewal of Cautionary Announcement
Exxaro Resources Limited
(Incorporated in the Republic of South Africa)
Registration number: 2000/011076/06
JSE share code: EXX
ISIN: ZAE000084992
ADR code: EXXAY
(“Exxaro” or the “Company”)
DETAILED TERMS OF THE REPLACEMENT BEE TRANSACTION AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION AND BACKGROUND
1.1. Exxaro shareholders (“Exxaro Shareholders”) are referred to the cautionary announcement released on
the Stock Exchange News Service (“SENS”) by the Company on 22 November 2016, as well as the
renewal of the cautionary announcement, released on SENS on 26 June 2017 (together, the “Previous
Announcements”), relating to the unwind of Exxaro’s existing Black Economic Empowerment (“BEE”)
transaction (the “Existing BEE Transaction”) and the proposed implementation of a replacement BEE
transaction (the “Replacement BEE Transaction”) with the direct and indirect shareholders of Main
Street 333 Proprietary Limited (“MS333”).
1.2. On Friday, 15 September 2017, Exxaro, MS333 (and its direct shareholders), the Industrial Development
Corporation (the “IDC”) and two special purpose vehicles, the first vehicle being incorporated for the
purpose of being the empowerment vehicle which will hold ordinary shares in Exxaro (“Exxaro Shares”)
(“NewBEECo”) and the second vehicle being incorporated for the purpose of holding the interests of
certain MS333 shareholders separately (“BEE SPV”), entered into a suite of detailed agreements to give
effect to the Replacement BEE Transaction (the “Transaction Agreements”).
1.3. Exxaro implemented a specific repurchase of 43 943 744 Exxaro Shares from MS333 on 20 January
2017, preceding the implementation of the Replacement BEE Transaction, which should be considered
as part of the unwinding of the Existing BEE Transaction (the “First Repurchase”). As part of the
Replacement BEE Transaction, Exxaro will implement a further specific repurchase of 22 686 572
Exxaro Shares from MS333 (the “Second Repurchase”).
1.4. The implementation of the Replacement BEE Transaction (which includes the Second Repurchase)
remains subject to various conditions precedent, including those set out in paragraph 6.2.
1.5. The purpose of this announcement is to provide Exxaro Shareholders with an overview of the key terms
of the Replacement BEE Transaction.
2. OVERVIEW OF THE REPLACEMENT BEE TRANSACTION
2.1. Components of the Replacement BEE Transaction
2.1.1. Exxaro has executed the Transaction Agreements to implement the various components of the
Replacement BEE Transaction. The key components of the Replacement BEE Transaction include:
- COMPONENT 1: the unwinding of the Existing BEE Transaction (the “MS333 Unwind”);
- COMPONENT 2: the Second Repurchase; and
- COMPONENT 3: the specific issue by Exxaro of Exxaro Shares to NewBEECo to implement the
Replacement BEE Transaction (the “Specific Issue”).
2.2. Rationale for the Replacement BEE Transaction
2.2.1. Since its creation in 2006, Exxaro has maintained its status as one of the largest Historically
Disadvantaged South African (“HDSA”) controlled companies in the South African mining sector.
Exxaro is aware of the current uncertainty around the legislative requirements for empowerment in the
South African mining sector. However, both Exxaro’s management and the independent sub-
committee, established by the Exxaro board of directors (the “Independent Board Sub-Committee”),
firmly believe that it is critical to Exxaro’s business strategy that it maintains an appropriate
empowerment status driven by ownership. Remaining empowered is essential for Exxaro to maintain
stability in its operational environment, reinforce sustainable relationships with critical stakeholders in
the industry and to ensure ongoing compliance with customer and other industry requirements. In
addition, Exxaro supports the imperative for economic transformation in South Africa.
2.2.2. Implementation of the Replacement BEE Transaction will:
- protect the stability of Exxaro’s operations by reinforcing the sustainability of its relationships with
key stakeholders (including customers, employees, communities in which Exxaro operates and
relevant development funding institutions);
- equip Exxaro for growth by positioning Exxaro with market leading empowerment credentials in
the South African mining sector;
- reduce the market impact of the MS333 Unwind by allowing MS333 shareholders to reinvest a
large portion of their Exxaro Shares into the Replacement BEE Transaction; and
- unlock long term value for Exxaro Shareholders.
2.3. Mechanism and steps to give effect to the Replacement BEE Transaction
2.3.1. As agreed in the Transaction Agreements, the Replacement BEE Transaction will be effected by way
of several indivisible steps, to give effect to Exxaro’s new empowerment shareholding structure (the
“New Empowerment Structure”). This process is summarised below:
2.3.1.1 The Replacement BEE Transaction will be implemented using a reference price of R125.01,
being the 5-day weighted average trading price as at market close on Thursday, 14
September 2017, being the last day before the signing of the Transaction Agreements (the
“Reference Price”). This Reference Price (prior to any discount) applies to both the Second
Repurchase and the Specific Issue;
2.3.1.2 MS333 conducting a formal election process (the “MS333 Election Process”) in terms of
which its indirect shareholders elect whether to:
i. reinvest Exxaro Shares into the New Empowerment Structure (the “MS333
Reinvestment”); and/or
ii. divest Exxaro Shares in the form of:
- cash; and/or
- Exxaro Shares that are not subject to any disposal or related restrictions applicable to the
New Empowerment Structure (“Unrestricted Exxaro Shares”);
2.3.1.3 Implementation of the MS333 Unwind to enable the reinvestment and divestment as
described above;
2.3.1.4 Implementation of the Second Repurchase, resulting in Exxaro repurchasing 22 686 572
Exxaro Shares from MS333 at a 5% discount to the Reference Price;
2.3.1.5 The capitalisation of NewBEECo as follows:
i. the IDC subscribing for ordinary shares in NewBEECo by contributing 12 337 616 Exxaro
Shares (the “IDC Reinvestment”);
ii. the MS333 Reinvestment, resulting in MS333 indirect shareholders (excluding the IDC)
who have elected to reinvest Exxaro Shares into the New Empowerment Structure
pursuant to the MS333 Election Process (the “Reinvesting MS333 Shareholders”),
subscribing for ordinary shares, on a pro-rata basis, in BEE SPV, by contributing a
minimum of 26 623 276 Exxaro Shares to BEE SPV, which will in turn be utilised by BEE
SPV to subscribe for ordinary shares in NewBEECo; and
iii. Exxaro subscribing for ordinary shares in NewBEECo for a cash consideration (the
“Exxaro Equity Investment”);
2.3.1.6 NewBEECo raising external funding from commercial funders through the issuance of
preference shares (the “Third Party Funding”). The amount of the Third Party Funding will
be reduced to the extent that the MS333 Reinvestment is greater than the minimum number
of 26 623 276 Exxaro Shares required to be reinvested; and
2.3.1.7 Implementation of the Specific Issue, where NewBEECo will utilise the proceeds from the
Exxaro Equity Investment and the Third Party Funding to subscribe for the number of Exxaro
Shares which, together with the Exxaro Shares received through the MS333 Reinvestment
and the IDC Reinvestment, will result in NewBEECo holding 30.0% of the Exxaro Shares
following the implementation of the Replacement BEE Transaction:
i. the Specific Issue will occur at a discount equal to 6.8% of the Exxaro market
capitalisation, based on the Reference Price but diluted for the implementation of the
Replacement BEE Transaction (including the Second Repurchase and the Specific Issue)
(the “BEE Facilitation Value”); and
ii. this discount equates to 22.6% of the total value of all the Exxaro Shares to be held by
NewBEECo following implementation of the New Empowerment Structure (the “New
Empowerment Structure Value”). The total BEE Facilitation Value will be transferred to
New BEECo through the Specific Issue (which represents 64.0% of the New
Empowerment Structure Value) and as such the discount of the Specific Issue to the
Reference Price equates to 40.1% (the “BEE Discount”) This is further explained in
paragraph 5.4.2.
2.3.2. Before implementation of the Replacement BEE Transaction, Exxaro’s empowerment shareholding
structure consists of MS333 holding 32.0% of the Exxaro Shares (as at 14 September 2017).
2.3.3. Following the implementation of the Replacement BEE Transaction, and assuming the Reinvesting
MS333 Shareholders reinvest the minimum number of Exxaro Shares pursuant to the MS333
Reinvestment of 26 623 276 Exxaro Shares, the New Empowerment Structure will be such that BEE
SPV (representing the Reinvesting MS333 Shareholders) holds 51.0%, Exxaro holds 25.4% and the
IDC holds 23.6% of the ordinary shares in NewBEECo respectively. Exxaro will share the specific
details of the Reinvesting MS333 Shareholders with the market following the conclusion of the MS333
Election Process, which is currently expected to be concluded by Friday, 29 September 2017, after
which Exxaro will release a further announcement on SENS, detailing the outcome of the MS333
Election Process and the final New Empowerment Structure.
2.3.4. Following the implementation of the Replacement BEE Transaction as set out in paragraph 2.3.3, the
New Empowerment Structure Value will be comprised as follows:
Percentage of New
Source Empowerment Structure BEE Shares Value (R’m) (1)
Value
Reinvestments 36.0% 38 960 892 4 510
Minimum MS333
24.6% 26 623 276 3 082
Reinvestment (2)
IDC Reinvestment (3) 11.4% 12 337 616 1 428
Specific Issue 64.0% 69 264 236 8 020
BEE Facilitation Value 22.6% 24 458 782 2 832
Exxaro Equity Investment 19.9% 21 536 715 2 494
Maximum Third Party
21.5% 23 268 310 2 694
Funding (2)
New Empowerment
100.0% 108 224 699 12 530
Structure Value
Notes:
(1) Value is based on the ex Replacement BEE Transaction Exxaro Share price of R115.78, which is calculated as the accretion impact of the
Second Repurchase and the dilution impact of the Specific Issue on the Reference Price (before implementation of the Replacement BEE
Transaction) of R125.01.
(2) The 24.6% MS333 Reinvestment represents 26 623 276 Exxaro Shares reinvested. Should the MS333 Reinvestment exceed 26 623 276
Exxaro Shares, the value raised through the Third Party Funding will be reduced accordingly.
(3) The 11.4% IDC Reinvestment represents 12 337 616 Exxaro Shares reinvested.
2.4. Key terms relating to the New Empowerment Structure
2.4.1. Empowerment levels
Following the implementation of the Replacement BEE Transaction, NewBEECo will directly hold
30.0% of the Exxaro Shares.
2.4.2. Term and lock-in arrangements
2.4.2.1 The New Empowerment Structure will have a duration of 10 years. The period during which
Exxaro Shares held by NewBEECo will be locked-in, is staggered between seven and ten
years.
2.4.2.2 The Exxaro Shares reinvested by Reinvesting MS333 Shareholders and the IDC will
become unrestricted on the 7th anniversary of the Replacement BEE Transaction with the
remaining Exxaro Shares becoming unrestricted in equal proportions at the end of the 8th,
9th and 10th anniversary of the Replacement BEE Transaction.
2.4.2.3 NewBEECo will have the interim liquidity mechanisms, listed in paragraph 2.4.2.4 below,
available to it in order to create liquidity. Notwithstanding anything to the contrary in the
Transaction Agreements, Exxaro will only be obliged to approve or implement a liquidity
mechanism if
- it is satisfied that Exxaro will be compliant with the empowerment shareholding requirements
set out in any relevant legislation, or as it may have contractually agreed; and
- all required and applicable regulatory, Exxaro Shareholder and contractual consents, including
in respect of the agreements relating to the Third Party Funding, if any, have been obtained.
2.4.2.4 The following interim liquidity mechanisms form part of the New Empowerment Structure:
- Trade sale: After the third anniversary of the Replacement BEE Transaction, each of BEE
SPV, the IDC and any Reinvesting MS333 Shareholder will be entitled to sell shares in BEE
SPV or NewBEECo, as the case may be, to any other party with at least the same HDSA
status, with the approval of Exxaro;
- Public offering: NewBEECo may be listed on a recognised securities exchange that restricts
trading to HDSA shareholders, with the approval of Exxaro;
- Further community or employee empowerment: Should Exxaro explore any transaction
designed to further empower the communities in areas where Exxaro operates or employees
of the group before the tenth anniversary of the Replacement BEE Transaction, other than as
contemplated in paragraph 2.4.3.2 of this announcement, NewBEECo will have the first right
to sell Exxaro Shares to enable such transaction, on terms determined by Exxaro; and
- Exxaro facilitated staggered vesting: Should the Exxaro Share Price increase by more than
50% from the date of implementation of the Replacement BEE Transaction, NewBEECo has
the right to sell Exxaro Shares back to Exxaro, at a pre-agreed discount, limited to the amount
of the existing Third Party Funding, subject to Exxaro Shareholder approval (as it will be a
specific repurchase of Exxaro Shares for cash), and assuming Exxaro remains sufficiently
empowered from a regulatory perspective.
2.4.3. Participants
2.4.3.1 The initial participants in the New Empowerment Structure will be the Reinvesting MS333
Shareholders, the IDC, and Exxaro, through the Exxaro Equity Investment. This participation
is set out in paragraph 2.3.3 of this announcement. The exact composition is subject to
finalisation of the MS333 Election Process.
2.4.3.2 Exxaro has earmarked a portion of its holding in the ordinary shares of NewBEECo,
received through the Exxaro Equity Investment, for the empowerment of relevant Exxaro
communities and employees. The form, size and structure of such empowerment will be
finalised following implementation of the Replacement BEE Transaction and Exxaro
Shareholder approval for this empowerment will be sought, to the extent required.
2.4.4. Funding of the New Empowerment Structure
2.4.4.1 The New Empowerment Structure will effectively be funded through a combination of
(assuming the minimum of 26 623 276 Exxaro Shares reinvested pursuant to the MS333
Reinvestment):
- vendor facilitation, equal to the BEE Facilitation Value of R2 832 million;
- equity, consisting of the MS333 Reinvestment of R3 082 million for 51.0% of
NewBEECo, the IDC Reinvestment, of R1 428 million for 23.6% of NewBEECo and the
Exxaro Equity Investment of R2 494 million for 25.4% of NewBEECo; and
- the Third Party Funding of R2 694 million.
The composition of the funding sources set out above remains subject to the outcome of the
MS333 Election Process.
2.4.4.2 The manner of funding of the New Empowerment Structure Value is detailed in paragraph
2.3.4 of this announcement.
2.4.5. NewBEECo distributions
2.4.5.1 Subject to a minimum value cover, any distributions made by Exxaro to NewBEECo, will be
applied equally to settle Third Party Funding (including the accrued funding charges, in the
form of preference share dividends) and to distribute to NewBEECo shareholders.
2.4.5.2 Any special dividend or distribution, received by NewBEECo, out of the proceeds from the
disposal of Exxaro’s interest in Tronox Limited and/or Sishen Iron Ore Company Proprietary
Limited, will be applied fully toward the settlement of Third Party Funding.
2.5. The MS333 Election Process
2.5.1. As described in paragraph2.3.1.2, the MS333 Election Process will determine the parameters of the
MS333 Reinvestment as well as the divestment in the form of cash and Unrestricted Exxaro Shares.
2.5.2. The MS333 Election will commence on Monday, 18 September 2017, and will be concluded by Friday,
29 September 2017.
2.5.3. Exxaro will release an announcement on SENS as soon as practically possible after the finalisation of
the MS333 Election Process, including the final New Empowerment Structure.
3. COMPONENT 1: THE MS333 UNWIND
3.1. The MS333 Unwind explained
3.1.1. MS333 will not be retained as the empowerment vehicle for the Replacement BEE Transaction. The
MS333 Unwind will apply to all the Exxaro Shares still held by MS333, excluding the Exxaro Shares
subject to the Second Repurchase, the MS333 Reinvestment and the IDC Reinvestment.
3.1.2. The MS333 Unwind serves as a mechanism for the Exxaro Shares not reinvested into the New
Empowerment Structure (the “Exiting MS333 Interests”) to be divested from (in the form of cash
and/or Unrestricted Exxaro Shares), and to enable Reinvesting MS333 Shareholders and the IDC to
invest into the New Empowerment Structure. The MS333 Unwind is not subject to Exxaro Shareholder
approval.
3.2. MS333 shareholding in Exxaro
3.2.1. The table below sets out the changes in MS333’s shareholding in Exxaro from 31 December 2015 to
its current shareholding (as at 14 September 2017):
Number of Exxaro Total Exxaro Shares MS333
Shares held by MS333 (million) shareholding
(million) percentage in
Exxaro
Initial shareholding as at
31 December 2015 186.6 358.1 52.1%
Sale of Shares in the
market during 2016 to (6.8) -
repay debt
Shares sold in December
2016 as part of the Anglo
American placement (17.4) -
First Repurchase by
Exxaro in January 2017 (43.9) (43.9)
Regulated sale of Shares in
the market during 2017 (17.8) -
Current shareholding as
at 14 September 2017 100.7 314.2 32.0%
3.2.2. It is anticipated that MS333’s shareholding in Exxaro will reduce as illustrated in the below table, due
to the Second Repurchase and the minimum reinvestment into the New Empowerment Structure:
MS333
Number of Exxaro Total shareholding
Shares held by MS333 Exxaro Shares percentage in
(million) (million) Exxaro
Current shareholding 100.7 314.2 32.0%
Second Repurchase (22.7) (22.7)
Minimum MS333 Reinvestment (26.7) -
IDC Reinvestment (12.3) -
Specific Issue(1) - 69.3
MS333 remaining
shareholding in Exxaro 39.0 360.8 10.8%
Notes:
(1) Number of Specific Issue Shares to be issued pursuant to the Specific Issue, assuming the Reinvesting MS333 Shareholders reinvest the
minimum of 26 623 276 Exxaro Shares. Should the MS333 Reinvestment exceed 26 623 276 Exxaro Shares, the Specific Issue Shares to be
issued to ensure NewBEECo holds 30.0% of Exxaro Shares, will be less.
3.2.3. Subject to the MS333 Election Process, the remaining 39.0 million Exxaro Shares held by MS333 will be:
a. retained as Unrestricted Exxaro Shares, outside the New Empowerment Structure.; and/or
b. disposed of in the market.
The detail of the above split, including the number of Exxaro Shares to be reinvested will be included
in an announcement on SENS, to be made by Exxaro as soon as practically possible after the
conclusion of the MS333 Election Process, which is expected to be Friday, 29 September 2017.
3.3. Regulated sale of Exxaro Shares
As set out in the Previous Announcements, the sale of Exxaro Shares by MS333 and/or any of its direct or
indirect MS333 shareholders pursuant to the MS333 Unwind, is overseen by the joint advisory committee
established between Exxaro and MS333 to regulate any sale of Exxaro Shares in the market.
4. COMPONENT 2: THE SECOND REPURCHASE
4.1. Overview of the Second Repurchase in the context of the Replacement BEE Transaction
4.1.1. As part of the Replacement BEE Transaction, Exxaro will repurchase 22 686 572 Exxaro Shares (the
“Second Repurchase Scheme Shares”) from MS333 pursuant to the Second Repurchase through a
scheme of arrangement in terms of section 114, read with section 115, of the Companies Act No. 71
of 2008 (the “Companies Act”) (the “Second Repurchase Scheme”).
4.1.2. The Second Repurchase Scheme Shares equate to 7.2% of the Exxaro Shares (currently in issue,
prior to the Second Repurchase and the Specific Issue).
4.1.3. The Second Repurchase is an integral part of the Replacement BEE Transaction, and is conditional
on the remainder of the Replacement BEE Transaction, including the Specific Issue, becoming
unconditional.
4.2. Rationale for the Second Repurchase
4.2.1. The rationale for the Replacement BEE Transaction is set out above in paragraph 2.2 of this
announcement. A key component of the Replacement BEE Transaction is the Specific Issue which
results in the issue of the Specific Issue Shares to NewBEECo, which would be dilutive for Exxaro
Shareholders, excluding MS333 (the “Exxaro Independent Shareholders”). The Second
Repurchase will act as an anti-dilutive measure for the Specific Issue. The Independent Board Sub-
Committee is of the opinion that it is in the best interest of Exxaro Independent Shareholders and
MS333 alike.
4.2.2. Furthermore, the Independent Board Sub-Committee believes that there is a strong rationale to
implement the Second Repurchase at a price equal to a 5% discount to the Reference Price, taking
into account:
- Exxaro’s assessment of the group’s intrinsic value; and
- Exxaro’s cash generating ability and capital requirements over the medium term.
4.2.3. The arrangements regulating the Existing BEE Transaction came to an end on 28 November 2016.
Since then, MS333 has disposed of Exxaro Shares in the market to settle certain of its obligations. It
is anticipated that MS333 will dispose of further Exxaro Shares to provide liquidity for the Exiting
MS333 Interests in the form of cash (as elected by MS333 indirect shareholders as part of the MS333
Election Process). The implementation of the Second Repurchase is thus also intended to contribute
to the orderly realisation of the Exiting MS333 Interests, and reducing the Exxaro Share overhang in
the market.
4.3. Key terms of the Second Repurchase
Exxaro and MS333 have reached agreement on the terms of the Second Repurchase, subject to the
provisions of Exxaro’s Memorandum of Incorporation, the Companies Act, the JSE Listings Requirements
(the “Listings Requirements”) and Exxaro Shareholder approval, on the following terms:
4.3.1. the Second Repurchase will be effected by way of the Second Repurchase Scheme;
4.3.2. the Second Repurchase Scheme Shares, being 22 686 572 Exxaro Shares currently held by MS333,
will be repurchased by Exxaro;
4.3.3. the Second Repurchase Scheme Shares will be repurchased for R118.76 per Second Repurchase
Scheme Share, which equates to a 5% discount to the Reference Price;
4.3.4. the Second Repurchase will be funded from Company cash reserves; and
4.3.5. the Second Repurchase Shares will be immediately cancelled as issued Exxaro Shares and there will
thus be no effect on Exxaro’s treasury shares as a result of the Second Repurchase.
5. COMPONENT 3: THE SPECIFIC ISSUE
5.1. Overview of the Specific Issue in the context of the Replacement BEE Transaction
5.1.1. As part of the Replacement BEE Transaction, Exxaro will issue, pursuant to the Specific Issue, the
Specific Issue Shares to NewBEECo.
5.1.2. The Specific Issue Shares will equate to 19.2% of the total Exxaro Shares following the
implementation of the Replacement BEE Transaction. This, together with the Exxaro Shares
reinvested pursuant to the MS333 Reinvestment and the IDC Reinvestment, will result in NewBEECo
holding 30.0% of the Exxaro Shares following the implementation of the Second Repurchase and the
Specific Issue.
5.1.3. The Specific Issue is conditional on the remainder of the Replacement BEE Transaction, including the
Second Repurchase, becoming unconditional.
5.2. Rationale for the Specific Issue
5.2.1. The Specific Issue is an integral part of the Replacement BEE Transaction and will result in
NewBEECo holding 30.0% of the Exxaro Shares.
5.2.2. The proceeds from the Specific Issue will restore Exxaro’s cash reserves following the implementation
of the Second Repurchase and the Exxaro Equity Investment, thereby limiting the cash impact of the
Replacement BEE Transaction on Exxaro.
5.3. Intended use of funds
The funds from the Specific Issue will be used by Exxaro to restore its cash reserves after effecting the
Second Repurchase and the Exxaro Equity Investment and thus ensure that the cash effect of the
implementation of the Replacement BEE Transaction on Exxaro is minimal.
5.4. Key terms of the Specific Issue
Exxaro and NewBEECo have reached agreement on the Specific Issue, subject to the provisions of
Exxaro’s Memorandum of Incorporation, the Companies Act, the Listings Requirements and Exxaro
Shareholder approval, on the following terms:
5.4.1. the Specific Issue Shares, being a maximum of 69 263 807 Exxaro Shares (which will be reduced
should the Reinvesting MS333 Shareholders reinvest more than the minimum of 26 623 276 Exxaro
Shares pursuant to the MS333 Reinvestment) will be issued by Exxaro to NewBEECo;
5.4.2. the Specific Issue will occur at a discount to the Reference Price, equal to the BEE Discount, which
equates to 22.6% of the New Empowerment Structure following implementation of the Replacement
BEE Transaction (this is based on the BEE Shares as opposed to the Specific Issue Shares only).
However, given that the BEE Facilitation Value will be transferred through the Specific Issue, the
discount on the Specific Issue Shares equates to 40.1%. This is illustrated below:
Number of Exxaro Shares held New Empowerment Structure Specific Issue
Total value received (R million) 10 472(1) 5 188(2)
Exxaro Shares (million) 108.2(3) 69.3(4)
Value per Exxaro Share (R) 96.76 74.90
Discount to Reference Price 22.6% 40.1%
Notes:
(1) Sum of the BEE Shares attributable to the MS333 Reinvestment, the IDC Reinvestment, the Exxaro Equity Investment and the Third Party
Funding at the Reference Price (refer to the BEE Shares in the table included in paragraph 2.3.4). This assumes that the all Replacement BEE
Transaction funding is procured at the Reference Price and the BEE Facilitation Value is transferred by issuing free Exxaro Shares (for no
value), i.e. (26.6m + 12.3m + 21.5m + 23.3m) x R125.01.
(2) Value of the Exxaro Equity Investment and the Third Party Funding.
(3) The BEE Shares.
(4) The Specific Issue Shares.
6. GENERAL INFORMATION
6.1. Related party considerations
6.1.1. MS333 is a material Exxaro Shareholder, and is therefore considered a related party to Exxaro in
terms of the Listings Requirements. Section 48, read with sections 114 and 115 of the Companies
Act, a special resolution is required to approve the Second Repurchase (excluding the vote of the
persons from which the shares are being repurchased, in this case MS333). Approval isn’t required in
terms of paragraph 5.69(b) of the Listings Requirements, as the Second Repurchase will occur at a
discount to the 30-day weighted average traded price of Exxaro Shares as at the date on which the
Second Repurchase was agreed, being Friday, 15 September 2017.
6.1.2. The Specific Issue to NewBEECo is regarded as an issue to an associate of a related party to Exxaro
in terms of the Listings Requirements, as the Reinvesting MS333 Shareholders and the IDC
collectively hold a material interest in Exxaro prior to implementation of the Replacement BEE
Transaction. In addition, following the implementation of the Replacement BEE Transaction, the
Reinvesting MS333 Shareholders and the IDC will, together and separately, have a material interest
in NewBEECo, being the party to whom the Specific Issue Shares will be issued in terms of the
Specific Issue, and is therefore considered a related party to Exxaro in terms of the Listings
Requirements. In terms of paragraph 5.51(g) of the Listings Requirements, an ordinary resolution (of
75%) must be passed by Exxaro Shareholders to implement the Specific Issue.
6.1.3. MS333 and its direct and indirect shareholders (including the IDC) will be excluded from voting on the
resolutions necessary to authorise and implement the Second Repurchase and the Specific Issue.
Their votes will however be taken into account for purposes of establishing a quorum for the general
meeting at which the resolutions required to approve the Replacement BEE Transaction will be
considered (the “General Meeting”).
6.2. Conditions precedent to the Replacement BEE Transaction
The Replacement BEE Transaction will be subject to the fulfilment, or waiver, as the case may be, of
amongst others the conditions precedent, summarised as follows:
6.2.1. the passing of a special resolution of the Exxaro Independent Shareholders, approving the Second
Repurchase by way of the Second Repurchase Scheme, as required by section 115(2) of the
Companies Act, read with section 114 of the Companies Act, and:
- to the extent required, the approval of the implementation of such resolution by the court; and
- if applicable, Exxaro not treating such resolution as a nullity, as contemplated in section 115(5)(b)
of the Companies Act;
6.2.2. within 30 business days following the General Meeting, Exxaro Shareholders holding more than 10%
of the Exxaro Shares have not exercised their rights in terms of section 164 of the Companies Act by
giving valid demands in terms of section 164(7) of the Companies Act. If Exxaro Shareholders give
notice objecting to the Second Repurchase Scheme as contemplated in section 164(3) of the
Companies Act, or if Exxaro Shareholders holding less than 10% of the issued Exxaro Shares vote
against the Second Repurchase Scheme resolution, this condition will be deemed to have been
fulfilled at the time of the passing of the Exxaro Shareholder resolution to approve the Second
Repurchase by way of the Second Repurchase Scheme;
6.2.3. the passing of a special resolution of the Exxaro Independent Shareholders, approving the Specific
Issue, as required by Exxaro’s Memorandum of Incorporation (which also addresses the requirement
for an ordinary resolution of 75%, as required by paragraph 5.51(g) of the Listings Requirements);
6.2.4. the JSE granting approval for the listing of the Specific Issue Shares;
6.2.5. the implementation of the Replacement BEE Transaction resulting in at least 30.0% HDSA ownership
in Exxaro;
6.2.6. both Exxaro and the IDC being satisfied that the indirect shareholder composition of BEE SPV is
sufficiently broad-based;
6.2.7. the IDC reinvesting 12 337 616 Exxaro Shares into the New Empowerment Structure pursuant to the
IDC Reinvestment;
6.2.8. the Transaction Agreements and the agreements relating to the Third Party Funding becoming
unconditional in accordance with their terms, including the Second Repurchase and the Specific
Issue; and
6.2.9. the issuance of a compliance certificate by the Takeover Regulation Panel (“TRP”) in relation to the
Second Repurchase Scheme.
6.3. Posting of the Circular and notice of General Meeting of Exxaro Shareholders
6.3.1. The circular to Exxaro Shareholders containing the details of the Replacement BEE Transaction,
incorporating a notice of General Meeting and a form of proxy, will be posted on or around Monday,
16 October 2017 (the “Circular”).
6.3.2. Exxaro Shareholders are advised that the Circular will be immediately available on Exxaro’s website:
www.exxaro.com.
6.3.3. The General Meeting of Exxaro Shareholders will be convened, in terms of the notice of General
Meeting forming part of the Circular, to vote on the Replacement BEE Transaction. The General
Meeting will be held at Exxaro Corporate Centre, Roger Dyason Road, Pretoria West, at 10h00 on or
around Monday, 13 November 2017.
6.4. Important dates and times relating to the Replacement BEE Transaction
Set out below are salient dates and times relating to the approval and implementation of the Replacement
BEE Transaction:
2017
Last day to trade in order to be eligible to receive the Circular Tuesday, 3 October
Record date to determine which Exxaro Shareholders are entitled to receive the Circular Friday, 6 October
Circular posted to Exxaro Shareholders Monday, 16 October
Last day to trade in order to be eligible to attend and vote at the General Meeting Tuesday, 31 October
Record date to determine which Exxaro Shareholders are eligible to attend and vote at Friday, 3 November
the General Meeting
For administrative purposes and the sake of good order, it will be appreciated if forms of Monday, 13 November
proxy be received or lodged by 10h00 on Thursday, 9 November 2017. Forms of proxy
may be lodged at any time before the commencement of the General Meeting
General Meeting to be held at 10h00, at the Exxaro Corporate Centre, Roger Dyason Monday, 13 November
Road, Pretoria West
Results of the General Meeting published on SENS Monday, 13 November
Results of the General Meeting published in the South African press Tuesday, 14 November
If all of the resolutions relating to the Second Repurchase and the Specific Issue
are passed by the requisite number of Exxaro Independent Shareholders at the
General Meeting:
Last day for Exxaro Independent Shareholders who voted against the Second Monday, 20 November
Repurchase Scheme to require Exxaro to seek court approval for the Second
Repurchase Scheme in terms of section 115(3)(a) of the Companies Act
Last day to send notice of adoption of special resolutions to dissenting shareholders in Monday, 27 November
accordance of section 164 of the Companies Act
Last day for Exxaro Independent Shareholders who voted against the Second Monday, 27 November
Repurchase Scheme to apply to court for leave to apply for a review of the Second
Repurchase Scheme in terms of section 115(3)(b) of the Companies Act
The following dates assume that no court approval or review of the Second
Repurchase Scheme is required and will be confirmed in the finalisation
announcement if the Second Repurchase, and as a result the Specific Issue,
becomes unconditional:
Expected date for compliance certificate to be received from the TRP and fulfilment of all Tuesday, 28 November
conditions precedent related to the Replacement BEE Transaction
Finalisation announcement (when the Replacement BEE Transaction becomes Tuesday 28 November
unconditional) expected to be released on SENS
Finalisation announcement published in the press Wednesday, 29 November
Repurchase implementation date (including cancellation and delisting of Second Wednesday, 6 December
Repurchase Scheme Shares) on or about
BEE implementation date (including Specific Issue Shares issued) on or about Thursday, 7 December
Notes:
(1) All times above are South African local time.
(2) All dates and times are subject to change. The above dates have been determined based on certain assumptions regarding the Replacement
BEE Transaction. If relevant dates in respect of the Replacement BEE Transaction change, and the dates above are impacted, an
announcement highlighting the change will be released on SENS and published in the press.
7. PRO-FORMA FINANCIAL EFFECTS OF THE REPLACEMENT BEE TRANSACTION
7.1. The pro forma financial effects of the Replacement BEE Transaction are still in the process of being
reviewed.
7.2. Once finalised, the pro forma financial effects of the Replacement BEE Transaction will be announced on
SENS.
8. RENEWAL OF CAUTIONARY
Further to the renewal of cautionary announcement issued on 26 June 2017, and despite all terms being
agreed, given that the pro forma financial effects of the Replacement BEE Transaction are still being finalised,
Exxaro Shareholders are advised to continue to exercise caution when dealing in Exxaro Shares, until these
effects are announced.
CH Wessels
Group Company Secretary
Pretoria
18 September 2017
Merchant bank, financial adviser and transaction sponsor to Exxaro
Rand Merchant Bank, a division of FirstRand Bank Limited
Legal adviser to Exxaro
Norton Rose Fulbright South Africa
Company sponsor to Exxaro
Absa Bank Limited, acting through its corporate and investment bank division
Tax adviser to Exxaro
Cliffe Dekker Hofmeyr
Financial adviser to MS333
Tamela
Legal adviser to MS333
Fasken Martineau
Tax adviser to MS333
Webber Wentzel
Independent Expert
KPMG
13
Date: 18/09/2017 05:38:00 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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