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ACQUISITION OF A STRATEGIC STAKE IN HARMONY BY KOMANANI

Release Date: 04/04/2001 09:06:30      Code(s): HAR HARO
Harmony Gold Mining Company Limited
(Registration number 1950/038232/06)
("Harmony")
Komanani Mining (Proprietary) Limited
(Registration number 2000/001519/07)
("Komanani")
The Industrial Development Corporation of South Africa Limited
(Registration number 1940/014201/06)
(the "IDC")
ACQUISITION OF A STRATEGIC STAKE IN HARMONY BY KOMANANI
1. Introduction
Harmony, Komanani and the IDC are pleased to announce that they have reached
agreement in terms of which Komanani and the IDC, on behalf of Komanani, will,
subject to the fulfilment of certain conditions precedent, subscribe for
ordinary and preference shares in Harmony pursuant to which Komanani will
become the largest single shareholder in Harmony with a holding of
approximately 10% ("the transaction").
The Minister of Minerals and Energy fully supports the transaction and has
indicated that she  believes it demonstrates Harmony's proactive approach to
change as well as representing a positive move in addressing black empowerment
and ownership in the gold mining industry.
It is expected that the transaction will:
- allow Harmony to contribute to and participate more proactively in the
empowerment of previously disadvantaged South Africans;
- provide for the repayment of a portion of Harmony's existing debt, resulting
in a meaningful reduction in future interest payments ; and
- strengthen Harmony's balance sheet, with a view to the further pursuit of
growth and acquisition opportunities.
2. The initial shares and preference shares
In terms of the transaction:
- the IDC and Komanani will subscribe for an aggregate of 10 958 904 ordinary
shares in Harmony ("initial shares") at a subscription price of R36 per initial
share representing a discount of 6,0% to the 30 day volume weighted average
traded price and a 3,5% discount to the closing market price of the ordinary
shares in Harmony ("ordinary shares") on the JSE Securities Exchange South
Africa ("JSE") on Tuesday, 3 March 2001. Such initial shares may not be
disposed of for a period of 18 months following their issue; and
- the IDC will subscribe for an aggregate of 10 958 904 convertible redeemable
preference shares in Harmony ("preference shares") at a subscription price of
50 cents each, which will be issued subject to the following terms and
conditions:
i) they will not confer any right to a dividend;
ii) they will confer a preference in the event of the final winding-up of
Harmony;
iii) they will not be listed and may not be traded;
iv) they will carry only limited voting rights, for example, when a resolution
is proposed which directly affects their rights and in the event of the
winding-up of Harmony;
v) they may be converted into ordinary shares on a 1 for 1 basis, at any time
after their issue, subject to a top-up payment of R41,50 for every ordinary
share into which they are converted; and
vi) if they are not converted into ordinary shares they will be redeemed by
Harmony after a period of 5 years at 50 cents per preference share.
3. Financial effects
The financial effects of the transaction on the audited results of Harmony for
the year ended 30th June, 2000, are set out below. Since this date, a sale of
business agreement has been concluded between Harmony, Randfontein Estates
Limited ("Randfontein") and Anglogold Limited ("Anglogold"), in terms of which
Harmony will (through Randfontein) acquire the Elandsrand and Deelkraal mines
from Anglogold ("the acquisition"). The acquisition remains subject to the
granting of the necessary mining authorisations. Hence two scenarios are
presented below - firstly, a scenario in which the acquisition is excluded
("Scenario 1") and secondly, a scenario in which the acquisition is included
("Scenario 2").
3.1  Financial effects excluding the acquisition of Elandsrand and Deelkraal
Scenario 1        Before   After the   Increase/  After the      Increase/
(Excluding the    (cents)  initial    (decrease)  initial share  (decrease)
acquisition)      (1.)     share issue (%)        issue and      (%)
                           (cents)                conversion
                           (2.)                   of the
                                                  preference
                                                  shares
                                                  (cents)
                                                  (3.)
Net asset value
and tangible asset
value per share   2953     3020        2,3        3128           5,9
Earnings and headline
earnings per
share             435      426         (2,1)      422            (3,1)
Notes to Scenario 1
1. The information has been compiled from the audited consolidated income
statement of Harmony for the year ended 30 June 2000 and the audited
consolidated balance sheet of Harmony as at 30 June 2000.
2. The adjustments in this column relate to the following:
- it has been assumed that 10 958 904 ordinary shares have been issued at a
price of R36 per ordinary share and 10 958 904 redeemable convertible
preference shares have been issued at a price of 50 cents per share;
- that interest of 12% per annum (before tax) has been received on cash
generated by the shares issued as indicated above; and
- that there are tax effects related to the above.
3. The adjustments in this column relate to the following:
- it has been assumed that 21 917 808 ordinary shares have been issued
(assuming that the 10 958 904 convertible preference shares referred to above
have been converted) and that the issue of these ordinary shares took place
with effect from 1 July 1999 for pro-forma  income purposes and 30 June 2000
for pro-forma balance sheet purposes;
- that the issue price for the initial shares is R36 per share;
- that the convertible redeemable preference shares are issued at 50 cents per
share and subsequently converted at an additional R41,50 per share;
- that interest of 12% per annum (before tax) has been received on cash
generated by the shares issued as indicated above; and
- that there are tax effects related to the above.
3.2  Financial effects including the Elandsrand and Deelkraal acquisition
Scenario 2        Before   After the   Increase/  After the      Increase/
(Including        (cents)  initial     (decrease) initial share  (decrease)
the acquisition ) (1.)     share issue (%)        issue and      (%)
                           (cents)                conversion
                           (2.)                   of the
                                                  preference
                                                  shares
                                                  (cents)
                                                  (3.)
Net asset value
and tangible asset
value per share   2953     3020        2,3        3128           5,9
Earnings and headline
earnings per
share             376      370         (1,6)      374            (0,5)
Notes to Scenario 2
1. The information has been compiled from the audited consolidated income
statement of Harmony for the year ended 30 June 2000 and the audited
consolidated balance sheet of Harmony as at 30 June 2000, appropriately
adjusted for the acquisition of Elandsrand and Deelkraal.
2. The adjustments in this column relate to the following:
- it has been assumed that 10 958 904 ordinary shares have been issued at a
price of R36 per ordinary share and 10 958 904  preference shares have been
issued at a price of 50 cents per preference share, a portion of which is used
to fund the acquisition;
- that interest of 12% per annum (before tax) has been received on cash
generated by the shares issued as indicated above; and
- that there are tax effects related to the above.
3. The adjustments in this column relate to the following:
- it has been assumed that 21 917 808 ordinary shares have been issued
(assuming that the 10 958 904 convertible preference shares referred to above
have been converted) and that the issue of these ordinary shares took place
with effect from 1 July 1999 for pro-forma income purposes and 30 June 2000 for
pro-forma balance sheet purposes, a portion of which is used to fund the
acquisition ;
- that the issue price for the initial shares is R36 per share;
- that the convertible redeemable preference shares are issued at 50 cents per
convertible redeemable preference share and subsequently converted at an
additional R41,50 per share;
- that interest of 12% per annum (before tax) has been received on cash
generated by the shares issued as indicated above; and
- that there are tax effects related to the above.
4. Conditions precedent
The transaction is subject to the fulfillment of the following conditions
precedent:
- that the following resolutions are passed by the requisite majority of
ordinary shareholders and that such resolutions are (to the extent required)
registered by the Registrar of Companies:
i) a resolution in terms of section 5.68 of the Listings Requirements of the
JSE to approve the specific issue of the initial shares and the preference
shares for cash;
ii) a resolution to increase Harmony's authorised share capital by such number
of ordinary shares and preference shares as required; and
iii) a resolution amending Harmony's articles of association to provide for the
terms and conditions attaching to the preference shares;
- that the JSE approves the listing of the initial shares and, in principle,
the ordinary shares into which the preference shares may be converted;
- that the acquisition is concluded and becomes unconditional; and
- that the IDC is provided with a legal opinion to its reasonable satisfaction
that Harmony has all necessary mining authorisations and other legal
documentation, rights and consents required for the conduct of its business.
5. Further details
A circular containing full details of the transaction and including a notice of
general meeting will be posted to shareholders shortly.
Virginia
4 April 2001
Financial adviser to Harmony
JP Morgan
Corporate advisor to Harmony
Micofin Holdings (Proprietary)Limited
Financial adviser to Komanani
African Legend Financial Services (Proprietary)Limited
Sponsor to Harmony
JP Morgan
Legal adviser to Harmony
Cliffe Dekker Fuller Moore Inc



                                        
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