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Harmony/ARM - Further announcement regarding the proposed acquisition by

Release Date: 07/01/2002 16:48:01      Code(s): HAR
Harmony and ARM of certain Free State Assets from AngloGold Limited
("AngloGold")
Harmony Gold Mining Company Limited
  (Incorporated in the Republic of South Africa)
  (Registration number 1950/038232/06)
  Share code: HAR   ISIN: ZAE000015228
  ("Harmony")
African Rainbow Minerals (Proprietary) Limited
  (Incorporated in the Republic of South Africa)
  (Registration number 1997/015869/07)
  ("ARM")
Further announcement regarding the proposed acquisition by Harmony and ARM
of certain Free State Assets from AngloGold Limited ("AngloGold")
1. Introduction
Further to the joint announcement published by Harmony and ARM on 21
November
2001 (the "previous announcement") regarding the acquisition of certain
assets and businesses in the Free State goldfields from AngloGold (the
"acquisition assets") with effect from 1 January 2002 (the "effective date")
(the "acquisition"), JPMorgan Chase Bank ("JPMorgan") and BOE Merchant Bank
("BOE")are authorised to announce that Harmony and ARM have reached
agreement with AngloGold regarding the potential restructuring of the
acquisition. In addition, the following conditions precedent (as set out in
the previous announcement) have been met, namely:
- Harmony and ARM have completed a high-level due diligence investigation of
the acquisition assets to their satisfaction; and
- Harmony and ARM have concluded a formal joint venture ("Joint Venture
agreement") and shareholders' agreement.
2. Revised structure of the acquisition
In terms of the current agreement with AngloGold, it is proposed that the
acquisition assets are transferred into a wholly owned subsidiary of
AngloGold, the shares in and claims against which will then be purchased by
Harmony and ARM. This is subject to the receipt of a ruling from the South
African Revenue Service that such transfer constitutes a scheme of
rationalisation in terms of section 39 of the Taxation Laws Amendment Act
(Act 20 of 1994), as amended (the "SARS ruling"). AngloGold has now agreed
that if the SARS ruling is not obtained on or before 31 January 2002,
Harmony and ARM, through a jointly held company (the "Company"), will
acquire the acquisition assets directly from AngloGold, as going concerns,
with effect from the effective date, in accordance with paragraph 3 below.
3. Consideration payable in terms of the revised structure
The consideration payable in terms of the revised structure will be an
amount of R2,2 billion, plus an amount equal to any liability for tax
payable by AngloGold pursuant to the sale by it of the acquisition assets
(the "additional amount"), (collectively, the "aggregate purchase price").
Accordingly, the Company will pay to AngloGold an amount of R2,2 billion, of
which R1,8 billion will be payable, in cash, on the date which is 10
business days following the date upon which the conditions precedent
referred to in paragraph 4 below are fulfilled and the balance of R400
million, payable in cash, on 1 January 2005. The Company will pay to
AngloGold the additional amount as and when the corresponding liability is
payable by AngloGold.
Under the revised structure the Company will, subsequent to the purchase of
the acquisition assets, have an unredeemed capital balance (the "capital
balance") equivalent to a significant proportion of the aggregate purchase
price. In the medium term therefore the net effect on the Company's
cashflows due to the additional amount and the tax benefit which will accrue
due to the redemption of the capital balance, will not be significant.
4. Conditions precedent
The implementation of the acquisition on the current terms is subject to the
fulfilment of the following conditions precedent by no later than 31 March
2002, namely:
-  the approval of the cession of the mining leases in respect of the
acquisition assets to the Company by the Minister of Minerals and Energy;
-  the granting of the necessary mining authorisations to the Company;
-  the pre-requisite rulings and approvals of the relevant regulatory
authorities, including the Competition Authorities; and
-  the approval of Harmony shareholders, insofar as may be necessary,
(collectively, the "acquisition conditions precedent"), and to the receipt
of the SARS ruling by no later than 31 January 2002. The implementation of
the acquisition on the basis of the revised structure is subject to the
fulfilment of all the acquisition conditions precedent by no later than 30
April 2002, the signing of an amended Joint Venture agreement in respect of
the Company by no later than 21 January 2002 and no receipt of the SARS
ruling on or before 31 January 2002.
5. Further announcements
Harmony shareholders will be notified of progress in the fulfilment of the
remaining conditions precedent.
  Virginia                              Sandton
  7 January 2002                        7 January 2002
Advisers to HarmonyAdvisers to Harmony
  JPMorgan Chase Bank
  (Registration number 2001/016069/10)
Sponsor to Harmony
  J.P. Morgan Equities
  (Registration number 1995/011815/06)
Legal adviser to Harmony
  Cliffe Dekker Fuller Moore Inc
  (Registration number 1998/018173/21)
Reporting accountants and auditors to Harmony
  PricewaterhouseCoopers Inc.
  Chartered Accountants (SA)
  Registered Accountants & Auditors
  (Registration no. 1998/012055/21)
Advisers to ARM
  BOE Merchant Bank
  A Division of BOE Bank Limited
  Co. Reg. No. 1951/000847/06
Legal adviser to ARM
  Bowman Gilfillan Inc.
  Registration number 1998/021409/21



                                        
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