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Notice of a Meeting of Bondholders
Soapstone Investment Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/011940/06)
Soapstone stock code: DMCCB
ISIN: ZAE000180204
(“Soapstone”)
NOTICE OF A MEETING OF BONDHOLDERS
In accordance with the provisions of the Offering Circular in
respect of the Soapstone Investments Limited ZAR40,000,000.00 14%
Fixed Rate Senior Secured Convertible Registered Bonds, dated on or
about 21 June 2013 (the "Offering Circular"), and the trust deed
dated on or about 21 June 2013 and entered into between the Issuer,
DiamondCorp plc ("Diamondcorp") and GMG Trust Company (SA)
Proprietary Limited (the "Trust Deed"), notice is hereby given, in
accordance with Condition 14.2 of the Offering Circular (Steps
following an Event of Default) of the Terms and Conditions of the
Bonds (the "Conditions"), that a meeting of the Bondholders will be
held at 14h00 on 5 April 2017 at the offices of Hogan Lovells (South
Africa) Inc., at 22 Fredman Drive, Sandton, Johannesburg, 2196 (the
"Bondholders Meeting"), at which meeting the Extraordinary
Resolutions set out below will be considered and, if deemed fit,
passed with or without modification.
Save as otherwise defined, words and expressions used in this Notice
have the meanings given to them in the Offering Circular.
WHEREAS:
1. As referred to in the SENS announcement of the Issuer dated 14
December 2016, the interest payment due to the Bondholders on
14 December 2016 as announced on SENS on 11 November 2016 was
not honoured.
2. The Issuer is unable to honour the interest payment due to
Bondholders on 14 March 2017, as referred to in the SENS
announcement of the Issuer dated 23 February 2017.
3. Each failure to make payment arose from the inability of
DiamondCorp plc ("DiamondCorp") to advance the requisite funds
to the Issuer, due to the circumstances set out below:
(a) DiamondCorp, the parent company of the Issuer, is the 74%
owner and operator of the Lace diamond mine in the Free
State province of South Africa.
(b) In the late afternoon of Friday, 11 November 2016, two
extreme thunderstorms passed over the Lace mine, dropping
almost 90mm of rain in just over an hour. This equates to
almost one-third of the mine's annual rainfall.
(c) This overwhelmed the mine's pumping systems and flooded
the 310m production level to the hanging wall. In total,
more than 10,000 cubic metres of water entered the mine
through the open pit and access ramps.
(d) All personnel were successfully evacuated from the mine
without injury. While the production level has been
pumped dry, no production will be possible in the short-
term as the longhole drill rig which was operating at the
time of the flood will need to be recovered and the
electrics rebuilt. This could take up to 12 weeks from
the time of recovery.
(e) As a consequence of the impact on production, a capital
raise being planned by DiamondCorp at the time of the
flood did not proceed.
(f) On 14 November 2016, DiamondCorp announced that the board
of the Company's operating subsidiary, Lace Diamond Mines
(Pty) Ltd ("LDM"), had placed LDM into business rescue in
accordance with the provisions of section 129 of the
Companies Act, 71 of 2008.
(g) On 22 November 2016, the board of the LDM resolved to
appoint Daniel Terblanche of Deloitte & Touche as the
Business Rescue Practitioner.
(h) On 29 November 2016, DiamondCorp provided the following
update on the business rescue proceedings of LDM:
(i) The 310m production level was clear of the flood
water and the mine's pumping system was now working
on a normal basis.
(ii) The longhole drill rig had been moved to higher
ground within the mine and was awaiting remediation
of the access ramp before being brought to surface
for despatch to Sandvik for rebuild. Options and
timelines for ramp repair are being assessed by LDM
management.
(iii) The Business Rescue Practitioner, Daniel Terblanche
of Deloitte, and the management of LDM were engaged
in discussions with all stakeholders in accordance
with the provisions of section 129 of the South
African Companies Act, 71 of 2008, including but not
limited to: trade creditors, the
Industrial Development Corporation of South
Africa ("IDC") as the primary lender; bondholders;
Laurelton Diamonds, Inc; the mine's workforce
including the Association of Mineworkers and
Construction Union (AMCU); and Soapstone Investment
Ltd and DiamondCorp plc, being themselves the
largest creditors to LDM.
(iv) The Board of DiamondCorp plc was also in continuing
discussions with the Company's creditors.
(v) LDM was in the process of claiming against its
insurance policy in respect of the storm damage and
remediation.
(i) DiamondCorp, alongside PwC, continue to evaluate the
Group's financial projections with a view to determining
the resultant additional capital requirement that is
anticipated to be required in the event of a successful
conclusion of the Business Rescue proceedings.
(j) In preparation for raising the required capital,
management is requesting that lenders to DiamondCorp and
LDM to agree to a standstill with respect to their rights
under existing loan facilities until the completion of
the business rescue process.
(k) On 19 December 2016, DiamondCorp announced that the
Industrial Development Corporation of South Africa (the
"IDC"), the primary lender to LDM, had formally agreed to
a standstill with respect to its rights under the secured
project loan to LDM until the completion of the business
rescue process.
(l) As a consequence of the IDC standstill, the Issuer is now
requesting the Bondholders to agree to a similar
standstill.
4. Accordingly, the Issuer will call a meeting of Bondholders to
discuss potential remedial steps.
5. In terms of Condition 23.4 of the Bonds, unless the holders of
at least 90% of the aggregate Principal Amount of the Bonds for
the time being outstanding agree in writing to a shorter
period, at least 15 days' written notice of a meeting must be
given to each Bondholder, the Issuer and the Trustee. Notice of
the Bondholders Meeting given in terms hereof has been given
with the required notice period of at least 15 days.
6. The Issuer wishes to request that the Bondholders waive the
failure by the Issuer to make the interest payments that were
due on 14 December 2016 and 14 March 2017 respectively (in each
case, the "Outstanding Payment"), and to determine that each
such failure to make payment shall not be treated as an Event
of Default for purposes of the Conditions, provided that each
Outstanding Payment shall be made, together with such other
amounts as may fall due for payment in accordance with the
Conditions, on the conclusion of the business rescue
proceedings in respect of Lace Diamond Mines Proprietary
Limited, and that penalty interest shall accrue on each
Outstanding Payment and/or such other amount(s) in accordance
with Condition 7.4 of the Offering Circular from 14 December
2016 until the date on which payment of each respective
Outstanding Payment and/or such other amount(s) is made.
7. The Issuer further wishes to request that the Bondholders
authorise the suspension of the Issuer's obligations to make
payment of principal and interest due under the Bonds until
such time as business rescue proceedings in respect of Lace
Diamond Mines Proprietary Limited have been concluded.
8. The Issuer therefore requests the Bondholders to approve the
Extraordinary Resolutions set out below.
9. Proxies
9.1 In terms of Condition 23.10 (Proxies and representatives), a
Bondholder may by an instrument in writing (a "proxy form")
signed by the Bondholder or his duly authorised agent or, in
the case of a juristic person, signed on its behalf by a duly
authorised officer, appoint any person (a "Proxy") to act on
its behalf in connection with any meeting or proposed meeting.
9.2 A person appointed to act as Proxy need not be a Bondholder.
9.3 A proxy form is attached as Annex A for those Bondholders who
wish to be represented by proxy at the Bondholders Meeting.
9.4 Please note that the proxy form must be deposited at the
Specified Office of the Issuer or at the Specified Office of
the Transfer Agent, as the case may be, not less than 24 hours
before the time appointed for holding the Bondholders Meeting
or adjourned meeting at which the person named in such proxy
form proposes to vote.
9.5 Please note that in accordance with Condition 23.9 (Votes),
Bondholders in respect of Bonds held in the Central Securities
Depository in uncertificated form shall vote at the Bondholders
Meeting on behalf of the holders of Beneficial Interests in
such Bonds, in accordance with the instructions to the Central
Securities Depository's Nominee from the holders of Beneficial
Interests conveyed through the Participants in accordance with
the Applicable Procedures.
9.6 If the Central Securities Depository Participant ("CSDP") of a
holder of Beneficial Interests does not contact such holder,
then such holder is advised to contact such holder's CSDP and
provide such CSDP with the holder's voting instructions.
IT IS RESOLVED THAT
10. Extraordinary Resolution No. 1 – Waiver of failure to make
payment
The Bondholders waive the failure by the Issuer to make the
interest payments that fell due on 14 December 2016 and 14
March 2017 (in each case, the "Outstanding Payment"), as
referred to in the SENS announcements of the Issuer dated 14
December 2016 and 23 February 2017 respectively, and further
resolve that each such failure to make payment shall not be
treated as an Event of Default for purposes of the Conditions,
provided that each Outstanding Payment shall be made, together
with such other amounts as may fall due for payment in
accordance with the Conditions, on the conclusion of the
business rescue proceedings in respect of Lace Diamond Mines
Proprietary Limited, and that penalty interest shall accrue on
each Outstanding Payment and/or such other amount(s) in
accordance with Condition 7.4 of the Offering Circular from 14
December 2016 until the date on which payment of each
respective Outstanding Payment and/or such other amount(s) is
made.
11. Extraordinary Resolution No. 2 – Suspension of payment
obligations
The Bondholders authorise the suspension of the Issuer's
obligations to make payment of principal and interest due under
the Bonds until such time as business rescue proceedings in
respect of Lace Diamond Mines Proprietary Limited have been
concluded.
The salient dates relating to the Bondholders Meeting are as
follows:
Last date to trade: Tuesday, 28 March 2017
Record date: Friday, 31 March 2017
Proxies due: Tuesday, 4 April 2017 at 14h00
Bondholders Meeting: Wednesday, 5 April 2017 at 14h00
Annex A – Form of Proxy
SOAPSTONE INVESTMENT LIMITED
(the "Issuer")
(Registration Number 2006/011940/06)
(Established and incorporated as a company with limited liability in
accordance with the laws of South Africa)
FORM OF PROXY
For use by the holders (the "Bondholders") of the
ZAR40,000,000.00 14% Fixed Rate Senior Secured Convertible
Registered Bonds due 14 December 2018 (the "Bonds") issued by the
Issuer in accordance with the Offering Circular in respect of the
Bonds dated on or about 21 June 2013 (the "Offering Circular"), at a
meeting of Bondholders to be held on 5 April 2017 at 14h00 at the
offices of Hogan Lovells (South Africa) Inc. , at 22 Fredman Drive,
Sandton, Johannesburg, 2196 (the "Bondholders Meeting").
Capitalised words and phrases used in this form will, unless
otherwise defined, bear the same
meanings as in the Offering Circular.
I/We
....................................................................
....... being the holder(s) of Bonds in an Outstanding Principal
Amount of ZAR .........................., appoint the chairman of
the meeting, as my/our proxy to act for me/us and on my/our behalf
at the Bondholders Meeting which will be held for the purpose of
considering, and if deemed fit, passing, with or without
modification, the resolutions to be proposed thereat and at any
adjournment thereof; and to vote for and/or against the resolutions
and/or abstain from voting in respect of ..........................
[all/insert number] the Bonds registered in my/our names(s), in
accordance with the following instructions:
FOR AGAINST ABSTAIN
Extraordinary
Resolution No.
1
Extraordinary
Resolution No.
2
Signed:
[***Insert name of Bondholder]
Name:
Date:
Who warrants his/her authority hereto
14 March 2017
Debt Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 14/03/2017 05:23:00 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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