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Early maturity of Zambezi BEE transaction, implementation of extended BEE transaction, FIA & cautionary withdrawal
NORTHAM PLATINUM LIMITED
Incorporated in the Republic of South Africa
(Registration number 1977/003282/06)
Share code: NHM ISIN: ZAE000030912
Debt issuer code: NHMI
Bond code: NHM002 Bond ISIN: ZAG000129024
Bond code: NHM006 Bond ISIN: ZAG000158577
Bond code: NHM007 Bond ISIN: ZAG000158593
Bond code: NHM009 Bond ISIN: ZAG000158866
Bond code: NHM011 Bond ISIN: ZAG000159237
Bond code: NHM012 Bond ISIN: ZAG000160136
Bond code: NHM014 Bond ISIN: ZAG000163650
Bond code: NHM015 Bond ISIN: ZAG000164922
Bond code: NHM016 Bond ISIN: ZAG000167750
Bond code: NHM018 Bond ISIN: ZAG000168097
Bond code: NHM019 Bond ISIN: ZAG000168105
Bond code: NHM020 Bond ISIN: ZAG000172594
(“Northam” or the “Company”)
EARLY MATURITY OF THE ZAMBEZI BEE TRANSACTION AND IMPLEMENTATION OF AN
EXTENDED BEE TRANSACTION, INCORPORATING A FIRM INTENTION ANNOUNCEMENT IN
RESPECT OF THE ACQUISITION BY NORTHAM PLATINUM HOLDINGS LIMITED OF THE
ENTIRE ISSUED ORDINARY SHARE CAPITAL IN NORTHAM, EXCLUDING TREASURY SHARES
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
KEY FEATURES OF THE COMPOSITE TRANSACTION:
Acceleration of maturity and wind-up of the Zambezi BEE transaction:
- R39.1 billion of total equity value in Zambezi
- R25.6 billion of gross value unlock in Zambezi, Northam’s empowerment
shareholder
- R12.9 billion of pre-tax value transfer to Northam group employees,
communities and strategic BEE partners
- R4.8 billion of estimated taxes in support of the South African fiscus
- More than 25% reduction in Northam’s issued share capital
- Extinguishment of the guarantee provided by Northam to Zambezi’s preference
shareholders
- Continuation of senior management’s incentive structure ensuring retention of
key individuals until 17 May 2025
Implementation of an extended BEE transaction:
- c. 26.5% ownership by historically disadvantaged persons in the Northam group
for a further 15 years
- Emphasis on participation by Northam group employees (excluding
management and employees that participate in the Northam share incentive
plan) and host and affected communities
- Participation by other historically disadvantaged persons such as women’s
groups and youth groups, through a vehicle to be listed on the BEE segment of
the JSE
- Flexibility to comply with BEE ownership requirements set out in the Mining
Charter in respect of existing mining rights and any new mining rights
Unless stated otherwise, the figures in this announcement are calculated based on the closing price of
an ordinary share in the issued share capital of Northam (“Northam Share”) traded on the securities
exchange operated by the JSE Limited (“JSE”) on the business day prior to the Signature Date (defined
below) of R244.76 (“Applicable Share Price”).
1. INTRODUCTION
1.1. Shareholders of Northam (“Shareholders”) are referred to the cautionary announcement
published by Northam on the Stock Exchange News Service operated by the JSE (“SENS”)
on 2 November 2020 (“Cautionary Announcement”), and the subsequent renewals
thereof published on SENS on 14 December 2020, 28 January 2021 and 11 March 2021,
wherein Shareholders were advised that Northam and Zambezi Platinum (RF) Limited
(“Zambezi”) had entered into discussions regarding a potential transaction to accelerate
the maturity of the empowerment transaction concluded between Northam and Zambezi in
May 2015 (“Zambezi BEE Transaction”), whilst maintaining Northam’s broad-based black
economic empowerment (“BEE”) ownership.
1.2. Northam is pleased to advise Shareholders that:
1.2.1. on 22 March 2021 (“Signature Date”), Northam and Zambezi entered into an
implementation and framework agreement (“Implementation Agreement”),
wherein the terms of the proposed acceleration of the maturity and wind-up of the
Zambezi BEE Transaction (“Transaction”) have been agreed; and
1.2.2. Northam’s board of directors (“Northam Board”) has approved an extended
15-year BEE transaction to maintain ownership by historically disadvantaged
persons (as defined in the Mineral and Petroleum Resources Development Act,
No. 28 of 2002) (“HDP”) in the Northam group at c. 26.5%, with an emphasis on
participation by Northam group employees and host and affected communities
(“Extended BEE Transaction”).
1.3. The Transaction and the Extended BEE Transaction are collectively referred to as the
“Composite Transaction”.
1.4. Each of the Transaction and the Extended BEE Transaction are inter-conditional and
subject to the fulfilment or waiver of the Conditions Precedent (as envisaged in paragraph
5 below) and implementation of the Extended BEE Transaction will be conditional on the
Transaction being implemented.
2. OVERVIEW OF THE COMPOSITE TRANSACTION
2.1. The Transaction
Details of the Transaction are summarised below.
2.1.1. Northam will make an offer to the holders of the cumulative, non-participating
preference shares in the share capital of Zambezi (“ZPLPs”) to acquire the
remaining ZPLPs not already held by Northam, for a cash consideration per ZPLP
amounting to the initial subscription price of R41.00 together with the
accumulated ZPLP dividends (collectively, the “Face Value”) on the date on
which the acquisition is implemented, plus a 15.99% premium to the Face Value
(collectively, the “ZPLP Offer Consideration”), (“ZPLP Offer”). The ZPLP Offer
will be implemented by way of a scheme of arrangement proposed by the board
of directors of Zambezi (“Zambezi Board”) between Zambezi and the ZPLP
holders in terms of section 114(1) read with section 115 of the Companies Act,
No. 71 of 2008 (“Companies Act”), (“Zambezi Scheme”). Following
implementation of the Zambezi Scheme, Northam will be the sole holder of the
ZPLPs. Simultaneously with the Zambezi Scheme, the Zambezi Board will
propose the delisting of the ZPLPs from the JSE (“ZPLP Delisting”).
2.1.2. After implementation of the Zambezi Scheme, Zambezi will settle the outstanding
accumulated ZPLP dividends on all of the ZPLPs, together with a premium
amounting to approximately 11.11% of the Face Value, through the transfer by
Zambezi to Northam of a number of Northam Shares held by Zambezi
(“BEE Shares”). For purposes of calculating the number of BEE Shares to be
transferred to Northam, Northam and Zambezi have agreed to a value per BEE
Share of R160.00. The BEE Shares transferred to Northam will be cancelled and
delisted, resulting in a reduction in Northam’s issued share capital.
2.1.3. In order to fund payment of, inter alia, Zambezi’s taxes and the costs arising from
the Transaction, Northam will repurchase a number of BEE Shares from Zambezi
(“Repurchase Shares”) at a price of R152.00 each, (“Repurchase”). Based on
Zambezi’s estimated tax liabilities arising from the Transaction
(“Zambezi’s Estimated Tax Liabilities”) calculated using, inter alia, the
Applicable Share Price, it is estimated that Northam will repurchase
approximately 35.1 million Repurchase Shares for an aggregate cash
consideration of approximately R5.3 billion. The actual number of Repurchase
Shares will be determined on the day prior to implementation of the Repurchase.
The Repurchase Shares acquired by Northam will be cancelled and delisted,
further reducing Northam’s issued share capital. A portion of the cash proceeds
payable to Zambezi pursuant to the Repurchase will be retained by Northam
(“Retention Amount”) in order for Northam to facilitate the settlement of
Zambezi’s tax liabilities on behalf of Zambezi, as set out in paragraphs 2.1.9 and
2.1.11 below. The balance of the Repurchase proceeds, estimated at
approximately R767 million, will be distributed to Zambezi’s ordinary
shareholders as set out in paragraph 2.1.5 below (“Net Cash Distribution”).
2.1.4. Following the Repurchase, Northam will assume economic control (subject to
certain exceptions, including in relation to the Net Value Distribution
contemplated in paragraph 2.1.5 below) and voting control of Zambezi and
Zambezi will become a subsidiary of Northam as envisaged in the Companies
Act.
2.1.5. Zambezi will distribute the net value in Zambezi to the Zambezi ordinary
shareholders by way of (i) a cash dividend amounting to the Net Cash Distribution
as envisaged in paragraph 2.1.3 above; and (ii) a dividend in specie of the
residual BEE Shares held by Zambezi (“Residual BEE Shares”), (collectively,
the “Net Value Distribution”).
2.1.6. The Residual BEE Shares will be the total BEE Shares currently held by
Zambezi (159 905 453) less (i) the BEE Shares transferred to Northam in
settlement of the redemption price and accumulated dividends in respect of the
ZPLPs in terms of paragraphs 2.1.2 above and 2.1.10 below; (ii) the Repurchase
Shares envisaged in paragraph 2.1.3 above; and (iii) any additional BEE Shares
which may need to be retained and sold by Zambezi to settle Zambezi’s taxes.
Based on, inter alia, Zambezi’s Estimated Tax Liabilities calculated using, inter
alia, the Applicable Share Price, it is estimated that the Residual BEE Shares will
amount to approximately 30.9 million Northam Shares. The Residual BEE Shares
received by the Zambezi ordinary shareholders will participate in the Northam
Scheme (as defined in paragraph 2.2.1 below).
2.1.7. The Net Cash Distribution will be applied towards settlement of, inter alia,
Transaction costs and the repayment of a loan to be advanced by Northam to
Zambezi’s ordinary shareholders as further detailed in paragraph 7 below.
2.1.8. Subject to reaching agreement with the Northam Employees’ Trust and the
Northam Community Trusts (as defined in paragraph 2.2.4 below), Northam will
repurchase all or some of the BEE Shares received by them pursuant to the
Net Value Distribution, for a cash consideration.
2.1.9. On or before Zambezi’s first provisional or final (as the case may be) tax payment
date occurring after the Net Value Distribution, Northam will, on behalf of
Zambezi, utilise a portion of the Retention Amount to settle Zambezi’s taxes
payable on such date arising from the steps envisaged in paragraphs 2.1.2, 2.1.3
and 2.1.5 above.
2.1.10. On a date occurring on or prior to 17 May 2025, at Zambezi’s election, Zambezi
will redeem all of the ZPLPs held by Northam by settling the issue price of each
ZPLP (i.e. R41.00) through the transfer of the remaining BEE Shares held by
Zambezi, valued at R160.00 per BEE Share, to Northam. Following
implementation of this step, Zambezi’s shareholding in Northam will reduce to nil
and the ZPLPs will be fully redeemed.
2.1.11. On or before Zambezi’s first provisional or final (as the case may be) tax payment
date occurring after the redemption of the ZPLPs as envisaged in paragraph
2.1.10 above, Northam will, on behalf of Zambezi, utilise a portion of the
Retention Amount to settle Zambezi’s taxes payable on such date arising from
the redemption of the ZPLPs.
2.1.12. As soon as practicably possible after redemption of the ZPLPs, Zambezi will be
voluntarily wound-up and subsequently dissolved and deregistered.
2.2. The Extended BEE Transaction
Details of the Extended BEE Transaction are summarised below.
2.2.1. Northam Platinum Holdings Limited (“Northam Holdings”), a newly incorporated
company established by Northam, will make an offer to the Shareholders to
acquire all of the Northam Shares in issue (excluding treasury shares)
(“Offer Shares”), in terms of a share for share transaction (“Northam Offer”).
The Northam Offer will be implemented by way of a scheme of arrangement
proposed by the Northam Board between Northam and the Shareholders in terms
of section 114(1) read with section 115 of the Companies Act (“Northam
Scheme”), pursuant to which Northam Holdings will acquire all of the Offer
Shares from the participants in the Northam Scheme (“Northam Scheme
Participants”) in exchange for ordinary shares in the share capital of Northam
Holdings (“Northam Holdings Shares”) on a 1:1 basis (“Northam Scheme
Consideration”).
2.2.2. The Northam Scheme will be implemented as soon as practicably possible after
implementation of the Net Value Distribution. Upon implementation of the
Northam Scheme, Northam will become a subsidiary of Northam Holdings, all
Northam Holdings Shares will be listed on the main board of the JSE and all
Northam Shares will be delisted from the main board of the JSE.
2.2.3. Following implementation of the Northam Scheme, Northam Shares and Northam
Holdings Shares will be issued to three newly incorporated HDP vehicles in order
to secure c. 26.5% ownership by HDPs in the Northam group, as follows:
2.2.3.1. companies established to hold and administer the collective interests
of (i) Northam group’s current and future employees (excluding
management and employees that participate in the SIP (defined
below)), (“Employee SPV”); and (ii) Northam group’s current host and
affected communities (“Community SPV”), will collectively (directly or
indirectly) subscribe for Northam Shares amounting to an aggregate
of no more than 23% of the total Northam Shares in issue (excluding
treasury shares held by Zambezi). The subscription price per Northam
Share will be the higher of (i) the 30 day volume weighted average
price (“VWAP”) of a Northam Share and/or Northam Holdings Share
(or a combined 30 day VWAP thereof to the extent necessary) traded
on the JSE on the business day prior to the subscription; and (ii)
R225.00, (such higher amount being the “Subscription Price”). The
subscription consideration for the Northam Shares will be funded
through the subscription by Northam for preference shares
(“BEE Prefs”) in each of Employee SPV and Community SPV; and
2.2.3.2. a company established to hold and administer the collective interests
of HDPs such as, inter alia, women’s groups and youth groups (“HDP
SPV”), will (directly or indirectly) subscribe for a number of Northam
Holdings Shares at the Subscription Price such that the collective
effective see-through shareholding in Northam by HDP SPV,
Employee SPV and Community SPV (collectively, the “BEE SPVs”)
will amount to c. 26.5% in aggregate (excluding treasury shares held
by Zambezi). The subscription consideration for the Northam Holdings
Shares will be funded through the subscription by Northam Holdings
for BEE Prefs in HDP SPV.
2.2.4. Other than participating in the Northam Scheme, Zambezi and its current ordinary
shareholders and their respective beneficiaries (other than beneficiaries of the
Northam Zondereinde Community Trust and Northam Booysendal Community
Trust (collectively the “Northam Community Trusts”) and the Northam
Employees’ Trust) shall not participate in the Extended BEE Transaction.
2.2.5. Following implementation of the subscriptions envisaged in paragraph 2.2.3
above (collectively, the “BEE SPV Subscriptions”), the shareholders of
(i) Northam Holdings will be the Northam Scheme Participants (which will include
the Zambezi ordinary shareholders) and HDP SPV; and (ii) Northam will be
Northam Holdings, Employee SPV, Community SPV and Zambezi.
2.2.6. As soon as practicably possible after implementation of the BEE SPV
Subscriptions envisaged in paragraph 2.2.3 above, the shares in HDP SPV will
be listed on the BEE segment of the JSE to allow for trading of HDP SPV shares
amongst BEE persons.
3. ADDITIONAL INFORMATION REGARDING THE TRANSACTION
3.1. Zambezi Scheme
3.1.1. The cash consideration to be offered per ZPLP (i.e. the ZPLP Offer
Consideration) will be funded from Northam’s internal cash resources.
3.1.2. The Zambezi Scheme amounts to a “transaction” by Northam as contemplated in
section 9 of the JSE Limited Listings Requirements (“JSE Listings
Requirements”). Furthermore, considering that Zambezi is a material
shareholder (as defined in the JSE Listings Requirements) of Northam and
therefore a related party to Northam in terms of paragraph 10.1(b)(i) of the JSE
Listings Requirements, the Zambezi Scheme amounts to a small related party
transaction in terms of paragraph 10.7 of the JSE Listings Requirements.
3.1.3. Simultaneously with the Zambezi Scheme, Zambezi will propose to the relevant
Zambezi shareholders that they approve (i) the ZPLP Delisting; and (ii) certain
amendments to Zambezi’s memorandum of incorporation, including the ZPLP
terms incorporated therein (“ZPLP Term Amendments”), in order to enable the
implementation of the Transaction (“Zambezi MOI Amendments”).
3.1.4. Implementation of the Zambezi Scheme, the ZPLP Delisting and the Zambezi
MOI Amendments (including the ZPLP Term Amendments) will be subject to the
Zambezi Scheme Conditions set out in paragraph 5.1 below.
3.1.5. The Zambezi Scheme shall terminate with immediate effect upon the occurrence
of, inter alia, the following events:
3.1.5.1. if any Zambezi Scheme Condition, which may be waived by Northam,
becomes incapable of fulfilment and Northam notifies Zambezi in
writing that it will not waive that Zambezi Scheme Condition;
3.1.5.2. if any or all of the Zambezi Scheme Conditions have not been fulfilled
or waived, on or before the relevant date/s for fulfilment or waiver;
3.1.5.3. if Northam gives written notice to Zambezi to such effect, if a
“Material Adverse Change” (as such term is defined in the
Implementation Agreement) occurs at any time after 30 April 2021,
regardless of whether such Material Adverse Change is continuing or
not. A Material Adverse Change will include, inter alia, the 30 day
VWAP of a Northam Share reducing below R130.00; net debt for the
Northam group exceeding R8 billion or the net debt to earnings before
interest, tax, depreciation and amortisation (EBITDA) ratio (measured
over a 12 month period) exceeding 2.5 times; or
3.1.5.4. upon termination or cancellation of the Implementation Agreement in
certain instances as envisaged in the Implementation Agreement.
3.2. Northam Share Acquisitions
3.2.1. The acquisitions of Northam Shares by Northam, inter alia, as contemplated in
paragraphs 2.1.2, 2.1.3, 2.1.8 and 2.1.10 above (collectively, the “Northam
Share Acquisitions”), constitute a repurchase of shares as contemplated in
section 48(8)(b) read with sections 114 and 115 of the Companies Act, and
paragraph 5.67(B)(a) read with paragraph 5.69(b) of the JSE Listings
Requirements.
3.2.2. The Northam Share Acquisitions will be implemented by way of a scheme of
arrangement in terms of section 114(1) read with section 115 of the Companies
Act between Northam and Shareholders (“Northam Share Acquisitions
Scheme”).
3.2.3. In the circumstances, the Northam Share Acquisitions Scheme is an “affected
transaction” as defined in section 117(1)(c)(iii) of the Companies Act and, as
such, is regulated by Parts B and C of Chapter 5 of the Companies Act and
Chapter 5 of the Companies Regulations, 2011 (“Regulations”) (collectively, the
“Takeover Laws”). Northam has obtained an exemption from the Takeover
Regulation Panel from the requirement to provide a guarantee or a cash
confirmation to the Takeover Regulation Panel in respect of the cash
consideration payable to Zambezi in terms of the Repurchase.
3.2.4. The cash consideration payable pursuant to the Repurchase will be funded from
Northam’s internal cash resources.
3.2.5. Implementation of the Northam Share Acquisitions will be subject to the
Transaction Conditions set out in paragraph 5.2 below.
3.3. Repayment by certain Zambezi ordinary shareholders of the lock-in fee
3.3.1. On implementation of the Zambezi BEE Transaction, Northam paid Zambezi a
lock-in fee of R400 million in exchange for Zambezi and the Zambezi ordinary
shareholders agreeing to certain undertakings, including, inter alia, undertaking
not to dispose of the BEE Shares until 17 May 2025 (“Lock-in Restrictions”).
3.3.2. On implementation of the Net Value Distribution (as envisaged in paragraph 2.1.5
above), the Lock-in Restrictions will no longer apply. Accordingly, each of the
Zambezi ordinary shareholders, excluding the Northam Employees’ Trust and the
Northam Community Trusts, have agreed to reimburse Northam their respective
proportionate amount of the lock-in fee in respect of the remaining term of the
Zambezi BEE Transaction, should they dispose of or encumber any or all of the
Northam Shares received pursuant to the Transaction or Northam Holdings
Shares received pursuant to the Northam Scheme, to a party other than Northam
or Northam Holdings (or their respective nominees) or another Zambezi ordinary
shareholder, prior to 17 May 2025.
4. ADDITIONAL INFORMATION REGARDING THE EXTENDED BEE TRANSACTION
4.1. Northam Scheme
4.1.1. The Northam Offer will be implemented by way of the Northam Scheme and the
resultant delisting of the Northam Shares from the main board of the JSE will be
implemented in terms of paragraph 1.17(b) of the JSE Listings Requirements.
4.1.2. The consideration to be offered per Offer Share will be one Northam Holdings
Share. Northam Holdings confirms that it has sufficient authorised but unissued
Northam Holdings Shares available to settle the Northam Scheme Consideration
to Northam Scheme Participants.
4.1.3. Upon implementation of the Northam Scheme, the Northam Holdings Shares will
be listed on the main board of the JSE.
4.1.4. The Northam Scheme amounts to an “affected transaction” as defined in section
117(1)(c)(iii) of the Companies Act and, as such, the Northam Scheme is
regulated by the Takeover Laws.
4.1.5. Implementation of the Northam Scheme will be subject to the fulfilment or waiver
of the Extended BEE Transaction Conditions set out in paragraph 5.3 below.
4.1.6. To the extent that it would be unlawful for Northam Holdings to offer the Northam
Holdings Shares to Shareholders resident, or otherwise situated, outside of South
Africa (“Foreign Shareholders”) or unlawful for Foreign Shareholders to take up
Northam Holdings Shares without Northam Holdings complying with any foreign
regulatory registrations or filings or obtaining any approvals or consents from any
authorities in any foreign jurisdiction, then cash will be remitted to such Foreign
Shareholders.
4.1.7. The tax implications of the Northam Scheme are dependent on the individual
circumstances and jurisdictions applicable to each Northam Scheme Participant.
It is recommended that Northam Scheme Participants seek appropriate
professional advice in this regard.
4.2. BEE SPV Subscriptions
4.2.1. Each BEE SPV will be subject to a 15-year lock-in term (“Empowerment Term”)
during which period each of the BEE SPVs will remain locked-in and prohibited
from disposing of or encumbering its shareholding in Northam Holdings or
Northam, as the case may be, other than to Northam Holdings and Northam (or
their respective nominees), notwithstanding an early redemption of the BEE Prefs
by the BEE SPVs.
4.2.2. Until the BEE Prefs have been fully redeemed, an indicative 5% of all the
distributions received by each BEE SPV from Northam or Northam Holdings, as
the case may be, will (after providing for, inter alia, operational costs and taxes,
if any) be distributed to the shareholders of the relevant BEE SPV and the
balance will be used to service the BEE Prefs.
4.2.3. The salient terms of the BEE Prefs are as follows:
4.2.3.1. the BEE Prefs will be redeemed in full by no later than the end of the
Empowerment Term through the transfer of Northam Shares to
Northam or Northam Holdings Shares to Northam Holdings, as the
case may be, valued by reference to the prevailing 30 day VWAP of
Northam Holdings Shares on the redemption date;
4.2.3.2. dividends on the preference shares will accrue at a discount to the
prevailing prime interest rate from time to time during the
Empowerment Term; and
4.2.3.3. an indicative 95% of all dividends received by the BEE SPVs from
Northam or Northam Holdings, as the case may be, will (after
providing for, inter alia, operational costs and taxes, if any) be
utilised to settle accrued dividends and, after the 3rd anniversary of
the issue date, to redeem the BEE Prefs.
4.2.4. Considering the low coupon rate associated with the BEE Prefs, Northam and
Northam Holdings will subscribe for yield enhancing preference shares in the
relevant BEE SPVs (“B Prefs”). The B Prefs will entitle Northam and Northam
Holdings to receive an additional dividend at the end of the Empowerment Term,
amounting to an indicative 35% of the net asset value of the relevant BEE SPVs
at the end of the Empowerment Term. The net asset value will be determined by
reference to the value of the Northam Shares or Northam Holdings Shares, as
the case may be, held by the relevant BEE SPV after redemption of the BEE
Prefs, after providing for taxes and relevant costs.
4.2.5. The Northam group will be entitled to accelerate the maturity of the Extended
BEE Transaction after the 5th anniversary of the implementation date thereof in
the event of, inter alia, changes to HDP ownership requirements set out in the
applicable legislation.
4.3. Annual cash payment to Employee SPV and Community SPV
4.3.1. To ensure value realisation and transfer on an annual basis to the beneficiaries
of Employee SPV and Community SPV over the Empowerment Term, Northam
will be entitled (but not obliged) to make annual aggregate payments of up to
R150 million (escalating by an indicative 5% per annum) to Employee SPV and
Community SPV collectively, by way of an appropriate funding structure, which
funds will be used for employee and community-based initiatives.
5. CONDITIONS PRECEDENT
Implementation of the Composite Transaction will be subject to the fulfilment or waiver of various
conditions precedent (“Conditions Precedent”), including, inter alia, the following:
5.1. Zambezi Scheme Conditions
5.1.1. To the extent required, the resolutions required in order to approve and
implement the ZPLP Offer and all matters ancillary thereto, are adopted by the
requisite majority of Shareholders;
5.1.2. the resolutions required in order to approve and implement the Zambezi Scheme
and all matters ancillary thereto, are adopted by the requisite majority of Zambezi
shareholders, including the resolutions approving the Zambezi Scheme
(“Zambezi Scheme Resolutions”), the ZPLP Delisting, the Zambezi MOI
Amendments, the ZPLP Term Amendments (“ZPLP Term Amendment
Resolutions”) and the necessary Zambezi N share term amendments;
5.1.3. in the event of the provisions of section 115(2)(c) of the Companies Act becoming
applicable in respect of a Zambezi Scheme Resolution:
5.1.3.1. (i) the High Court of South Africa approving the implementation of
such resolution and no appeal or review is timeously lodged or, if
timeously lodged, the appeal or review is not successful; or (ii) the
provisions of section 115(2)(c) of the Companies Act cease to be
applicable; and
5.1.3.2. if applicable, Zambezi not treating such Zambezi Scheme Resolution
as a nullity as contemplated in section 115(5)(b) of the Companies
Act;
5.1.4. in relation to the relevant Zambezi Scheme Resolutions or the ZPLP Term
Amendment Resolutions, as the case may be, either:
5.1.4.1. no ZPLP holder gives notice objecting to such resolution as
contemplated in section 164(3) of the Companies Act, alternatively
ZPLP holders give notice objecting to such resolution as
contemplated in section 164(3) of the Companies Act and vote against
such resolution in respect of 1% or less of all of the ZPLPs in issue;
or
5.1.4.2. if ZPLP holders give notice objecting to such resolution as
contemplated in section 164(3) of the Companies Act and vote against
such resolution in respect of more than 1% of all of the ZPLPs in issue,
then, by the 30th business day following the relevant Zambezi
shareholders meeting, those dissenting shareholders have not
exercised appraisal rights (as contemplated in section 164 of the
Companies Act), by giving valid demands in terms of sections 164(5)
to 164(8) of the Companies Act, in respect of more than 1% of all of
the ZPLPs in issue;
5.1.5. no Zambezi ordinary shareholder exercises appraisal rights;
5.1.6. the Transaction Conditions and the Extended BEE Transaction Conditions are
timeously fulfilled or waived, save for any conditions relating to the Zambezi
Scheme and the Repurchase being implemented; and
5.1.7. all regulatory consents are received on an unconditional basis or, to the extent
that any such regulatory consents are subject to any obligation, undertaking,
condition or qualification, the party adversely affected thereby confirms in writing
to the other party that the condition is acceptable to it.
5.2. Transaction Conditions
5.2.1. The resolutions required in order to approve and implement the Transaction and
the Extended BEE Transaction and all matters ancillary thereto, are adopted by
the requisite majority of Shareholders, including the resolutions approving the
Northam Share Acquisitions (“Northam Share Acquisitions Resolutions”);
5.2.2. in the event of the provisions of section 115(2)(c) of the Companies Act becoming
applicable in relation to a Northam Share Acquisitions Resolution:
5.2.2.1. (i) the High Court of South Africa approving the implementation of
such Northam Share Acquisitions Resolution and no appeal or review
is timeously lodged or, if timeously lodged, the appeal or review is not
successful; or (ii) the provisions of section 115(2)(c) of the Companies
Act cease to be applicable; and
5.2.2.2. if applicable, Northam not treating such Northam Share Acquisitions
Resolution as a nullity as contemplated in section 115(5)(b) of the
Companies Act;
5.2.3. in relation to the relevant Northam Share Acquisitions Resolutions, either:
5.2.3.1. no Shareholder gives notice objecting to such resolutions as
contemplated in section 164(3) of the Companies Act, alternatively,
Shareholders give notice objecting to such resolutions as
contemplated in section 164(3) of the Companies Act and vote against
such resolutions, in respect of 1% or less of all of the Northam Shares
in issue; or
5.2.3.2. if Shareholders give notice objecting to such resolutions as
contemplated in section 164(3) of the Companies Act and vote against
such resolution in respect of more than 1% of all of the Northam
Shares in issue, then, by the 30th business day following the relevant
Shareholders meeting, those dissenting shareholders have not
exercised appraisal rights, by giving valid demands in terms of
sections 164(5) to 164(8) of the Companies Act, in respect of more
than 1% of all of the Northam Shares in issue;
5.2.4. the resolutions required in order to approve and implement the Transaction are
adopted by the requisite majority of Zambezi ordinary shareholders including the
resolutions approving the disposal of the BEE Shares by Zambezi pursuant to the
Northam Share Acquisitions and the Net Value Distribution;
5.2.5. no Zambezi ordinary shareholder exercises appraisal rights;
5.2.6. the agreements pertaining to the Transaction are entered into and have become
unconditional in accordance with their terms save in relation to the condition
contained therein regarding, inter alia, the implementation of the Zambezi
Scheme;
5.2.7. the written consent or waiver of the relevant counterparties to any material
contracts to which a member of the Northam group is a party, is obtained in
relation to the implementation of the Transaction, to the extent required;
5.2.8. the Zambezi Scheme Conditions are timeously fulfilled or waived and the
Zambezi Scheme is implemented; and
5.2.9. the Extended BEE Transaction Conditions are timeously fulfilled or waived, save
for any condition relating to the Repurchase being implemented.
5.3. Extended BEE Transaction Conditions
5.3.1. The resolutions required in order to approve and implement the Extended BEE
Transaction are adopted by the requisite majority of Shareholders including
resolutions approving the Northam Scheme (“Northam Scheme Resolution”)
and the provision of financial assistance for purposes of implementing the
relevant components of the Extended BEE Transaction;
5.3.2. in the event of the provisions of section 115(2)(c) of the Companies Act becoming
applicable in relation to a Northam Scheme Resolution:
5.3.2.1. (i) the High Court of South Africa approving the implementation of
such Northam Scheme Resolution and no appeal or review is
timeously lodged or, if timeously lodged, the appeal or review is not
successful; or (ii) the provisions of section 115(2)(c) of the Companies
Act cease to be applicable; and
5.3.2.2. if applicable, Northam not treating such Northam Scheme Resolution
as a nullity as contemplated in section 115(5)(b) of the Companies
Act;
5.3.3. in relation to the Northam Scheme Resolution, either:
5.3.3.1. no Shareholder gives notice objecting to such resolution as
contemplated in section 164(3) of the Companies Act, alternatively,
Shareholders give notice objecting to such resolution as contemplated
in section 164(3) of the Companies Act and vote against such
resolution at the Shareholder meeting in respect of 1% or less of all of
the Northam Shares in issue; or
5.3.3.2. if Shareholders give notice objecting to such resolution as
contemplated in section 164(3) of the Companies Act and vote against
such resolution in respect of more than 1% of all of the Northam
Shares in issue, then, by the 30th business day following the
Shareholders meeting, those dissenting shareholders have not
exercised appraisal rights, by giving valid demands in terms of
sections 164(5) to 164(8) of the Companies Act, in respect of more
than 1% of all of the Northam Shares in issue;
5.3.4. all agreements pertaining to the Extended BEE Transaction are entered into and
have become unconditional in accordance with their terms;
5.3.5. the written consent or waiver of the relevant counterparties to any material
contracts to which a member of the Northam group is a party, is obtained in
relation to the implementation of the Extended BEE Transaction, to the extent
required;
5.3.6. the Zambezi Scheme Conditions are timeously fulfilled or waived and the
Zambezi Scheme is implemented;
5.3.7. the Transaction Conditions are timeously fulfilled or waived and the Repurchase
is implemented; and
5.3.8. all regulatory consents are received on an unconditional basis or, to the extent
that any such regulatory consents are subject to any obligation, undertaking,
condition or qualification, the party adversely affected thereby confirms in writing
to the other party that the condition is acceptable to it.
The Conditions Precedent envisaged in paragraphs 5.1 to 5.3 have been summarised and
full details of the Conditions Precedent will be set out in the Circular (as defined in
paragraph 13.1 below).
5.4. The Conditions Precedent envisaged in:
5.4.1. paragraphs 5.1.4, 5.1.5, 5.2.3, 5.2.5 and 5.2.7 above have been inserted for the
benefit of Northam who shall be entitled to, upon written notice to Zambezi prior
to any such Conditions Precedent having failed, (i) extend the time and/or date
for fulfilment or waiver of any such Conditions Precedent from time to time,
provided that such extension shall not be beyond 15 October 2021 unless
Zambezi consents thereto in writing; and/or (ii) waive fulfilment of any such
Conditions Precedent, in whole or in part;
5.4.2. paragraphs 5.3.3 and 5.3.5 above have been inserted for the benefit of both
Northam and Northam Holdings. Northam shall be entitled to, by written notice to
Northam Holdings, (i) extend the time and/or date for fulfilment or waiver of such
Conditions Precedent from time to time; and/or (ii) waive fulfilment of any such
Conditions Precedent, in whole or in part prior to such Conditions Precedent
having failed;
5.4.3. paragraphs 5.1.1 to 5.1.3, 5.1.6, 5.1.7, 5.2.1, 5.2.2, 5.2.4, 5.2.6, 5.2.8 and 5.2.9
above shall not be capable of being waived. Despite such, Northam shall be
entitled to, upon written notice to Zambezi prior to any such Conditions Precedent
having failed, extend the time and/or date for fulfilment of any such Conditions
Precedent from time to time, provided that such extension shall not be beyond 15
October 2021 unless Zambezi consents thereto in writing; and
5.4.4. paragraphs 5.3.1, 5.3.2, 5.3.4, 5.3.6, 5.3.7 and 5.3.8 above shall not be capable
of being waived. Despite such, Northam shall be entitled to, upon written notice
to Northam Holdings prior to any such Conditions Precedent having failed, extend
the time and/or date for fulfilment of any such Conditions Precedent from time to
time.
6. SIP AMENDMENTS
6.1. Pursuant to the rules of the Northam Platinum Share Incentive Plan 2011 (“SIP”),
implementation of the Composite Transaction will, inter alia, result in the acceleration of
the vesting of the relevant conditional Northam Shares awarded to senior members of
Northam’s management under the lock-in and incentive scheme (“Zambezi BEE
Transaction Awards”) to retain such employees until 17 May 2025, being the original
maturity date of the Zambezi BEE Transaction.
6.2. Simultaneously with the proposal of the Composite Transaction, Northam will propose
amendments to the rules of the SIP, to, inter alia:
6.2.1. retain the vesting period applicable to the Zambezi BEE Transaction Awards, until
the original maturity date of the Zambezi BEE Transaction (i.e. 17 May 2025), in
order to ensure continued alignment between the interests of Northam senior
management and Shareholders; and
6.2.2. replace the conditional Northam Shares and the forfeitable Northam Shares
awarded under the SIP to Northam Holdings Shares and replace reference to
Northam with Northam Holdings,
conditional on the Composite Transaction becoming wholly unconditional
(“SIP Amendments”).
6.3. Further details pertaining to the SIP Amendments will be set out in the Circular.
7. LOAN ADVANCED BY NORTHAM TO THE ZAMBEZI ORDINARY SHAREHOLDERS
7.1. At the request of Zambezi ordinary shareholders in order to provide the Zambezi ordinary
shareholders with an early liquidity event, Northam has agreed to advance a loan in an
amount of R511.5 million to all of the Zambezi ordinary shareholders, pro rata to their
shareholding in Zambezi. Should the Transaction not be implemented, Northam has
agreed to advance an additional amount of up to R9.2 million to the Zambezi ordinary
shareholders to finance the costs associated with the Transaction. The loan will accrue
interest at the prime interest rate plus 3.5% (i.e. the same rate as the ZPLP dividend rate)
and will be settled as follows:
7.1.1. should the Transaction be implemented, the loan will be repaid by the Zambezi
ordinary shareholders utilising a portion of the Net Cash Distribution; alternatively,
7.1.2. should the Transaction not be implemented, the loan will be repaid following the
maturity of the Zambezi BEE Transaction in the ordinary course on 17 May 2025.
8. RATIONALE FOR THE COMPOSITE TRANSACTION
Northam believes that the Composite Transaction will achieve, inter alia, the following benefits:
8.1. Benefits for Shareholders
8.1.1. The Repurchase and settlement of the ZPLPs through a transfer of BEE Shares
to Northam will result in a reduction in Northam’s issued share capital in excess
of 25%.
8.1.2. The BEE Shares transferred to Northam pursuant to the Repurchase are priced
at R152.00 each.
8.1.3. The BEE Shares transferred to Northam pursuant to the settlement of the
accumulated dividends (plus the premium) and redemption of the ZPLPs are
priced at R160.00 each.
8.1.4. The Extended BEE Transaction secures c. 26.5% HDP shareholding in the
Northam group by the BEE SPVs collectively for a further 15-year term, with an
emphasis on employees and host and affected communities.
8.1.5. The introduction of Northam Holdings optimises the Northam group structure for
compliance with the HDP ownership requirements set out in the Mining Charter.
8.1.6. The Transaction removes the overhang of the guarantee provided by Northam in
favour of ZPLP holders in terms of the Zambezi BEE Transaction.
8.1.7. The vesting period applicable to the Zambezi BEE Transaction Awards will
continue until 17 May 2025, in order to ensure continued alignment between the
interests of Northam senior management and Shareholders.
8.1.8. The Transaction and the Extended BEE Transaction collectively result in an
effective see-through net increase in Northam’s issued share capital of only 1.3%,
whilst securing the benefits set out above.
8.2. Benefits for Zambezi ordinary shareholders
8.2.1. An estimated R12.9 billion of unencumbered pre-tax economic value will be
realised and transferred to the participants in the Zambezi BEE Transaction.
8.2.2. The Transaction provides early value realisation certainty for the participants in
the Zambezi BEE Transaction by securing the value creation to date and
eliminating the risks associated with the single day cliff maturity of the Zambezi
BEE Transaction on 17 May 2025.
8.2.3. Zambezi ordinary shareholders will be able to participate in the Northam group’s
future growth through their holding of unencumbered Northam Holdings Shares.
8.3. Benefits for ZPLP holders
8.3.1. The ZPLP Offer Consideration represents a 15.99% premium to the prevailing
Face Value.
8.3.2. The ZPLP Offer Consideration will be settled in cash, as opposed to a distribution
of Northam Shares held by Zambezi to the ZPLP holders on maturity of the
Zambezi BEE Transaction.
8.4. Benefits for participants in the Extended BEE Transaction
8.4.1. HDPs will participate across the full value chain in the Northam group in a
structure that is funded by the Northam group.
8.4.2. The relatively low coupon on the BEE Prefs reduces the threshold for value
creation in the BEE SPVs, thereby enhancing the potential for value creation in
the hands of HDPs.
8.4.3. The indicative 5% trickle dividend enables value transfer through participation in
dividends prior to settlement of the BEE Prefs.
8.4.4. HDP SPV will provide a listed platform for participation by BEE members of the
public in the Extended BEE Transaction, further broadening HDP ownership in
the Northam group.
8.4.5. Employee SPV and Community SPV may receive annual cash payments from
Northam in terms of an appropriate funding structure, thereby ensuring value
transfer to employees and communities during the Empowerment Term.
9. SHAREHOLDER SUPPORT
Northam has obtained support from:
9.1. asset managers acting on behalf of their clients and Shareholders, in the form of binding
irrevocables and letters of support, in support of the Shareholder resolutions required to
implement the Composite Transaction (“Northam Resolutions”) as set out in the table
below:
Support Support
including excluding
Zambezi Zambezi
Zambezi (note 1) 31.4% -
Public Investment Corporation (SOC) Limited 12.7% 18.5%
Coronation Asset Management Proprietary Limited (acting 7.7% 11.2%
on behalf of its clients) (note 2)
Fairtree Asset Management Proprietary Limited (acting on 3.6% 5.2%
behalf of its clients)
Allan Gray Proprietary Limited (acting on behalf of its clients) 2.9% 4.2%
Total support (rounding differences may occur) 58.2% 39.1%
Notes:
1. In terms of section 115 of the Companies Act, Zambezi is precluded from voting on certain Northam
Resolutions.
2. Coronation Asset Management Proprietary Limited has provided a letter of support to vote in favour of the
Northam Resolutions.
9.2. Zambezi ordinary shareholders, in the form of binding irrevocables, in support of the
Zambezi ordinary shareholder resolutions required to implement the Transaction
(“Zambezi Shareholder Resolutions”), representing 74.5% of all of the Zambezi ordinary
shares eligible to vote on the Zambezi Shareholder Resolutions; and
9.3. ZPLP holders, in the form of binding irrevocables, in support of the ZPLP holder resolutions
required to implement the Transaction (“ZPLP Resolutions”) representing 97.4% of all of
the ZPLPs eligible to vote on the ZPLP Resolutions including the ZPLPs held by Northam.
To the extent that Northam is precluded from voting on any of the ZPLP Resolutions,
support in respect of 78.8% of the ZPLPs eligible to vote on those ZPLP Resolutions has
been obtained.
10. BENEFICIAL INTEREST
10.1. Northam Share Acquisitions
As at the date of this announcement, Northam directly holds 87.5% of the ZPLPs and one
N share in the issued share capital of Zambezi. Northam has no other beneficial interests,
or options to purchase beneficial interests, in Zambezi that are held or controlled, directly
or indirectly by Northam or any parties acting in concert with Northam.
10.2. Northam Scheme
Northam directly holds 100% of the issued share capital of Northam Holdings and has no
other beneficial interests, or options to purchase beneficial interests, in Northam Holdings.
Northam Holdings does not hold any beneficial interests, or options to purchase beneficial
interests, in Northam that are held or controlled, directly or indirectly by Northam Holdings
or any parties acting in concert with Northam Holdings.
11. INDEPENDENT BOARD AND INDEPENDENT EXPERT
11.1. Northam has convened an independent board (“Independent Board”), comprising
Mr David Brown, Ms Hester Hickey, Dr Yoza Jekwa, Mr Mcebisi Jonas, Mr Temba Mvusi,
Mr Jean Nel, Mr John Smithies and Mr Glyn Lewis, to consider the Northam Share
Acquisitions Scheme as well as the Northam Scheme and the consideration thereunder.
11.2. The Independent Board and the Northam Board have appointed BDO Corporate Finance
Proprietary Limited as the independent expert (“Independent Expert”) for purposes of
preparing opinions in respect of, inter alia:
11.2.1. the Zambezi Scheme in terms of paragraph 10.7(c) of the JSE Listings
Requirements;
11.2.2. the Northam Share Acquisitions Scheme in terms of Regulations 90 and 110 read
with sections 114(2) and 114(3) of the Companies Act; and
11.2.3. the Northam Scheme in terms of Regulations 90 and 110 read with sections
114(2) and 114(3) of the Companies Act,
(the “Independent Expert Reports”).
11.3. The Independent Expert Reports and the recommendations of the Independent Board and
the Northam Board will be included in the Circular.
12. PRO FORMA FINANCIAL INFORMATION
12.1. The table below sets out the pro forma financial effects of (i) the Transaction (prior to
implementation of the Extended BEE Transaction) on Northam reflected on a per Northam
Share basis and (ii) the Composite Transaction on a Northam Scheme Participant.
12.2. The pro forma financial effects have been prepared in order to provide information on how:
12.2.1. the Transaction (prior to implementation of the Extended BEE Transaction) may
affect the financial performance and position of Northam, by illustrating the effect
thereof on the basic and diluted earnings per share (“EPS”), basic and diluted
headline earnings per share (“HEPS”), the net asset value per share (“NAVPS”)
and the tangible net asset value per share (“TNAVPS”) of a Northam Share; and
12.2.2. the Composite Transaction may affect the financial performance and position of
Northam and Northam Holdings, by illustrating the effect thereof on the EPS,
HEPS, NAVPS and TNAVPS of a Northam Share that a Northam Scheme
Participant will be exchanging for the EPS, HEPS, NAVPS and TNAVPS per
Northam Holdings Share.
12.3. The pro forma financial effects of the Composite Transaction on a Northam Scheme
Participant reflects a comparison of:
12.3.1. the historical financial information extracted, without adjustment, and/or derived
from Northam’s condensed reviewed interim financial results for the
6 months ended 31 December 2020, adjusted for post balance sheet adjustments
and the Transaction (prior to implementation of the Extended BEE Transaction)
(further details of which are contained below); and
12.3.2. the historical financial information extracted, without adjustment, and/or derived
from Northam Holdings’ unaudited financial statements as at the date of
incorporation, adjusted for the Composite Transaction (further details of which
are contained below) (“Northam Holdings’ Pro Forma Financial Effects”),
by multiplying the Northam Holdings’ Pro Forma Financial Effects by the exchange ratio of
one Northam Holdings Share for every one Northam Share held (after implementation of
the Transaction but prior to implementation of the Extended BEE Transaction), to provide
the pro forma financial effects of the Composite Transaction on a Northam Scheme
Participant.
12.4. The pro forma financial effects assume, inter alia, all Conditions Precedent (as
contemplated in paragraph 5) are fulfilled or waived and have been prepared to illustrate
the effect of the Transaction (prior to implementation of the Extended BEE Transaction) on
a Shareholder and the Composite Transaction on a Northam Scheme Participant, had the
Composite Transaction been implemented on 1 July 2020 for purposes of EPS and HEPS
and on 31 December 2020 for purposes of NAVPS and TNAVPS.
12.5. The pro forma financial effects set out below are the responsibility of the directors of
Northam and Northam Holdings, respectively, and have not been reviewed or reported on
by the independent reporting accountant or independent auditor.
12.6. The pro forma financial effects are provided for illustrative purposes only and because of
their nature, may not fairly represent the financial performance and position of Northam,
Northam Holdings, a Shareholder or a Northam Scheme Participant after the
implementation of the Transaction and/or the Composite Transaction. In this regard, the
adjustments reflected in the pro forma financial effects are only illustrative and are
determined with reference to, inter alia, the 30 day VWAP as at the last practicable date
prior to the finalisation of this announcement, being 12 March 2021 (“Last Practicable
Date”). For the avoidance of doubt, the actual adjustments will be determined with
reference to, inter alia, the prevailing Northam Share price or the 30 day VWAP immediately
prior to the implementation of the various components of the Composite Transaction.
12.7. The pro forma financial effects have been prepared in accordance with International
Financial Reporting Standards (“IFRS”), the Guide on Pro forma Financial Information
issued by the South African Institute of Chartered Accountants, the JSE Listings
Requirements, the Regulations and accounting policies that comply with IFRS and which
are consistent with those applied in the preparation of the financial statements of Northam
(as at 31 December 2020) and Northam Holdings (as at incorporation), as the context
requires.
Northam Northam Northam after Northam Holdings after
31 31 implementation of the implementation of the
December December Transaction (but prior to Composite Transaction
2020 2020 implementation of the
Adjusted Extended BEE
Transaction)
Reported Pro forma Pro forma Percentage Pro forma Percentage
change change
Notes 1 2 3 4 5 6
Basic and 599.9 548.5 393.8 (28.2%) (2 329.2) (691.5%)
diluted EPS (cents) 531.0 485.4 393.8 (18.9%) (2 329.2) (691.5%)
Basic and 599.9 548.4 393.8 (28.2%) (2 329.2) (691.5%)
diluted HEPS (cents) 531.0 485.4 393.8 (18.9%) (2 329.2) (691.5%)
NAVPS (cents) 3 353.7 3 296.9 1 835.5 (44.3%) 1 506.1 (17.9%)
TNAVPS (cents) 3 353.7 3 296.9 1 835.5 (44.3%) 1 506.1 (17.9%)
Weighted average
number of shares in 349 876 349 876 373 702 6.8% 373 702 -
issue (‘000)
Diluted number of 395 305 395 305 373 702 (5.5%) 373 702 -
shares in issue (‘000)
Number of shares in
issue (‘000) 509 781 509 781 421 686 (17.3%) 398 840 (5.4%)
Treasury shares in
issue (‘000) 159 905 159 905 47 984 (70.0%) 25 138 (47.6%)
Shares in issue
adjusted for treasury 349 876 349 876 373 702 6.8% 373 702 -
shares (‘000)
Notes:
1. The financial information included in the “Northam 31 December 2020” column has been extracted, without
adjustment, and/or derived from Northam’s condensed reviewed interim financial results for the 6 months
ended 31 December 2020 (“Northam’s Interim Results”) as published on SENS on 19 March 2021.
2. The financial information included in the “Northam 31 December 2020 Adjusted” column reflects the financial
information extracted, without adjustment, and/or derived from Northam’s Interim Results and adjusted for:
2.1. the acquisition by Northam of 11 402 503 ZPLPs since 1 January 2021 until the Last Practicable Date,
for an aggregate amount of R1.1 billion, being an aggregate of i) the acquisition premium and costs
associated with said acquisition (“ZPLP Acquisition Loss”) of R180.1 million and ii) the aggregate Face
Value of R961.3 million, funded from Northam’s cash reserves;
2.2. R18.4 million adjustment for accumulated dividends in the statement of financial position of Northam in
respect of ZPLPs not already held by Northam between 1 January 2021 and the date of the relevant
acquisitions; and
2.3. the recognition of a R511.5 million loan to all Zambezi ordinary shareholders (“Zambezi Ordinary
Shareholder Loan”) of which R127.5 million is in respect of the Northam Community Trusts and the
Northam Employees’ Trust, which entities are consolidated by Northam in accordance with IFRS 10:
Consolidated financial statements,
(collectively, “Northam’s Adjusted Interim Results”). The ZPLP Acquisition Loss is the only amount
recognised in the statement of profit and loss and other comprehensive income and is not expected to have a
continuing effect.
3. The financial information included in the “Northam after implementation of the Transaction (but prior to
implementation of the Extended BEE Transaction)” column reflects the financial information extracted from
Northam’s Adjusted Interim Results adjusted for (please note that taxes based on a market value per Northam
Share have been calculated using the 30 day VWAP of R218.42 per Northam Share as at the Last Practicable
Date):
3.1. the Zambezi Scheme, which includes:
3.1.1. the acquisition by Northam of remaining ZPLPs not already held by Northam, amounting to
19 932 957 ZPLPs as at the Last Practicable Date, for an aggregate cash consideration of
R2.0 billion, being an aggregate acquisition premium of R269.1 million to the aggregate Face Value
of R1.7 billion as at the Last Practicable Date, of which the acquisition premium is not expected to
have a continuing effect;
3.1.2. a R33.7 million adjustment for accumulated dividends in the statement of financial position of
Northam in respect of ZPLPs not already held by Northam between 1 January 2021 and the Last
Practicable Date;
3.1.3. the realisation of the balance of the unamortised liquidity fee of R72.4 million, which fee was paid
by Northam upon inception of the Zambezi BEE Transaction. The unamortised liquidity fee is not
expected to have a continuing effect;
3.2. the settlement of the outstanding accumulated ZPLP dividends on all the ZPLPs, together with a premium
amounting to approximately 11.11% of the Face Value for an aggregate amount of R8.4 billion at the
Last Practicable Date, which includes:
3.2.1. the transfer by Zambezi of 52 722 393 BEE Shares held by it, calculated using the agreed value of
R160.00 per BEE Share;
3.2.2. the recognition of a tax liability of R1.4 billion in respect of Capital Gains Tax (“CGT”) and Security
Transfer Taxes (“STT”) from the transfer of 52 722 393 BEE Shares;
3.3. the Repurchase, which includes:
3.3.1. the acquisition by Northam of 34 226 008 Repurchase Shares held by Zambezi, at a price of
R152.00 per Repurchase Share for an aggregate consideration of R5.2 billion;
3.3.2. the recognition of a tax liability of R618.5 million in respect of CGT and STT from the repurchase of
34 226 008 Repurchase Shares;
3.4. the Net Value Distribution to Zambezi ordinary shareholders which includes:
3.4.1. the Net Cash Distribution of an amount equal to R766.4 million, comprising the following:
3.4.1.1. an amount of R511.5 million utilised to settle the Zambezi Ordinary Shareholder Loan
outstandings, of which R127.5 million is in respect of the Zambezi Ordinary Shareholder Loan
to the Northam Community Trusts and the Northam Employees’ Trust, which entities are
consolidated by Northam in accordance with IFRS 10: Consolidated financial statements;
3.4.1.2. an amount of R70.1 million payable to Zambezi’s advisors in respect of a portion of Zambezi’s
Transaction costs;
3.4.1.3. an amount of R167.3 million in relation to the relevant Zambezi ordinary shareholder’s
proportionate lock-in fee, of which R42.7 million is paid to the Northam Employees’ Trust and
the Northam Community Trusts and the remaining R124.6 million will be retained by Northam
and may subsequently be paid to Zambezi ordinary shareholders as further set out in
paragraph 3.3.2;
3.4.1.4. an amount of R17.5 million to be retained by Northam and utilised to settle the STT liability,
arising from the dividend in specie as contemplated in note 3.4.2 below, on behalf of the
Zambezi ordinary shareholders,
thereby ultimately resulting in, inter alia, a cash payment by the Northam group of an aggregate
amount of R70.1 million;
3.4.2. the declaration by Zambezi of a dividend in specie of an aggregate of 31 981 280 Residual BEE
Shares to the Zambezi ordinary shareholders, of which 23 826 054 Residual BEE Shares are
distributed to Zambezi ordinary shareholders not consolidated by Northam in accordance with IFRS
10: Consolidated financial statements. The distribution of such Residual BEE Shares is expected
to have a continuing effect;
3.4.3. the recognition of a CGT and STT liability for Zambezi and Zambezi ordinary shareholders of
R1.3 billion;
3.5. the repurchase by Northam of all or some of the BEE Shares received by the Northam Employees’ Trust
pursuant to the Net Value Distribution, which includes:
3.5.1. Northam acquiring 1 146 633 BEE Shares from the Northam Employees’ Trust, at a price of
R152.00 per BEE Share, for an aggregate consideration of R174.3 million cash;
3.5.2. the recognition of a STT liability for Northam of R0.6 million;
3.6. the payment of Northam’s transaction costs associated with the Transaction, which expense is not
expected to have a continuing effect.
4. The “Percentage change” column compares the financial information included in the “Northam after
implementation of the Transaction (but prior to implementation of the Extended BEE Transaction)” column with
the financial information in the “Northam 31 December 2020 Adjusted” column.
5. The financial information included in the “Northam Holdings after implementation of the Composite
Transaction” column reflects the financial information extracted, without adjustment, and/or derived from
Northam Holdings’ unaudited financial statements as at the date of incorporation adjusted for:
5.1. the Northam Scheme, which comprises Northam Holdings acquiring all of the Offer Shares from the
Northam Scheme Participants in exchange for Northam Holdings Shares, on a share for share basis,
such that the 380 710 406 Offer Shares acquired by Northam Holdings from the Northam Scheme
Participants are exchanged for 380 710 406 Northam Holdings Shares. 7 008 593 Northam Holdings
Shares held by the Northam Employees’ Trust and the Northam Community Trusts are treated as
treasury shares as a result of the consolidation of said entities in accordance with IFRS 10: Consolidated
financial statements;
5.2. the Extended BEE Transaction, which includes:
5.2.1. Northam issuing an aggregate 113 718 693 new Northam Shares to Employee SPV and
Community SPV, at the Subscription Price which is assumed to be R225.00 per Northam Share,
funded through the subscription by Northam of BEE Prefs and B Prefs in Employee SPV and
Community SPV, respectively, which triggers the recognition of an aggregate BEE share-based
payment charge of R8.8 billion in terms of IFRS 2: Share-Based Payments, which expense is not
expected to have a continuing effect;
5.2.2. Northam Holdings issuing 18 129 067 new Northam Holdings Shares to HDP SPV, at the
Subscription Price which is assumed to be R225.00 per Northam Holdings Share, funded through
the subscription by Northam Holdings of BEE Prefs and B Prefs in HDP SPV, which triggers the
recognition of a BEE share-based payment charge of R1.4 billion in terms of IFRS 2: Share-Based
Payments, which expense is not expected to have a continuing effect;
5.3. the assumed redemption by Zambezi of all the ZPLPs held by Northam, which includes:
5.3.1. the settlement of the R6.6 billion aggregate ZPLP issue price comprising 159 905 453 ZPLPs at the
original issue price of each ZPLP (i.e. R41.00) through the transfer of 40 975 772 BEE Shares held
by Zambezi to Northam, calculated using the agreed value of R160.00 per BEE Share;
5.3.2. the recognition of CGT and STT of R1.1 billion for Zambezi as a result of the redemption of all the
ZPLPs held by Northam; and
5.4. the payment of the Northam Holdings’ transaction costs associated with the Extended BEE Transaction,
which costs are deducted from stated capital.
6. The “Percentage change” column compares the financial information included in the “Northam Holdings after
implementation of the Composite Transaction” column with the financial information in the “Northam after
implementation of the Transaction (but prior to implementation of the Extended BEE Transaction)” column.
13. CIRCULARS AND PROSPECTUS
13.1. Northam and Northam Holdings will issue a combined circular to Shareholders in
accordance with, Regulation 106 and the JSE Listings Requirements, setting out the full
terms and conditions of the Composite Transaction and including the notice convening the
general meeting of Shareholders to be convened for purposes of considering and, if
deemed appropriate, approving the resolutions required to implement the Composite
Transaction (“General Meeting”), (the “Circular”).
13.2. The Circular will be accompanied by a prospectus to be issued by Northam Holdings in
accordance with the JSE Listings Requirements and section 99 of the Companies Act and
registered with the Companies and Intellectual Property Commission, the purpose of which
is to provide Shareholders with information regarding Northam Holdings (“Prospectus”).
13.3. The Circular, accompanied by the Prospectus, is expected to be posted as soon as
practicably possible. A further announcement pertaining to the posting of the Circular and
Prospectus will be released in due course.
13.4. Shareholders are advised to refer to the Circular and the Prospectus for the full terms and
conditions of the Composite Transaction. For the avoidance of doubt, in the event of an
inconsistency between this announcement and the Circular or the Prospectus, the
provisions of the Circular or the Prospectus will prevail.
14. GENERAL MEETING AND OTHER IMPORTANT INFORMATION
The General Meeting is expected to occur on or before 30 June 2021. Further details relating to
the Composite Transaction and the General Meeting and the related salient dates and times will
be published on SENS in due course.
15. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Further to the Cautionary Announcement and subsequent renewals thereof, Shareholders are
advised that caution is no longer required to be exercised when dealing in the Company’s
securities.
16. THE INDEPENDENT BOARD AND NORTHAM BOARD RESPONSIBILITY STATEMENT
The Independent Board and Northam Board (to the extent that the information relates to Northam)
collectively and individually accept responsibility for the information contained in this
announcement and certify that, to the best of their knowledge and belief, the information contained
in this announcement relating to Northam is true and this announcement does not omit anything
that is likely to affect the import of such information.
17. NORTHAM HOLDINGS BOARD RESPONSIBILITY STATEMENT
The board of directors of Northam Holdings (to the extent that the information relates to Northam
Holdings) accepts responsibility for the information contained in this announcement and certify
that, to the best of their knowledge and belief, the information contained in this announcement
relating to Northam Holdings is true and this announcement does not omit anything that is likely to
affect the import of such information.
Johannesburg
23 March 2021
Corporate advisor to Northam and Northam Holdings
One Capital Advisory Proprietary Limited
Transaction Sponsor and Sponsor to Northam and Northam Holdings and Debt Sponsor to
Northam
One Capital Sponsor Services Proprietary Limited
Attorneys to Northam and Northam Holdings
Webber Wentzel
Counsel to Northam and Northam Holdings as to English and US law
Allen & Overy LLP
Independent Expert to Northam
BDO Corporate Finance Proprietary Limited
Independent auditor and independent reporting accountant to Northam and Northam Holdings
Ernst & Young Inc.
Disclaimer
This announcement does not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there
be any sale of the securities described herein, in any jurisdiction, in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of such jurisdiction or without an exemption
from the registration or qualification requirements under the securities laws of such jurisdiction.
The distribution of this announcement in certain jurisdictions may be restricted by applicable law and therefore
persons in such jurisdictions into which this announcement is released, published or distributed should inform
themselves about and observe such restrictions. Foreign Shareholders who are in any doubt as to their position
should consult their professional advisers.
Notice to Swiss investors in Northam
The offer of Northam Holdings Shares in Switzerland is exempt from the requirement to prepare a prospectus
pursuant to article 36(1)(b) of the Swiss Financial Services Act (“FinSA”) and the Northam Holdings Shares will
not be admitted to trading on any trading venue (exchange or multilateral trading facility) in Switzerland. Neither
this announcement nor any other offering or marketing material relating to the Northam Holdings Shares constitutes
a prospectus pursuant to the FinSA nor has it been approved by a Swiss review body within the meaning of
article 52 of the FinSA, and no such prospectus will be prepared in connection with the Northam Scheme.
Notice to US investors in Northam
The Northam Offer relates to the shares of a South African company and is being made by means of a scheme of
arrangement provided for under South African company law. A transaction effected by means of a scheme of
arrangement is not subject to the tender offer or proxy solicitation rules under the US Securities Exchange Act of
1934. Accordingly, the Northam Offer is subject to the disclosure requirements and practices applicable in South
Africa to schemes of arrangement which differ from the disclosure requirements of the US tender offer and proxy
solicitation rules. The financial information included in this announcement has been prepared in accordance with
accounting standards applicable in South Africa and thus may not be comparable to financial information of US
companies or companies whose financial statements are prepared in accordance with generally accepted
accounting principles in the US.
It may be difficult for US holders of Offer Shares to enforce their rights and any claim arising out of the US federal
laws, since Northam and Northam Holdings are located in a non-US jurisdiction, and some or all of their officers
and directors may be residents of a non-US jurisdiction. US holders of Offer Shares may not be able to sue a non-
US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be
difficult to compel a non-US company and its affiliates to subject themselves to a US court’s judgement. The Offer
Shares will not be and have not been registered under the US Securities Act of 1933 and may not be offered or
sold in the United States absent registration or an applicable exemption from the registration requirements.
Neither the US Securities and Exchange Commission nor any US state securities commission has approved or
disapproved of the acquisition, or determined if this announcement is accurate or complete. Any representation to
the contrary is a criminal offence in the US.
US Shareholders also should be aware that the transaction contemplated herein may have tax consequences in
the US and, that such consequences, if any, are not described herein. US Shareholders are urged to consult with
legal, tax and financial advisers in connection with making a decision regarding this transaction.
Notice to United Arab Emirates investors in Northam
If you are in any doubt about the contents of this announcement, you should consult an authorised financial adviser.
By receiving this announcement, the person or entity to whom it has been issued understands, acknowledges and
agrees that this announcement has not been approved by or filed with the UAE Central Bank, the UAE Securities
and Commodities Authority (the “SCA”) or any other authorities in the UAE, nor has Northam or Northam Holdings
received authorisation or licensing from the UAE Central Bank, SCA or any other authorities in the UAE to market
or sell securities or other investments within the UAE. No marketing of any financial products or services has been
or will be made from within the UAE other than in compliance with the laws of the UAE and no subscription to any
securities or other investments may or will be consummated within the UAE. It should not be assumed that Northam
or Northam Holdings is a licensed broker, dealer or investment adviser under the laws applicable in the UAE, or
that any of them advise individuals resident in the UAE as to the appropriateness of investing in or purchasing or
selling securities or other financial products. The Offer Shares are not intended for circulation or distribution in or
into the UAE, other than to persons who are “Qualified Investors” within the meaning of the SCA’s Board of
Directors Decision No. 37/R.M of 2019 Concerning the Definition of Qualified Investor to whom the materials may
lawfully be communicated. This does not constitute a public offer of securities in the UAE in accordance with the
SCA Chairman of the Board Resolution No. 11/R.M of 2016 on the Regulations for Issuing and Offering Shares of
Public Joint Stock, or otherwise. Nothing contained in this announcement is intended to constitute investment,
legal, tax, accounting or other professional advice. This announcement is for information purposes only and nothing
herein is intended to endorse or recommend a particular course of action. Any person considering acquiring
securities should consult with an appropriate professional for specific advice rendered based on their respective
situation.
Notice to Japanese investors in Northam
The Offer Shares have not been and will not be registered under the Financial Instruments and Exchange Act of
Japan (Law No. 25 of 1948, as amended, the “FIEA”). The Offer Shares will not be offered or sold, directly or
indirectly, in Japan or to, or for the account or benefit of, any resident of Japan (as defined under Item 5, Paragraph
1, Article 6 of the Foreign Exchange and Foreign Trade Act of Japan (Law No. 228 of 1949, as amended)) (including
any corporation or other entity organised under the laws of Japan), or to others for re-offering or resale, directly or
indirectly, in Japan or to, or for the account or benefit of, any resident of Japan, except pursuant to an exemption
from the registration requirements of, and otherwise in compliance with, the FIEA and any other applicable laws,
regulations and ministerial guidelines of Japan.
Forward-looking statements
The statements contained in this announcement that are not historical facts are “forward-looking” statements.
These forward-looking statements are subject to a number of substantial risks and uncertainties, many of which
are beyond the Company’s and Northam Holdings’ control and actual results and developments may differ
materially from those expressed or implied by these statements for a variety of factors. These forward-looking
statements are statements based on the Company’s and Northam Holdings’ current intentions, beliefs and
expectations about among other things, the Company’s results of operations, financial condition, prospects, growth,
strategies and the industry in which the Company operates. By their nature, forward-looking statements involve
risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in
the future. Many of these risks and uncertainties relate to factors that are beyond the Company’s and Northam
Holdings’ ability to control or estimate precisely, such as changes in taxation, future market conditions, currency
fluctuations, the actions of governmental regulators and other risk factors. Such risks and uncertainties could cause
actual results to vary materially from the future results indicated, expressed or implied in such forward-looking
statements. The forward-looking statements contained in this announcement speak only as of the date of this
announcement and the Company and Northam Holdings undertake no duty to update any of them publicly in light
of new information or future events, except to the extent required by applicable law or the JSE Listings
Requirements.
No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this
announcement should be interpreted to mean that earnings per Northam Share for the current or future financial
years would necessarily match or exceed the historical published earnings per Northam Share. Prices and values
of, and income from, shares may go down as well as up and an investor may not get back the amount invested. It
should be noted that past performance is no guide to future performance. Persons needing advice should consult
an independent financial adviser.
Date: 23-03-2021 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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