Pan African Resources Plc BEE Ownership Restructuring

 
TIDMPAF 
 
Pan African Resources PLC 
 
(Incorporated and registered in England and Wales under Companies Act 1985 with 
                registered number 3937466 on 25 February 2000) 
 
                                 AIM Code: PAF 
 
                                 JSE Code: PAN 
 
                              ISIN: GB0004300496 
 
                         ("Pan African" or "Company") 
 
PAN AFRICAN BLACK ECONOMIC EMPOWERMENT ("BEE") OWNERSHIP RESTRUCTURING 
 
Introduction 
 
Pan African is pleased to announce that it has successfully concluded 
restructuring agreements, replacing the current BEE equity shareholdings in the 
Company (held via interests in PAR Gold Proprietary Limited ("PAR Gold")) with 
BEE shareholdings in Emerald Panther Investments 91 Proprietary Limited ("SA 
Holdco"), a subsidiary of the Company (the "Transaction").  SA Holdco will 
house all Pan African's South African mining operations, following 
implementation of the Transaction.  Where the previous BEE ownership structure 
terminates during December 2018, the new BEE structure will only terminate on 
31 December 2021, which is a three-year extension of the original BEE 
transaction. 
 
The rationale and benefits of the Transaction are as follows: 
 
-     Extension of the BEE ownership structure for a three-year period with 
limited IFRS charges to the Company; 
 
-     The Transaction provides flexibility to further restructure the BEE 
ownership of the South African operations, depending on the outcome of the 
proposed third South African Mining Charter and other relevant regulations; 
 
-     The Transaction will avoid BEE ownership dilution, in the event that Pan 
African raises equity capital in the future; 
 
-     The Transaction will not result in a dilution of Group earnings. 
 
Following implementation of the Transaction, Pan African's BEE ownership is 
calculated at 26%, comprising 21% in SA Holdco and 5% from its on-mine employee 
ownership schemes. 
 
Refer to Pan African's pre and post Transaction Group structures on our website 
that summarise the BEE holdings. (website link: http:// 
www.panafricanresources.com/about-overview/company-structure/) 
 
BEE shareholdings prior to the Transaction 
 
PAR Gold, which owns 19.53% of Pan African's issued share capital, is currently 
Pan African's primary BEE investor and its shareholders are summarised as 
follows: 
 
-     The Mabindu Development Trust ("Mabindu") - 49.5% 
 
-     K2015200726 Proprietary Limited ("K2015") - 0.6% 
 
-     Pan African Resources Funding Company Proprietary Limited ("Fund Co") - 
49.9% 
 
PAR Gold is currently majority owned by BEE shareholders (50.1%) with the 
balance held by PAR's wholly owned subsidiary Fund Co. 
 
Steps to implement the Transaction 
 
1)         Establishment of a new BEE entity: 
 
The Group has established a new BEE entity, Concrete Rose Proprietary Limited 
("Concrete Rose"). Concrete Rose has not conducted any business since 
incorporation and has been established for the purpose of housing the interests 
to be acquired in SA Holdco, as further detailed below. The provisions of the 
memorandum of incorporation of Concrete Rose do not frustrate or relieve the 
Company in any way from compliance with its obligations in terms of the JSE 
Limited Listings Requirements. 
 
The following parties will subscribe for shares in Concrete Rose for a nominal 
value, as follows: 
 
1)   Mabindu - 24.75% 
 
2)   Pan African Resources Management Trust - 10.5% (note 1) 
 
3)   Pan African Resources Education Trust - 4.95% (note 2) 
 
4)   Alpha Investment Group Proprietary Limited - 9.9% (note 3) 
 
The remaining shares in Concrete Rose are held by Fund Co (49.9%). 
 
Note 1: The Pan African Resources Management Trust is a new trust established 
to hold shares on behalf of black management employees of the group and is 
controlled by employees of the Group and other historically disadvantaged South 
Africans ("HDSA's"). 
 
Note 2: Pan African Resources Education Trust is a new trust established to 
hold shares that will provide funding for the education of black students and 
is controlled by employees of the Group and other HDSA's. 
 
Note 3: Alpha Investment Group Proprietary Limited is the investment vehicle 
for a BEE entrepreneur. 
 
2)         Subscription by Concrete Rose for shares in SA Holdco 
 
Concrete Rose will subscribe for 22.11% of SA Holdco's shares for notional 
value through a notional vendor financed ("NVF") transaction. The BEE 
shareholders 50.1% share of the NVF at 15 December 2017 is approximately R756 
million. 
 
The NVF shares will be issued by SA Holdco to Concrete Rose on similar 
commercial terms to the original PAR Gold NVF terms with Mabindu, as summarised 
below. 
 
Comparison of the revised BEE scheme versus the original BEE scheme 
 
Description               Revised BEE scheme        Original BEE Scheme 
 
Strategic BEE             Concrete Rose             PAR Gold 
shareholder: 
 
Term expiry:              31 December 2021          31 December 2018 
 
Repayment mechanism:      90% of dividends utilised 95% of dividends utilised 
                          to fund NVF repayments    to fund NVF repayments 
 
Trickle dividends:        10% of attributable       5% of attributable 
                          dividends                 dividends. Mabindu 
                                                    received R5.6 million in 
                                                    trickle dividends over 
                                                    the term of the BEE 
                                                    scheme relating to two 
                                                    dividend distributions. 
 
NVF finance rate:         SA prime rate plus a      SA prime rate plus a 
                          margin of five percent    margin of five percent 
 
BEE ownership on mining   Total of 26%              Total of approximately 
operations (direct and                              26% 
indirect) 
 
Conversion right:         On expiry of the scheme,  On expiry of the scheme, 
                          BEE shareholders of       BEE shareholders of PAR 
                          Concrete Rose will be     Gold were entitled to 
                          entitled to exchange      sell their shares to Fund 
                          their shares in Concrete  Co for cash. 
                          Rose for Pan African 
                          shares based on the 
                          market value of their 
                          holding, less the 
                          outstanding NVF balance. 
                          The conversion rights 
                          remains subject to 
                          regulatory,  PAR 
                          shareholder and other 
                          approvals if required. 
 
SA Holdco's investments and shareholdings 
 
As previously stated, SA Holdco will house all the Pan African South African 
mining operations. The Transaction will result in: 
 
-     Barberton Mines Proprietary Limited ("Barberton Mines"), which is 95% 
held by Pan African, being transferred to SA Holdco through an intra-group 
asset-for-share transaction; and 
 
-     Elikhulu Tailings Retreatment Proprietary Limited ("Elikhulu"), which is 
a wholly owned subsidiary of Pan African, being transferred to SA Holdco 
through an intra-group asset-for-share transaction. 
 
Following the restructure, SA Holdco will house the following investments: 
 
-     Evander Gold Mining Proprietary Limited - 95% 
 
-     Barberton Mines - 95% 
 
-     Elikhulu - 100% 
 
-     Evander Gold Mines Proprietary Limited - 100% 
 
Currently SA Holdco is a wholly owned subsidiary of Pan African. Following the 
implementation of the Transaction, the shareholders of SA Holdco will be: 
 
-     Pan African - 77.89% 
 
-     Concrete Rose - 22.11% 
 
The details pertaining to and the net assets and profits attributable to SA 
Holdco, Evander, Barberton Mines and Elikhulu are contained in the 2017 
integrated annual report and the audited consolidated annual financial 
statements of Pan African for the financial year ended 30 June 2017 available 
at www.panafricanresources.com. In the year ended 30 June 2017, the entities 
that are the subject of the transaction produced profit after tax of 
approximately GBP18.6 million and as at 30 June 2017 these entities had gross 
assets of approximately GBP263.8 million. 
 
3)         PAR Gold shareholding post the Transaction 
 
PAR Gold will repurchase Mabindu's 49.5% shareholding for a nominal 
consideration, due to the NVF currently exceeding the market value of the 
equity interest.  Thereafter PAR Gold will issue new shares to K2015 to the 
extent of 50.1% for a nominal consideration. In future these new shares will 
enjoy full voting rights but no economic rights. Following the issue to K2015, 
Fund Co and K2015 will hold 49.9% and 50.1% of the issued share capital of PAR 
Gold, respectively. 
 
The 50.1% interest held in PAR Gold by K2015 does not qualify for BEE ownership 
within the group. The 19.53% of Pan African's issued equity held by PAR Gold is 
treated as treasury shares and will still be eliminated on consolidation for 
purposes of calculating earnings per share as was previously the case. 
 
Conditions precedent 
 
The conditions precedent to the Transaction are customary to transactions of 
this nature, including any regulatory approvals. The Transaction is likely to 
be implemented during January 2018. 
 
Categorisation 
 
The value pursuant to the Transaction represents a 21% interest in the mining 
operations of the Group. Accordingly, the Transaction is considered to be a 
category 2 transaction, as contemplated in the JSE Listings Requirements. 
 
By order of the Board 
 
Johannesburg 
 
15 December 2017 
 
 
Contact information 
 
Corporate Office                        Registered Office 
The Firs Office Building                Suite 31 
1st Floor, Office 101                   Second Floor 
Cnr. Cradock and Biermann Avenues       107 Cheapside 
Rosebank, Johannesburg                  London 

South Africa                            EC2V 6DN 
Office: + 27 (0) 11 243 2900            United Kingdom 
Facsimile: + 27 (0) 11 880 1240         Office: + 44 (0) 207 796 8644 
                                        Facsimile: + 44 (0) 207 796 8645 
 
Cobus Loots                             Deon Louw 
Pan African Resources PLC               Pan African Resources PLC 
Chief Executive Officer                 Financial Director 
Office: + 27 (0) 11 243 2900            Office: + 27 (0) 11 243 2900 
 
 
Phil Dexter                             John Prior / Paul Gillam 
St James's Corporate Services Limited   Numis Securities Limited 
Company Secretary                       Nominated Adviser, Joint Broker 
Office: + 44 (0) 207 796 8644           Office: [phone] 
 
 
Sholto Simpson                          Ross Allister / Chris Burrows 
One Capital                             Peel Hunt LLP 
JSE Sponsor                             Joint Broker 
Office: + 27 (0) 11 550 5009            Office: [phone] 
 
 
Jeffrey Couch/Neil Haycock/Thomas Rider Bobby Morse/Chris Judd 
BMO Capital Markets Limited             Buchanan Communications 
Joint Broker                            Public & Investor Relations UK 
Office: [phone]            Office: + 44 (0) 207 466 5000 
 
 
Julian Gwillim                          Gareth Driver/Huneiza Goolam 
Aprio Strategic Communications          Webber Wentzel 
Public & Investor Relations SA          Legal Advisers 
Office: [phone]              Office: [phone] 
 
 
www.panafricanresources.com 
 
 
 
END 
 

(END) Dow Jones Newswires

December 15, 2017 04:00 ET (09:00 GMT)