RNS Number:3261O
Lonmin PLC
05 August 2003
NOT FOR DISTRIBUTION IN THE UNITED STATES
4 August 2003
LONMIN PLC ("LONMIN") AGREES TO SUPPORT RECOMMENDED MERGER OF ANGLOGOLD LIMITED
("ANGLOGOLD") AND ASHANTI GOLDFIELDS COMPANY LIMITED ("ASHANTI")
Summary
Lonmin refers to today's announcement by AngloGold and Ashanti that their Boards
of Directors have entered into a transaction agreement (the "Transaction
Agreement") setting out the terms of a recommended merger of the two companies
("the Merger").
Lonmin has signed an undertaking to AngloGold pursuant to which Lonmin has
agreed to vote in favour of and support the Merger in respect of its 36,000,000
Ashanti ordinary shares (representing approximately 27.6% of Ashanti's current
issued share capital). Lonmin has agreed not to solicit alternative offers and
to withdraw its support only if the Ashanti Board publicly announces the
withdrawal of its recommendation or if the Transaction Agreement is terminated.
Lonmin also holds Ashanti Mandatorily Exchangeable Notes ("MENs") with a face
value of US$75 million. Upon completion of the Merger, Ashanti Capital (Second)
Limited, a subsidiary of Ashanti, will redeem these MENs for US$75 million plus
accrued and unpaid interest thereon in cash.
Commenting on the agreement, Lonmin's Chairman Sir John Craven said:
"Lonmin is pleased to support the merger between AngloGold and Ashanti, which
enhances the value of our financial investment.
I believe this significant development in the global gold mining industry will
enable both parties to build on their considerable strengths. As Ghana's largest
employer, Ashanti has entered a transaction which enhances the opportunities for
employment there and will maximise the Group's operational performance across
all their assets."
Lonmin's Chief Executive Officer, Edward Haslam, is a member of the Board of
Directors of Ashanti and did not take part in the deliberations of the Ashanti
Board relating to the recommendation of the Merger. Ashanti's Chief Executive
Officer, Sam Jonah, KBE, is a member of the Board of Directors of Lonmin and did
not take part in the deliberations of the Lonmin Board relating to its decision
to agree to support the Merger. Sam Jonah, in addition to joining the Board of
the enlarged entity, will play a leading role in the executive management in the
position of President, and will join a five person Executive Committee chaired
by AngloGold Chief Executive Officer Bobby Godsell.
Terms of the Merger
The terms of the Merger are set out in the joint announcement made earlier today
by AngloGold and Ashanti, which includes, inter alia, the following information:
* The Merger will be effected by means of a
scheme of arrangement (the "Scheme") between Ashanti and its shareholders under
Ghanaian law
* Each holder of an Ashanti ordinary share
("Ashanti Share") or Ashanti Global Depositary Security ("Ashanti GDS") will be
entitled to elect to receive either 0.26 AngloGold ordinary shares ("AngloGold
Shares") or 0.26 AngloGold American Depositary Shares ("AngloGold ADSs") for
each Ashanti Share or Ashanti GDS
* Ashanti shareholders resident in Ghana will
have the option of receiving AngloGold Ghanaian Depositary Shares ("AngloGold
GhDSs"), 100 of which shall represent one AngloGold share, at an exchange ratio
of 26 AngloGold GhDSs for each Ashanti Share or Ashanti GDS
* Completion of the Merger is conditional on,
among other things, the approval of the Merger by Ashanti shareholders, the
receipt of the required regulatory approvals (in addition to the approvals from
the Government of Ghana referred to below), third party consents and the
confirmation of the Scheme by the High Court of Ghana prior to 31 March 2004
* The Merger is conditional on AngloGold
receiving undertakings from the Government of Ghana (holder of approximately
16.9% of Ashanti's issued ordinary share capital) to vote in favour of the
Merger and is also subject to receiving certain regulatory and other approvals
and undertakings that have been requested by AngloGold and Ashanti from the
Government of Ghana prior to the date of the Transaction Agreement. The
Transaction Agreement will terminate if these conditions are not satisfied (or
waived by AngloGold) on or before 30 September 2003 or such later date as
Ashanti and AngloGold may agree
Based on the closing market price of AngloGold ADSs on the New York Stock
Exchange on 1 August 2003, the last practicable trading day prior to this
announcement, of US$32.15, the Merger values each Ashanti Share (and each
Ashanti GDS) at US$8.36 and the current issued share capital of Ashanti at
approximately US$1,089 million.
This represents a premium of approximately 4% to the closing market price of
Ashanti GDSs on the New York Stock Exchange on 1 August 2003, the last
practicable trading day prior to this announcement, of US$8.00 and, on the bases
of closing prices for AngloGold ADSs and Ashanti GDSs on the New York Stock
Exchange on 15 May 2003, the day prior to the announcements of discussions
between AngloGold and Ashanti, of US$30.63 and US$7.10 respectively, a premium
of approximately 12%. Based on the average closing prices of Ashanti GDSs and
AngloGold ADSs on the New York Stock Exchange over the 30 trading days to 15 May
2003 these terms represent a premium of approximately 34%.
Effect of the Merger on Lonmin
Based on the Merger ratio of 0.26 AngloGold Shares or AngloGold ADSs per Ashanti
Share and Lonmin's current shareholding, Lonmin will receive 9,360,000 AngloGold
Shares or AngloGold ADSs upon closing of the Merger (representing approximately
3.6% of AngloGold's enlarged issued share capital). Based on the closing market
price of AngloGold ADSs on the New York Stock Exchange on 1 August 2003, the
last practicable trading day prior to this announcement, of US$32.15, these
shares have a value of approximately US$301 million.
Lonmin's Ashanti shareholding is shown as a fixed asset investment in Lonmin's
2002 financial statements and 2003 Interim Report at a Directors' valuation of
US$200 million. The investment made no contribution to Lonmin's attributable net
income in the year ending 30 September 2002 or the six months ending 31 March
2003 as Ashanti did not pay any dividends for the years ended 31 December 2001
or 2002 or in the first quarter of 2003. Lonmin does not expect to incur a
taxable gain on its Ashanti Shares as a result of the Merger transaction.
AngloGold's most recent interim and final dividends were declared on 31 July
2003 (3.75 Rand per share, ex dividend date 18 August 2003) and 30 January 2003
(6.75 Rand per share), respectively. Ashanti shareholders will not be entitled
to receive AngloGold's 2003 interim or final dividends.
Lonmin's Ashanti MENs are also shown as a fixed asset investment in Lonmin's
2002 financial statements and 2003 Interim Report, at a valuation of
US$77 million. Upon completion of the Merger, Ashanti Capital (Second) Limited,
a subsidiary of Ashanti, will redeem the Ashanti MENs held by Lonmin for cash at
their face value of US$75 million plus accrued and unpaid interest thereon
(approximately US$2.7 million to date).
In the event that the Merger does not complete and subject to the agreement of
the Government of Ghana, Lonmin has agreed to extend from 28 December 2003 to
31 December 2004 (i) the deadline for Ashanti to undertake a rights issue as
part of its Cash Redemption Alternative recapitalisation programme announced on
28 June 2002, and (ii) the final exercise date of the call option granted by
Lonmin to the Government of Ghana on 28 June 2002 in relation to US$28.4 million
MENs.
Lonmin has yet to determine whether or not the AngloGold Shares or AngloGold
ADSs it would receive on completion of the Merger will be sold or retained.
Concurrently with the Shareholder Support Deed of Agreement entered into between
Lonmin and AngloGold, the parties have entered into a Registration Rights
Agreement which gives Lonmin additional flexibility in selling its AngloGold
Shares or AngloGold ADSs following closing of the Merger, should it so choose.
Morgan Stanley & Co. Limited is acting as financial adviser to Lonmin Plc.
Information on Ashanti
Ashanti, headquartered in Accra, Ghana, is engaged in the mining and processing
of gold ores and the exploration and development of gold properties in four
African countries - Ghana, Guinea, Tanzania and Zimbabwe. Ashanti also has an
extensive exploration programme in Africa.
For the six months ended 30 June 2003 Ashanti reported (in accordance with UK
GAAP):
* Gold production of 0.7 million ounces (attributable)
* Cash operating costs (including royalties) of US$232 per ounce (attributable)
* Revenue of US$257 million
* Pre-exceptional net earnings of US$14.6 million
* Pre-exceptional net earnings per share of US$0.11
* Net assets of US$478 million
For further information relating to Lonmin Plc:
Anthony Cardew/Jackie Range CardewChancery Tel: +44 (0)20 7930 0777
This Press release is not an offer of securities for sale in the United States.
Securities may not be offered or sold in the United States absent registration
or an exemption from registration. Any public offering of securities in the
United States will be made by means of a prospectus that may be obtained from
the issuer or selling security holder and that will contain detailed information
about the issuer and management, as well as financial statements.
Morgan Stanley & Co. Limited is acting exclusively for Lonmin Plc and no one
else in connection with the matters described herein and will not be responsible
to anyone other than Lonmin Plc for providing the protections afforded to
clients of Morgan Stanley & Co. Limited or for providing advice in relation to
such matters.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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