Lonmin Plc/ Implats - Joint Announcement
Lonmin Plc
(Incorporated in the United Kingdom)
Share code : LON
ISIN code : GB0031192486
("Lonmin")
Impala Platinum Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number: 1957/001979/06
Share code : IMP
ISIN ZAE000003554
("Implats")
LONMIN AND IMPLATS ANNOUNCE SIGNIFICANT PROGRESS ON THE SALE BY IMPLATS OF ITS
ENTIRE 27.1% STAKE IN EACH OF WESTERN PLATINUM LIMITED AND EASTERN PLATINUM
LIMITED (TOGETHER "LONPLATS") - 9.0% TO HDSA INVESTORS AND THE BALANCE TO LONMIN
A number of key milestones have been achieved including endorsement by the
Department of Minerals and Energy, participation by the Industrial Development
Corporation, the involvement of Historically Disadvantaged South Africans and
the obtaining of bank funding
Sale of 27.1% of Lonplats by Implats
Implats to dispose of its entire 27.1% shareholding in Lonplats for cash;
9.0% for US$240.1 million directly to a number of consortia comprising
Historically Disadvantaged South Africans ("HDSA") ("HDSA Investors");
18.1% for a total of US$554.4 million to Lonmin; and
Implats and Lonmin to provide a vendor-financing package of US$122.0 million for
HDSA investors.
Purchase of 18% of Lonplats by Incwala Resources
Lonmin to on-sell 9.0% of Lonplats to Incwala Resources (Pty) Ltd ("Incwala
Resources") - a newly formed company (to be HDSA controlled) - for US$240.1
million in cash;
HDSA Investors to sell the 9.0% of Lonplats acquired from Implats to Incwala
Resources for US$240.1 million in cash, to be partly reinvested in Incwala
Resources equity;
HDSA Investors will own more than 50% of Incwala Resources;
Lonmin to invest a cash amount of US$90.3 million in Incwala Resources for
equity;
The Industrial Development Corporation of SA ("IDC") to make a direct equity
investment in Incwala Resources, of US$81.7 million in cash; and
Incwala Resources secures funding in the Rand equivalent of US$125.0 million
from a syndicate of banks.
Department of Minerals and Energy Support
The South African Minister of Minerals and Energy supports the proposed
transaction and endorses it as a constructive approach to black economic
empowerment - within the requirements of the new Mining law
Introduction
On 18 September 2003, Lonmin and Implats announced that they had signed a non-
binding Memorandum of Understanding ("MOU") providing for the sale by Implats of
its entire 27.1% holding in Western Platinum Ltd and Eastern Platinum Ltd,
Lonmin"s principal operating subsidiaries (together referred to as "Lonplats")
which would have the effect of ending Implats" joint control of Lonplats. Lonmin
currently holds the balance of 72.9% of Lonplats.
Significant progress has been made since the September announcement The
transaction has been restructured to facilitate the claim, on application for
conversion of mining rights, of equity ownership credits in terms of the Mining
Charter.
Commenting on the transaction, the Minister for Minerals and Energy Ms. Phumzile
Mlambo-Ngcuka said: "As presented, this transaction is in line with the
requirements of the new mining law. The Department of Minerals and Energy will
at an appropriate time evaluate compliance with all aspects of the law; the
Scorecard and the Mining Charter, that is when the parties formally present
themselves for conversion to new order mining rights. It is at that stage that
any due credits for compliance will be formally awarded to the parties. We wish
the partners success in this business venture and the courage to face the
challenges that lie ahead.
Lonmin and Impala have both facilitated this transaction and both will be
allocated credits that are proportional to the percentages and ounces they have
sold to their BEE partners. We welcome the progress that has been made by all
the parties".
Sale by Implats of 9.0% of Lonplats to HDSA Investors
HDSA Investors will acquire a 9.0% stake in Lonplats directly from Implats for
US$240.1 million in cash. Funding for this acquisition will be facilitated as
follows:
HDSA Investors will contribute approximately US$61.1 million of their own-
sourced funding;
US$57.0 million short term bridge finance; and
Lonmin and Implats will provide US$27.0 million and US$95.0 million of vendor-
financing respectively.
Lonmin will indemnify Implats for its vendor-financing portion up to a cap of
US$95.0 million, in the event that the HDSAs are unable to repay the principal
amount of the loan on maturity. Given the strong cash flows of Lonplats, Lonmin
believes it is unlikely that this indemnity will be called.
HDSA Investors will on-sell to Incwala Platinum (Pty) Ltd (Incwala Resources"
wholly-owned subsidiary, "Incwala Platinum") the entire 9.0% stake for a
matching consideration of US$240.1 million to be settled in cash. The HDSA
Investors will use part of the consideration to repay the US$57.0 million of
bridge finance, and the balance to acquire shares in Incwala Resources.
Lonmin and Implats are in advanced discussions on the potential investment with
various broad-based HDSA consortia, which will between them purchase the 9.0%
stake in Lonplats from Implats and become the founding HDSA Investors in Incwala
Resources as envisaged above.
To date, three HDSA consortia have succeeded in securing strong financial
support for some US$30 million (corresponding to an investment of approximately
24.7% in Incwala Resources) towards the US$61.0 million of total funding
required for the HDSA investment in Incwala Resources.
These three HDSA Investors are:
Andisa Capital, a black empowerment financial services company headed by Saki
Macozoma (Chairman) and Ronnie Ntuli (Chief Executive);
Dema Group, a women"s group, led by Zanele Mavuso Mbatha (MD);and
Vantage Capital, an empowerment group headed by Mutle Mogase.
Further potential HDSA investors are working on obtaining the required own-
sourced funding in order to participate in the unique investment opportunity
represented by the balance of the controlling interest in Incwala Resources. The
identities of further HDSA consortia will be announced upon the successful
completion of this exercise.
Sale by Implats of its remaining 18.1% of Lonplats to Lonmin
Lonmin will acquire 18.1% of Lonplats from Implats for US$534.4 million less an
amount equal to US$31.7 million, which is the amount of the dividend that
Lonplats has paid to Implats in respect of the last financial year ended 30
September 2003. In addition, Lonmin will, simultaneously with the sale by
Implats to the HDSA investors, pay Implats US$20.0 million for facilitating the
transaction within this structure. The net payment to Implats by Lonmin for the
18.1% is therefore US$522.7 million.
From its newly acquired 18.1% shareholding in Lonplats, Lonmin will immediately
sell 9.0% directly to Incwala Platinum for US$240.1 million to be settled in
cash.
Following the completion of this transaction, Lonmin will have an 82.0% stake in
Lonplats and Incwala Resources an 18.0% stake. Lonmin will also make a direct
equity investment in Incwala Resources of US$90.3 million in cash.
Introduction of the Industrial Development Corporation as a founding direct
equity investor
The IDC has approved a direct equity investment of US$81.7 million in Incwala
Resources. It is envisaged that the IDC and Lonmin will acquire an equal
shareholding in Incwala Resources.
This investment will represent a facilitation by the IDC of Black Economic
Empowerment in the platinum industry.
Incwala Resources - Funding and Capital Structure
Incwala Resources is to be funded through a combination of equity and preference
shares. It is currently envisaged that the funding (other than that to be
provided by the HDSA Investors) will be sourced as follows:
A syndicate of banks will provide the Rand equivalent of US$125.0 million to
Incwala Platinum in the form of preference share funding with an expected term
of 7 years. The banks comprise: ABSA Bank Limited, Nedbank Limited, Standard
Chartered Bank Limited and The Standard Bank of South Africa Limited ; and
Lonmin and the IDC will subscribe for equal equity interests of approximately
23.6% each in Incwala Resources.
Provision is being made to accommodate the South African Women in Mining
Association, Lonplats employees by way of their Masikane Provident Fund and
communities in the vicinity of Lonplats operations by way of the Bapo Ba Mogale
community, to have an equity interest in Incwala. On completion, Incwala
Resources will be majority HDSA-owned and have majority HDSA Board
representation.
Incwala Resources intends to develop into a flagship for Black Economic
Empowerment in the South African diversified mining industry, enabling wide
spread participation by HDSAs in the mineral wealth of South Africa, and
ultimately seeking a listing on the JSE Securities Exchange South Africa.
Conditions to Completion
Completion of the proposed transaction is subject to the following conditions:
The potential HDSA investors successfully obtaining the required amount of own-
sourced funds;
Signature of legally binding agreements between all the parties involved in the
transaction;
The approval of Lonmin shareholders as required by the UK Listing Rules; and
The unconditional approval of the South African competition authorities and
other relevant regulatory authorities.
It is expected that the transaction will complete in the third quarter of 2004.
Further announcements will be made in due course.
Enquiries
Lonmin
John Robinson, Chief Financial Officer +44 20 7201 6032
Ian Farmer, Director +27 11 268 6318
CardewChancery +44 207 930 0777
Implats
David Brown, Chief Financial Officer +27 11 481 3926
Cathie Markus, Executive Director +27 11 481 3925
Issued by sponsor: Deutsche Securities
Date: 12/05/2004 04:45:11 PM Produced by the JSE SENS Department
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