REG-Pan African Resources PLC: Acquisition and Vendor Placing <Origin Href="QuoteRef">PAFR.L</Origin>

Pan African ResourcesAnnouncement

26/05/2016 07:15

Pan African Resources PLC 
 
 (Incorporated and registered in England and Wales under Companies Act 1985 
 with registered number 3937466 on 25 February 2000) 
 
 Share code on AIM: PAF 
 
 Share code on JSE: PAN 
 
 ISIN: GB0004300496 
 
 (“ Pan African ” or the “ Company ”) 
 
 ACQUISITION OF A FURTHER INTEREST IN SHANDUKA GOLD AND VENDOR PLACING 
 
 1, INTRODUCTION 
 
 Pan African shareholders (“ Shareholders ”) are referred to the
announcement published by the Company on 23 February 2016 (“ SBSA
Announcement ”), wherein Shareholders were advised that the Company had
entered into an agreement to acquire the Standard Bank of South Africa
Limited’s (“ SBSA ”) 16.9% interest in Shanduka Gold Proprietary Limited
(“ Shanduka Gold ”) (“ SBSA Transaction ”). 
 
 Shanduka Gold’s only assets are its 23.8% interest in Pan African’s
issued ordinary share capital and its interest in a notional loan (as more
fully described in section 2 below). Shanduka Gold is currently (i.e. before
implementation of the SBSA Transaction) owned by the following entities: 
 
 * The Mabindu Business Development Trust (“ Mabindu ”) (49.5%); 
 * Jadeite Limited (“ Jadeite ”) (33.6%); and 
 * SBSA (16.9%). 
 
 
 Further to the SBSA Announcement, Shareholders are advised that, pursuant to
Shanduka Gold’s memorandum of incorporation (“ MOI ”), Jadeite has
exercised a tag-along right in terms of which Pan African was required to make
an offer to acquire Jadeite’s Shanduka Gold shares. Accordingly, Pan African
will present an offer (“ Offer ”) to Jadeite to acquire its 33.6% interest
in Shanduka Gold subject to certain terms and conditions (“ Jadeite
Transaction ”) on materially the same terms as the SBSA Transaction. The
Offer remains subject to acceptance by Jadeite. 
 
 If Jadeite accepts the Offer, the SBSA Transaction and the Jadeite
Transaction (the “ Transactions ”) are expected to be concluded
simultaneously on or about 7 June 2016. The aggregate purchase consideration
payable by Pan African pursuant to the Transactions is approximately R545.6
million (£23.9 million) (“ Purchase Consideration ”) which shall be
settled in cash from the Company’s existing reserves and facilities, and
from the proceeds of a vendor consideration placing (“ Vendor Placing ”)
of new Pan African ordinary shares (“ PAR Shares ”), as explained below. 
 
 A maximum of 111 711 791 PAR Shares (“ Placement Shares ”) are to be
issued in consideration of a portion of the Purchase Consideration and will be
issued by Pan African to certain Shareholders and new institutional investors
(“ Investors ”) pursuant to a vendor consideration placing (“ Vendor
Placing ”). The Transactions are not conditional upon the implementation of
the Vendor Placing. Completion of the Vendor Placing is subject to, inter alia
, the Jadeite Transaction becoming unconditional in all respects and approval
for the listing and admission of the Placement Shares to trading on AIM and
the exchange operated by the JSE Limited (“ Main Board ”). 
 
 In anticipation of completion of the Vendor Placing, Pan African has
concluded a bookbuild in terms of which it has secured undertakings from the
Investors to acquire the Placement Shares. Should the Vendor Placing proceed,
the Placement Shares shall be acquired by the Investors for R3.25
(approximately 14.25 pence) per share (the “ Placing Price ”), being a
premium of 5.1% to the 30 day volume weighted average traded price of a PAR
Share as at 25 May 2016, to raise a maximum of R363.1 million (£15.9
million) and the remaining portion of the Purchase Consideration will be
settled in cash by Pan African using its existing cash reserves and funding
facilities. 
 
 The Vendor Placing comprises two separate but simultaneous and co-ordinated
vendor placings in the United Kingdom and South Africa. The Company has
entered into a placing agreement (the “ Placing Agreement ”) with Numis
and Peel Hunt (together the “ UK Bookrunners ”), pursuant to which the UK
Bookrunners have agreed, in accordance with its terms, to use their reasonable
endeavours to procure on behalf of the Company subscribers for the Placement
Shares at the Placing Price in the United Kingdom. 
 
 The Placing Agreement contains customary warranties given by the Company to
the UK Bookrunners as to matters relating to the Company and its business and
a customary indemnity given by the Company to the UK Bookrunners in respect of
liabilities arising out of or in connection with the Vendor Placing. The UK
Bookrunners are entitled to terminate the Placing Agreement in certain
circumstances prior to admission of the Placement Shares, including
circumstances where any of the warranties are found not to be true or accurate
or were misleading and upon the occurrence of certain other events. The
Placing Shares will represent, in aggregate, approximately 5.7% of the
enlarged issued share capital of the Company following the Vendor Placing. The
Placement Shares will be issued to Investors credited as fully paid and will,
upon issue, rank pari passu in all respects with the Pan African ordinary
shares then in issue, including all rights to receive all dividends and other
distributions declared, made or paid following admission and listing of such
Pan African ordinary shares. The Placement Shares are not being made available
to the public or being offered or sold in any jurisdiction where it would be
unlawful to do so. The Vendor Placing is not underwritten by the UK
Bookrunners or any other person. 
 
 Application will be made to the London Stock Exchange for admission of the
Placement Shares to trading on AIM. The Company will also apply to the JSE
Limited for the listing and trading of the Placement Shares on the Main Board.
It is expected that admission and listing of the Placement Shares on AIM and
the Main Board will become effective on or about 3 June 2016. 
 
 2. RATIONALE FOR THE TRANSACTIONS 
 
 The Transactions allow Pan African to: 
 
 * address operational and value dilution risks presented by the possible
dilution of its black economic empowerment (“ BEE ”) ownership; 
 * gain further flexibility and commensurate certainty as to its ability to
comply with the prevailing BEE legislation from time to time; 
 * partner with Mabindu in furthering Pan African’s BEE ownership in a
meaningful and mutually beneficial manner on an ongoing basis; 
 * through the Vendor Placing, retain the Company’s funding headroom
necessary for swift access to potential future organic and acquisitive growth
opportunities; and 
 * realise further value for Shareholders through a reinvestment in the
Company via Shanduka Gold on an earnings and dividends accretive basis, as
more fully explained below. 
 
 
 Mabindu is a black owned and controlled trust and constitutes a Historically
Disadvantaged South African (“ HDSA ”) for the purposes of South
Africa’s BEE legislation. Shanduka Gold (and, indirectly, Mabindu) is Pan
African’s primary BEE shareholder. Pursuant to legislation governing BEE and
the granting and retention of South African mining licences and rights, Pan
African is required to have a minimum level of HDSA ownership and Shanduka
Gold contributes significantly towards the Company’s continued compliance
with these requirements. The Transactions allow Pan African to ensure that its
current HDSA ownership structures are unaffected by retaining Shanduka Gold
and, indirectly, Mabindu as Shareholders. 
 
 A draft Mining Charter has been published by the Minister of Mineral
Resources for comment. Companies have until 31 May 2016 to submit their
comments. It is anticipated that there may be a number of significant
amendments to this draft version of the Charter following the submissions made
by the mining industry and, therefore, it is unclear at this stage in what
form the final version of the Charter will be published.  The Transactions
will provide Pan African with flexibility in terms of ensuring compliance with
future BEE regulations. 
 
 Approximately 0.6% of the Shanduka Gold shares to be acquired from Jadeite
will be retained by Jadeite for sale, at a future date, to an independent
third party nominated by Pan African. Pursuant to the Transactions, Pan
African will therefore acquire a 49.9% direct interest in Shanduka Gold.
Shanduka Gold shall accordingly not be a subsidiary of Pan African and further
details of the intended application of the 0.6% interest in Shanduka Gold will
be determined after completion of the Transactions. Jadeite shall retain
ownership of these shares and all the benefits and rights associated therewith
until they are transferred to the selected recipient. 
 
 Mabindu’s 49.5% interest in Shanduka Gold was acquired at a discounted
value but created a notional loan, to be settled by Mabindu, with a notional
value of R536 039 493 (“ Notional Loan ”) as at 11 December 2015. The
Notional Loan accrues notional interest at the South African prime rate plus
5% and is required to be notionally settled on 11 December 2018. Whilst the
Notional Loan is outstanding, 95% of the dividends payable to Mabindu are
waived by Mabindu and the Notional Loan is notionally reduced by the aggregate
value of all dividends paid and payable to Mabindu. On 11 December 2018, the
Notional Loan will be notionally settled by the repurchase by Shanduka Gold of
all or a portion of Mabindu’s Shanduka Gold shares at the same price per
share as originally paid by Mabindu. The number of Shanduka Gold shares to be
repurchased shall be calculated by dividing the Notional Loan value by the
fair value of a Shanduka Gold share calculated at that time. 
 
 Pursuant to, inter alia , the Notional Loan, implementation of the
Transactions will result in Pan African consolidating all the PAR Shares
(436 358 059 shares) held by Shanduka Gold for accounting purposes.
Accordingly, the net effect will be a reduction of 324 646 268 PAR Shares
(as increased by the issue of the Placement Shares) in issue for purposes of
the Company’s earnings per share calculations. Furthermore, Pan African will
receive the benefit of indirectly participating in dividends it declares to
Shareholders on a continuing basis. 
 
 3. SUSPENSIVE CONDITIONS 
 
 Subject to the acceptance of the offer by Jadeite, the Jadeite Transaction is
expected to be conditional upon the fulfilment or waiver of, inter alia , the
following suspensive conditions: 
 
 * the SBSA Transaction becoming unconditional; and 
 * Mabindu waiving its pre-emptive rights pursuant to the MOI. 
 
 
 2CATEGORISATION 
 
 Pursuant to the JSE Limited Listings Requirements, the Purchase Consideration
payable pursuant to the Transactions represents 9.2%, being more than 5% but
less than 30%, of the Company’s current market capitalisation. Accordingly,
the Transactions, on an aggregated basis, are classified as a category 2
transaction. 
 
 The net asset value of Shanduka Gold is materially equal to approximately
23.8% of Pan African’s market capitalisation, from time to time, and, its
earnings primarily comprise dividends received from Pan African according to
the number of PAR Shares held by it from time to time. 
 
 Rosebank, Johannesburg 
 
 26 May 2016 
 
 For further information on Pan African, please visit the Company’s website
at http://www.panafricanresources.com/       
 
 Sole Corporate Advisor in respect of the Transactions, South African
Bookrunner 
 and JSE Sponsor to Pan African 
 
 One Capital 
 
 South African Legal Advisors to Pan African 
 
 Webber Wentzel 
 
 UK Bookrunners 
 
 Numis Securities
Limited                                               
Peel Hunt LLP 
 
 UK Legal Advisors to Pan African 
 
 Fladgate LLP 
 
 Legal Advisors to UK Bookrunners 
 
 Memery Crystal 
 
 Contact Details 
 
 Corporate Office 
 
 The Firs Office Building 
 
 1st Floor, Office 101 
 
 Cnr. Cradock and Biermann Avenues 
 
 Rosebank, Johannesburg 
 
 South Africa 
 
 Office:   + 27 (0) 11 243 2900 
 
 Facsimile: + 27 (0) 11 880 1240 
 
 Registered Office 
 
 Suite 31 
 
 Second Floor 
 
 107 Cheapside 
 
 London 
 
 EC2V 6DN 
 
 United Kingdom 
 
 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 / James Black / George Fry 
 
 St James's Corporate Services Limited Numis Securities Limited 
 
 Company Secretary                             
Nominated Adviser and Joint Broker 
 
 Office: + 44 (0)207 796 8644                 Office: + 44
(0)207 260 1000 
 
 Sholto
Simpson                                               
Matthew Armitt / Ross Allister 
 
 One
Capital                                                    
Peel Hunt LLP 
 
 JSE Sponsor and Transaction Advisor Joint Broker 
 
 Office: + 27 (0)11 550
5009                              Office: + 44
(0)207 418 8900 
 
 Gareth Driver / Huneiza Goolam                      
Julian Gwillim 
 
 Webber
Wentzel                                             
Aprio Strategic Communications 
 
 South African Legal
Advisor                            Public &
Investor Relations SA 
 
 Office: + 27 (0)11 530
5000                              Office: + 27
(0)11 880 0037 
 
 Daniel Thöle 
 
 Bell Pottinger 
 
 Public & Investor Relations UK 
 
 Office: + 44 (0)203 772 2500 
 
 Numis and Peel Hunt, who are authorised and regulated in the United Kingdom
by the Financial Conduct Authority, are acting for the Company and for no-one
else in relation to the Vendor Placing, and will not be responsible to any
person other than the Company for providing the protections afforded to their
clients nor for providing advice in connection with the matters contained in
this announcement. No representation or warranty, express or implied, is or
will be made, and to the fullest extent permitted by law no responsibility or
liability is or will be accepted by any of Numis or Peel Hunt, or by any of
their affiliates or agents, as to or in relation to, the accuracy or
completeness of this announcement, or any other written or oral information
made available to or publicly available to, any interested party or its
advisers, and any liability therefor, or in connection therewith, is expressly
disclaimed. 
 
 DISCLAIMER – INTENDED ADDRESSEES 
 
 NOT FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN, OR
INTO THE UNITED STATES, AUSTRALIA, NEW ZEALAND, HONG KONG, CANADA, JAPAN, OR
SWITZERLAND OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL OR TO U.S.
PERSONS (WITHIN THE MEANING OF REGULATION S UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED). 
 
 This announcement is for information purposes only and does not constitute an
invitation or offer to subscribe for, underwrite or otherwise acquire or
dispose of any securities in any jurisdiction. This announcement is only
intended to be accessed and reviewed by persons to whom it can lawfully be
addressed and is not intended to be transmitted or distributed, directly or
indirectly, into the United States, Australia, New Zealand, Hong Kong, Japan,
Canada or Switzerland or any jurisdiction where to do so would constitute a
violation of the relevant laws of such jurisdiction. The transmission and
distribution of this announcement may be restricted by law in various
jurisdictions, and persons who access this announcement should inform
themselves about, and observe, any such restrictions. 
 
 The securities described in this announcement have not been, and will not be,
registered under the U.S. Securities Act 1933, as amended (the “Securities
Act”), or under any relevant securities laws of any state of the United
States of America and, subject to certain exceptions, the securities may not
be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons or to persons within the United States of America, as
such terms are defined in Regulation S under the Securities Act. There will be
no public offering of the securities in the United States. 
 


Copyright (c) 2016 PR Newswire Association,LLC. All Rights Reserved