TIDMDCP
RNS Number : 7981N
Diamondcorp Plc
28 October 2016
28 October 2016
DiamondCorp plc
AIM share code: DCP & JSE share code: DMC
ISIN: GB00B183ZC46
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
("DiamondCorp", "the Group" or "the Company")
Posting of Circular and Notice of General Meeting
DiamondCorp, the Southern African diamond mining, development
and exploration company, announces that, further to the Company's
announcement of 20 October 2016, a circular ("Circular") is being
posted to shareholders convening a General Meeting of the Company
to be held at the offices of City Group plc, 6 Middle Street,
London EC1A 7JA at 11.00 a.m. (UK time, 1.00 p.m. South Africa
time) on 16 November 2016.
The purpose of the General Meeting is to:
(i) grant the Directors of the Company the necessary authorities
to issue such new Ordinary Shares sufficient to fulfil
DiamondCorp's obligations to issue new Ordinary Shares to Rasmala
should they opt, pursuant to the terms of the Facility, to convert
the outstanding principal amounts under the Facility;
(ii) seek approval of Shareholders, pursuant to Rule 21.1 of the
Code, for the repayment of the Facility to Rasmala on an Early
Repayment Event and/or the conversion of the Facility into new
Ordinary Shares; and
(iii) grant the Directors of the Company increased general
authorities to allot and issue further equity securities and to
dis-apply statutory pre-emption rights in addition to those
required for the purposes of the Facility.
Certain sections of the Chairman's letter from the Circular have
been included below. A copy of the Circular will also be available
shortly on the Company's website (www.diamondcorp.plc.uk).
Unless otherwise stated, terms and expressions defined in the
Circular have the same meaning in this announcement.
Contact details:
DiamondCorp plc
Paul Loudon, Chief Executive
Tel: +27 56 216 1300
Chris Ellis, Interim Non-Executive Chairman
Tel: +44 (0) 20 3151 0970
UK Broker & Nomad
Panmure Gordon (UK) Limited
Adam James/Karri Vuori/Atholl Tweedie
Tel: +44 20 7886 2500
JSE Designated Advisor
Sasfin Capital (a division of Sasfin Bank Limited)
Megan Young
Tel: +27 11 445 8068
SA Corporate Advisor
Qinisele Resources Proprietary Limited
Dennis Tucker/Andrew Brady
Tel: +27 11 883 6358
The information communicated in this announcement is inside
information for the purposes of Article 7 of Market Abuse
Regulation 596/2014 ("MAR").
Approval of the issue of Ordinary Shares pursuant to the
Facility under Rule 21.1 of the City Code on Takeovers and
Mergers
and
Notice of General Meeting
1. Introduction
The Company announced on 20 October 2016 that it had entered
into a Shariah-compliant secured convertible financing facility
with Rasmala, a leading independent investment manager and
shareholder in the Company pursuant to which Rasmala will advance
to the Company the sum of GBP700,000 in 2 tranches, being Tranche 1
and Tranche 2 as described in section 3 below.
Further details on the background to the Facility are set out in
section 2 below.
It is a condition of the continued availability of the Facility
that the Company obtains requisite approval from its shareholders
at general meeting to allow the Company to issue the new Ordinary
Shares sufficient to fulfil its obligations to issue new Ordinary
Shares to Rasmala should they opt, pursuant to the terms of the
Facility, to convert the outstanding principal amounts under the
Facility. If such resolutions are not passed, Rasmala may, at its
option, cancel the Facility and demand immediate repayment in full
of any principal sums outstanding thereunder.
Further details as to the terms and conditions of the Facility
are set out in sections 3 and 4 below.
2. Background to, and reasons for, the Facility
As Shareholders will be aware from recent announcements made by
the Company, the Company has been actively seeking immediate
funding to cover working capital requirements to allow the Company
to continue to operate as a going concern in the immediate term.
The proceeds of the Facility will satisfy the Company's immediate
term funding requirement of not less than approximately GBP500,000,
and shall be utilised for working capital purposes.
3. Terms of the Facility
The Facility is structured as a Shariah-compliant commodity
murabaha agreement with the option to convert (at the Conversion
Price) pursuant to which the Company and Rasmala have agreed to the
drawdown by the Company of two tranches under the Facility, for a
total principal amount of GBP700,000. The first tranche in the
amount of GBP400,000, has already been drawn down. The second
tranche, in the amount of GBP300,000, is to be drawn down at the
request of the Company subject to the satisfaction of certain
conditions. It is anticipated that Tranche 2 will be drawn down in
the near term.
The Facility shall terminate and becomes repayable on 15
December 2016 and is convertible, at Rasmala's option and subject
to Rasmala giving written notice to the Company, into Ordinary
Shares on 15 December 2016 (or earlier in certain circumstances as
detailed below) at the equivalent of a 30 per cent. discount to the
average daily volume weighted average price of the Ordinary Shares
across each trading day from the date of the agreement of the
Facility to the date of conversion. The Facility may also be repaid
by the Company prior to termination at DiamondCorp's
discretion.
Under the terms of the Facility, the Company will pay a mark-up
on the commodities underpinning the Facility (whose value is equal
to the principal amount drawn down) at an equivalent rate of 15 per
cent per annum during the Term (payable in either cash or new
Ordinary Shares at Rasmala's discretion). In the event of a delayed
payment, the Company must pay a daily delay payment from the due
date to the date of actual payment on the overdue amount at a rate
of 2 per cent. per annum in addition to the Facility rate of 15 per
cent. per annum. This penalty is structured in a Shariah-compliant
manner.
The Company is required pursuant to the terms of the Facility to
publish a circular on or before 31 October 2016 in order to convene
a General Meeting to seek to obtain shareholder approval to
increase authorities to a level considered sufficient to fulfil the
Company's obligations to issue new Ordinary Shares to Rasmala
should they opt, pursuant to the terms of the Facility, to convert
the outstanding principal amounts under the Facility.
Rasmala shall be precluded from issuing a conversion notice for
any number of new Ordinary Shares as shall (i) exceed the current
issued share capital of the Company unless and until increased by
way of the passing of the requisite resolutions at a general
meeting of the Company; (ii) result in Rasmala holding in excess of
29.99 per cent. of the issued Ordinary Shares of the Company as at
the conversion date; and/or otherwise trigger an obligation to make
a mandatory offer of the Company.
The outstanding principal amounts of the Facility drawn down by
the Company under the Facility may become repayable (in either cash
or new Ordinary Shares at Rasmala's discretion) ahead of maturity
of the Facility in the event that the Company: (i) has released one
or more announcements pursuant to Rule 2.4 of the Code ('the
announcement of a possible offer') and/or (ii) has released one or
more announcements pursuant to Rule 2.7 of the Code ('the
announcement of a firm intention to make an offer'), in each case
an announcement in respect of a potential offer or an offer other
than the announcement commencing the Formal Sale Process. In the
event that either such Rule 2.4 or Rule 2.7 announcements have been
released, Rasmala is entitled to elect for the Facility to be
repaid in cash, or to exercise its conversion option and be issued
with Ordinary Shares (an "Early Repayment Event").
Rasmala shall put in place appropriate confidentiality
provisions to ensure that members of its board and staff who, under
all applicable rules and regulations, are classified as insiders
for the purpose of inside information in relation to the Company
are appropriately segregated from the team authorised to deal with
the Facility and the arrangements arising thereunder.
An administration fee of GBP25,000 in respect of Tranche 1 has
become payable to Rasmala, and a further administration fee of
GBP25,000 in respect of Tranche 2 will be paid by the Company pro
rata to the total amount drawn down under the Facility relative to
the total principal amount. The Company shall also reimburse
appropriate legal and other costs and expenses incurred.
Tranche 1 is collateralised against 2,800 carats of the
Company's current diamond inventory. Tranche 2 is to be
collateralised against an additional 2,200 carats, in aggregate, of
the Company's future diamond inventory, to be supplied in
instalments every week from Lace mine production.
The Murabaha Agreement provides for customary events of default.
On and at any time after the occurrence of an event of default,
Rasmala may at its absolute discretion by written notice to the
Company, declare all outstanding amounts under the Facility to be
immediately due and payable, together with any other sums then owed
by the Company to Rasmala.
The Murabaha Agreement also provides for the following changes
in the Board:
-- Euan Worthington, former Chairman of the Company, resigned
from the Board, effective on execution of the Murabaha Agreement,
but shall remain as an employee of the Company for the immediate
future in order to ensure an orderly handover of his
responsibilities.
-- Chris Ellis, Non-Executive Director of the Company, to be
appointed as Independent Interim Non-Executive Chairman. Chris was
formally appointed as Independent Interim Non-Executive Chairman on
27 October 2016 and it is currently intended that Mr Ellis'
appointment shall be on an interim basis to oversee the Formal Sale
Process.
-- the Rasmala Representative to be appointed to the Board. Neil
McDougall was formally appointed as Non-Executive Director on 27
October 2016
As noted above, it is a condition of the continued availability
of the Facility that the Company obtains requisite approval from
its shareholders at general meeting to allow the Company to issue
the new Ordinary Shares sufficient to fulfil its obligations to
issue new Ordinary Shares to Rasmala should they opt, pursuant to
the terms of the Facility, to convert the outstanding principal
amounts under the Facility.
The Company's existing share authorities (of up to 11,207,667
new Ordinary Shares) are not considered sufficient to satisfy a
conversion notice should Rasmala elect to convert the Facility in
full into new Ordinary Shares. For this reason the Company is
proposing Resolutions 1 and 2 at the General Meeting. The passing
of the requisite resolutions are a condition of the Facility.
In addition, the Company is required to obtain Rule 21.1
Approval, as is further described in paragraph 5 below, and
accordingly the Company is proposing Resolution 3 at the General
Meeting.
Tranche 2 of the Facility cannot be drawn down unless and until
the Shareholders have passed Resolutions 1, 2 and 3. Additionally,
if Resolutions 1, 2 and 3 are not passed, Rasmala may, at its
option, cancel the Facility and demand immediate repayment in full
of any principal sums outstanding thereunder. In the absence of any
alternative, immediately available funding, this would result in
the Company being unable to pay its debts as they fall due, and the
Company would be insolvent and a receiver would need to be
appointed. Accordingly it is important that Shareholders vote in
favour of Resolutions 1, 2 and 3.
4. Future Funding and Formal Sale Process
As also previously announced, and notwithstanding the Facility,
the Company currently estimates an additional equity and/or debt
financing requirement of approximately GBP2.5 to GBP3.0 million in
the near term to cover the anticipated cash required to fund
operations through to commercial production, although there can be
no certainty that the Company will subsequently secure the
necessary funding solutions to meet its longer term financial
requirements.
Pursuant to the Formal Sale Process, as entered into on 18
October 2016, the Board continues to explore all options available
to the Company in parallel with its discussions to secure
additional funding, including a corporate transaction such as a
merger with or offer for the Group by a third party or a sale of
the Group's businesses. As at the date of this document, no such
acceptable proposal has been put forward to the Board. The Company
has also received early stage expressions of interest in respect of
potential additional funding. However, there can be no certainty
that any such proposal(s) will be made nor as to the terms on which
any such proposal(s) might be made.
Consequently it is the Board's intention at the General Meeting
to seek shareholders' approval to provide the Board with increased
authorities to allot and issue further equity securities and to
dis-apply statutory pre-emption rights in addition to those
required for the purposes of the Facility.
5. Rule 21.1 Approval
Pursuant to the Formal Sale Process as announced on 18 October
2016, the Company is now in an "offer period" as defined in the
Code. Pursuant to Rule 21.1 of the Code, the Board must not,
without the approval of the Shareholders, take any action which may
result in any offer or bona fide possible offer being frustrated or
in Shareholders being denied the opportunity to decide on its
merits or take certain actions, including issuing any shares. The
repayment of the Facility to Rasmala on an Early Repayment Event
and/or the conversion of the Facility into new Ordinary Shares is
deemed to be 'frustrating action' and will therefore require
Shareholder approval pursuant to Rule 21.1 of the Code.
In addition, the dealing disclosure requirements under Rule 8 of
the Code that apply to shareholders of a company in an offer period
also apply. Such requirements are outlined in paragraph 6
below.
6. Dealing disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in
1% or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1% or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a
Dealing Disclosure if the person deals in any relevant securities
of the offeree company or of any securities exchange offeror. A
Dealing Disclosure must contain details of the dealing concerned
and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s), save to the
extent that these details have previously been disclosed under Rule
8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies
must be made by no later than 3.30 pm (London time) on the business
day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
7. General Meeting
A notice convening the General Meeting to be held at 6 Middle
Street, London EC1A 7JA, at 11:00 a.m. (UK time) and 1.00 p.m.
(South Africa time) on 16 November 2016 is set out at the end of
this document. At the General Meeting, the following Resolutions
will be proposed:
1. an ordinary resolution to grant authority to the Directors to
allot new Ordinary Shares or to grant rights to subscribe for or
convert any security into shares in the capital of the Company
pursuant to section 551 of the 2006 Act up to an aggregate nominal
amount of GBP50,000. The Directors will limit this authority to the
issue of any new Ordinary Shares to be issued pursuant to a
conversion of the Facility or any part thereof. This authority will
expire at the conclusion of the next Annual General Meeting of the
Company to be held after the passing of the resolution, or if
earlier, 18 months from the passing of the resolution;
2. a special resolution to disapply the statutory pre-emption
rights contained in section 561(1) of the 2006 Act in respect of
the allotment for cash of new Ordinary Shares with an aggregate
nominal amount of up to GBP50,000. The Directors will again limit
this authority to the issue of any new Ordinary Shares to be issued
pursuant to a conversion of the Facility or any part thereof. This
authority will expire at the conclusion of the next Annual General
Meeting of the Company to be held after the passing of the
resolution, or if earlier, 18 months from the passing of the
resolution;
3. an ordinary resolution to approve the issue of Ordinary
Shares pursuant to the Facility, for the purposes of Rule 21.1 of
the Code in circumstances where the Company remains in an offer
period (as defined in the Code).
4. an ordinary resolution to grant a general authority, in
addition to that granted pursuant to paragraph 1 above, to the
Directors to allot shares or to grant rights to subscribe for or
convert any security into shares in the capital of the Company
pursuant to section 551 of the 2006 Act up to an aggregate nominal
amount of GBP319,160. This authority will expire at the conclusion
of the next Annual General Meeting of the Company after the passing
of the resolution, or if earlier, 18 months from the passing of the
resolution. This authority will be in addition to the authority
referred to in Resolution 1; and
5. a special resolution to disapply the statutory pre-emption
rights contained in section 561(1) of the 2006 Act in respect of
the allotment for cash of equity shares with an aggregate nominal
amount of up to GBP200,000. This authority will expire at the
conclusion of the Annual General Meeting of the Company to be held
in 2017 after the passing of the resolution, or 18 months from the
passing of the resolution. This authority will be in addition to
the authority referred to in Resolution 2.
Resolutions 1, 3 and 4 are to be proposed as ordinary
resolutions and Resolutions 2 and 5 are to be proposed as special
resolutions.
8. Action to be taken
Shareholders will find accompanying this circular a Form of
Proxy for use at the General Meeting. Whether or not Shareholders
intend to be present at the General Meeting, they are requested to
complete, sign and return the Form of Proxy in accordance with the
instructions printed on it to Computershare Investor Services plc,
at The Pavilions, Bridgwater Road, Bristol, BS13 8AE, UK or to
Computershare Investor Services (PTY) Limited at their registered
office at 70 Marshall Street, Johannesburg 2001 or P.O. Box 61051,
Marshaltown 2017, South Africa, as soon as possible and, in any
event, so as to arrive no later than 11:00 a.m. (UK time) and 1.00
p.m. (South Africa time) on 14 November 2016. Completion and return
of the Form of Proxy will not affect Shareholders' right to attend
and vote in person at the General Meeting if they so wish. Further
information regarding the appointment of proxies can be found in
the notes to the Notice of General Meeting. In the case of
non-registered Shareholders who receive these materials through
their broker or other intermediary, the Shareholder should complete
and send a letter of direction in accordance with the instructions
provided by their broker or other intermediary.
Tranche 2 of the Facility cannot be drawn down unless and until
the Shareholders have passed Resolutions 1, 2 and 3. Additionally,
if Resolutions 1, 2 and 3 are not passed, Rasmala may, at its
option, cancel the Facility and demand immediate repayment in full
of any principal sums outstanding thereunder. In the absence of any
alternative, immediately available funding, this would result in
the Company being unable to pay its debts as they fall due, and the
Company would be insolvent and a receiver would need to be
appointed. Accordingly it is important that Shareholders vote in
favour of Resolutions 1, 2 and 3.
9. Responsibility
The Company and the Directors accept responsibility for the
information contained in this Circular. To the best of the
knowledge and belief of the Company and the Directors (which has
and who have taken all reasonable care to ensure that such is the
case) the information contained in this circular for which they
accept responsibility is in accordance with the facts and does not
omit anything likely to affect the import of such information.
10. Directors' Recommendation and Intention
The Directors consider the Resolutions to be proposed at the
General Meeting to be in the best interests of the Company and the
Shareholders as a whole. Consequently, the Directors unanimously
recommend that you vote in favour of the Resolutions, as they
intend to do themselves in respect of their beneficial interests
amounting, in aggregate, to 10,111,166 Ordinary Shares representing
approximately 2.11 per cent. of the Existing Ordinary Shares.
Yours faithfully,
Christopher Ellis
Interim Non-Executive Chairman
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Posting of this circular 28 October 2016
and Form of Proxy
Last date to trade in 08 November 2016
order to vote for purposes
of the shareholders on
the South African register
Record date to be registered 11 November 2016
in the share register
in order to vote for the
purposes of the shareholders
on the South African register
Record date to be registered 14 November 2016
in the share register
in order to vote for the
purposes of the shareholders
on the UK register
Latest time and date for 11.00 a.m. (UK time) and
receipt of Forms of Proxy 1.00 p.m. (South Africa
time) on 14 November 2016
General Meeting 11.00 a.m. (UK time) and
1.00 p.m. (South Africa
time) on 16 November 2016
Expected date of announcement 16 November 2016
of the results of the
General Meeting
Notes:
(1) If any of the details contained in the timetable above
should change, the revised times and dates will be notified by
means of an announcement through a Regulatory Information
Service.
(2) All times above and throughout the Circular are London times
and each of the times and dates are subject to change.
DEFINITIONS
The following definitions apply, unless the context requires
otherwise:
2006 Act the UK Companies Act 2006
AIM the market of that name operated
by the London Stock Exchange
AIM Rules the AIM Rules for Companies,
published by the London Stock
Exchange from time to time
Board the board of directors of
the Company
Code The City Code on Takeovers
and Mergers
Company or DiamondCorp DiamondCorp plc
Conversion Price the price at which the Facility
(or part thereof) may be
converted into Ordinary Shares,
being a 30% discount to the
VWAP of the Ordinary Shares
over the period commencing
on 20 October 2016 and ending
on the date of conversion
Existing Ordinary the existing Ordinary Shares
Shares in issue as at close of business
on 27 October 2016 being
the last practicable date
prior to the issue of this
circular
Facility a Shariah-compliant secured
convertible financing facility
in the maximum sum of GBP700,000
provided to the Company by
Rasmala pursuant to the Murabaha
Agreement
FCA the Financial Conduct Authority
FMA the Financial Markets Act,
19 of 2012 of South Africa
Form of Proxy the form of proxy for use
by Shareholders in connection
with the General Meeting
Formal Sales Process The formal sales process
currently being undertaken
by the Company in accordance
with Note 2 on Rule 2.6 of
the Code
FSMA the Financial Services and
Markets Act 2000 (as amended)
GBP or GBP the lawful currency of the
United Kingdom
General Meeting the general meeting of the
Company convened for 11:00
a.m. (UK time) and 1.00 p.m.
(South Africa time) on 16
November 2016 (or any adjournment
or postponement thereof),
notice of which is set out
at the end of the Circular
Group the Company, together with
its subsidiary undertakings
JSE the JSE Limited (registration
number 2005/022939/06), a
public company duly registered
and incorporated with limited
liability under the company
laws of South Africa, licensed
as an exchange under the
FMA
Lace Lace Diamond Mines (Pty)
Limited, a subsidiary of
the Company
London Stock Exchange the London Stock Exchange
plc
Maturity Date 15 December 2016
Murabaha Agreement the Convertible Master Murabaha
Agreement dated 20 October
2016 between the Company
(1) and Rasmala (2)
Notice of General the notice convening the
Meeting General Meeting, set out
at the end of the Circular
Ordinary Shares ordinary shares of GBP0.001
each in the capital of the
Company
Official List the official list of the
UK Listing Authority
Panmure Panmure Gordon (UK) Limited
Rasmala Rasmala plc, a company registered
in England and Wales with
registered number 05328847
Rasmala Representative Neil McDougall, or such other
individual as may be nominated
by Rasmala from time to time
Resolutions the resolutions set out in
the Notice of General Meeting
Rule 21.1 Approval the approval by Shareholders
of the issue of Ordinary
Shares pursuant to the Facility
for the purposes of Rule
21.1 of the Code
Shareholders holders of Ordinary Shares
Term the term of the Facility,
commencing on 20 October
2016 and ending on the Maturity
Date
Tranche 1 the sum of GBP400,000 that
was drawn down against the
Facility upon execution of
the Murabaha Agreement
Tranche 2 the additional sum of GBP300,000
that is able to be drawn
down against the Facility
UK Listing Authority the FCA acting in its capacity
as the competent authority
for the purposes of FSMA
United States or means the United States of
US America, its territories
or possessions, any state
of the United States and
the District of Columbia
USD or US$ the lawful currency of the
United States
VWAP volume weighted average price
This information is provided by RNS
The company news service from the London Stock Exchange
END
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