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
shareholder: |
Concrete Rose |
PAR Gold |
Term expiry: |
31 December 2021 |
31 December 2018 |
Repayment mechanism: |
90% of dividends utilised to fund
NVF repayments |
95% of dividends utilised to fund
NVF repayments |
Trickle dividends: |
10% of attributable dividends |
5% of attributable 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 margin of five
percent |
SA prime rate plus a margin of five
percent |
BEE ownership on mining
operations (direct and indirect) |
Total of 26% |
Total of approximately 26% |
Conversion right: |
On expiry of the scheme, BEE
shareholders of Concrete Rose will be entitled to exchange their
shares in Concrete 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. |
On expiry of the scheme, BEE
shareholders of PAR Gold were entitled to sell their shares to Fund
Co for cash. |
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 £18.6
million and as at 30 June 2017 these
entities had gross assets of approximately £263.8 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
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
Pan African Resources PLC
Chief Executive Officer
Office: + 27 (0) 11 243 2900 |
Deon Louw
Pan African Resources PLC
Financial Director
Office: + 27 (0) 11 243 2900 |
Phil Dexter
St James's Corporate Services Limited
Company Secretary
Office: + 44 (0) 207 796 8644 |
John Prior / Paul Gillam
Numis Securities Limited
Nominated Adviser, Joint Broker
Office: +44 (0) 20 7260 1000 |
Sholto Simpson
One Capital
JSE Sponsor
Office: + 27 (0) 11 550 5009 |
Ross Allister / Chris Burrows
Peel Hunt LLP
Joint Broker
Office: +44 (0) 207 418 8900 |
Jeffrey Couch/Neil Haycock/Thomas Rider
BMO Capital Markets Limited
Joint Broker
Office: +44 (0) 207 236 1010 |
Bobby Morse/Chris Judd
Buchanan Communications
Public & Investor Relations UK
Office: + 44 (0) 207 466 5000 |
Julian Gwillim
Aprio Strategic Communications
Public & Investor Relations SA
Office: +27 (0)11 880 0037
www.panafricanresources.com |
Gareth Driver/Huneiza Goolam
Webber Wentzel
Legal Advisers
Office: +27 (0) 11 530 5000 |