28 Aug 2005
Shareholders and debenture holders are referred to the cautionary announcement dated 19 August 2005 and are advised that agreement has been reached between JCI and Investec Bank Limited ("Investec"), in terms of which Investec will, subject to the fulfilment of certain conditions precedent as set out in paragraph 5 below, arrange a loan facility of up to R460 million ("the facility") to a special purpose vehicle ("SPV") to be constituted as a wholly-owned subsidiary of JCI.
- Purpose of the facility
The facility will provide JCI and SPV with funding to enable them respectively to meet certain immediate cash flow requirements; to restructure existing facilities; to follow their rights in terms of a rights offer ("the WAL rights offer") currently proposed by Western Areas Limited ("WAL"); and to underwrite a portion of the WAL rights offer. Details of the WAL rights offer are published on the Securities Exchange News Service ("SENS") of the JSE Limited ("the JSE") today. JCI currently has a loan account claim of approximately R230 million against WAL ("the WAL loan"), which is repayable by the allotment and issue by WAL to JCI of shares in terms of the WAL rights offer, or in cash if the WAL rights offer is oversubscribed.
The facility will be used by SPV, amongst other purposes:
- to subscribe for WAL shares in terms of the WAL rights offer;
- to underwrite a portion of the WAL rights offer up to a maximum of R250 million;
- to refinance a borrowing from a financial institution to which approximately 15 million WAL shares have been pledged ("the pledged shares") as security. As a result of such refinancing, SPV will acquire the pledged shares in an unencumbered form; and
- to satisfy the judgement debt of JCI to Benoryn Investments (Proprietary) Limited ("Benoryn") in respect of the claim against Kabusha Mining and Finance (Proprietary) Limited in respect of which JCI has bound itself as surety.
- Details of SPV
The following assets, all of which are currently owned by JCI or wholly-owned subsidiaries of JCI, will be transferred to SPV:
- all JCI’s shares in and loan account claims against Letseng Investment Holdings South Africa (Proprietary) Limited;
- JCI’s loan account claim against Equitant Trading (Proprietary) Limited ("Equitant");
- 200 million unsecured convertible redeemable preference shares in Matodzi Resources Limited ("Matodzi"), currently pledged to Benoryn, which preference shares are convertible into Matodzi ordinary shares;
- the WAL loan and the right to receive repayment of the WAL loan by the allotment and issue of shares in WAL in terms of the WAL rights offer, or the receipt of cash in the event that the WAL rights offer shall be oversubscribed;
- approximately 15 million WAL shares currently pledged to a financial institution;
- 12 000 debentures in Kovacs Investment 608 (Proprietary) Limited and all rights relating to those debentures in respect of the Boschendal wine estate;
- approximately 357 million redeemable preference shares in Jaganda (Proprietary) Limited, each with a redemption price equal to the aggregate of R0.25 and 20% of the 30 day weighted average traded price of the shares of Simmer and Jack Mines Limited on the JSE as at the date of redemption, in excess of R0.25;
- 6.5 million WAL shares currently pledged to the Industrial Development Corporation of South Africa Limited ("IDC") in terms of a loan extended by the IDC to Letseng; and
- the property portfolio of JCI and its subsidiary companies, (collectively, "the assets").
- Terms of the facility
SPV will be able and entitled to draw down on the facility for a period which shall be the longest of 60 days from the date of fulfilment of the conditions precedent to the facility, the date which the parties shall agree as the date on which WAL shall implement the WAL rights offer, or such other date as the parties may agree.
The assets, as well as JCI’s shares in and loan account claims against SPV, and the loan account claims of all entities selling the assets to SPV, will be ceded and pledged to Investec as security for the facility, JCI and such entities having bound themselves to Investec as guarantors for SPV in respect of its obligations in terms of the facility.
Interest will be charged on the facility at the prime rate as charged by Investec from time to time. Capital and interest will be repaid from the proceeds of the sale of the assets, the refinancing of any portion of the facility and/or all amounts received by SPV by way of dividend, interest, the repayment of any loan, or any other payment.
The facility will be repayable on the later of 18 months after the final draw down date, or such other date (not being later than 24 months after the final draw down date) as the parties may agree. SPV shall be entitled to repay the facility early, subject to the payment of break costs.
A raising fee will be payable to Investec in respect of the facility, in an amount being the greater of:
- R50 million; or
- the aggregate of 30% of the increase in value of the assets and 10% of the increase in the price of approximately 2.2 billion JCI shares, during the period commencing on 16 August 2005 and terminating on the date on which the facility shall be repaid (or, such later date as Investec shall determine, which date shall be not later than 18 months after the date on which the facility shall be repaid).
- Conditions precedent to the facility
The facility is subject to the fulfilment of a number of conditions precedent, including:
- compliance with all relevant regulatory requirements;
- the reconstitution of the board of directors of, amongst others, WAL and JCI, Further details regarding the reconstitution of the board of directors of JCI are included in paragraph 6 below and details of the reconstitution of the boards of directors of WAL are published on SENS today; and
- other conditions precedent as are normal in a transaction of this nature.
- Reconstitution of the board of directors of JCI
The granting of the facility is subject to the reconstitution of, amongst others, the board of directors of JCI ("the JCI board"). In compliance with paragraph 3.59 of the Listings Requirements of the JSE Limited ("the JSE"), JCI advises that Messrs CHD Cornwall, RAR Kebble and J Stratton have resigned as directors of JCI with effect from close of business on 24 August 2005, and Mr HC Buitendag retires with effect from the same date, and the following directors have been appointed to the JCI board on the same date:
- Mr PH Gray (Chief Executive Officer)
- Mr JC Lamprecht (Financial Director)
Mr RB Kebble will relinquish his responsibilities as chief executive officer, but will remain on the JCI board as a non-executive director. The following new appointments will be made to the JCI board, and shareholders will be advised in due course:
- Mr DM Nurek (Independent Non-Executive Chairman)
- Mr DE Jowell (Independent Non-Executive Director)
- Mr PRS Thomas (Independent Non-Executive Director).
In addition, it is proposed that in due course Mr AC Nissen be appointed as an Independent Non-Executive Director and an additional Independent Non-Executive Director will be appointed to the JCI board simultaneously.
- Change of auditors of JCI
The existing auditors of JCI, will be replaced by KPMG Inc for the 2005 year-end audit. It is anticipated that JCI’s audited annual report will be posted to shareholders and debenture holders on or about 30 September 2005, at which time JCI will apply to the JSE for the suspension of its shares and debentures on the JSE to b