Harmony Gold Mining Company Limited Claims No Change to the
Fundamental Value Leakage Inherent Within the Proposed IAMGold
Transaction Substantial opposition remains JOHANNESBURG, South
Africa, Nov. 30 /PRNewswire-FirstCall/ -- Gold Fields
(NYSE:GFI)(JSE:GFI)has announced that it has reached agreement with
IAMGold (TSX: IMG; Amex: IAG) ("IAMGold") to revise the terms of
the proposed IAMGold transaction through an amendment to the cash
portion contributed by Gold Fields by US$200 million (the
"amendment"). Harmony (NYSE:HMY)(JSE:HAR) believes that the
amendment does not alter the fundamental value leakage inherent
within the proposed IAMGold transaction and that it remains
unconvincing and difficult to justify from both a value and
structural perspective. Furthermore, despite the amendment, the
proposed IAMGold transaction has negative implications for Gold
Fields, its shareholders, its South African assets and all of its
stakeholders. Harmony believes that the amendment confirms what
Harmony and other Gold Fields shareholders have been saying to Gold
Fields' management over recent time, namely that the proposed
IAMGold transaction has no merit and is value destructive. In
recognizing that there is substantial opposition to the proposed
IAMGold transaction, Harmony believes that Gold Fields' management,
under the smoke screen of the recent changes in South African
exchange control restrictions, have made an inadequate and
desperate attempt to re-price the proposed transaction a matter of
days after vigorously defending it. Unfortunately the amendment
will have a minimal effect on the overall terms of the proposed
transaction, particularly given that IAMGold shareholders will
continue to have a 30% share in the enlarged IAMGold. The
structural disadvantages implicit in the proposed IAMGold
transaction will remain and the proposed transaction continues to
be highly dilutive to Gold Fields shareholders. Whilst retaining
US$200m of Gold Fields shareholders' own cash will be less
disadvantageous to Gold Fields shareholders in the short term, it
does not alter the fact that, in Harmony's belief, the sale of
these international assets at a significant undervaluation will
have an enduring detrimental effect on Gold Fields and its
shareholders. Harmony believes that it remains in the best
interests of Gold Fields shareholders to vote against the proposed
IAMGold transaction at the Gold Fields general meeting on 7
December 2004, for the following key reasons: -- from a value
perspective the fundamental issues remain: * Gold Fields is
disposing of its international asset portfolio at substantially
less than fair value: - the terms of the proposed IAMGold
transaction are at a significant discount to the consensus average
P/NPV multiples of Gold Fields itself, comparable South African and
mid-cap international gold mining peers and the international gold
mining majors; - the terms of the proposed IAMGold transaction are
at a significant discount to other comparable transactions in the
gold sector; * Gold Fields is contributing a disproportionate share
of value in exchange for only approximately 70% of the fully
diluted equity of the enlarged IAMGold; and * a substantial
re-rating of the enlarged IAMGold is required for Gold Fields
shareholders just to break even. Any re-rating is uncertain given
the structure of the proposed IAMGold transaction. Furthermore,
given that Gold Fields intends to dispose of its international
asset portfolio at significantly less than its fair value, Gold
Fields will create an unnecessarily low relative value base for its
shareholders. Accordingly, substantially all of the required
re-rating of the enlarged IAMGold, should it eventuate, would be
for the benefit of existing IAMGold shareholders. -- from a
structural perspective, the fundamental issues remain. The proposed
IAMGold transaction would: * result in a complex and inefficient
corporate structure, with the likelihood of a holding-company
discount; * with only 2 directors out of a possible 10 representing
Gold Fields' interests (5 would be non-executive directors, subject
to strict rules of independence under the Canadian governance
code), minimize Gold Fields' ability to control the strategic
direction of the enlarged IAMGold, which will be run on a
stand-alone basis and be fully independent of Gold Fields; * impair
Gold Fields' ability to access the cash flows of its international
asset portfolio, which, as at 30 June 2004, generated 75% of Gold
Fields' operating cash flows, thereby leading to a loss of
financial flexibility and potentially prejudicing the optimal
allocation of scarce cash resources, with negative implications for
Gold Fields and its South African asset portfolio; * reduce the
ability of Gold Fields to maintain its historic dividend payout
ratio in the absence of any substantial dividend receipts from the
enlarged IAMGold, which are unlikely, given the enlarged IAMGold's
own funding requirements and its management's own forecasts; * lead
to the creation of two mid-cap producers, lacking in scale; and *
as a result of the non-compete clause with the enlarged IAMGold
outside SADC, have negative implications for Gold Fields' future
growth prospects. Notwithstanding the amendment, Harmony firmly
believes that Gold Fields shareholders: * would be selling their
international assets at a material discount to their fair value; *
will lose control of their future growth potential, the majority of
their operating cash flows and control of all of the upside in
their exploration portfolio, which, by Gold Fields' own admission,
has extremely promising prospects; and * should realise that the
amendment is a transparent and cosmetic attempt to hoodwink them
into voting in favour of the ill-conceived proposed IAMGold
transaction. The proposed IAMGold transaction will cause value
leakage of an enduring nature. Substantial opposition remains
Despite the amendment, Harmony believes that there remains
substantial opposition to the proposed IAMGold transaction: --
Harmony, which owns a total of 53,392,108 Gold Fields shares,
representing approximately 10.8% of the entire issued share capital
of Gold Fields, remains opposed to the proposed IAMGold
transaction; -- the amendment will have no impact on the
irrevocable undertaking from Norilsk to vote against the proposed
IAMGold transaction in respect of 98,467,758 Gold Fields shares,
representing approximately 20.03% of the entire issued share
capital of Gold Fields; and -- in Harmony's view, the amendment is
entirely cosmetic and of no real substance and will be of little
consequence to the significant number of Gold Fields shareholders
who have indicated to Harmony their opposition to the proposed
IAMGold transaction. Harmony believes that its views are confirmed
by Gold Fields' management itself. Gold Fields' management claims
to have held "limited discussions" with certain institutional
shareholders representing approximately 18% of the outstanding
shares of Gold Fields, of which some 78% have indicated support.
Harmony notes that this equates to only 14% of Gold Fields'
outstanding shares, significantly below the level required to
approve the proposed IAMGold transaction. Harmony would assume that
the majority of these shareholders represent funds that hold long
positions in IAMGold and, therefore, are economically incentivised
to support the proposed IAMGold transaction, regardless of whether
it is in the best interests of Gold Fields and its shareholders.
Inconsistent strategy Since the announcement of the Harmony offers,
the Gold Fields board has created significant uncertainty through
offering Gold Fields' shareholders a number of potential
inducements to refrain from tendering their shares into the early
settlement offer. As previously stated, Harmony believes that some
of these are not capable of being implemented, especially in a
manner that would be considered attractive to Gold Fields'
shareholders. In addition, a number of these proposed options are
clearly mutually exclusive and contradictory. The amendment
confirms Harmony's belief that these elusive strategies, never
detailed in formal announcements, were merely designed to cause
confusion amongst Gold Fields shareholders. Given that Harmony
believes that the amendment has no impact on the fundamental value
leakage inherent within the proposed IAMGold transaction, Harmony
questions whether this is the best proposal that the Gold Fields
board could produce. Harmony remains firm in its belief that Gold
Fields' management's strategy is in disarray and questions whether
Gold Fields shareholders can still believe in a management team
that has changed the terms of a transaction only days after
defending it so vigorously. Unless the context otherwise requires,
the definitions contained in the offer document or the registration
statement sent to Gold Fields shareholders have the same meaning in
this announcement. In connection with the proposed merger, Harmony
will file with the U.S. Securities and Exchange Commission ("SEC"),
a registration statement on Form F-4, which will include a
preliminary prospectus and related exchange offer materials, to
register the Harmony ordinary shares (including Harmony ordinary
shares represented by Harmony ADSs) to be issued in exchange for
the remainder of Gold Fields ordinary shares held by Gold Fields
shareholders located in the United States and for Gold Fields ADSs
held by Gold Fields shareholders wherever located, as well as a
Statement on Schedule TO. Investors and holders of Gold Fields
securities are strongly advised to read the registration statement
and the preliminary prospectus, the related exchange offer
materials and the final prospectus (when available), the Statement
on Schedule TO and any other relevant documents filed with the SEC,
as well as any amendments and supplements to those documents,
because they will contain important information. Investors and
holders of Gold Fields securities may obtain free copies of the
registration statement, the preliminary and final prospectus and
related exchange offer materials and the Statement on Schedule TO,
as well as other relevant documents filed or to be filed with the
SEC, at the SEC's web site at http://www.sec.gov/. Investors and
holders of Gold Fields securities will receive information at an
appropriate time on how to obtain transaction-related documents for
free from Harmony or its duly designated agent. The preliminary
prospectus and other transaction-related documents may be obtained
for free from MacKenzie Partners, Inc., the information agent for
the U.S. offer, at the following address: 105 Madison Avenue, New
York, New York 10016; telephone 1 212 929 5500 (call collect) or 1
800 322 2885 (toll-free call); e-mail . This communication is for
information purposes only. It shall not constitute an offer to
purchase or exchange or the solicitation of an offer to sell or
exchange any securities of Gold Fields or an offer to sell or
exchange or the solicitation of an offer to buy or exchange any
securities of Harmony in the US, nor shall there be any sale or
exchange of securities in any jurisdiction in which such offer,
solicitation or sale or exchange would be unlawful prior to the
registration or qualification under the laws of such jurisdiction.
The distribution of this communication may, in some countries, be
restricted by law or regulation. Accordingly, persons who come into
possession of this document should inform themselves of and observe
these restrictions. The solicitation of offers to buy Gold Fields
ordinary shares (including Gold Fields ordinary shares represented
by Gold Fields ADSs) in the US will only be made pursuant to a
prospectus and related offer materials that Harmony will send to
holders of Gold Fields securities. The Harmony ordinary shares
(including Harmony ordinary shares represented by Harmony ADSs) may
not be sold, nor may offers to buy be accepted, in the US prior to
the time the registration statement becomes effective. No offering
of securities shall be made in the US except by means of a
prospectus meeting the requirements of Section 10 of the United
States Securities Act of 1933, as amended. Forward-looking
Statements Statements in this announcement include "forward-looking
statements" that express or imply expectations of future events or
results. Forward-looking statements are statements that are not
historical facts. These statements include financial projections
and estimates and their underlying assumptions, statements
regarding plans, objectives and expectations with respect to future
operations, products and services, and statements regarding future
performance. Forward-looking statements are generally identified by
the words "expect," "anticipates," "believes," "intends,"
"estimates" and similar expressions. All forward-looking statements
involve a number of risks, uncertainties and other factors, and
Harmony cannot give assurances that such statements will prove to
be correct. Risks, uncertainties and other factors that could cause
actual events or results to differ from those expressed or implied
by the forward-looking statements include, without limitation, the
satisfaction of closing conditions, the acceptance or rejection of
any agreement by regulators, delays in the regulatory processes,
changes in the economic or political situation in South Africa, the
European Union, the US and/or any other relevant jurisdiction,
changes in the gold industry within any such country or area or
worldwide and the performance of (and cost savings realised by)
Harmony. Although Harmony's management believes that the
expectations reflected in such forward-looking statements are
reasonable, investors and holders of Gold Fields securities are
cautioned that forward-looking information and statements are
subject to various risks and uncertainties, many of which are
difficult to predict and generally beyond the control of Harmony,
that could cause actual results and developments to differ
materially from those expressed in, or implied or projected by, the
forward-looking information and statements. These risks and
uncertainties include those discussed or identified in the public
filings with the SEC made by Harmony and Gold Fields, including
those listed under "Cautionary Statement Concerning Forward-Looking
Statements" and "Risk Factors" in the preliminary prospectus
included in the registration statement on Form F-4 that Harmony
will file with the SEC. Harmony does not undertake any obligation
to update any forward-looking information or statements. You may
obtain a free copy of the registration statement and preliminary
and final prospectus (when available) and other public documents
filed with the SEC in the manner described above. The directors of
Harmony accept responsibility for the information contained in this
announcement. To the best of the knowledge and belief of the
directors of Harmony (who have taken all reasonable care to ensure
that such is the case), the information contained in this
announcement is in accordance with the facts and does not omit
anything likely to affect the import of such information.
DATASOURCE: Harmony Gold Mining Company Limited CONTACT: Ferdi
Dippenaar, +27-11-684-0140, mobile, +27-82-807-3684, or Corne
Bobbert, +27-11-684-0146, mobile, +27-83-380-6614, both of Harmony
Gold; South Africa - Jennifer Cohen, +27-11-214-2401, mobile,
+27-82-468-6469, ; or Patrick Lawlor, +27-11-214-2410, mobile,
+27-82-459-6709, both of Beachhead Media & Investor Relations;
United States - Hollis Rafkin-Sax, +1-212-850-5789, mobile,
+1-917-509-0255, , or Torie Pennington, +1-212-850-5629, mobile,
+1-917-838-1369, , United Kingdom - Nic Bennett +44-207-269-7115,
mobile, +44-7979-536-619, , or Charles Watenphul, +44-207-269-7216,
mobile, +44-7866-438-013, , all of Financial Dynamics Business
Communications; US Information Agent - MacKenzie Partners, Inc -
Daniel Burch +1-212-929-5500, , or Steve Balet, 1-800-322-2885
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