Joy Global Inc. (NASDAQ:JOYG) (“Joy
Global”) a worldwide leader in high productivity mining solutions,
and International Mining Machinery Holdings Ltd. (HKSE:1683)
(“IMM”) jointly announced today that TJCC Holdings Limited (“TJCC”)
and Joy Global have entered into a Share Purchase Agreement in
which TJCC has conditionally agreed to sell 534.8 million shares of
IMM to Joy Global for a purchase price of HKD 8.50 per share, or a
total cash consideration of approximately USD 585 million. These
shares represent approximately 41% of the issued share capital of
IMM.
Completion is subject to the receipt of
necessary approval from the Anti-monopoly Bureau of the Ministry of
Commerce (“MOFCOM”) of the People’s Republic of China and the
satisfaction of other customary closing conditions.
Pursuant to Rule 26.1 of the Hong Kong
Takeovers Code, upon receipt of MOFCOM approval and completion of
the Share Purchase Agreement, Joy Global will be required to make
an offer for the remaining approximately 59% of IMM shares. The
tender offer will be launched by Joy Global’s wholly owned Hong
Kong subsidiary, Newco Hong Kong 123 Limited, and will be subject
to the terms and conditions to be set out in the offer document.
The offer document is subject to approval by the Hong Kong
Securities and Futures Commission, and following such approval will
be made available on www.joyglobal.com. The transactions will be
financed with a combination of cash, borrowings or with cash raised
through an equity offering, depending upon the number of shares
tendered and the amount of cash on hand.
IMM is a leading designer and manufacturer of
underground longwall coal mining equipment in China. It has strong
domestic market positions in roadheaders and longwall shearing
machines, and is growing the share of its armored-face conveyor and
electric control systems businesses. In addition to original
equipment, IMM provides aftermarket parts and services through a
broad network of service and warehouse locations. IMM's calendar
2010 financial results had revenues of approximately RMB 1,943
million (USD 299 million) and Adjusted EBITDA* of RMB 585 million
(USD 90 million).
“A core part of our business strategy has been
to position ourselves for the high growth of the emerging markets,
and the investment in IMM is a major step in the execution of that
strategy,” said Mike Sutherlin, President and Chief Executive
Officer. “The China coal market is large and diverse, and must be
accessed with a multi-dimensional strategy. While the major mines
generally use globally sourced equipment, a larger number of mines
rely on local Chinese mining equipment manufacturers. Leadership in
the China market requires strong positions specific to each
segment, and IMM is an established market leader in the local
market with premier products for longwall shearing machines and
road headers. IMM is a very strong complement to our Joy Mining and
P&H businesses, and gives us leading positions in each of the
major segments of the China market.”
Investor Conference Call
Management will host a conference call on July
14, 2011 at 2:00 p.m. EDT to discuss the investment. Interested
parties can listen to the call by dialing 888-389-5988 in the
United States or 719-457-2683 outside of the United States, access
code 3575474, at least 15 minutes prior to the 2:00 p.m. EDT start
time of the call. A rebroadcast of the call will be available until
the close of business on August 2, 2011 by dialing 888-203-1112 or
719-457-0820, access code 3575474.
Management has posted a presentation on its
website that provides additional information on this transaction,
and which will be referred to during the conference call. The
presentation can be accessed at
http://investors.joyglobal.com/events.cfm.
Alternatively, interested parties can listen to
a live webcast of the call on the Joy Global website at Joy Global
at http://investors.joyglobal.com/events.cfm. To listen, please
register and download audio software on the site at least 15
minutes prior to the start of the call. A replay of the webcast
will be available until the close of business on August 4,
2011.
About Joy Global
Joy Global is a worldwide leader in
manufacturing, servicing and distributing equipment for surface
mining through P&H Mining Equipment and underground mining
through Joy Mining Machinery.
Advisors
UBS AG and Goldman Sachs (Asia) L.L.C. are
serving as financial advisors to Joy Global on this
transaction.
Allen & Overy are serving as legal advisors
to Joy Global.
*Appendix A
IMM Adjusted EBITDA Reconciliation Year Ended December
31, 2010 RMB USD* (In Millions) (In Thousands)
EBITDA 498.8 $ 76.8 Initial Public Offering Expenses 119.5
18.4 Waiver of Legacy Tax Liability (32.9 ) (5.1 )
Adjusted EBITDA 585.4 $ 90.1
IMM EBITDA Reconciliation
Year Ended December 31, 2010 RMB USD* (In Millions)
(In Thousands) EBITDA 498.8 $ 76.8 Depreciation &
Amortization (70.8 ) (10.9 ) Net - Finance Costs (11.1 )
(1.7 ) Income Tax Expense (66.9 ) (10.3 )
Profit For the Year (Net Income) 350.0 $ 53.9
*USD results are calculated using exchange
rates in effect during 2010
Source : 2010 IMM Annual Report
IMM’s consolidated financial statements are
prepared in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board
and the disclosure requirements of the Hong Kong Companies
Ordinance.
Forward Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Terms such as "anticipate," "believe,"
"estimate," "expect," "indicate," "may be," "objective," "plan,"
"predict," "will," "will be," and the like are intended to identify
forward-looking statements. The forward-looking statements in this
press release are based on our current expectations and are made
only as of the date of this press release. In addition, certain
market outlook information is based on third-party sources that we
cannot independently verify, but that we believe reliable. We
undertake no obligation to update forward-looking statements to
reflect new information. We cannot assure you the projected results
or events will be achieved. Because forward-looking statements
involve risks and uncertainties, they are subject to change at any
time. Such risks and uncertainties, many of which are beyond our
control, include, but are not limited to: (i) risks of
international operations, including currency fluctuations, (ii)
risks associated with acquisitions, (iii) risks associated with
indebtedness, (iv) risks associated with the cyclical nature of our
business, (v) risks associated with the international and U.S. coal
and copper commodity markets, (vi) risks associated with access to
major purchased items, such as steel, castings, forgings and
bearings, and (vii) risks associated with labor markets and other
risks, uncertainties and cautionary factors set forth in our public
filings with the Securities and Exchange Commission.
Use of Non-GAAP Financial Measures
In this press release "EBITDA", which is not
recognized as a financial measurement under GAAP accounting rules,
is used as a performance measure. Management uses EBITDA and other
operating metrics as tools to evaluate the profitability of IMM’s
operations and the effectiveness of its various initiatives. EBITDA
is calculated as net profit before taxes, plus depreciation,
amortization and net finance costs. “Adjusted EBITDA” excludes
material charges related to IMM’s Global Offering in 2010 as well
as its receipt of a waiver of taxes for periods prior to formation
of the IMM. We believe that the presentation of Adjusted EBITDA
included in this press release provides useful information to
investors regarding IMM’s results of operations because it assists
in analyzing and benchmarking the performance and value of IMM's
business. Presenting Adjusted EBITDA facilitates company-to-company
operating performance comparisons of companies within the same or
similar industries by backing out differences caused by variations
in capital structure, taxation and depreciation of facilities and
equipment (affecting relative depreciation expense), which may vary
for different companies for reasons unrelated to operating
performance. These measures provide an assessment of controllable
operating expenses and afford management the ability to make
decisions which are expected to facilitate meeting current
financial goals as well as achieve optimal financial performance.
These measures also provide an indicator for management to
determine if adjustments to current spending decisions are needed.
Furthermore, the presentation of Adjusted EBITDA has economic
substance because it provides important insight into IMM’s
profitability trends, and allows management and investors to
analyze operating results with and without the impact of
depreciation and amortization, interest and income tax expense and
material related to IMM’s Global Offering in 2010 as well as its
receipt of a waiver of taxes for the periods prior to formation of
IMM. Accordingly, these metrics measure financial performance based
on operational factors that management can impact in the
short-term, namely the operational cost structure and expenses of
the business. In addition, Adjusted EBITDA is used by securities
analysts, investors and other interested parties in evaluating
companies, many of which present an EBITDA measure when reporting
their results. Although Adjusted EBITDA is used as a financial
measure to assess the performance of this business, the use of
Adjusted EBITDA is limited because they do not include certain
material costs, such as depreciation, amortization and interest,
necessary to operate the business. The reconciliation between
EBITDA and Adjusted EBITDA and net income is disclosed to
compensate for this limitation. While net income is used as a
significant measure of profitability, Adjusted EBITDA, when
presented along with net income, provides balanced disclosure
which, for the reasons set forth above, is useful to investors in
evaluating operating performance and profitability. Adjusted EBITDA
included in this press release should be considered in addition to,
and not as a substitute for, net income as calculated in accordance
with GAAP as a measure of IMM’s performance.
Responsibility Statement
The directors of Joy Global and Newco Hong Kong
123 Limited (a wholly-owned subsidiary of Joy Global and the entity
acquiring the shares under the share purchase agreement and making
the offer) jointly and severally accept full responsibility for the
accuracy of the information contained in this announcement, except
in relation to information on IMM, and confirm, having made all
reasonable inquiries, that to the best of their knowledge, opinions
expressed in this announcement have been arrived at after due and
careful consideration and there are no other facts not contained in
this announcement, the omission of which would make any statement
in this announcement, except in relation to information on IMM,
misleading. The information relating to IMM contained in this
announcement has been taken from the published annual and interim
reports of IMM and from other public sources, including IMM's
website at www.immchina.com. The directors of Joy Global and Newco
Hong Kong 123 Limited take full responsibility for ensuring such
information has been correctly and fairly reproduced.
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