RNS No 8791t
REUNION MINING PLC
20 April 1999
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
RECOMMENDED CASH OFFER BY CAZENOVE & CO.
ON BEHALF OF MINORCO FINANCE (U.K.) PLC
A WHOLLY OWNED SUBSIDIARY OF MINORCO S.A.
FOR REUNION MINING PLC
- The boards of Minorco S.A. ("Minorco") and Reunion
Mining PLC ("Reunion") announce that they have reached
agreement on the terms of a recommended cash offer to
be made by Cazenove & Co. on behalf of Minorco Finance
(U.K.) plc (the "Offeror"), a wholly owned subsidiary
of Minorco, for the entire issued share capital of
Reunion not already owned by the Offeror.
- The Offer is 88 pence in cash for each Reunion Share,
valuing the current issued share capital of Reunion at
#37.2 million. In addition, the Offeror will, in due
course, make a cash cancellation offer under which
holders of Reunion Options and Reunion Warrants may
agree that their Reunion Options and Reunion Warrants
are cancelled in consideration of the payment to them
of the amount per underlying Reunion Share (if any) by
which 88 pence exceeds the exercise price of the
Reunion Options and Reunion Warrants. If all such
holders accept the cash cancellation offer, the
aggregate consideration payable under the Offer and the
cash cancellation offer will be #38.1 million.
- The Offeror has purchased from the Reunion
Directors their entire beneficial holdings of Reunion
Shares, amounting in aggregate to 4,960,390 Reunion
Shares, representing approximately 11.7 per cent. of
Reunion's current issued share capital. In addition,
the Offeror has purchased from certain institutions
15,837,863 Reunion Shares, representing approximately
37.5 per cent. of Reunion's current issued share
capital.
- Taken together with a further 500,000 Reunion Shares
already held by Firecrest Investments Limited, a
wholly owned subsidiary of Minorco, the Offeror now
owns or controls approximately 50.4 per cent. of the total current
issued share capital of Reunion. Accordingly, once the
purchases of the Shares which the Offeror owns have
been settled and registered, the Offer will become
wholly unconditional.
- The Reunion Directors, who have been so advised by SG
Securities, consider the terms of the Offer to be fair
and reasonable and accordingly unanimously recommend
Reunion Shareholders to accept the Offer. In providing
advice to the Reunion Directors, SG Securities has
taken into account the Reunion Directors' commercial
assessments.
- The Offer represents a premium of 68 per cent. to the
Reunion Share price of 52.5 pence at the close of
business on 8 February 1999, the business day
immediately prior to the day on which Reunion announced
that it was in discussions which may or may not lead to
an offer.
- Minorco has announced that it intends to combine with
Anglo American Corporation of South Africa Limited
("AAC") to form Anglo American plc, a new UK domiciled
company whose base metals division will include a
substantial portfolio of projects recently developed or
under development.
Julian Ogilvie Thompson, Chairman of Minorco, said:
"The base metals activities of Minorco and Anglo American
Corporation of South Africa Limited are to be combined
and Anglo Base, as it will be called, will be one of the
core business divisions of Anglo American plc. Its
strategy will be to continue development of its business
in primary base metals, in particular copper, nickel and
zinc. The Offer for Reunion, and the consequent securing
of 100 per cent. ownership in Skorpion, a Namibian zinc
project that AAC knows well through its existing 40 per
cent. ownership, is consistent with this strategy. A
fully owned Skorpion deposit, when combined with the
Gamsberg zinc deposit in South Africa (on which a US$16
million feasibility study is underway), the Lisheen
project in Ireland (currently under construction) and
Hudson Bay Mining and Smelting in Canada, will provide
Anglo American plc, once all of the projects are brought
to account, with a significant position in the zinc
market.
The acquisition brings to a close the good working
relationship which AAC has enjoyed with its mining
partner, Reunion."
Andrew Woollett, Chairman of Reunion, said:
"Following a review by the board of the options available
to achieve the fullest value from Reunion's assets, we
believe the Offer is at a level that enables the
shareholders to realise the best assured value and which
the board is able unanimously to recommend."
Enquiries
Minorco :
Mike Gordon, Executive Vice President, Head of Strategic Planning
0171 404 2060
Nick von Schirnding, Vice President, Investor & Corporate Affairs
0171 404 2060
Cazenove & Co:
Nick Wiles
0171 588 2828
Reunion Mining PLC :
Andrew Woollett, Chairman
0171 535 0400
SG Securities (London) Ltd:
Andrew Dawber
0171 676 6000
This summary should be read in conjunction with the full
text of the announcement.
The Offer will not be made, directly or indirectly, in or
into the United States, Canada, Australia or Japan.
Copies of this announcement are not being, and must not
be, mailed or otherwise distributed or sent in or into or
from the United States, Canada, Australia or Japan.
Cazenove, which is regulated by The Securities and
Futures Authority, is acting for Minorco and for no one
else in connection with the Offer and will not be
responsible to anyone other than Minorco for providing
the protections afforded to customers of Cazenove nor for
providing advice in relation to the Offer or any matter
referred to herein or in the Offer Document.
SG Securities (London) Ltd, which is regulated by The
Securities and Futures Authority, is acting for Reunion
and for no one else in connection with the Offer and will
not be responsible to anyone other than Reunion for
providing the protections afforded to customers of SG
Securities (London) Ltd nor for providing advice in
relation to the Offer or any matter referred to herein or
in the Offer Document.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
RECOMMENDED CASH OFFER BY CAZENOVE & CO.
ON BEHALF OF MINORCO FINANCE (U.K.) PLC
A WHOLLY OWNED SUBSIDIARY OF MINORCO S.A.
FOR REUNION MINING PLC
Introduction
- The boards of Minorco S.A. ("Minorco") and Reunion
Mining PLC ("Reunion") announce that they have reached
agreement on the terms of a recommended cash offer to
be made by Cazenove & Co. on behalf of Minorco Finance
(U.K.) plc (the "Offeror"), a wholly owned subsidiary
of Minorco, for the entire issued share capital of
Reunion not already owned by the Offeror.
The Offer
- The Offer, which will be made on the terms and subject
to the condition set out in Appendix I and to be set
out in the Offer Document will be on the following
basis:
for each Reunion Share 88 pence in cash
- The Offer represents a premium of 68 per cent. to the
Reunion Share price of 52.5 pence at the close of
business on 8 February 1999, the business day
immediately prior to the day on which Reunion announced
that it was in discussions which may or may not lead to
an offer.
- The Offeror has purchased from the Reunion
Directors their entire beneficial holdings of Reunion
Shares, amounting in aggregate to 4,960,390 Reunion
Shares, representing approximately 11.7 per cent. of
Reunion's current issued share capital. In addition,
the Offeror has purchased from certain institutions
15,837,863 Reunion Shares, representing approximately
37.5 per cent. of Reunion's current issued share
capital.
- Taken together with a further 500,000 Reunion Shares
already held by Firecrest Investments Limited, a
wholly owned subsidiary of Minorco, the Offeror now
owns or controls approximately 50.4 per cent. of the total current
issued share capital of Reunion. Accordingly, once the
purchases of the Shares which the Offeror owns have
been settled and registered, the Offer will become
wholly unconditional.
- On 15 April 1999, the latest practicable date prior to
the making of this announcement, certain directors of
Minorco and its subsidiaries owned 112,000 Reunion
Shares and a wholly owned subsidiary of Minorco,
Firecrest Investments Limited, held 500,000 Reunion
Shares. These holdings represent 612,000 Reunion
Shares in total and 1.5 per cent. of the total current
issued share capital of Reunion.
- Except as set out above, the Offeror does not own any
Reunion Shares or rights over Reunion Shares. In
addition, following an enquiry throughout the AAC
Group, there are no holdings of Reunion Shares within
the AAC Group of which the Offeror is aware. In the
event that the Offeror becomes aware of the ownership
of additional Reunion Shares within the AAC Group, the
Offeror will inform the Panel and make a further
announcement if required.
Recommendation of the Offer
- The Reunion Directors, who have been so advised by SG
Securities, consider the terms of the Offer to be fair
and reasonable and accordingly unanimously recommend
Reunion Shareholders to accept the Offer. In providing
advice to the Reunion Directors, SG Securities has
taken into account the Reunion Directors' commercial
assessments.
Information relating to the Offeror
- Minorco Finance (U.K.) plc is a wholly owned subsidiary
of Minorco. As part of a wider reorganisation of the
shareholding structures of the AAC Group, it was
announced by Minorco and AAC on 15 October 1998 that
they had agreed in principle to combine their
businesses to form Anglo American plc, a company which
is expected to be listed in London during May. The
Directors believe that Anglo American plc will, if
listed, become a constituent of the FTSE 100 index in
due course.
- Anglo American plc will be one of the world's largest
mining and natural resource companies, with a
formidable range of interests in gold, platinum and
diamonds and an important presence in coal, base and
ferrous metals, industrial minerals (in the markets in
which it operates) and forest products. It will also
have an internationally diversified exploration
programme and important industrial and financial
activities.
- The combination of the businesses of Minorco and AAC to
establish Anglo American plc will be achieved by share
exchange offers to shareholders of Minorco and AAC.
The posting of documentation relating to these
transactions and an announcement of the formal offers
are expected to take place shortly.
- The offer to Minorco shareholders will be by means of a
public offer of one new Anglo American plc share for
every two Minorco shares held, with a cash alternative
of US$16 per Minorco share. In addition, Anglo
American plc intends to propose a scheme of arrangement
between AAC and all its shareholders under the terms of
which all AAC shareholders will be offered one share in
Anglo American plc for each share they hold in AAC.
- Minorco's results for the 12 months ended 31 December
1998 show turnover of US$5,601m (1997: US$5,662m) and
profit on ordinary activities before taxation of
US$377m (1997: US$666m). Minorco's market
capitalisation, as at 19 April 1999, was US$5.4bn.
Information relating to Reunion
- Reunion is a company devoted exclusively to mineral
exploration and mining in Africa. Reunion was set up
in 1989 to take advantage of increasing African
economic liberalisation and the opportunities that this
presented for employing modern prospecting and mining
technologies to explore for, and re-evaluate, major
deposits.
- Reunion intends, as a result of this transaction, to
relinquish its rights to participate in the Mufulira
consortium in Zambia, allowing the potential partners,
with whom it has been negotiating, to proceed in their
own rights.
- Reunion has two productive mines: Sanyati Mine in
Zimbabwe, producing LME grade A copper and Dunrobin
Gold Mine in Zambia, producing dore gold. In addition,
Reunion has exploration interests in Botswana, Gabon,
Ghana, Namibia, Zambia and Zimbabwe.
- In November 1998 Reunion completed a feasibility study
of the Skorpion zinc project in Namibia. The
conclusions of this study were that Skorpion, if put
into production, would rank as one of the larger
integrated zinc mines and refineries in the world with
the potential to be amongst the lowest cost producers
in the world.
- Reunion was listed on the London Stock Exchange on 21
December 1995. For the year to 31 December 1998,
Reunion reported a loss after taxation of #5.5 million
(1997: #4.6 million) on turnover of #2.1 million (1997:
#2.9 million). As at 31 December 1998 Reunion had net
assets of #1.1 million (1997: #4.2 million).
- On 9 February 1999 Reunion announced that it was
investigating a number of options regarding the
financing of the Skorpion zinc project in Namibia. As
one of these options, Reunion announced that
discussions were ongoing which might or might not lead
to an offer being made for the entire issued share
capital of the company, or for all or part of Reunion's
interest in the Skorpion zinc project.
Background to and reasons for the Offer
- The Directors of Minorco believe investment in the
development of primary base metals requires a long-term
commitment of management skills, expertise and resource
supported by a strong, well-capitalised financial base.
The base metals activities of Minorco and AAC will be a
core business for Anglo American plc. Its strategy
will be to continue development of its business in
primary base metals, in particular copper, nickel and
zinc. Given the long term nature of investments in
this area, the current weakness in world base metal
prices provides a good opportunity for Minorco to
review its position in these and other primary base
metals, to consolidate its international position in
its current base metals business and to explore
additional areas for broadening the scope of the base
metals operations. In reviewing opportunities in
primary base metals, including those projects currently
underway in the division, Minorco is seeking to develop
opportunities as an operator of long life, low cost
mines which are capable of generating a satisfactory
shareholder return over the longer term.
- Minorco intends to increase its exposure to zinc mining
and production. The acquisition of Reunion, and in
particular the 60 per cent. of the Skorpion zinc
deposit held by Reunion, is consistent with this
strategy. Upon the combination of Minorco and AAC, 100
per cent. of the project will be owned by Anglo
American plc which will enable it to enhance the
potential returns to shareholders and to optimise the
financing of this major zinc deposit.
- The completion of a project feasibility study for
Skorpion in November 1998 by Reunion allowed it to
satisfy its earn-in entitlement to 60 per cent. of the
project and AAC subsequently confirmed its intention to
maintain its 40 per cent. interest in Skorpion. The
study quoted proven and probable ore reserves of 19.5
million tonnes at a zinc grade of 10.1 per cent. and
anticipated average output over the first six and a
half years of 150,000 tonnes of zinc metal per annum.
Project implementation is planned to commence in 2000,
with production of zinc planned to start in 2002. The
capital cost of Skorpion is estimated by the project
feasibility study to be US$279 million.
- The Reunion Directors have, over several months, been
investigating a number of financing options in order to
establish the most appropriate means by which Reunion
can meet its 60 per cent. share of these capital costs.
In addition, given the scale of the project compared to
Reunion's stock market capitalisation, Reunion
Directors have also undertaken a broader evaluation to
consider whether it is in the best interests of
Reunion's Shareholders for Reunion to maintain its
existing participation in Skorpion with the attendant
financing obligations. Central to this evaluation was
the acknowledgement that any Skorpion project financing
would require Reunion to undertake a major equity
related fund raising, the size of which would be likely
to be comparable to the stock market capitalisation of
Reunion. This compares to total equity fund raisings
of #4.4 million undertaken by Reunion since its
introduction to the Official List in 1995.
- Against this background, on 9 April 1999, Reunion
announced its results for the year ended 31 December
1998. A loss after taxation of #5.5 million was
reported. The auditors included a reference to going
concern in their audit report on these financial
statements. Loans of #6.7 million advanced to Reunion
fall due for repayment during 1999. Reunion does not,
at the present time, have the cash resources to meet
these obligations.
- The opportunities for junior mining companies to equity
finance projects have been in decline for some years.
Since there is little prospect of this changing in the
foreseeable future, and having carefully considered the
financial position of Reunion and the financing needs
of Skorpion, the Reunion Directors consider that the
Offer represents the most assured way for shareholders
to obtain a material benefit from Reunion's interest in
Skorpion.
Management and Employees
- The Offeror has confirmed that the existing rights,
including pension rights, of all Reunion employees will
be safeguarded.
Further details of the Offer
- The Offer extends to any Reunion Shares issued or
unconditionally allotted while the Offer remains open
for acceptance (or by such earlier date as the Offeror
may, subject to the City Code, determine).
- The Reunion Shares will be acquired by the Offeror
fully paid and free from all liens, equities, charges,
encumbrances and other interests and together with all
rights now or hereafter attaching to them, including
the right to receive and retain all dividends and other
distributions declared, made or paid hereafter.
- The Offer and the cash cancellation offer will be
financed from existing cash resources of the Offeror.
Cazenove is satisfied that the necessary resources to
satisfy the Offer and the cash cancellation offer are
available in full.
- The Offer will be subject to the condition and certain
further terms set out in Appendix I to this
announcement.
Reunion Share Options and Reunion Warrants
- The Offeror has agreed to make the cash cancellation
offer, under which holders of Reunion Options and
Reunion Warrants may agree that their Reunion Options
and Reunion Warrants are cancelled in consideration of
the payment to them of the amount per underlying
Reunion Share (if any) by which 88 pence exceeds the
exercise price of the Reunion Options and Reunion
Warrants per Reunion Share.
General
- The formal Offer Document will be posted to Reunion
shareholders in due course.
- The Offer will not be made directly or indirectly, in
or into the United States, Canada, Australia or Japan.
Copies of this announcement are not being, and must not
be, mailed or otherwise distributed or sent in or into
or from the United States, Canada, Australia or Japan.
- Cazenove, which is regulated by The Securities and
Futures Authority, is acting for Minorco and for no one
else in connection with the Offer and will not be
responsible to anyone other than Minorco for providing
the protections afforded to customers of Cazenove nor
for providing advice in relation to the Offer or any
matter referred to herein or in the Offer Document.
- SG Securities (London) Ltd, which is regulated by The
Securities and Futures Authority, is acting for Reunion
and for no one else in connection with the Offer and
will not be responsible to anyone other than Reunion
for providing the protections afforded to customers of
SG Securities (London) Ltd nor for providing advice in
relation to the Offer or any matter referred to herein
or in the Offer Document.
- Appendix II contains the definitions used in this
announcement.
APPENDIX I
Condition and certain further terms of the Offer
Condition of the Offer
The Offer will be subject to valid acceptances being
received (and not, where permitted, withdrawn) by 3.00pm
on the first closing date of the Offer or such later
time(s) and/or date(s) as the Offeror may, subject to the
rules of The City Code, decide, in respect of Reunion
Shares which, together with any other Reunion Shares
which the Offeror and any person acting in concert with
it has acquired or agreed to acquire (either pursuant to
the Offer or otherwise) by such date, will result in the
Offeror and any person acting in concert with it holding
shares carrying more than 50 per cent. of the voting
rights then exercisable at general meetings of Reunion.
For the purposes of this condition, shares which have
been unconditionally allotted but not issued shall be
deemed to carry the voting rights they will carry upon
their being entered into the register of members of
Reunion.
Terms
The Offer will lapse if the European Commission either
initiates proceedings under article 6(1)(c) of Council
Regulation (EEC) 4064/89 in respect of the Offer or,
following a referral to a competent authority of the
United Kingdom under Article 9(1) thereof or otherwise,
the Offer is referred to the Competition Commission, in
any case before 3.00pm on the first closing date of the
Offer or the date on which the Offer becomes or is
declared unconditional as to acceptances, whichever is
the later. If the Offer so lapses, it will cease to be
capable of further acceptance and accepting Reunion
Shareholders and the Offeror will cease to be bound by
forms of acceptance submitted before the time when the
Offer lapses.
The Offer will remain open for acceptance for 21 days
following the posting of the formal Offer Document or
such later date as the Offeror may, subject to the City
Code, decide.
The Offer will not be made, directly or indirectly, in or
into the United States, Canada, Australia and Japan, or
by the use of the mails, or by any other means or
instrumentality (including, without limitation, facsimile
transmission, telex or telephone) of interstate or
foreign commerce of, or any facilities of a national
securities exchange of, the United States, Canada,
Australia or Japan.
The Offer will be governed by English Law and will be
subject to the exclusive jurisdiction of the Courts of
England.
APPENDIX II
Definitions
The following definitions apply throughout this press
release unless the context requires otherwise.
"AAC"
Anglo American Corporation of South Africa Limited
"AAC Group" or "Group"
AAC and its subsidiary and associated undertakings,
including Minorco and Minorco Finance (U.K.) plc
"AAC Shareholders"
holders of AAC Shares
"Anglo American plc"
Anglo American plc and those companies which will be
its subsidiary undertakings or associates following
completion of the reorganisation of the AAC Group
"cash cancellation offer"
the offer under which holders of Reunion Options and
Reunion Warrants may elect for their Reunion Options
and Reunion Warrants to be cancelled in consideration
of a cash payment, as more fully described in this
announcement
"Cazenove"
Cazenove & Co. which is acting as financial adviser to
Minorco
"City Code"
The City Code on Takeovers and Mergers
"Companies Act"
the Companies Act 1985 (as amended)
"Directors" or "Board"
the directors of Minorco
"Form of Acceptance"
the form of acceptance relating to the Offer
"London Stock Exchange"
London Stock Exchange Limited
"Minorco"
Minorco S.A.
"Offer"
the recommended offer to be made by Cazenove on behalf
of Minorco Finance (U.K.) plc to acquire the Reunion
Shares and, where the context admits, any subsequent
revision, variation, extension or renewal thereof
"Offer Document"
the offer document to be addressed to Reunion
Shareholders in connection with the Offer, including
the Form of Acceptance
"Offeror"
Minorco Finance (U.K.) plc
"Official List"
the Daily Official List of the London Stock Exchange
"Panel"
The Panel on Takeovers and Mergers
"Reunion "
Reunion Mining PLC
"Reunion Directors"
the directors of Reunion
"Reunion Group"
Reunion and its subsidiary and associated undertakings
"Reunion Options"
options over Reunion Shares granted pursuant to the
Reunion Share Option Schemes
"Reunion Share"
an ordinary share of 10 pence each in the share capital
of Reunion
"Reunion Shareholders"
holders of Reunion Shares
"Reunion Share Option Schemes"
the Reunion Mining PLC Executive Share Option Scheme
and the Reunion Mining PLC 1996 Executive Share Option
Scheme (Unapproved)
"Reunion Warrants"
warrants over Reunion Shares
"SG Securities"
SG Securities (London) Ltd. which is acting as
financial adviser to Reunion
"UK"
the United Kingdom
"United States"
the United States of America, its possessions or
territories or any area subject to its jurisdiction or
any political subdivision thereof
END
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