10th May 2010 07:00
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
10 May 2010
LONMIN PLC
FACILITATING NEW OWNERSHIP OF INCWALA RESOURCES
AND
PLACING OF NEW ORDINARY SHARES
1. INTRODUCTION
The Boards of Lonmin Plc ("Lonmin" or the "Company") and Shanduka Resources (Proprietary) Limited ("Shanduka") today announce that Shanduka has agreed to acquire a majority stake in Incwala Resources (Proprietary) Limited ("Incwala"), Lonmin's Black Economic Empowerment ("BEE") partner. Lonmin and Shanduka believe that the transaction will secure the long term future and financial stability of Incwala.
Given the importance for Lonmin of securing a stable empowerment partnership via a financially robust financing structure, Lonmin has agreed to provide Shanduka with funding of £206 million (US$309 million) which will be secured on Shanduka's interest in Incwala, with Shanduka making an equity contribution of £27 million (R300 million). In line with the Board's policy to maintain an appropriate capital structure, which preserves financial flexibility and supports future growth, Lonmin intends to finance this funding through the issue of up to 9,654,000 new ordinary shares (the "Placing Shares") representing up to approximately 5% of the Company's current issued share capital immediately prior to the Placing, to be placed with institutional investors (the "Placing"), with the balance being funded from Lonmin's own financial resources.
Highlights
·; Shanduka has agreed to acquire Incwala shares from a number of counterparties (the "Shanduka Offer"), including certain of the original Historically Disadvantaged South African ("HDSA") shareholders of Incwala, and, on completion, will hold interests directly and indirectly representing in aggregate 50.03% of the shares of Incwala ("Incwala Shares");
·; Completion of the Shanduka Offer will simplify the ownership structure of Incwala and create the basis for a long-term relationship between Lonmin and Shanduka as the single majority HDSA shareholder;
·; Shanduka will provide leadership for Incwala and strategic support to Lonmin in achieving its BEE objectives;
·; Shanduka has a proven track record of BEE investment and management in the natural resources sector and believes this investment will advance its strategy of developing as an operating BEE company in the South African mining sector. Lonmin and Shanduka have already targeted several PGM projects which we may cooperate on, and which could result in Shanduka's operational involvement;
·; Following completion of the Shanduka Offer, Cyril Ramaphosa will join the Lonmin Board as a Non-executive Director. Mr Ramaphosa is Executive Chairman of Shanduka Group (Proprietary) Limited, ("Shanduka Group"), Shanduka's holding company;
·; The South African Minister of Mineral Resources and the Department of Mineral Resources have acknowledged Lonmin's support for the transaction and endorse it in principle as a constructive contribution, which facilitates the long term financial stability of our BEE structure;
·; The objective of securing a new BEE partner via a robust funding structure is critical to the future of Lonmin. Following an extensive process in this regard, it has become clear that this objective can only be achieved with significant funding from Lonmin;
·; Accordingly, Lonmin has agreed to provide funding of £206 million (US$309 million) to Shanduka through a 5 year loan, which will be secured on Shanduka's holding in Incwala. In line with the Board's policy to maintain an appropriate capital structure, which preserves financial flexibility and supports future growth, the funding will be financed through a combination of the net proceeds to be raised from the Placing announced today and from Lonmin's own financial resources. The provision of vendor finance by Lonmin to Shanduka raised in this manner, provides a robust financial structure to the Lonmin Shanduka partnership, avoiding the risks shown to be inherent in BEE structures built on bank debt;
·; The terms of the funding provide for Lonmin to receive a fair commercial return and of this, Lonmin expect to accrue interest at the rate of 5% annually. In addition, in the event that there is significant future value created for Shanduka through its Incwala shareholding, the terms of the funding provide that a proportion of such incremental value uplift will be shared with Lonmin. This was not available to Lonmin under the original Incwala transaction in 2004;
·; The Placing of up to 9,654,000 new ordinary shares in the capital of the Company, represents up to approximately 5% of the Company's issued share capital immediately prior to the Placing; and
·; Completion of the Shanduka Offer including the provision of the Lonmin funding are conditional on, inter alia, South African Reserve Bank and South African Competition Authority approval.
Mr Roger Phillimore, Chairman of Lonmin, said:
"The Board of Lonmin is delighted to be joining forces with Shanduka, a high-calibre BEE partner. This transaction provides a secure and long-term empowerment platform for Lonmin. We look forward to working with Shanduka in realising our shared vision for the ultimate benefit of all of our stakeholders.
"Given the importance for Lonmin of securing a stable empowerment partnership, via a financially robust financing structure, the Board believes it necessary for Lonmin to provide financing for this transaction, whilst ensuring, through the placing, that the Company maintains an appropriate capital structure to maintain its financial flexibility and support its future growth."
Mr Cyril Ramaphosa, Executive Chairman of Shanduka Group, said:
"The Board and Executive team of Shanduka have been monitoring Incwala and its investment in Lonmin's operating subsidiaries for a number of years and we are delighted to be able to invest in the Company through this transaction. We are very pleased that the transaction has been endorsed in principle by The Minister of Mineral Resources and the Department of Mineral Resources.
"This transaction affords Shanduka with a rare opportunity to invest in the world's third largest primary Platinum producer, and this investment bolsters our existing PGM investments. Shanduka's equity contribution represents a significant portion of the Group's liquid capital and further exposes the Group's balance sheet to the PGM market. Furthermore, we look forward to supporting Lonmin and its management team and, in particular, assisting in the progression of a number of transformation and sustainability initiatives currently underway at Lonmin."
Ms Susan Shabangu, The Minister of Mineral Resources of South Africa, said:
"This transaction demonstrates the commitment of Lonmin to transformation of the mining industry, consistent with the Mining Charter objective. The financial model adopted to support this transaction is laudable, marking a fundamental shift from typically cumbersome debt traps set for emerging BEE companies partnering with established mining companies, as evidenced by the instant dissipation of such BEE companies in the recent financial crisis. The Lonmin model must be emulated by other role-players in the industry."
2. BACKGROUND TO AND REASONS FOR THE SHANDUKA OFFER AND THE PLACING
Background and recent developments in respect of Incwala
Under the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry (the "Mining Charter"), which was published in its current form in October 2002, Lonmin is required, inter alia, to ensure economic participation by HDSAs as part of the granting of its New Order prospecting and mining rights. While it holds these rights, Lonmin must be able to demonstrate equity participation in its prospecting and mining operations by HDSAs of 15% (with effect from 1 May 2009) and 26% (with effect from 1 May 2014).
Lonmin was a key facilitator of the original BEE transaction with Incwala in September 2004 which resulted in Incwala owning 18% of the equity of Lonmin's two principal operating subsidiaries. Lonmin also provided third party loan indemnifications, financing and related arrangements, totalling U$126 million which, together with external bank debt, enabled equity participation by the original HDSA shareholders.
A substantial proportion of the bank-funded and vendor-financed debt advanced to the HDSA shareholders in Incwala matured in September and December 2009. Prior to the first maturity date in September 2009, discussions regarding the future of Incwala commenced between Lonmin, the original HDSA shareholders of Incwala and the providers of the finance.
In addition to considering the refinancing options available to the original HDSA shareholders of Incwala, discussions also focused on identifying potential buyers of the Incwala Shares. Following an extensive process, these discussions have culminated in the announcement today of the Shanduka Offer and the Placing.
Shanduka ownership will simplify the Incwala structure
Shanduka has entered into legally-binding share sale agreements, including directly with existing HDSA Incwala shareholders, one of which is the Lonplats Employee Masakhane Provident Trust, in relation to interests directly and indirectly representing in aggregate 50.03 % of the shares of Incwala. Upon completion of the purchase of these interests Shanduka will hold a controlling stake in Incwala.
Completion of the Shanduka Offer will result in a single majority HDSA shareholder which will simplify the ownership structure of Incwala, provide leadership and create the basis for a long-term relationship between Lonmin and Shanduka. The Board believe that Shanduka has a proven track record of BEE investment in the resources sector and it aspires to increase its operating capabilities in the South African mining sector.
Subsequent to the conditions precedent set out in section 3 below being fulfilled, and completion of the share sale agreements referred to above, Shanduka will, directly or indirectly, own 50.03% of Incwala, the Industrial Development Corporation of South Africa ("IDC") and Lonmin will each continue to own 23.56%, with other HDSA shareholders continuing to own 2.85%.
As part of the transaction, Shanduka will be entitled to nominate one HDSA for appointment as a director on the Lonmin Board, and has duly nominated Mr Cyril Ramaphosa, Executive Chairman of Shanduka Group. Mr Ramaphosa will join the Lonmin board as a non-executive director on standard terms and conditions with effect from completion of the Shanduka Offer.
The parties have also agreed that Shanduka will be entitled to nominate two individuals to join the boards of Lonmin's operational subsidiaries in South Africa, and an individual who will become a member of the Lonmin Executive Committee.
Funding of the Shanduka Offer
The total value of the Shanduka Offer to the selling HDSA shareholders is approximately £248 million (US$373 million), which will be funded as follows:
·; funding from Shanduka totalling £27 million (US$40 million);
·; funding from Lonmin of £ 206 million (US$309 million). This funding is made up of:
o the existing Lonmin vendor finance totalling £61 million (US$91 million) as at 31 March 2010, which includes £39 million (US$59 million) paid to Impala Platinum Holdings Limited ("Impala") who called on guarantees in October and December 2009 pursuant to the guarantees given to Impala as part of the original BEE transaction in September 2004;
o additional Lonmin funding totalling £145 million (US$218 million); and
·; the current loan from Impala of £16 million (US$24 million). The Lonmin indemnity already granted over this amount will remain in place in the Incwala structure.
Following completion of the Shanduka Offer, Lonmin's contingent liabilities in connection with Incwala will reduce from US$69 million at 31 March 2010 to US$24 million.
In order to provide the long term funding to Shanduka, Lonmin intends to use the net proceeds to be raised from the Placing with the balance coming from its own financial resources.
Background to and reasons for the Placing
The objective of securing a new BEE partner, via a financially robust financing structure, is critical to the future development of Lonmin. Following an extensive process in this regard, it has become clear that this objective can only be achieved with significant funding from Lonmin.
Operating successfully in South Africa today requires a BEE partner that can actively add value. Meeting South Africa's transformational aspirations, addressing productivity challenges in partnership with unions and investing in growth with assurance of mining right security, all demand that the relationships with Lonmin's many stakeholders function effectively. The Board believes that a partnership with Shanduka will serve Lonmin well in this regard.
The Board remains confident of the longer term potential of Lonmin, with its high quality asset base and organic growth prospects, and in the fundamentals of the Platinum Group Metals ("PGM") industry and the longer term pricing environment. The primary focus of the Board continues to be on enhancing value for all Lonmin shareholders by increasing production and continuing to improve our operational performance.
As evidence of success in this regard, significant improvements in grade and concentrator recoveries were achieved during the first six months of 2010. Management has also continued its efforts to implement cost and productivity efficiencies, with a number of initiatives having been implemented across the operations. As a result, during the first half of 2010, Lonmin's unit costs declined from the prior year period.
However, even after achieving these improvements in operational delivery, and in spite of recent favourable PGM price improvements, Lonmin's profitability and cash flows will always remain highly geared to the PGM pricing environment and Rand/US dollar exchange rate movements, both of which have been particularly volatile during the last 18 months.
The provision of vendor finance by Lonmin to Shanduka is intended to ensure that the structure of the transaction is sustainable in the long term and able to withstand adverse changes in economic and market fundamentals. It also demonstrates Lonmin's confidence in Shanduka as a party with whom Lonmin can partner to achieve its BEE transformational objectives.
Accordingly, to maintain an appropriate capital structure which preserves financial flexibility and supports future growth, the Board has concluded that raising equity now, by way of the Placing, is in the best interest of the Company and its shareholders as a whole.
Notwithstanding that the Placing is being undertaken in connection with the Shanduka Offer, the Placing is not conditional on the Shanduka Offer becoming unconditional. It is therefore possible that the Placing will complete and the Shanduka Offer will not. In this event, the net proceeds of the Placing will be utilised for an alternative BEE transaction or for other general corporate purposes.
Future refinancing of Incwala
The terms of the Lonmin funding provides for the Company to receive a fair commercial return and of this we expect to accrue interest of 5% annually. In addition to this return, in the event that there is significant future value created for Shanduka through its shareholding in Incwala, the terms provide that a proportion of such incremental value uplift will be shared with Lonmin. This potential for value creation was not available to Lonmin under the terms of the original Incwala transaction in 2004.
All of the Lonmin funding will require re-financing or repayment by Shanduka within 5 years following completion of the Shanduka Offer. The means by which Shanduka could ultimately be able to repay its financial obligations include, but are not limited to, dividend flows from its investments, refinancing in the credit markets, an IPO of part or the whole of its group or the exchange of Shanduka's interest at operating level for an equity interest at the ultimate parent company and subsequent sell-down of such interest. Any such transaction will be subject, without limitation, to compliance with all applicable laws and regulations, and, to the extent required, all other shareholder and regulatory approvals, consents and confirmations being obtained.
Current trading
Lonmin's financial performance was much improved during the first six months of 2010, compared to the prior year period. Revenue for the period increased by 51.6% to U$661 million, due to an improved pricing environment compared to the prior year period, and underlying operating profit for the period increased by U$168 million to $70 million. Net debt increased by U$137 million to U$250 million at the end of the first six months of 2010.
The management team remains focused on improving operational delivery. During the first half of 2010, Lonmin's Mining management continued to place a strong emphasis on quality, with a number of processes and procedures now in place to underpin improvements in discipline, training and quality of mining practices. The Process Division produced an excellent performance during the period, with the concentrators and refineries delivering significant operational improvements.
As evidence of this continued management focus, significant improvements in grade and concentrator recoveries were achieved during the first six months of 2010, supporting a marginal increase in metals in concentrate production from our Marikana operations, excluding discontinued operations, to 291,922 saleable ounces of Platinum.
Underground milled head grade increased to 4.74 grammes per tonne in the first half of 2010 from 4.57 grammes per tonne in the prior year period. This improvement was a result of cleaner mining across the property, a better ratio of stoping ore to development ore at Hossy and Saffy as well as an improved ore mix. Underground concentrator recoveries improved significantly during the first half to 84.6%, from 80.8% during the prior year period. The improvement was due to the improved head grade and also the result of continued benefits from our concentrator optimisation programme, excellent plant availability and a rigorous focus on batch milling the right ore through the right concentrators.
In addition, as a consequence of management's continued efforts to implement cost and productivity efficiencies across the business, and as a result of the significant restructuring programme completed in 2009, Lonmin's cost performance during the first half of 2010 was strong, with cost per ounce reducing, compared to the prior year period. This is the first time cost per ounce has fallen, versus a comparative period, since this metric was introduced in 2005.
Further information on current trading can be found in Lonmin's interim result announcement for the six month period ending 31 March 2010, which has also been published today.
3. CONDITIONS PRECEDENT TO THE SHANDUKA OFFER
The Shanduka Offer will be completed following the finalisation of ancillary documentation typical for a transaction of this nature and satisfaction of a number of outstanding conditions precedent, including:
·; South African Reserve Bank approval; and
·; South African Competition Authority approval.
Completion is expected to take place in the third quarter of the 2010 calendar year.
4. INFORMATION ON SHANDUKA
Shanduka is a subsidiary of Shanduka Group, a black-owned and managed investment holding company founded by Mr Cyril Ramaphosa, Mr James Motlatsi and several other black professionals. Shanduka Group encompasses its own element of broad-based BEE through a 10% equity shareholding by a consortium of women, as well as a further 5% shareholding by community development trusts. These trusts are part of the Shanduka Foundation which was launched in 2004 as the vehicle through which Shanduka Group channels its social and community investment initiatives. Shanduka Group has committed to spend in excess of R100 million in upliftment programmes over ten years.
The Shanduka Foundation is committed to supporting initiatives aimed at:
·; providing scholarships for deserving, previously disadvantaged students at accredited tertiary institutions enabling them to continue their studies in business related courses;
·; assisting underprivileged schools to acquire basic facilities through the Adopt-a-School programme;
·; supporting small, medium and micro enterprises through initiatives aimed at developing business skills and ensuring sustainability through Shanduka Black Umbrellas;
·; supporting targeted community-based initiatives; and
·; drawing in other stakeholders to partner the Shanduka Foundation in its initiatives.
Shanduka has a long-term strategy to develop a diversified resources house with operational capabilities. To date it has invested in the precious metals, coal, iron ores, mining services, and paper and forestry industries.
The Lonmin Board believes that Shanduka will provide leadership for Incwala and strategic support to Lonmin in achieving its BEE and transformation objectives.
5. THE PLACING
Lonmin intends to place up to 9,654,000 new ordinary shares with institutional investors, representing up to approximately 5% of the Company's issued share capital immediately prior to the Placing, (and representing up to approximately 4.76% of the enlarged issued ordinary share capital of the Company). The Placing will be on a non-pre-emptive basis.
The Placing will be conducted in accordance with the terms and conditions set out in the Appendix. The Placing will be effected by way of an accelerated bookbuilding to be managed by Citigroup Global Markets Limited ("Citi") and J.P. Morgan Securities Ltd. (which conducts its UK investment banking activities as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove" and together with Citi, the "Managers"). The book will open with immediate effect. The timing of the closing of the book, pricing and allocations is at the absolute discretion of the Managers. The price at which the Placing Shares are to be placed (the "Placing Price") and the number of Placing Shares will be agreed by Lonmin with the Managers at the close of the accelerated bookbuilding period. Details of the Placing Price and the number of Placing Shares will be announced as soon as practicable after the close of the bookbuilding process.
The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of Lonmin, including the right to receive all dividends and other distributions declared, made or paid after the date of the issue.
Application will be made for the Placing Shares to be admitted to the Official List of the Financial Services Authority, and to be admitted to trading by London Stock Exchange plc on its main market for listed securities (together, "Admission"). Application will also be made to JSE Limited in South Africa for the Placing Shares to be admitted to the Main Board of the Johannesburg Stock Exchange ("JSE") at the same time as Admission occurs. It is expected that Admission will take place at 8.00 a.m. on 13 May 2010 and that dealings in the Placing Shares on the London Stock Exchange's main market for listed securities and on the JSE's Main Board will commence at that time.
The Placing is conditional upon, amongst other things, Admission and admission of the Placing Shares to the JSE's Main Board becoming effective and the Placing Agreement between the Company and the Managers not being terminated prior to Admission.
6. CONTACTS
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Lonmin |
+44 (0)20 7201 6000 |
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Tanya Chikanza (Acting Head of Investor Relations) |
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Citi (Financial Adviser) |
+44 (0)20 7986 4000 |
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David Wormsley |
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Jan Skarbek |
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Robert Way |
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Sean Wegerhoff (South Africa) |
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Citi (Joint Broker) |
+44 (0)20 7986 4000 |
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Tom Reid |
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Andrew Forrester |
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J.P. Morgan Cazenove (Joint Broker) |
+44 (0)20 7588 2828 |
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Michael Wentworth-Stanley |
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Jonathan Wilcox |
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Cardew Group (Financial PR Adviser) |
+44 (0)20 7930 0777 |
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Rupert Pittman |
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James Milton |
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Financial Dynamics (Financial PR Adviser) |
+27 (0)21 487 9000 |
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Dani Cohen |
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Ravin Maharaj |
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Important Information
This announcement, including the Appendix (together "this Announcement"), is not for publication, release or distribution, directly or indirectly, in whole or in part, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Australia, Canada or Japan or any jurisdiction into which the same would be unlawful.
This Announcement is for information purposes only and does not constitute, or form part of, any offer to sell or issue or any solicitation of an offer to purchase or subscribe for Placing Shares or other securities in the capital of Lonmin in Australia, Canada or Japan or in any jurisdiction in which such offer or solicitation is or may be unlawful and should not be relied upon in connection with any decision to acquire the Placing Shares or other securities in the capital of Lonmin. No public offer of securities of the Company is being made in the United Kingdom or elsewhere.
In member states of the European Economic Area ("EEA"), this Announcement is only addressed to and directed at persons who are 'qualified investors' within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) (the "Prospectus Directive") ("Qualified Investors").
In the United Kingdom, this Announcement is only addressed to and directed at Qualified Investors who are persons (i) who have professional experience in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the "Order") or (ii) falling within Article 49(2)(a) to (d) (high net worth companies, incorporated associations, etc.) of the Order; and (c) other persons to whom it may otherwise lawfully be communicated.
This Announcement is not an offer of securities for sale in or into the United States. The Placing Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or under the laws of any State of the United States and may not be offered or sold in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. No public offering of securities will be made in the United States.
This Announcement has been issued by and is the sole responsibility of Lonmin. The Managers, each of whom are authorised and regulated in the United Kingdom by the Financial Services Authority ("FSA"), are acting for Lonmin in connection with the Placing and no one else and will not be responsible to anyone other than Lonmin for providing the protections afforded to each of their respective clients or for providing advice in relation to the Placing or any other matter referred to herein.
The distribution of this Announcement and the offering of the Placing Shares in certain jurisdictions may be restricted by law. The Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into the Australia, Canada or Japan or any other jurisdiction outside the United Kingdom. No action has been taken by Lonmin or the Managers or any of their respective affiliates that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by Lonmin and the Managers to inform themselves about, and to observe, any such restrictions.
Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action.
The statements contained in this Announcement that are not historical facts are "forward-looking" statements, which are based on the Company's current intentions, beliefs and expectations about, among other things, the Company's results of operations, financial condition, prospects, growth, strategies and the industry in which the Company operates. Forward-looking statements are typically identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "could", "should", "intends", "estimates", "plans", "assumes" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. By their nature, forward- looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements contained in this Announcement speak only as of the date of this Announcement and the Company undertakes no duty to update any of them publicly in light of new information or future events, except to the extent required by applicable law.
Any indication in this Announcement of the price at which shares have been bought or sold in the past cannot be relied upon as a guide to future performance. No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.
The price of shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the shares.
Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this Announcement.
Exchange rates used in this announcement are as follows:
South African Rand: UK Pound Sterling:11.25:1
US Dollar: UK Pound Sterling: 1.5:1
APPENDIX
TERMS AND CONDITIONS
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS (AS DEFINED IN ARTICLE 2(1)(E) OF EU DIRECTIVE 2003/71/EC (THE "PROSPECTUS DIRECTIVE")); AND (B) QUALIFIED INVESTORS IN THE UNITED KINGDOM WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC) OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS IN (A) AND (B) TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS APPENDIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.
Details of the Placing Agreement and the Placing Shares
The Managers have entered into a placing agreement with the Company (the "Placing Agreement") under which the Managers have, on the terms and subject to the conditions set out therein, undertaken to use reasonable endeavours to procure subscribers for the Placing Shares by way of an accelerated bookbuild process ("the Bookbuild") and, subject to agreement with the Company as to the number and price of the Placing Shares to be placed with Placees, to the extent that such Placees fail to subscribe for all the Placing Shares, to subscribe for the unsubscribed Placing Shares at the agreed price.
In this Appendix, unless the context otherwise requires, Placee means a person (including individuals, funds or others) on whose behalf a commitment to subscribe for Placing Shares has been given to the Company.
Bookbuild
The Managers will today commence the Bookbuild to determine demand for participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.
The Managers and the Company shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in their absolute discretion, determine.
Participation in, and principal terms of, the Placing
1. Citi and J.P. Morgan Cazenove are arranging the Placing as Managers and agents of the Company.
2. Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by the Managers. The Managers and their respective affiliates are entitled to enter bids in the Bookbuild as principals.
3. The Bookbuild will establish a single price payable to the Managers by all Placees whose bids are successful (the "Placing Price"). The Placing Price and the number of Placing Shares will be agreed between the Managers and the Company following completion of the Bookbuild and any discount to the market price of the ordinary shares will be determined in accordance with the Listing Rules of the FSA (and to the extent applicable, the JSE Listing Requirements). The Placing Price and the number of Placing Shares will be announced on a Regulatory Information Service ("RIS") and the Securities Exchange News Service ("SENS") following the completion of the Bookbuild (the "Pricing Announcement").
4. To bid in the Bookbuild, Placees should communicate their bid by telephone to their usual sales contact at Citi and J.P. Morgan Cazenove. Each bid should state the number of Placing Shares which the prospective Placee wishes to subscribe for at either the Placing Price which is ultimately established by the Company and the Managers or at prices up to a price limit specified in its bid. Bids may be scaled down by the Managers on the basis referred to in paragraph 7 below.
5. The Bookbuild is expected to close no later than 5:00p.m. (GMT) on 10 May 2010 but may be closed earlier or later at the discretion of the Managers. The Company and the Managers reserve the right to reduce or seek to increase the amount to be raised pursuant to the Placing, in their absolute discretion.
6. Each prospective Placee's allocation will be confirmed to such Placee orally by the Managers (as agents for the Company) following the close of the Placing, and a trade confirmation will be dispatched thereafter. The Managers' oral confirmation to such Placee will constitute an irrevocable legally binding commitment upon such person (who will at that point become a Placee) in favour of the Managers and the Company, under which it agrees to subscribe for the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with the Company's articles of association.
7. Subject to paragraphs 4 and 5 above, the Managers may choose to accept bids, either in whole or in part, on the basis of allocations determined at their discretion and may scale down any bids for this purpose on such basis as they may determine. The Managers may also, notwithstanding paragraphs 4 and 5 above (i) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time and (ii) allocate Placing Shares after the Bookbuild has closed to any person submitting a bid after that time.
8. A bid in the Bookbuild will be made on the terms and subject to the conditions in this Announcement and will be legally binding on the Placee on behalf of which it is made and except with the Managers' consent will not be capable of variation or revocation after the time at which it is submitted. Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to the Managers (as agents of the Company), to pay them (or as they may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to subscribe and the Company has agreed to allot. Each Placee's obligations will be owed to the Company and to each of the Managers.
9. Except as required by law or regulation, no press release or other announcement will be made by the Managers or the Company using the name of any Placee (or its agent), in its capacity as Placee (or agent) other than with such Placee's prior written consent.
10. Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".
11. All obligations under the Bookbuild and Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Right to terminate under the Placing Agreement".
12. By participating in the Bookbuild, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.
13. To the fullest extent permissible by law, neither the Managers nor any of their respective affiliates shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, none of Citi and J.P. Morgan Cazenove nor any of their respective affiliates shall have any liability (including to the extent permissible by law, any fiduciary duties) in respect of the Managers' conduct of the Bookbuild or of such alternative method of effecting the Placing as the Managers and the Company may agree.
Conditions of the Placing
The Managers' obligations under the Placing Agreement in respect of the Placing Shares are conditional on, inter alia:
(a) publication of the Placing Announcement, the Q2 Production Report and the Interim Results Announcement through a Regulatory Information Service and through SENS by not later than 7.00 a.m. (London Time) on 10 May 2010;
(b) the Company allotting, subject only to Admission, the Placing Shares to the Placees;
(c) the representations, warranties and agreements of the Company contained in the Placing Agreement being true, accurate and not misleading on and as at the date of the Placing Agreement, the time of execution of the terms of subscription and the Admission date;
(d) the Company having complied with all of its obligations and having satisfied all conditions to be satisfied under the Placing Agreement which fall to be performed or satisfied under the Placing Agreement on or prior to the Admission Date and which in each case, the Managers consider in good faith to be material in the context of the Placing and/or Admission;
(e) the Loan Agreement having been executed and remaining in full force and effect and event having arisen at any time prior to Admission which gives any party to the Loan Agreement a right to terminate it. It being acknowledged by the Company and the Managers that the completion of the Loan Agreement and the performance by the parties to it of their obligations under it remain subject to certain conditions;
(f) in the good faith opinion of the Managers, there shall not have been, whether or not foreseeable at the execution of this agreement, a material adverse change in respect of the Company as a result of which the Managers in good faith consider it impractical or inadvisable to proceed with the Placing; and
(g) Admission having occurred by 8.00 a.m. (London time) on 13 May 2010 (or such later date as the Company and the Managers may agree in advance in writing).
If (i) any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by the Managers by the respective time or date where specified therein (or such later time or date as the Managers and the Company may agree) or (ii) the Placing Agreement is terminated in the circumstances specified below under "Right to terminate under the Placing Agreement", the Placing will lapse and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.
The Managers may, at their discretion and upon such terms as they think fit, waive, or extend the time for, compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Placing Agreement save that the above condition relating to Admission taking place may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.
Neither the Managers nor the Company nor any other person shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and /or date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Managers.
Right to terminate under the Placing Agreement
Any Manager may, by notice to the Company, on behalf of all parties terminate the Placing Agreement at any time prior to Admission if:
(i) any matter or circumstance arises as a result of which any of the conditions has not been satisfied or waived (if capable of waiver) by the Managers, by the required time(s) (if any); or
(ii) any matter has arisen which might reasonably be expected to give rise to a claim for indemnification and which the Managers consider in good faith to be material in the context of the Group taken as a whole, the Placing and/or Admission; or
(iii) the Company's application to the UK Listing Authority for admission of the Placing Shares to the Official List and/or the Company's application to the London Stock Exchange for admission to trading of the Placing Shares on the London Stock Exchange's main market for listed securities is withdrawn by the Company and/or refused by the UK Listing Authority or the London Stock Exchange (as appropriate) and/or the Company's application to have the Placing Shares admitted to trading on the main board of the JSE is withdrawn by the Company and/or refused by the JSE (as appropriate); or
(iv) in the good faith opinion of the Managers, there shall have been, whether or not foreseeable at the date of this Agreement, a material adverse change in respect of the Company as a result of which the Managers in good faith consider it impractical or inadvisable to proceed with the Placing;
(v) if:
(1) there has occurred any material adverse change in the financial markets in the United States, the United Kingdom, South Africa, any member state of the EEA or the international financial markets, any outbreak of hostilities or escalation thereof, any act of terrorism or war or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, exchange rates or exchange controls; or
(2) trading in any securities of the Company has been suspended or limited by the London Stock Exchange, the JSE or on any exchange or over-the-counter market, or if trading generally on the New York Stock Exchange, the NASDAQ National Market, the London Stock Exchange or the JSE has been suspended or limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of such exchanges or by such system or by order of the SEC, the National Association of Securities Dealers, Inc. or any governmental authority, or a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States or in the EEA; or
(3) a banking moratorium has been declared by the United States, the United Kingdom, South Africa, a member state of the EEA, or New York authorities; or
(4) there has occurred an adverse change or a prospective adverse change since the date of this Agreement in United States, United Kingdom or South Africa taxation affecting the Shares or the transfer thereof or exchange controls have been imposed by the United States, the United Kingdom, South Africa or a member state of the EEA;
which event, in each case, the Managers consider in good faith to be material in the context of the Placing such as to make it impractical or inadvisable to proceed with the Placing, the Managers may, in their absolute discretion by notice in writing given to the Company allow the Placing to proceed on the basis of the Announcement subject, if the Managers so request, to the publication by the Company of an announcement to the Managers' reasonable satisfaction; or terminate this Agreement.
By participating in the Placing, Placees agree that the exercise by the Managers of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Managers and that it need not make any reference to Placees and that it shall have no liability to Placees whatsoever in connection with any such exercise.
By participating in the Placing, each Placee agrees that its rights and obligations cease and terminate only in the circumstances described above and will not be capable of rescission or termination by it.
No prospectus
No offering document or prospectus has been or will be submitted to be approved by the FSA or the JSE in relation to the Placing and the Placees' commitments will be made solely on the basis of the information contained in this Announcement and any information publicly announced to an RIS and to SENS by or on behalf of the Company on or prior to the date of this Announcement and subject to the further terms set forth in the trade confirmation to be provided to individual prospective Placees.
Each Placee, by participating in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information, representation, warranty or statement made by or on behalf of the Company or the Managers or any other person and neither the Managers nor the Company nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
Registration and Settlement
Settlement of transactions in the Placing Shares (ISIN: GB0031192486) following Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"), subject to certain exceptions, but the Managers reserve the right to require settlement for and delivery of the Placing Shares to Placees by such other means that they deem necessary if delivery or settlement is not possible or practicable within CREST within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in the Placee's jurisdiction.
Following the close of the Bookbuild, each Placee allocated Placing Shares in the Placing will be sent a trade confirmation in accordance with the standing arrangements in place with the Manager with whom they conduct their trade (the "Relevant Manager"), stating the number of Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Placee to the Relevant Manager and settlement instructions. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions that it has in place with the Relevant Manager.
Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by the Relevant Manager.
Each Placee agrees that, if it does not comply with these obligations, the Managers may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for the Managers' account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.
If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation.
Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax.
Application for admission to listing and trading
Application will be made to the FSA for admission of the Placing Shares to the official list maintained by the FSA (the "Official List") and to the London Stock Exchange plc for admission to trading of the Placing Shares on its main market for listed securities (together, "Admission"). Application will also be made to JSE Limited for the Placing Shares to be admitted to the Main Board of the JSE at the same time as Admission occurs. It is expected that Admission will take place at 8.00 a.m. on 13 May 2010 and that dealings in the Placing Shares on the London Stock Exchange's main market for listed securities and on the Main Board of the JSE will commence at that time.
Representations and Warranties
By participating in the Placing each Placee (and any person acting on such Placee's behalf):
1. represents and warrants that it has read and understood this Announcement in its entirety and that its acquisition of Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained herein;
2. acknowledges that no offering document or prospectus has been prepared in connection with the Placing of the Placing Shares and represents and warrants that it has not received a prospectus or other offering document in connection therewith;
3. acknowledges that the content of this Announcement is exclusively the responsibility of the Company and that neither the Managers nor any person acting on their respective behalf has or shall have any liability for any information, representation or statement contained in this Announcement or any information previously or subsequently published by or on behalf of the Company, including, without limitation, any information required to be published by the Company pursuant to applicable laws (the "Exchange Information"). Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to acquire the Placing Shares is contained in this Announcement and any information previously published by Lonmin by notification to an RIS and to SENS, such information being all that they deem necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by any of the Managers or the Company and neither has it requested such information from the Managers or the Company and neither the Managers nor the Company will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any information, representation or statement contained in this Announcement or any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing. None of the Managers, the Company or any of their respective affiliates has made any representations to it, express or implied, with respect to the Company, the Placing and the Placing Shares or the accuracy, completeness or adequacy of the Exchange Information. It understands that the Exchange Information has been prepared in accordance with the UK and/or South Africa format, style and content requirements, which differs from US format, style and content requirements. Nothing in this paragraph or otherwise in this Announcement excludes the liability of any person for fraudulent misrepresentation made by that person;
4 unless otherwise specifically agreed in writing with the Managers, represents and warrants that neither it nor the beneficial owner of such Placing Shares will be a resident of Australia, Canada or Japan and acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of Australia, Canada or Japan and, subject to certain exceptions, may not be offered, sold, or delivered or transferred, directly or indirectly, within those jurisdictions;
5. represents and warrants that the allotment or issue to it, or the person specified by it for registration as holder, of Placing Shares will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer Placing Shares into a clearance system;
6. if a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive (which means Directive 2003/71/EC and includes any relevant implementing measure in any member state) (the "Prospectus Directive"), represents and warrants that the Placing Shares purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a Member State of the European Economic Area other than qualified investors, or in circumstances in which the prior consent of the Managers has been given to the offer or resale;
7. represents and warrants that it has not offered or sold and, prior to the expiry of a period of six months from Admission, will not offer or sell any Placing Shares to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the Financial Services and Markets Act 2000 ("FSMA");
8. represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (including any relevant implementing measure in any member state);
9. represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) relating to the Placing Shares in circumstances in which section 21(1) of the FSMA does not require approval of the communication by an authorised person;
10. represents and warrants that it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;
11. if in a Member State of the European Economic Area, unless otherwise specifically agreed with the Managers in writing, represents and warrants that it is a "qualified investor" within the meaning of the Prospectus Directive;
12. if in the UK, represents and warrants that it is a person (i) who has professional experience in matters relating to investments falling with Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); (ii) falling within Article 49(2)(A) to (D) ("High Net Worth Companies, Unincorporated Associations, etc") of the Order; or (iii) to whom this Announcement may otherwise be lawfully communicated;
13. represents and warrants that it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions which apply to it and that it has fully observed such laws and obtained all such governmental and other guarantees, permits, authorisations, approvals and consents which may be required thereafter and complied with all necessary formalities and that it has not taken any action or omitted to take any action which will or may result in the Managers, the Company or any of their respective directors, officers, agents, employees or advisers acting in breach of the legal or regulatory requirements of any jurisdiction in connection with the Placing;
14. represents and warrants that it has all necessary capacity and has obtained all necessary consents and authorities to enable it to commit to its participation in the Placing and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this Announcement) and will honour such obligations;
15 undertakes that it (and any person acting on its behalf) will make payment for the Placing Shares allocated to it in accordance with this Announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as the Managers may in their absolute discretion determine and without liability to such Placee;
16. acknowledges that none of the Managers, nor any of their respective affiliates, nor any person acting on behalf of any of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be treated for these purposes as a client of any of the Managers and that the Managers have no duties or responsibilities to it for providing the protections afforded to their clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;
17. acknowledges that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions shall be governed by and construed in accordance with English law and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company or any of the Managers in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;
18. agrees that the Company, the Managers and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to the Managers on its own behalf and on behalf of the Company and are irrevocable; and
19. agrees to indemnify and hold the Company, each of the Managers and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing.
Please also note that the agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as agent) free of stamp duty and stamp duty reserve tax in the UK relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct from the Company for the Placing Shares in question. Such agreement assumes that the Placing Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to issue or transfer the Placing Shares into a clearance service and will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986. If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, each Placee should seek its own advice and notify the Relevant Manager accordingly. Neither the Company nor the Managers are liable to pay any stamp duty or stamp duty reserve tax that arises in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. Nor are the Company or the Managers, liable to bear any transfer taxes that arise on a sale of Placing Shares subsequent to their acquisition by Placees or for transfer taxes arising otherwise than under the laws of the United Kingdom. Each Placee should, therefore, take its own advice as to whether any such transfer tax liability arises. Furthermore, each Placee agrees to indemnify on an after-tax basis and hold each of the Managers and/or the Company and their respective affiliates harmless from any and all interest, fines or penalties in relation to stamp duty, stamp duty reserve tax and all other similar duties or taxes to the extent that such interest, fines or penalties arise from the unreasonable default or delay of that Placee or its agent.
When a Placee or person acting on behalf of the Placee is dealing with the Managers, any money held in an account with the Managers on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FSA made under the FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the Managers money in accordance with the client money rules and will be used by the Managers in the course of their own business and the Placee will rank only as a general creditor of the Managers.
All times and dates in this Announcement are subject to amendment by the Managers (in their absolute discretion).
Related Shares:
Lonmin