1st Jun 2007 11:00
Mondi plc Proposed Demerger of Mondi Group from Anglo American plc
Introduction
Mondi Limited and Mondi plc, collectively the Mondi Group ("Mondi"), today announce the posting of their prospectus (the "Prospectus") along with the Anglo American plc ("Anglo American") circular (the "Circular") to Anglo American shareholders in relation to the Mondi demerger from Anglo American and the listing of the ordinary issued share capital on the JSE Limited ("JSE") and London Stock Exchange (the "Demerger").
The Demerger will result in Mondi being held by way of a dual listed company structure ("DLC Structure"), comprising MLTD, a South African incorporated company holding Mondi's African assets, and MPLC, a UK incorporated company holding Mondi's non African assets.
If the Demerger becomes effective, holders of ordinary shares in Anglo American (the "Anglo American Shareholders") will receive both ordinary shares in MLTD ("MLTD Ordinary Shares") and ordinary shares in MPLC ("MPLC Ordinary Shares") in proportion to their holdings of existing ordinary shares in Anglo American ("Existing Anglo American Ordinary Shares"), which they will continue to hold. Following the Demerger, Mondi and Anglo American will operate independently of each other as separately listed and publicly traded companies.
The Business of Mondi
Mondi is an integrated paper and packaging group with sales of ¢â€š¬5,751 million in 2006. Its key operations and interests are in Western Europe, Emerging Europe and South Africa. Mondi is principally involved in the manufacture of packaging paper, converted packaging products (including corrugated packaging, bags and flexible packaging) and office paper. In addition, it has merchant operations which focus on Austria and Emerging Europe and newsprint operations in South Africa, the United Kingdom and Russia.
Mondi is integrated across the paper and packaging production process from the growing of wood for pulp production and the manufacture of pulp and paper to the conversion of packaging papers into corrugated packaging and industrial bags. Furthermore, it has a growing flexibles business focused on the production of release liner, extrusion coating and consumer flexibles products.
Mondi has production operations in 112 locations across 34 countries. Mondi averaged approximately 34,000 employees during 2006.
Background to and reasons for the Demerger
From its founding by the Anglo American group in South Africa in 1967, and its subsequent expansion into Europe during the 1990s, Mondi has grown to become a leading integrated paper and packaging group.
In October 2005, the Board of Directors of Anglo American announced that it had undertaken a major strategic review of its business that would lead to a rationalisation and simplification of its portfolio, with an increased focus on Anglo American's controlled mining businesses. Following this review, Anglo American announced in February 2006 its plans to list Mondi on the London Stock Exchange and, on 21 February 2007, it announced that approval in principle had been received from the regulatory authorities in South Africa to demerge Anglo American's interests in Mondi through a DLC Structure.
The Directors of Anglo American believe the proposed separation of Mondi from Anglo American reflects the different characteristics of Mondi's paper and packaging business and Anglo American's mining businesses. The Demerger will allow Anglo American and Mondi to pursue the independent strategies that best meet their respective long-term objectives. Additionally, the Demerger should ensure that the value of Mondi's business is more fully recognised by the market as investors are better able to assess its attributes. The Demerger will also enable Anglo American Shareholders to participate more directly in Mondi's future development should they choose to do so.
Summary of the Demerger and Anglo American Share Consolidation
A number of steps are required to give effect to the Demerger and the creation of the DLC Structure. Accordingly, the proposals of the Anglo American Board of Directors (the "Proposals") involve:
* amendments to Anglo American's articles of association in order to allow the payment of a dividend in specie and to facilitate the Demerger and an Anglo American Ordinary Share consolidation; * an Anglo American dividend in specie to effect the first stage of the Demerger, resulting in Anglo American Shareholders receiving MPLC Ordinary Shares (pro rata to their holdings in Anglo American and on a one for one basis); * a MPLC reduction of capital reducing the nominal value of each MPLC Ordinary Share from ¢â€š¬2.00 to ¢â€š¬0.05 resulting in the transfer of MLTD Ordinary Shares to holders of MPLC Ordinary Shares (pro rata to their holdings in Anglo American and, in relation to their holdings in MPLC Ordinary Shares, on a one for ten basis); * a share consolidation of the MPLC Ordinary Shares received by Anglo American Shareholders (on a one for four basis) thereby increasing the nominal value of each MPLC Ordinary Share from ¢â€š¬0.05 to ¢â€š¬0.20; * the various agreements and structures establishing the DLC Structure coming into effect; and * a share consolidation of Existing Anglo American Ordinary Shares to create new ordinary shares in Anglo American ("New Anglo American Ordinary Shares").
Assuming that the Proposals become effective, subject to rounding down of the fractional entitlements to New Anglo American Ordinary Shares, MLTD Ordinary Shares and MPLC Ordinary Shares, Anglo American Shareholders will receive for every 100 Existing Anglo American Ordinary Shares held:
i. 91 New Anglo American Ordinary Shares,
ii. 10 MLTD Ordinary Shares; and
iii. 25 MPLC Ordinary Shares.
Immediately following implementation of the Proposals, the aggregate number of issued MLTD Ordinary Shares and the aggregate number of issued MPLC Ordinary Shares will be in the ratio of 2:5.
The individual entitlements of Anglo American Shareholders (other than South African shareholders holding dematerialised shares ("SA Dematerialised Shareholders")) will be calculated by reference to their holdings of Existing Anglo American Ordinary Shares on the Register at the Record Time, being 12.01 a.m. on Monday, 2 July 2007 and individual entitlements of SA Dematerialised Shareholders will be calculated by reference to their holdings at the JSE Record Time, being 5.00 p.m. (South African time) on Friday, 6 July 2007.
Key Features of the DLC Structure
The Mondi Group will be held by MLTD and MPLC, which will be separate entities with separate stock exchange listings. Anglo American Shareholders will receive shares in each of these entities upon implementation of the Demerger, and will have the ability (as will investors generally) to buy and sell shares in these companies independently. However, the agreements to which each of the holding companies will be party will effectively create a single economic group.
1. Separate entities and listings
The JSE has granted a primary listing to MLTD by way of an introduction of the entire issued ordinary share capital of MLTD, in the "Basic Resources - Forestry and Paper", sector of the JSE List. The JSE has also granted a secondary listing by way of introduction of the entire issued ordinary share capital of MPLC in the "Basic Resources - Forestry and Paper" sector of the JSE List. Application has been made to the FSA for the MPLC Ordinary Shares to be admitted to the Official List and to the London Stock Exchange and for all of the MPLC Ordinary Shares to be admitted to trading on the London Stock Exchange's market for listed securities.
2. Holdings of MLTD Ordinary Shares and MPLC Ordinary Shares
Following implementation of the DLC Structure, any ordinary share held in either MLTD or MPLC gives the holder an equivalent effective economic interest in Mondi (see below for details).
3. Unified boards and management
Mondi will operate as a single corporate group. As MLTD and MPLC will be separate corporate entities, they will each continue to have a board of directors, but the MLTD Board and MPLC Board will comprise the same directors. The MLTD Board and the MPLC Board will, in addition to their duties to the company concerned, have regard to the interests of both the holders of MLTD Ordinary Shares ("MLTD Shareholders") and holders of MPLC Ordinary Shares ("MPLC Shareholders") as if the two companies were a single economic enterprise.
4. Equivalent economic interests
Both MLTD Ordinary Shareholders and MPLC Ordinary Shareholders will have equivalent economic and voting interests in Mondi. The economic and voting interests represented by an ordinary share in one company relative to the economic and voting interests of an ordinary share in the other company will be determined by reference to a ratio known as the "Equalisation Ratio".
Following the Demerger, the economic and voting interests attached to each MLTD Ordinary Share and each MPLC Ordinary Share will be the same, on the basis that the initial Equalisation Ratio will be 1:1.
5. Voting arrangements
Under the terms of the DLC Agreements, the Articles of Association of MLTD and the Articles of Association of MPLC, special voting arrangements are in place so that the shareholders of both companies effectively vote together as a single decision-making body on matters affecting the shareholders of each company in similar ways ("Joint Electorate Actions"). For so long as the Equalisation Ratio remains 1:1, each MLTD Ordinary Share will effectively have the same voting rights as each MPLC Ordinary Share on Joint Electorate Actions.
6. Cross guarantees
On implementation of the DLC Structure, MLTD and MPLC will each execute a Deed Poll Guarantee as a result of which it is anticipated that both MLTD and MPLC will share the same credit rating. Creditors of MLTD and MPLC entitled to the benefit of the Deed Poll Guarantees will, to the extent possible, be placed in the same position as if the relevant debts were owed by Mondi.
7. Restrictions on takeovers of one company only
The Articles of Association of MLTD and the Articles of Association of MPLC ensure that a person cannot gain control of one company without having made an equivalent offer to the shareholders of both companies on equivalent terms.
Dividend Policy
Following the Demerger, Mondi intends to pursue a dividend policy that reflects its strategy of disciplined and value creating investment and growth with the aim of offering its shareholders long term dividend growth. The Directors intend that the final and interim dividends will generally be paid in May and September in the approximate proportions of two-thirds (final dividend) and one-third (interim dividend). The Directors intend that Mondi will pay an interim dividend in September 2007, in the absence of unforeseen circumstances, with respect to the six-month period to 30 June 2007.
Mondi will target a dividend cover range of two to three times on average over the cycle, although the payout ratio in each year will vary in accordance with the business cycle and will be subject to Mondi having sufficient distributable reserves.
Debt Allocation
Mondi's financing requirements, to the extent not financed out of cash generated from operations, has historically been financed through a combination of equity and debt. Debt has been provided from bank loans made to Mondi and loans from Anglo American. On the date the Demerger becomes effective, Mondi expects to have net debt of approximately ¢â€š¬1.5 billion, of which approximately ¢â€š¬0.9 billion will be owed to existing external lenders to Mondi and the balance will be owed under a new ¢â€š¬1.55 billion banking facility. Mondi intends to refinance all of its existing debt to Anglo American at or shortly prior to completion of the Demerger out of the new multi-currency revolving credit facility.
MLTD and MPLC Boards of Directors
Name Age Nationality Position Sir John Parker 65 British Joint Chairman (Non-executive director) Cyril Ramaphosa 55 South African Joint Chairman (Non-executive director) David Hathorn 45 South African and Chief Executive Officer Austrian (Executive director) Paul 47 British Chief Financial Officer Hollingworth (Executive director) David Williams 61 British Senior Independent Non-executive director Colin Matthews 51 British and Independent Non-executive Canadian director Imogen Mkhize 45 South African Independent Non-executive director Anne Quinn 55 New Zealander and Independent Non-executive Irish director
The business addresses of the directors listed above are 44 Main Street, Johannesburg 2001, South Africa in the case of MLTD and Building 1, Aviator Park, Station Road, Addlestone, Surrey KT15 2PG, United Kingdom in the case of MPLC.
Expected Mondi Group Ordinary Share Capital upon Admission
Authorised Expected maximum issued and fully paid or credited as fully paid Number Amount Number Amount MPLC ordinary 3,084,508,780 ¢â€š¬ 369,627,980 ¢â€š¬73,925,596.00shares of ¢â€š¬0.20 616,901,756.00 each MLTD ordinary 250,000,000 R50,000,000.00 147,851,192 R29,570,238.40shares of R0.20 each Expected Timetable
The notice convening an Extraordinary General Meeting of Anglo American for 4.00 p.m. (UK time) on Monday, 25 June 2007 at 20 Carlton House Terrace, London, United Kingdom SW1Y 5AN, is set out in the Circular. At that meeting, approval from the Anglo American Shareholders will be sought for the Demerger and related Proposals. This will be followed by a Court hearing at 10.00am on Monday 2, July 2007 to seek approval of the reduction of capital of MPLC. On Monday 2 July 2007, MLTD Ordinary Shares and MPLC Ordinary Shares will commence trading on the JSE on a conditional basis, and MPLC Ordinary Shares will commence trading on the London Stock Exchange on a conditional basis. It is expected that the Demerger will become effective and the shares in MLTD and MPLC will be admitted and commence unconditional trading on Tuesday, 3 July 2007.
Anglo American Shareholders on the Anglo American register of members at 12.01 a.m. on Monday, 2 July 2007 (other than SA Dematerialised Shareholders) will receive 2 MLTD Ordinary Shares and 5 MPLC Ordinary Shares for every 20 Existing Anglo American Ordinary Shares that they hold. The entitlements of SA Dematerialised Shareholders will be calculated by reference to their holdings of Existing Anglo American Ordinary Shares at 5.00 p.m. (South African time) on Friday, 6 July.
If the reduction of capital or Admission does not occur on Tuesday, 3 July 2007, all conditional dealings will be suspended. If it cannot be confirmed that the reduction of capital and Admission will become effective on Wednesday, 4 July 2007, all conditional dealings on Monday, 2 July 2007 will be of no effect. If the reduction of capital and Admission will not become effective by Friday, 6 July 2007, Anglo American will acquire all the MPLC Ordinary Shares and allot (by Monday, 9 July 2007) New Anglo American Ordinary Shares to the MPLC Ordinary Shareholders instead.
Prospectus and Circular Distribution
Copies of the Prospectus and the Circular will be available on www.mondidemerger.com from Friday, 1 June 2007. Copies of the Prospectus may be obtained during normal business hours from Friday, 1 June 2007 until Tuesday, 3 July 2007, both days inclusive, at the following addresses:
* the registered office of MLTD, 44 Main Street, Johannesburg, 2001, South
Africa;
* the registered office of MPLC, Building 1, Aviator Park, Station Road,
Addlestone, Surrey KT15 2PG, United Kingdom;
* the offices of UBS South Africa (Proprietary) Limited, 64 Wierda Road East,
Wierda Valley, Johannesburg, 2196, South Africa; and
* the offices of Anglo American plc, 20 Carlton House Terrace, London SW1Y
5AN, United Kingdom. 1 June 2007Advisers
Joint sponsors to MPLC in the UK: Goldman Sachs International and UBS Limited
Sponsor to MLTD and MPLC on the JSE: UBS South Africa (Proprietary) Limited
Legal adviser to MPLC and MLTD as to English law: Linklaters LLP
Legal adviser to MPLC and MLTD as to South African law: Webber Wenzel Bowens
Legal Adviser to the joint sponsors as to English law: Allen & Overy LLP
Auditors and reporting accountants: Deloitte & Touche LLP
Notes to the Editors
1. Upon the Demerger becoming effective, the Mondi Group will be held by way
of a dual listed company structure comprising MLTD and MPLC.
2. The JSE has granted a primary listing to MLTD by way of an introduction of
the entire issued ordinary share capital of MLTD, in the "Basic Resources - Forestry and Paper", sector of the JSE List. The JSE has also granted a secondary listing by way of introduction of the entire issued ordinary share capital of MPLC in the "Basic Resources - Forestry and Paper" sector of the JSE List. Application has been made to the FSA for the MPLC Ordinary Shares to be admitted to the Official List and to the London Stock Exchange and for all of the MPLC Ordinary Shares to be admitted to trading on the London Stock Exchange's market for listed securities. MPLC will be included in the "Forestry and Paper" sector of the London Stock Exchange List. Unconditional dealings in MPLC Ordinary Shares on the London Stock Exchange are expected to commence at 8.00 a.m. (UK time) on Tuesday, 3 July 2007. Unconditional dealings in MLTD Ordinary Shares and MPLC Ordinary Shares on the JSE are expected to commence at 9.00 a.m. (South African time) on Tuesday, 3 July 2007.
3. The Demerger is conditional upon, amongst other things, the approval of
resolutions by the Anglo American Shareholders at the Extraordinary General Meeting of Anglo American to be held at 4.00 p.m. on Monday, 25 June 2007, and the approval of the reduction of capital by the Court at the court hearing at 10.00 a.m. on Monday, 2 July 2007. (As mentioned in the Circular, another of the conditions is the giving of clearances by HM Revenue and Customs. At the time of printing the Circular, the clearances already given on the basis of advanced proposals for the Demerger were in the process of being refreshed to reflect minor changes to the proposals. Updated clearances have now been obtained.)
The information in this summary should be read in conjunction with the full text of the Prospectus and Circular. Terms used in this press release but not defined herein have the meaning given to them in the Prospectus.
This press release has been issued by and is the sole responsibility of Mondi.
Goldman Sachs International which is regulated in the United Kingdom by the FSA, UBS Limited and UBS South Africa (Proprietary) Limited are acting exclusively for Anglo American and Mondi and no one else in connection with the proposed Demerger and Admission and will not be responsible to anyone else for providing the protections afforded to respective customers of Goldman Sachs International, UBS Limited and UBS South Africa (Proprietary) Limited or for providing advice in relation to the proposed Demerger and Admission or the contents of this announcement.
This press release does not comprise listing particulars or a prospectus relating to Mondi Limited, Mondi plc or Anglo American and does not constitute an offer or invitation to purchase or subscribe for any securities of Mondi or Anglo American and should not be relied on in connection with a decision to purchase or subscribe for any such securities. This press release does not constitute a recommendation regarding the securities of Mondi or Anglo American and has been issued in compliance with the Listings Requirements of the JSE.
This announcement does not constitute a recommendation concerning the Demerger, and should not be construed as legal, business, tax or investment advice. The value of shares can go down as well as up. Past performance is not a guide to future performance. Anglo American Shareholders should consult a professional adviser as to the suitability of the Demerger for the individual concerned.
None of the MPLC Ordinary Shares, the MLTD ordinary Shares or the Anglo American Ordinary Shares will be, or is required to be, registered under the US Securities Act of 1933, as amended. None of the MPLC Ordinary Shares, the MLTD Ordinary Shares or the Anglo American Ordinary Shares referred to in this announcement have been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other US regulatory authority, nor have such authorities passed upon or determined the adequacy or accuracy of this document. Any representation to the contrary is a criminal offence in the United States.
The financial information concerning Mondi or Anglo American contained in this announcement does not amount to statutory accounts within the meaning of Section 240 of the UK Companies Act 1985.
Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward looking statements.
The distribution of this document in jurisdictions other than the United Kingdom or the Republic of South Africa may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY. NONE OF THE SECURITIES REFERRED TO IN THIS DOCUMENT SHALL BE SOLD, ISSUED OR TRANSFERRED IN ANY JURISDICTION IN CONTRAVENTION OF APPLICABLE LAW.
ANGLO AMERICAN PLCRelated Shares:
Anglo American