AA plc & De Beers-Replacement
Anglo American PLC
15 February 2001
The issuer advises that the following replaces the 'AA plc and De Beers'
announcement released today 15 February 2001 at 07.01 under RNS number 9324Y.
As previously released the announcement contains elements of draft text and
draft figures. These have been amended and the full corrected version appears
below.
15 February 2001
ANGLO AMERICAN PLC
ELIMINATION OF THE CROSS-HOLDING WITH DE BEERS
AND
INCREASE IN ANGLO AMERICAN'S INTEREST IN DE BEERS
Introduction
Anglo American plc ('Anglo American') is pleased to announce that, in
conjunction with Central Holdings Limited ('CHL') and Debswana Diamond Company
(Proprietary) Limited ('Debswana'), DB Investments ('DBI'), a new company to
be owned by Anglo American, CHL and Debswana, has reached agreement with the
board of De Beers on the terms of a recommended transaction to be proposed to
the holders of De Beers Linked Units which will result in:
* the elimination of the cross-holding between De Beers and Anglo
American; and
* the increase of Anglo American's interest in De Beers from 32.2 per
cent. to 45.0 per cent.
Strategy
At the time of its listing in London in May 1999, Anglo American set out
shareholder value enhancement as its key objective. In pursuit of this
objective, the Board has, to date, focused its efforts on enhancing Anglo
American's core portfolio of businesses and holdings and has successfully
completed a number of major steps in this process, including:
* significant expansionary growth in a number of divisions;
* major acquisitions in the Industrial Minerals, Coal and Forest Products
divisions;
* the accelerated disposal of non-core industrial interests, leading to
the sale of US$840 million of assets in 2000; and
* the exchange of the major portion of its non-core holding in FirstRand
in return for certain listed mining assets valued at around US$730
million.
Other important aspects of Anglo American's strategy have remained the drive
for improved capital efficiency, transparency and the need to address the
cross-holding between Anglo American and De Beers.
Benefits of the Transaction
The Transaction is a further significant step in enhancing shareholder value.
The Board believes that the specific benefits to Anglo American of the
Transaction are that it will:
* simplify Anglo American's structure and increase transparency through
the removal of the cross-holding;
* result in a net cash inflow of US$1,072 million immediately and US$701
million on redemption of preference shares in DBI;
* increase Anglo American's interest in De Beers; and
* increase the free float of Anglo American Shares to approximately 90 per
cent.
The Transaction is expected to be broadly earnings neutral and cash flow
positive per Anglo American Share.*
* This statement should not be interpreted to mean that the earnings or cash
flow per Anglo American Share for the current or future financial years will
necessarily match or exceed the historical published earnings per Anglo
American Share.
Terms of the Transaction
Following completion of the Transaction, De Beers will be wholly owned by DBI,
a new company to be owned by Anglo American (45 per cent.), CHL (45 per cent.)
and Debswana (10 per cent.). CHL is a holding company for the Oppenheimer
family interests and Debswana is a company jointly owned by the Government of
the Republic of Botswana and De Beers. DBI will be managed by CHL under the
terms of the Management Contract, a summary of which is set out in Appendix I.
Under the terms of the Transaction, De Beers Public Linked Unitholders will
receive US$14.40 in cash (holders on the South African section of the De Beers
register will be paid in South African rand, while those on the United Kingdom
section of the register will be paid in sterling unless they elect for payment
in US$) and 0.43 of an Anglo American Share for each De Beers Linked Unit
held. In addition, the Boards of De Beers have confirmed that they intend to
recommend and declare combined final dividends totalling US$1.00 per De Beers
Linked Unit for the year ended 31 December 2000, which will accrue to those
holders on the register on 23 March 2001. In aggregate, this values each De
Beers Linked Unit at US$43.17 and the combined share capital of De Beers at
US$17.6 billion, based on the closing price of an Anglo American Share of
US$64.58 on 14 February 2001, the last business day prior to this
announcement.
Cancellation of shares and bonus issue
Upon completion of the Transaction, 40.8 million Anglo American Shares,
(approximately 10.0 per cent. of Anglo American's issued share capital), from
Anglo American's entitlement to the Anglo American Shares to be distributed by
De Beers, will be cancelled. Anglo American will then make a bonus issue of
Anglo American Shares such that Anglo American Shareholders (including former
De Beers Linked Unitholders) will receive, in total, three new Anglo American
Shares for each existing Anglo American Share then held.
Conditions
Approval for the Transaction has been granted by the South African Reserve
Bank. However, this announcement does not constitute an offer or a statement
of a firm intention to make an offer for De Beers as submission of the
proposals to De Beers Linked Unitholders is subject to fulfilment of certain
pre-conditions, including: underwriting of DBI's senior credit facilities
becoming unconditional; agreement between DBI and De Beers on the detailed
mechanics of implementing the Transaction and related documentation; and
confirmation by the South African Revenue Service of the tax treatment of a
number of steps under the Transaction. In addition to approval by De Beers
Public Linked Unitholders, the Transaction will be subject to satisfaction of
other conditions including approval by Anglo American Public Shareholders, the
sanction of the High Court of South Africa, and competition and other
regulatory approvals and tax clearances. The proposed cancellation and bonus
issue of Anglo American Shares is subject to obtaining relevant approvals.
Current trading and dividend forecast
Anglo American will announce its preliminary results for the year ended 31
December 2000 on 14 March 2001. The anticipated outcome for the year ended 31
December 2000 remains in line with management's expectations. The Board will
recommend a final dividend in respect of the year ended 31 December 2000 of
not less than US$1.20 per Anglo American Share prior to the bonus issue. De
Beers Linked Unitholders will be entitled to this dividend in respect of the
Anglo American Shares they receive pursuant to the Transaction.
Tony Trahar, Chief Executive of Anglo American, said:
'This transaction will achieve a number of our strategic objectives. It will
eliminate the cross-holding between Anglo American and De Beers, release
around US$1 billion in cash, improve transparency in our business and increase
our interest in the diamond sector.
'Today's announcement is a significant addition to a number of important
developments achieved since Anglo American's listing in London, all aimed at
furthering the development of Anglo American as a truly world class company
and enhancing value for our shareholders.'
This summary should be read in conjunction with the attached announcement.
Enquiries:
ANGLO AMERICAN
London Telephone +44 20 7698 8540
Nick von Schirnding, Investor Relations Telephone +44 20 7698 8547
Edward Bickham, Media
Johannesburg Telephone +27 11 638 3301
Mike Spicer, Media Telephone +27 11 638 4730
Anne Dunn, Investor Relations
MERRILL LYNCH INTERNATIONAL Telephone: +44 20 7628 1000
London
Mark Preston, Managing Director
Kevin Smith, Managing Director
Johannesburg Telephone: +27 11 305 5555
Nick Pagden, Managing Director
Caroline Learmonth, Director
CAZENOVE & CO. Telephone: +44 20 7588 2828
London
Nick Wiles
Piers Coombs
Johannesburg Telephone: +27 11 280 7900
Graham Bird
Robyn Kruger
Merrill Lynch International, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting exclusively for Anglo
American in connection with the Transaction and for no-one else and will not
be responsible to anyone other than Anglo American for providing the
protections afforded to customers of Merrill Lynch International or for giving
advice in relation to the Transaction.
Cazenove & Co., which is regulated in the United Kingdom by The Securities and
Futures Authority Limited, is acting exclusively for Anglo American in
connection with the Transaction and for no-one else and will not be
responsible to anyone other than Anglo American for providing the protections
afforded to customers of Cazenove & Co. or for giving advice in relation to
the Transaction.
15 February 2001
ANGLO AMERICAN PLC
ELIMINATION OF THE CROSS-HOLDING WITH DE BEERS
AND
INCREASE IN ANGLO AMERICAN'S INTEREST IN DE BEERS
1 Introduction
Anglo American plc ('Anglo American') is pleased to announce that, in
conjunction with Central Holdings Limited ('CHL'), and Debswana Diamond
Company (Proprietary) Limited ('Debswana'), DB Investments ('DBI'), a new
company to be owned by Anglo American, CHL and Debswana, has reached agreement
with the board of De Beers on the terms of a recommended transaction to be
proposed to the holders of De Beers Linked Units which will result in:
* the elimination of the cross-holding between De Beers and Anglo
American; and
* the increase of Anglo American's interest in De Beers from 32.2 per
cent. to 45.0 per cent.
Following completion of the Transaction, De Beers will be wholly owned by DBI,
a new company to be owned by Anglo American (45 per cent.), CHL (45 per cent.)
and Debswana (10 per cent.). CHL is a holding company for the Oppenheimer
family interests and Debswana is a company jointly owned by the Government of
the Republic of Botswana and De Beers. DBI will be managed by CHL under the
terms of the Management Contract, a summary of which is set out in Appendix I.
Under the terms of the Transaction, De Beers Public Linked Unitholders will
receive US$14.40 in cash (holders on the South African section of the De Beers
register will be paid in South African rand, while those on the United Kingdom
section of the register will be paid in sterling unless they elect for payment
in US$) and 0.43 of an Anglo American Share for each De Beers Linked Unit
held. In addition, the Boards of De Beers have confirmed that they intend to
recommend and declare combined final dividends totalling US$1.00 per De Beers
Linked Unit for the year ended 31 December 2000, which will accrue to those
holders on the register on 23 March 2001. In aggregate, this values each De
Beers Linked Unit at US$43.17 and the combined share capital of De Beers at
US$17.6 billion, based on the closing price of an Anglo American Share of
US$64.58 on 14 February 2001, the last business day prior to this
announcement.
2. Anglo American's Independent Committee
In view of the existing cross-holding between Anglo American and De Beers, the
interests of certain directors of Anglo American in CHL and De Beers and
various common directorships between these three companies, Anglo American
appointed the Independent Committee to oversee the formation of DBI, conduct
discussions with De Beers, review the terms of the Transaction, and make a
recommendation on the Transaction to the Board of Anglo American. The
Independent Committee, which is advised by Merrill Lynch International, will
include its recommendation to proceed with the Transaction in the circular to
be sent to Anglo American Shareholders in due course.
3. Background to and reasons for the Transaction
In recent years, Anglo American has sought to maximise shareholder value by
simplifying its corporate structure, focusing on its core mining and natural
resources businesses and holdings, and on improving financial returns and
transparency. The combination of the assets of Anglo American Corporation of
South Africa Limited and Minorco to form Anglo American and Anglo American's
listing on the London Stock Exchange in May 1999 were fundamental steps in
this process. Since listing in London, the Board has focused its efforts on
enhancing Anglo American's portfolio of assets and investments and has
successfully completed a number of major steps in this process. Particular
highlights of this strategy have been:
* Financial Services - in December 2000, Anglo American announced an
agreement to reduce its holding in FirstRand from 20.6 per cent. to 5.3
per cent. in exchange for holdings in Billiton Plc and Gold Fields
Limited, valued at around US$730 million;
* Industries - during 2000, Anglo American sold or reduced its holdings in
a number of industrial interests resulting in over US$840 million being
realised;
* Industrial Minerals - in March 2000, Anglo American acquired Tarmac for
US$1.1 billion (net of the proceeds received from the subsequent disposal
of Tarmac USA);
* Coal - in May 2000, Anglo American acquired Shell Coal and subsequently
certain minority interests in joint ventures for US$1.0 billion;
* Platinum - in May 2000, Anglo Platinum announced that it intended to
increase annual production to 3.5 million ounces by 2006 to meet growing
demand and will invest an additional US$2.1 billion to achieve this; and
* Forest Products - in August 2000, Anglo American bought out the
minorities in Neusiedler, increased its ownership in Frantschach to 70 per
cent. and acquired Assi Sacks for US$730 million in total.
Other important aspects of Anglo American's strategy have remained the drive
for improved capital efficiency, transparency and the need to address the
cross-holding between Anglo American and De Beers.
The Transaction is a further significant step in enhancing shareholder value.
The Board believes that the specific benefits to Anglo American of the
Transaction are that it will:
* simplify Anglo American's structure and increase transparency through
the removal of the cross-holding;
* result in a net cash inflow of US$1,072 million immediately, including
dividends received, and US$701 million on redemption of preference shares
in DBI;
* increase Anglo American's interest in De Beers; and
* increase the free float of Anglo American Shares to approximately 90 per
cent.
The Transaction is expected to be broadly earnings neutral and cash flow
positive per Anglo American Share.*
* This statement should not be interpreted to mean that the earnings or cash
flow per Anglo American Share for the current or future financial years will
necessarily match or exceed the historical published earnings per Anglo
American Share.
De Beers is the world's leading diamond producer by value and benefits from a
portfolio of long life, low cost mines. It is one of Anglo American's core
holdings and the Transaction will result in Anglo American increasing its
holding in De Beers at a key stage of De Beers' development.
Furthermore, the Board believes that the new ownership structure being
proposed for De Beers has significant attractions to Anglo American. Through
CHL, the Oppenheimer family will continue to bring its extensive knowledge,
experience and relationships in the diamond industry to the management of De
Beers. Similarly, Debswana is a valued strategic partner of De Beers and its
increased interest in De Beers will strengthen this relationship for the
future.
4. De Beers
De Beers' principal activity is the mining and marketing of rough
diamonds. It also holds a 35.4 per cent. interest in Anglo American.
As at 14 February 2001, De Beers had a market capitalisation of US$16.5
billion, on a fully diluted basis and using a ruling price of a De Beers
Linked Unit of US$40.56. Today, De Beers announced estimated results for
the year ended 31 December 2000. These indicate that De Beers generated
own earnings of US$1,289 million and headline earnings of US$1,707 million
for that year.
Diamond Business
De Beers currently mines over 30 million carats of diamonds per annum from
operations in South Africa, Botswana, Namibia and Tanzania, either
directly or in partnership with the relevant government. This represents
approximately 45 per cent. of the total value of the world's current
production of natural diamonds.
Furthermore, through the Diamond Trading Company ('DTC'), De Beers buys
diamonds from Russia and Canada, which, along with its own production, are
sold to DTC sightholders. De Beers' other diamond activities include the
production and sale of natural and synthetic industrial diamonds and
research and development related to the diamond industry.
In the year ended 31 December 2000, the DTC generated sales of
approximately US$5,670 million and De Beers' 'net diamond account', which
includes De Beers' earnings from diamond mining and marketing activities,
generated earnings before tax of approximately US$1,322 million.
On 16 January 2001, De Beers announced a joint initiative with LVMH Moet
Hennessy Louis Vuitton, the world's leading luxury products group, to
establish an independently managed and operated company to develop the
global consumer brand potential of the De Beers name.
The market value of De Beers' listed investments, as at the close of
business on 14 February 2001, the last business day prior to this
announcement, was approximately US$300 million. The most significant
holdings of listed investments are in AngloGold, Billiton and Gold Fields.
Interest in Anglo American
De Beers currently holds 144.3 million Anglo American Shares representing
approximately 35.4 per cent. of the issued share capital of Anglo
American. Based upon the closing price of an Anglo American Share of
US$64.58 on 14 February 2001, De Beers' stake in Anglo American has a
market valuation of US$9.3 billion.
5. CHL
CHL is the Oppenheimer family holding company which currently owns 2.6 per
cent. of the De Beers Linked Units and 7.2 per cent. of Anglo American
Shares. As part of the Transaction, CHL will contribute 10.4 million of
its existing holding in Anglo American Shares (net of the 3.4 million
shares received as its pro rata entitlement to the Anglo American Shares
to be distributed by De Beers) and US$37.5 million of cash. As a result,
CHL will reduce its holding in Anglo American to approximately 5.1 per
cent.
6. Debswana
The Government of the Republic of Botswana and De Beers have had a long
association through their joint ownership of Debswana and Debswana's 5.0
per cent. interest in De Beers. Debswana operates three diamond mines
(Jwaneng, Orapa and Letlhakane) under 25 year term mining leases granted
by the Government of the Republic of Botswana which are due to expire in
2004, 2017 and 2017 respectively. In 1999, these mines accounted for
approximately 66 per cent. of the combined production of De Beers,
Debswana and Namdeb by carats and, similarly, approximately 30 per cent.
of the estimated total world production of natural diamonds.
7. Future relationship between Anglo American, CHL and Debswana
Following completion of the Transaction, the relationship between Anglo
American, CHL and Debswana, in respect of the ownership and management of
DBI, will be governed by the terms of a Shareholders' Agreement and a
Management Contract between DBI and CHL. Summaries of the principal terms
of these agreements are set out in Appendix I.
8. Details of the Transaction
It is proposed that the Transaction will be implemented, inter alia, by way of
a Scheme of Arrangement between De Beers and De Beers Linked Unitholders under
section 311 of the South African Companies Act, under which Scheme of
Arrangement, if successfully implemented, the following will take place:
* De Beers RSA will purchase from each De Beers Linked Unitholder
(including Anglo American, CHL and Debswana) part of their respective
holdings of De Beers RSA Shares, in consideration for which De Beers RSA
will distribute to each De Beers Linked Unitholder, on a pro rata basis,
130.4 million of the 144.3 million Anglo American Shares then held by De
Beers;
* following the purchase of De Beers RSA Shares, the balance of the De
Beers RSA Shares held by De Beers Public Linked Unitholders will be
cancelled; and
* in consideration for such cancellation and the delivery to De Beers RSA
of the relevant De Beers Linked Unit Certificates, the De Beers Public
Linked Unitholders will receive additional Anglo American Shares such that
they receive, when taken together with Anglo American Shares received on
the purchase of De Beers RSA Shares described above, 0.43 Anglo American
Shares and US$14.40 in cash for each Linked Unit held.
The Scheme of Arrangement will be subject to, amongst other matters, the
approval of a majority representing at least 75 per cent. of the votes
exercised by De Beers Public Linked Unitholders attending and voting at the De
Beers Scheme of Arrangement meeting and the sanction of the Scheme of
Arrangement by the High Court of South Africa. The Transaction will also be
subject to other conditions described in section 10 below.
The aggregate cash payment, in addition to the final De Beers dividend, due to
De Beers Public Linked Unitholders will amount to approximately US$3,464
million and will be funded by DBI out of funds drawn down under credit
facilities to be entered into for this purpose, as described in Section 11
below.
If the Transaction does not complete after 30 June 2001, interest will accrue
on the cash consideration of US$14.40 per De Beers Linked Unit at the London
interbank offered rate from 1 July 2001 to the date of completion.
Appropriate arrangements will be made for De Beers' optionholders taking into
account the consideration to be offered to De Beers Public Linked Unitholders.
Following completion of the Transaction, Anglo American's, CHL's and
Debswana's interests in De Beers RSA and De Beers AG will be held by DBI. The
value of the contributions made by Anglo American and Debswana will exceed the
amounts necessary for Anglo American and Debswana to finance their agreed
participations in DBI. Consequently, in addition to the Anglo American Shares
to which it will become entitled under the De Beers Scheme of Arrangement,
Anglo American will receive from DBI a net cash payment of US$943 million and
preference shares in DBI having a redemption value of US$701 million. In
addition to the 6.5 million Anglo American Shares it will receive on the pro
rata distribution by De Beers, Debswana will receive a further 0.6 million
Anglo American Shares and preference shares in DBI having a redemption value
of US$156 million.
9. Cancellation of shares and bonus issue
Upon completion of the Transaction, 40.8 million Anglo American Shares
(approximately 10.0 per cent. of Anglo American's issued share capital) from
Anglo American's entitlement to the Anglo American Shares to be distributed by
De Beers, will be cancelled. Anglo American will then make a bonus issue of
Anglo American Shares such that Anglo American Shareholders (including former
De Beers Linked Unitholders) will receive, in total, three new Anglo American
Shares for each existing Anglo American Share then held.
10. Conditions to the Transaction
Approval for the Transaction has been granted by the South African Reserve
Bank. However, this announcement does not constitute an offer or a statement
of a firm intention to make an offer for De Beers as submission of the
proposals to De Beers Linked Unitholders is subject to the fulfilment of
certain pre-conditions, including:
* underwriting of DBI's senior credit facilities, as described in section
11 below, becoming unconditional;
* agreement between DBI and De Beers on the detailed mechanics of
implementing the Transaction and related documentation; and
* confirmation by the South African Revenue Services of the tax treatment
of a number of steps under the Transaction.
The Transaction, as submitted to the De Beers Linked Unitholders, will also be
subject to satisfaction of other conditions, including:
* approval by Anglo American Public Shareholders;
* approval by De Beers Public Linked Unitholders;
* the sanction of the De Beers Scheme of Arrangement by the High Court of
South Africa; and
* competition and other regulatory approvals and tax clearances.
The proposed cancellation and bonus issue of Anglo American Shares is subject
to obtaining relevant approvals.
11. Funding of the Transaction
Dresdner Bank Luxembourg S.A. and UBS AG have agreed, pursuant to a commitment
letter, subject to the satisfactory completion of due diligence and financing
documentation, and other customary conditions, to underwrite senior credit
facilities consisting of a term loan facility of an amount no greater than
US$3.3 billion (with a maturity of five years), a short term bridge facility
of an amount together with the amount of the term loan facility of US$4.4
billion, and a revolving facility of US$1.0 billion (with a maturity of five
years).
In addition, Anglo American and Debswana will hold 10 year, 10 per cent.,
cumulative redeemable preference shares in DBI in the aggregate amount of
US$857 million, redeemable in four equal instalments in the years 2007 to 2010
inclusive, subject to early redemption in certain circumstances.
Following completion of the Transaction, the revolving facility of US$1.0
billion will be available to De Beers to finance its operational activities.
12. Anglo American directorate
As stated in its listing prospectus in 1999, Anglo American is rapidly
evolving. In July 2000, the roles of Chairman and Chief Executive were
separated: Mr A.J. Trahar was appointed Chief Executive with Mr J. Ogilvie
Thompson continuing as non-executive Chairman.
As indicated in the prospectus, at the Annual General Meeting in May 2001, Mr
L. Boyd and Mr M.W. King will be retiring as Vice Chairmen and as directors.
The Board will propose the election as directors at the May 2001 Annual
General Meeting of Mr B.E. Davison, Chief Executive of Anglo American
Platinum, and Mr W.A. Nairn, Group Technical Director, thereby maintaining a
strong management team.
Mr N.F. Oppenheimer intends to resign as a Deputy Chairman on the completion
of the Transaction but will continue as a non-executive director. Sir
Chippendale Keswick, who is also a director of CHL and De Beers, proposes to
resign as a non-executive director.
The Board intends to appoint at least two new independent non-executive
directors in the course of the next twelve months.
In addition to these changes, Dr C.E. Fay will take Sir Chippendale Keswick's
place on the Audit Committee and Mr R.J. Margetts will assume the chairmanship
of the Remuneration Committee in place of Sir David Scholey.
Further changes to the Board will take place at the Annual General Meeting in
2002:
* As the main objectives of the transformation process of the last four
years will have been achieved, Mr J. Ogilvie Thompson proposes to retire
after 12 years as Chairman of Anglo American plc and its predecessor
companies and from the Board.
* Viscount Davignon who joined the Board of Minorco (a predecessor
company) in 1990, and Mr P.S. Wilmot-Sitwell, who joined the Minorco Board
in 1993, propose to retire after 12 and 9 years' service respectively.
13. Extraordinary General Meeting of Anglo American Shareholders
For the reasons set out in section 2 above, the Transaction constitutes a
related party transaction for the purposes of the UKLA Listing Rules.
Subject to satisfaction of the pre-conditions to the proposals, referred
to in section 10 above, a circular explaining the Transaction in more
detail and containing a notice of the EGM and the recommendation of the
Independent Committee will be sent to Anglo American Shareholders in due
course.
De Beers, CHL and their associates, including those Anglo American
directors with interests in CHL, holding, in total, approximately 42.6 per
cent. of the Anglo American Shares in issue, will undertake not to vote on
any resolutions to be voted on at the EGM involving related party
transactions, as required by the UKLA Listing Rules.
14. Current trading and dividend forecast
Anglo American will announce its preliminary results for the year ended 31
December 2000 on 14 March 2001. The anticipated outcome for the year ended 31
December 2000 remains in line with management's expectations. The Board will
recommend a final dividend in respect of the year ended 31 December 2000 of
not less than US$1.20 per Anglo American Share, prior to the bonus issue. De
Beers Linked Unitholders will be entitled to this dividend in respect of the
Anglo American Shares they receive pursuant to the Transaction.
Merrill Lynch International, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting exclusively for Anglo
American in connection with the Transaction and for no-one else and will not
be responsible to anyone other than Anglo American for providing the
protections afforded to customers of Merrill Lynch International or for giving
advice in relation to the Transaction.
Cazenove & Co. which is regulated in the United Kingdom by The Securities and
Futures Authority Limited, is acting exclusively for Anglo American in
connection with the Transaction and for no-one else and will not be
responsible to anyone other than Anglo American for providing the protections
afforded to customers of Cazenove & Co. or for giving advice in relation to
the Transaction.
APPENDIX I
Shareholders' Agreement and Management Contract
1. Shareholders' Agreement
The Shareholders' Agreement will contain provisions governing the constitution
of the boards of DBI and De Beers and the conduct of their respective
businesses. The DBI board will represent shareholder interests, while the De
Beers board will be responsible for the running of De Beers (subject to
matters requiring the approval of shareholders or their nominated directors)
and will comprise both shareholder representatives, and executive and
non-executive directors appointed by DBI.
Initially, the board of DBI will comprise four nominees of Anglo American,
four nominees of CHL and two nominees of Debswana and the De Beers board will
comprise two directors appointed by each of Anglo American, CHL and Debswana
and the existing directors of De Beers.
For so long as the Management Contract remains in force, CHL will have the
right, following consultation with Anglo American and Debswana, to appoint on
behalf of DBI up to ten executive and non-executive directors to the De Beers
board (provided that the majority are executive directors), including the
managing director, and also to fill the other key De Beers executive
positions. Otherwise, the appointment of De Beers' directors, other than
shareholder representatives, will require a supermajority approval (two-thirds
majority) of the board of DBI or its shareholders.
Anglo American, CHL and Debswana will agree not to compete with the business
of De Beers, except where they have a pre-existing competing business, and
will be restricted from soliciting the employment of senior managers of De
Beers.
Ordinary shares in DBI may not be disposed of within four years of completion
of the Transaction. Thereafter, disposal will be subject to pre-emption by the
other shareholders of DBI.
2. Management Contract
A management contract will also be entered into between DBI and CHL which has
regard to the unique understanding, knowledge, expertise and connections
available to CHL in relation to the diamond industry. Under the management
contract, CHL will contribute to the strategic development and growth of DBI
and to general marketing initiatives and relationships with key customers and
suppliers. In addition, CHL will be responsible for the appointment of senior
executives and directors of De Beers. CHL will receive management and
incentive fees of between US$5.0 million and US$15.0 million per annum, based
on the attainment of certain performance criteria, in respect of each of the
years 2001 to 2007 inclusive.
DBI has the right to terminate the Management Contract on 12 months written
notice given at any time after the seventh anniversary of completion of the
Transaction and Anglo American will have the right to require DBI to give such
notice (subject to prior consultation with Debswana). In addition, the
Management Contract will also terminate automatically if CHL ceases to hold at
least 25 per cent. of the ordinary shares of DBI.
APPENDIX II
Sources and Bases
1. The consideration of US$43.17, which each De Beers Public Linked Unitholder
will receive in respect of each De Beers Linked Unit, expressed in South
African rand ('ZAR') terms as ZAR340.18, is based on a ZAR to US$ exchange
rate of 7.8800, the Noon Buying Rate in the City of New York for cable
transfers as announced by the Federal Reserve Bank of New York for customs
purposes (the 'Noon Buying Rate') on 14 February 2001, being the last day
prior to this announcement.
2. The consideration of US$43.17 is based on an Anglo American Share price of
US$64.58, which is the official closing price (being the weighted average
price of the closing range of automatic trades) of an Anglo American Share
of GBP44.30 as quoted on the London Stock Exchange on 14 February 2001,
being the last day prior to this announcement, converted to US$ at a US$
to GBP exchange rate of 1.4578, being the Noon Buying Rate on such date.
3. The price of a De Beers Linked Unit on 14 February 2001, the last business
day prior to this announcement, of US$40.56, is based on the ruling price
of a De Beers Linked Unit of ZAR319.60 as quoted on the Johannesburg
Securities Exchange on 14 February 2001, converted to US$ at a ZAR to US$
exchange rate of 7.8800, being the Noon Buying Rate on such date.
APPENDIX III
Definitions
'Anglo American' Anglo American plc and its subsidiary undertakings and where
the context permits, any of them
'Anglo American Anglo American Shareholders other than De Beers and its
Public Associates, CHL and its associates and those directors of
Shareholders' Anglo American who, by virtue of their interests in CHL, are
related parties for the purposes of the UKLA Listing Rules
'Anglo American holders of Anglo American Shares
Shareholders'
'Anglo American ordinary shares of US$0.50 each in the capital of Anglo
Shares' American
'Associates' has the meaning given to it in the UKLA Listing Rules
'Board' the board of directors of Anglo American
'CHL' Central Holdings Limited, a company incorporated as a
societe anonyme under the laws of Luxembourg
'DBI' DB Investments, a company incorporated as a societe anonyme
under the laws of Luxembourg, which will, following
completion of the Transaction, wholly own De Beers and be
owned by Anglo American, CHL and Debswana in the ratio of
45:45:10 respectively
'De Beers' De Beers RSA and De Beers AG and their respective subsidiary
undertakings and, where the context permits, any of them
'De Beers AG' De Beers Centenary AG, a company incorporated under the laws
of Switzerland
'De Beers AG depositary receipts issued by Centenary Depositary AG in
Depositary respect of Centenary Units, each unit comprising ordinary
Receipts' shares in De Beers AG and one participation certificate in
Centenary Holdings
'De Beers Linked holders of De Beers Linked Units
Unitholders'
'De Beers Linked linked units (each representing a De Beers RSA Share and De
Units' Beers AG Depositary Receipt tradeable as a single unit) and
any further such linked units which are unconditionally
allotted or issued before the operative date of the De Beers
Scheme of Arrangement
'De Beers Public De Beers Linked Unitholders other than Anglo American, CHL,
Linked Debswana or DBI
Unitholders'
'De Beers RSA' De Beers Consolidated Mines Limited, a company incorporated
under the laws of South Africa
'De Beers RSA linked deferred shares of ZAR0.05 each in the capital of De
Shares' Beers RSA
'Debswana' Debswana Diamond Company (Proprietary) Limited, a company
incorporated under the laws of Botswana
'DTC' the Diamond Trading Company Limited, a company incorporated
under the laws of England and Wales
'EGM' the Extraordinary General Meeting of Anglo American to be
convened for the purposes of obtaining the approval of Anglo
American Public Shareholders for the Transaction
'Independent the Committee of the Board constituted for the purposes of
Committee' the Transaction and consisting of R.J. Margetts (chairman),
A.J. Trahar. L Boyd. M.W. King, J.W. Campbell, A.W. Lea,
Viscount Davignon, Dr C.E. Fay, R.M. Godsell and P.S.
Wilmot-Sitwell
'Linked Unit certificates representing De Beers RSA Shares and a like
Certificates' number of De Beers AG Depositary Receipts
'London Stock London Stock Exchange plc
Exchange'
'Management the agreement to be entered into between DBI and CHL
Contract' relating to the management of De Beers, the principal terms
of which are summarised in Appendix I
'Namdeb' Namdeb Diamond Corporation (Proprietary) Limited, a company
incorporated under the laws of Namibia
'Scheme of the scheme of arrangement to be proposed between De Beers
Arrangement' RSA and holders of De Beers Linked Units in terms of section
311 of the South African Companies Act on the terms and
subject to the conditions to be set out in the scheme
document including, where the context so requires, any
subsequent revision or variation of the scheme of
arrangement
''Shareholders' the agreement to be entered into between Anglo American,
Agreement' CHL, Debswana and DBI relating to the interests of Anglo
American, CHL and Debswana in DBI, the principal terms of
which are summarised in Appendix I
'Transaction' the series of interrelated steps summarised in this
announcement which are to be implemented, inter alia,
pursuant to the De Beers Scheme of Arrangement
'UKLA Listing the Listing Rules of the Financial Services Authority in its
Rules' capacity as competent authority under the Financial Services
Act 1986
END
Latest directors dealings
- 19 minutes ago Schroder Income Growth Fund
- 21 minutes ago CVC Income & Growth Limited NPV GBP
- 24 minutes ago Schroder Japan Growth Fund
- 24 minutes ago SHAWBROOK GROUP PLC
- 25 minutes ago Schroder Japan Growth Fund