LONDON, UNITED KINGDON, May 09 (MARKET WIRE) --
African Copper PLC (AIM: ACU)(TSX: ACU) -
Zambia Copper Investments Limited
(Registered in Bermuda)
(South African registration number 1970/000023/10)
JSE share code: ZCI & ISIN: BMG988431240
Euronext share code: BMG988431240
Zambia Copper Investments Limited ('ZCI') and African Copper Plc ('ACU')
Agreement between African Copper and Zambia Copper Investments
ZCI and ACU are pleased to announce that they have today entered into
binding agreements pursuant to which ZCI has agreed to provide ACU with a
comprehensive financing package of approximately US$22.5 million (the
"Financing Package").
Highlights
The highlights of the Financing Package are as follows:
- A US$10 million bridge loan facility which will enable ACU to:
-- satisfy in full all repayment obligations owing to Natasa Mining
Limited;
-- make interim payments to ACU's bondholders and key trade creditors in
the amount of 50 per cent. of the total cash amounts being offered to
them under the terms of the Financing Package;
- The Financing Package returns significant cash (approximately US$8.8
million in total) to both bondholders and trade creditors and allows
bondholders to retain a proportion of their bonds (US$2.5 million) giving
an aggregate cash and bond offer of approximately US$11.3 million;
- At completion existing shareholders retain a 15.14 per cent. equity
interest in ACU;
- The Financing Package will be financed using ZCI's internal cash
resources; and
- The Financing Package does not require approval of ACU's shareholders
as it has been designed to fall within the ACU board's existing
authorities to allot shares.
The details of the Financing Package are set out in the Appendix, which
should be read in conjunction with this summary.
Commenting on the Financing Package, ZCI Chairman Tom Kamwendo said:
"The board of ZCI is delighted to have reached an agreement with ACU and
is looking forward to the completion of the deal and is committed to
bolstering ACU's board of directors and management with experienced
mining executives. ZCI will assist ACU management to optimise the Mowana
mine operations, and seek ways to expand the mining and processing
capability beyond the 25,000 t.p.a envisaged in ACU's current five year
plan. We look forward to working together to make ACU into a successful
operational African mining company, providing employment and revenue for
all stakeholders."
Commenting on the Financing Package, ACU's deputy Chairman Dave Jones
said:
"The board of ACU are very pleased to have reached agreement with ZCI who
have experience and expertise in the copper mining industry in Southern
Africa. Joining with a well financed and experienced mining group who can
provide ongoing expertise will serve African Copper well in its quest to
grow the Mowana mine in future years."
For more information, please contact:
ZCI John Kleynhans +35 24 025 05 427
iCapital (Financial
Adviser to ZCI) Jordan Soko/ Ken Muyangwa +260 211 256 657
Canaccord Adams
Limited (Financial Robert Finlay/ Mike Jones/
Adviser to ZCI) Andrew Chubb +44 207 050 6500
Bridge Capital
Advisors (Pty)
Limited
(Sponsors to ZCI) Pieter Veldtman/ Zayd Laher +27 (0) 11 268 6231
College Hill Paddy Blewer (UK) +44 207 457 2020
(Public Relations
adviser to ZCI)
Jacques de Bie (SA) +27 (0) 11 447 3030
African Copper PLC Chris Fredericks/ Brad Kipp +27 (11) 467 2360/
(416) 847 4866
Numis Securities John Harrison (Nominated Advisor)/
Limited James Black (Corporate Broker) +44 (9) 20 7260 1000
About ZCI
ZCI is a Johannesburg Stock Exchange ('JSE') and Euronext (Paris) listed,
Bermuda incorporated, mining investment company. ZCI previously owned 65
per cent. (subsequently sold down to 28 per cent. in 2005) of the Konkola
Copper Mine ('KCM') in Zambia but sold its residual stake in 2008 and is
looking to invest in Africa-based mining companies.
About ACU
ACU is an international exploration and development company incorporated
in England and Wales and tri-listed on the AIM market of the London Stock
Exchange, the Toronto Stock Exchange and the Botswana Stock Exchange. ACU
is involved in the exploration and development of copper deposits in
Botswana and is currently developing its first copper mine at the Mowana
Mine and holds permits in exploration properties at the Matsitama
Project. The Mowana Mine is located in the northeastern portion of
Botswana and the Matsitama Project is contiguous to the southern boundary
of the Mowana Mine.
Canaccord Adams Limited, which is authorised and regulated by the
Financial Services Authority (the 'FSA'), is acting exclusively for ZCI
and no-one else in relation to the Financing Package and will not be
responsible to any person other than ZCI under the Financial Services and
Markets Act 2000, the rules of the FSA or otherwise for providing the
protections afforded to its clients or for any matter concerning the
Financing Package or for providing advice in relation to the Financing
Package or in relation to the contents of this announcement or any other
transaction, arrangement or matter referred to herein. Canaccord Adams
Limited can be contacted at Cardinal Place, 7th Floor, 80 Victoria
Street, London SW1E 5JL.
Numis Securities Limited, which is authorised and regulated by the FSA,
is acting exclusively for ACU and no-one else in relation to the
Financing Package and will not be responsible to any person other than
ACU under the Financial Services and Markets Act 2000, the rules of the
FSA or otherwise for providing the protections afforded to its clients or
for any matter concerning the Financing Package or for providing advice
in relation to the Financing Package or in relation to the contents of
this announcement or any other transaction, arrangement or matter
referred to herein. Numis Securities Limited can be contacted at The
London Stock Exchange Building, 10 Paternoster Square London EC4M 7LT.
The release, publication or distribution of this announcement into
certain jurisdictions other than the United Kingdom and Canada may be
restricted by law and therefore persons in such jurisdictions into which
this announcement is released, published or distributed should inform
themselves about and observe any such restrictions. Any failure to comply
with any such restrictions may constitute a violation of the securities
laws or regulations of such jurisdictions.
APPENDIX
The Financing Package
ZCI and ACU have entered into the Financing Package to provide
approximately US$22.5 million to the ACU group and its stakeholders.
The Financing Package comprises, among other things:
- a share subscription by ZCI for 676,570,500 new ordinary shares at an
issue price of 1 pence per share (the 'Share Subscription') for gross
proceeds to ACU of approximately US$9.9 million, giving ZCI a
post-Financing Package interest in ACU of 69.73 per cent.;
- provision by ZCI of a four year secured convertible credit facility
(the 'Convertible Loan Facility') to ACU of US$8.1 million with a coupon
of 12 per cent. per annum and a conversion price of 1p exercisable at any
time during its term. The conversion element of the Convertible Loan
Facility is subject to ACU shareholder approval;
- provision by ZCI of a short-term, secured credit facility (the
'Short-Term Facility') to ACU of US$2 million bearing interest at a rate
of 14 per cent. per annum;
- the continuation, to the benefit of bondholders, of US$2.5 million of
the outstanding Pula bond; and
- in order to meet the immediate working capital needs of ACU, to repay
the US$1.5 million bridge financing advanced to ACU by Natasa and other
indebtedness owing by ACU or its subsidiaries to Natasa and to make
interim payments to bondholders and certain large creditors as described
below, the Financing Package provides for a secured bridge loan (the
'Bridge Loan') of US$10 million; the Bridge Loan will be refinanced out
of the proceeds of the Share Subscription and the Convertible Loan
Facility;
The security that will be provided for the Bridge Loan will be identical
to that put in place for the Natasa bridge loan with the addition of a
share pledge over the shares of ACU's subsidiary Messina Copper.
The Bridge Loan will be available in two tranches as follows:
a five million Dollar ($5,000,000) tranche ("Tranche A") that:
- is available immediately for the purpose of repaying indebtedness owing
to Natasa, for professional fees and for other authorised expenditures;
and
- will, from the date of any draw-down of monies under Tranche B, bear
interest of twelve per cent. (12%) per annum; and
five million Dollar ($5,000,000) tranche ("Tranche B") that:
- will be available following the execution of compromise agreements with
bondholders and certain large trade creditors and security for the Bridge
Loan having become effective;
- will be available for the purpose of making interim payments to
bondholders and certain creditors of amounts to be paid to them, as
described below and for other authorised expenditures; and
- will bear interest of twelve per cent. (12%) per annum.
ZCI proposes that ACU's large trade creditors - the mining contractor and
the engineering, procurement, contracting and management contractors -
would be paid in cash 40 per cent. of monies owed and issued with
approximately 48,952,986 new ordinary shares in full and final settlement
of debts due from ACU. Following completion of the Financing Package,
such creditors would have an interest of 5.05 per cent. of the enlarged
ACU share capital. The payments to the large trade creditors would be
made in two equal instalments with an interim payment of half the amount
made upon the availability of Tranche B of the Bridge Loan and the other
half paid at completion of the financing transactions. Small creditors
should be repaid in full in cash from the proceeds of the Financing
Package as their debts become due.
ZCI proposes that ACU's bondholders be paid 25 per cent. of the face
value of their bonds (equating to approximately US$5.0 million) and
retain existing bonds or be issued with new bonds equivalent to US$2.5
million on terms and conditions, as a whole, no worse than the current
ACU bonds, with the balance of the bonds to be retired. The retained
bonds would greatly benefit from the restored financial position of ACU.
Bondholders would also be issued with 97,905,971 ordinary shares as final
and total discharge of their debts due from ACU. Following completion of
the Financing Package, they would have an interest of 10.09 per cent. of
the enlarged ACU share capital. The payments to the bondholders would be
made in two equal instalments with an interim payment of half the amount
made upon the availability of Tranche B of the Bridge Loan and the other
half paid at completion of the financing transactions.
The proposed post-Financing Package shareholding structure would be as
follows:
Description New Share Structure
Ordinary Shares % of total
Shares to be issued to large trade creditors 48,952,986 5.05
Shares to be issued to Bondholders 97,905,971 10.09
Existing shares in issue 146,859,000 15.14
Shares to be issued to ZCI 676,570,500 69.73
TOTAL 970,288,457 100.00
The numbers set out above assume that the Convertible Loan Facility
has not been converted into ordinary shares of ACU. Were the Convertible
Loan Facility to be converted in full the new share structure would be as
follows:
Description New Share Structure
Ordinary Shares % of total
Shares to be issued to large trade creditors 48,952,986 3.2
Shares to be issued to Bondholders 97,905,971 6.4
Existing shares in issue 146,859,000 9.6
Shares to be issued to ZCI 1,235,191,233 80.8
TOTAL 1,528,909,190 100.00
In consideration of ZCI entering into binding agreements with ACU to
provide the Financing Package, ZCI has been granted a hard exclusivity
clause under which ACU and its subsidiaries shall not sell or otherwise
dispose of all or any part of their share capital or the whole or
substantially the whole of their business or assets to any third party or
enter into any discussions with any third party in relation to such a
transaction.
Management of ACU
ZCI currently intends to work within the existing management and board
structure of ACU. Nevertheless, in light of its significant investment in
ACU, it is a condition of the Financing Package that ZCI has the right to
appoint two non-executive directors to the board of ACU, one of whom
shall be chairman. In addition, ZCI has nominated (and ACU has appointed)
three senior and experienced mining personnel for senior management
positions with Messina Copper (Botswana) (Proprietary) Limited.
Conditions precedent
Completion of the subscription by ZCI for ACU ordinary shares under the
Subscription Agreement and the availability of funds under the
Convertible Loan Facility and Short-Term Facility are subject to the
satisfaction or waiver by ZCI of certain conditions precedent including
the following:
- ACU and its subsidiaries arranging the compromise detailed above with
its large creditors and bondholders;
- ACU's agreement to the legal documentation in relation to the
Subscription Agreement and in relation to the Short-term Facility and
Convertible Loan Facility;
- the management changes referred to above;
- ACU being delisted from the TSX;
- any nominees of Natasa appointed as directors or officers of ACU or its
subsidiaries having resigned or been given notice of their removal and
any legal agreements between ACU or its subsidiaries and Natasa having
lapsed or been terminated;
- there having been no material adverse effect on the condition or the
earnings, business affairs, business prospects of the ACU group taken as
a whole; and
- the approval of ZCI shareholders as required under the rules of the
JSE. No shareholder approval is required prior to any advances being made
under the Bridge Loan. Further, ACU has obtained a signed comfort letter
from The Copperbelt Development Foundation ('CDF' - the holder of 71.5
per cent. of the issued ZCI share capital) indicating that they intend to
vote all of their shares in favour of all necessary resolution(s) to
approve the transaction.
New ACU Board Members
David Rodier, who will be joining the board of ACU as Chairman, is a
non-executive director of ZCI and currently works as Senior Consultant,
Sustainability for Hatch Associates, a global engineering company located
in Ontario, Canada, which is devoted to the support of the Mining and
Metallurgical industries. He gained his extensive working experience in
the non-ferrous industry, starting with Cominco in British Columbia, (now
Teck-Cominco) and later for Noranda Inc., where he was employed for 35
years and where he was involved with zinc and copper recycling. His
experience includes a wide range of technical and managerial positions in
zinc and copper businesses. His most recent positions were: Senior Vice
President, Environment Safety and Health at Noranda between 1998 and
2002; Senior Vice President, Copper & Recycling at Noranda between 1995
and 1997; and President of Canadian Electrolytic Zinc between 1992 and
1995. Mr Rodier was Noranda's delegate to the World Business Council for
Sustainable Development, the International Council for Mining and Metals,
the International Zinc Association, the International Copper Association,
the Mining Association of Canada and the Canadian Chemical Producers
Association.
Mr Rodier was born in Montreal, Canada, and has a Bachelor's degree in
Metallurgical Engineering from McGill University, Montreal.
Jordan Soko, who will be joining the board of ACU as a non-executive
Director is the founder and CEO of iCapital (Mauritius), a private equity
and advisory firm that are investment advisers to ZCI. Prior to forming
iCapital (Mauritius), he was CFO, and also acted as CEO, of Konkola
Copper Mines PLC (KCM), a Zambian copper mining company with over 10,000
employees, then producing about 220,000mt of copper from a complex suite
of mining and metals assets. He has extensive capital markets and
corporate finance experience having, prior to joining KCM, worked for
Stanbic Bank Zambia for nine years as head of its capital markets,
leasing and corporate and project finance unit. He served for six years
on the investment committee of the first venture capital and private
equity fund in Zambia and has chaired several privatization transactions.
He has also worked in the public sector in numerous financial roles for
over 10 years. He is a qualified Chartered Management Accountant and
holds an MBA degree from Lincoln University in the UK. Mr Soko is a
qualified stock broker and investment advisor.
In addition to managing iCapital (Mauritius), Jordan is non-executive
Chairman of AEL Zambia PLC, a company listed on the Lusaka Stock
Exchange, and is a non-executive director of the Copper Development
Association Africa and Lumwana Mining Company, the largest single copper
mine in Africa.
Proposed Timetable
ACU and ZCI have proposed the following indicative timetable:
Execution of offer and bridge loan 9 May
Advance of US$5million 11 May
Execution of bondholder/creditor compromise agreements and loan 18 May
facility and subscription agreement
Registration of bridge loan security By 30 June
Advance of US$5million By 30 June
Payments to bondholders and large trade creditors (50% of cash By 30 June
due under compromise agreements)
ZCI shareholders meeting By 31 July
Completion of ZCI offer and ZCI share subscription By 31 July
Pro forma financial effects
Following the acceptance of the Financing Package by ACU, in compliance
with paragraph 9.15 of the Listings Requirements, pro forma financial
effects will be disclosed.
ZCI controlling shareholder's undertaking
ZCI confirms that it has received a comfort letter from The Copperbelt
Development Foundation ('CDF'), which holds 71.5% of the issued share
capital of ZCI confirming that CDF intends to vote all of its shares in
favour of all resolutions required to approve the Financing Package.
Forward-Looking Information
This press release contains forward-looking information. All statements,
other than statements of historical fact, that address activities, events
or developments that may occur in the future (including, without
limitation, the anticipated dilutive effect of the above transactions
contemplated by the Financing Package, the anticipated stakeholder value
that may result from such transactions, the proposed arrangements with
ACU's creditors and bondholders, proposed changes to the management of
ACU and ZCI's intentions with regard to ACU and other statements which
are not historical facts) are forward-looking information.
Forward-looking information is subject to a number of risks and
uncertainties that may cause the actual results of ACU to differ
materially from those discussed in the forward-looking information, and
even if such actual results are realized or substantially realized, there
can be no assurance that they will have the expected consequences to, or
effects on, ACU. Factors that could affect the transactions described
above (and ACU's future viability as a going concern) include, among
other things, bondholders and major creditors not agreeing terms
acceptable to ACU and ZCI in a timely manner or at all and the failure to
complete the ZCI transactions as result of the non-fulfilment of the
conditions precedent. All forward-looking information speaks only as of
the date hereof and, except as may be required by applicable securities
laws, ACU disclaims any intent or obligation to update any
forward-looking information, whether as a result of new information,
future events or results or otherwise. Although ACU believes that its
expectations reflected in the forward-looking information, as well as the
assumptions inherent therein, are reasonable, forward-looking information
is not a guarantee of future performance and, accordingly, undue reliance
should not be put on such information due to the inherent uncertainty
therein.
Contacts:
African Copper Plc
Brad Kipp
Chief Financial Officer
(416) 847 4866
bradk@africancopper.com
www.africancopper.com
Copyright 2009, Market Wire, All rights reserved.
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