TIDMBAO
RNS Number : 0325G
Baobab Resources PLC
27 February 2015
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
FOR IMMEDIATE RELEASE
27 February 2015
Baobab Resources Plc
De-Listing Proposal
and
Cash Takeover Offer
by
Redbird Investments Limited
to acquire the entire issued and to be issued ordinary share
capital of
Baobab Resources Plc
not already owned by Redbird or its associated entities
The Independent Directors of Baobab Resources Plc ("Baobab" or
the "Company") (AIM:BAO) are pleased to announce that, following
discussions with its major shareholder, Redbird Investments Limited
("Redbird"), a wholly owned investment vehicle of African Minerals
Exploration & Development Fund SICAR, S.C.A. ("Fund I"), they
have reached agreement on the terms of a proposal for seeking the
cancellation of the admission of the Company's ordinary shares of 1
pence each ("Shares") to trading on the AIM Market of the London
Stock Exchange ("AIM") (the "De-Listing") and the making of a cash
offer for all of the Company's Shares not already owned by Redbird
for a cash consideration of 6.0 pence per Share (the "Offer").
The Offer Document and the Form of Acceptance accompanying the
Offer Document will be published no later than 28 days from the
date of this announcement (or such later date as may be agreed by
the Offeror and the Independent Directors).
SUMMARY OF THE OFFER
-- The Offer Price of 6.0 pence in cash for each Share values
the existing issued share capital of Baobab at approximately
GBP20.5 million (approximately US$31.7 million).
-- The Offer Price represents a premium of approximately:
o 45.5 per cent. to 4.125 pence, being the closing mid-market
price per Share on 26 February 2015 (being the last Business Day
prior to the date of this announcement);
o 41.8 per cent. to 4.23 pence, being the volume weighted
average price ("VWAP") per Share for the 20 trading days prior to
the date of this announcement;
o 31.3 per cent. to 4.57 pence, being the VWAP per Share for the
three months prior to the date of this announcement; and
o 7.3 per cent. to 5.59 pence, being the VWAP per Share for the
six months prior to the date of this announcement.
-- The Offer is subject to the Conditions set out in Appendix I,
including, inter alia, receipt of applicable regulatory approvals
in Mozambique, and a minimum acceptance condition of 72.31 per
cent. of the entire Issued Share Capital (or such lower percentage
as Redbird may decide), representing a shareholding of 75 per
cent., sufficient to approve the resolutions to be proposed in
connection with the De-Listing, less the percentage of Shares held
by the Independent Directors who are Shareholders, namely Jeremy
Dowler and Ben James, in respect of which irrevocable commitments
have been given to vote in favour of the De-Listing as outlined in
Appendix I.
-- If the Offer becomes, or is declared, unconditional in all
respects and sufficient acceptances of the Offer are received,
Redbird intends to procure that Baobab will make an application to
the London Stock Exchange for the cancellation of the admission to
trading on AIM of all the Shares. Cancellation of admission to
trading is likely to reduce significantly the liquidity and
marketability of any Shares in respect of which the Offer has not
been accepted at such time. Following implementation of the Offer,
Redbird may seek to re-register Baobab as a private limited
company.
-- Even if Redbird does not reach a holding of 75 per cent. of
the Shares as a result of the Offer, following its Completion, the
Independent Directors intend to convene the General Meeting to
consider the Resolutions to give effect to the De-Listing, and the
Independent Directors who are Shareholders, namely Jeremy Dowler
and Ben James, have irrevocably committed to Redbird to vote the
9,204,669 Shares expected to be held by them on Completion,
representing 2.69 per cent. of the Issued Share Capital, in favour
of such resolutions. Together with the 121,193,158 Shares currently
held by Redbird, an aggregate of 130,397,827 Shares representing
approximately 38.09 per cent. of the Company's Issued Share Capital
are therefore committed to support the proposed De-Listing.
-- To finance the completion of the Bankable Feasibility Study
("BFS") for its principal asset, the Tete pig iron and
ferro-vanadium project (the "Project"), to repay its existing (and
future) indebtedness to Redbird and Affiliated entities and to
finance its near term working capital requirements, the Company
requires to raise additional equity in the amount of at least US$12
million. In the current market conditions, it is likely that such
equity, if raised, would have to be raised at a discount to the
current price of the Company's Shares on AIM, and therefore at a
significant discount to the price of the Offer.
-- As at the date of this announcement, the Company has a net
working capital deficit, excluding its existing loans, and
therefore requires immediate additional funding. To address this
near-term financing requirement, an Affiliate of Redbird has today
agreed to extend additional bridge financing to Baobab of US$1
million. The extended bridging loan provided, which now totals US$2
million, is repayable upon the earlier of (i) the completion of a
capital raising by Baobab if, in the sole discretion of Redbird,
the financial position of Baobab is such that the bridging loan can
be repaid in full; (ii) a change of control of the Company (other
than to Redbird or an Affiliated entity); or (iii) 31 December
2015.
-- Following the completion of the proposed De-Listing, the
Company intends that an equity financing of at least US$12 million
will proceed as soon as practicable and it is anticipated to be
conducted at a discount to the recent trading price, and as far as
practicable on a pre-emptive basis without triggering a requirement
to file a prospectus or making the offer available in jurisdictions
where regulatory or filing requirements would be unduly onerous.
Redbird intends to fully support such equity financing.
-- The Independent Directors note that, given the current
financial status of the Company, the Offer represents an
opportunity for Shareholders to realise the value of their Shares
at a significant premium to the current and recent trading price of
the Shares on AIM.
Commenting on the Offer, Jeremy Dowler, the Chairman of Baobab,
said:
"We thank Redbird for its continued support since building a
significant interest in the Company following its original
investment in July 2012. Notwithstanding the attractions of the
Project and the Company's wider asset base, the Independent
Directors are of the view that the market has to date failed to
recognise the value proposition. Despite its long history as a
quoted company, liquidity in the Company's shares remains
relatively limited and there are significant direct and indirect
costs associated with the maintenance of the AIM listing. Therefore
the Independent Directors are firmly of the view that a De-Listing
of the Company is in the best interests of Shareholders. In light
of the current financial status of the Company and the De-Listing
proposal we are supportive of Redbird, as the Company's largest
Shareholder, who is prepared to make the Offer in order to enable
Shareholders to realise their Shares for cash at significant
premium to the current share price."
This summary should be read in conjunction with the full text of
this announcement (including the Appendices). The Offer will be
made on the terms and subject to the conditions set out in Appendix
I to this announcement and the further terms and conditions to be
set out in the Offer Document and Form of Acceptance when issued.
Appendix II to this announcement contains a summary of the
irrevocable undertakings received in relation to the Offer,
Appendix III contains the sources of information and bases of
calculation of certain information contained in this announcement,
and Appendix IV contains definitions of certain expressions used in
this announcement.
Enquiries:
Baobab Resources Plc Tel: +258 21 486 404
Ben James (Managing Director) Tel: +44 1372 450529
Jeremy Dowler (Chairman) Tel: +27 76 753 5377
Frank Eagar (Finance Director)
Canaccord Genuity Limited (NOMAD, Tel: +44 20 7523 8000
broker and financial adviser
to the Independent Directors)
Henry Fitzgerald-O'Connor
Chris Fincken
Ryan Gaffney
GMP Securities Europe LLP (financial Tel: +44 20 7647 2800
adviser to Redbird)
Richard Greenfield
Andrew Young
Tavistock (financial public relations Tel: +44 20 7920 3150
to Baobab)
Emily Fenton / Nuala Gallagher
/ Jos Simson
Canaccord Genuity Limited, which is authorised and regulated in
the UK by the Financial Conduct Authority, is acting exclusively
for the Independent Directors and no one else in connection with
the Offer and will not be responsible to any person other than the
Independent Directors for providing the protections afforded to
clients of Canaccord Genuity Limited for providing advice in
connection with the Offer or any other matter referred to
herein.
GMP Securities Europe LLP, which is authorised and regulated in
the UK by the Financial Conduct Authority, is acting exclusively
for Redbird and no one else in connection with the Offer and will
not be responsible to any person other than Redbird for providing
the protections afforded to clients of GMP Securities Europe LLP
for providing advice in connection with the Offer or any other
matter referred to herein.
This announcement is for information purposes only and does not
constitute an offer to sell or an invitation to purchase any
securities or the solicitation of an offer to buy any securities,
pursuant to the Offer or otherwise. The Offer will be made solely
by means of an Offer Document and the Form of Acceptance
accompanying the Offer Document, which will contain the full terms
and Conditions of the Offer, including details of how the Offer may
be accepted. Any acceptance or other response to the proposals
should be made on the basis of the information in the Offer
Document.
Overseas Shareholders
The release, publication or distribution of this announcement in
certain jurisdictions may be restricted by law. Persons who are not
resident in the United Kingdom or who are subject to the laws of
other jurisdictions should inform themselves of, and observe, any
applicable requirements. Any failure to comply with these
restrictions may constitute a violation of securities laws of any
such jurisdictions. To the fullest extent permitted by law, the
Offeror disclaims any responsibility or liability for the violation
of such restrictions by such person.
Unless otherwise determined by the Offeror, and permitted by
applicable law and regulation, the Offer will not be made, directly
or indirectly, in, into or from a Restricted Jurisdiction where to
do so would violate the laws in that jurisdiction, and the Offer
will not be capable of acceptance from or within a Restricted
Jurisdiction. Accordingly, copies of this announcement and all
documents relating to the Offer are not being, and must not be,
directly or indirectly, mailed or otherwise forwarded, distributed
or sent in, into or from a Restricted Jurisdiction where to do so
would violate the laws in that jurisdiction, and persons receiving
this announcement and all documents relating to the Offer
(including custodians, nominees and trustees) must not mail or
otherwise distribute or send them in, into or from such
jurisdictions as doing so may invalidate any purported acceptance
of the Offer.
The availability of the Offer to Shareholders who are not
resident in the United Kingdom may be affected by the laws of the
relevant jurisdictions in which they are resident. Persons who are
not resident in the United Kingdom should inform themselves of, and
observe, any applicable requirements.
Notice to US investors
In accordance with normal UK market practice, the Offeror, or
its nominees, or its brokers (acting as agents) may from time to
time make certain purchases of, or arrangements to purchase,
Shares, other than pursuant to the Offer, before or during the
period in which the Offer remains open for acceptance. These
purchases may occur either in the open market at prevailing prices
or in private transactions at negotiated prices. Any information
about such purchases will be disclosed as required in the United
Kingdom.
Forward Looking Statements
This announcement contains statements about the Offeror, Baobab
and the Independent Directors that are or may be forward looking
statements. All statements other than statements of historical
facts included in this announcement may be forward looking
statements. Without limitation, any statements preceded or followed
by or that include the words "targets", "plans", "believes",
"expects", "aims", "intends", "will", "may", "anticipates",
"estimates", "projects" or words or terms of similar substance or
the negative thereof, are forward looking statements. Forward
looking statements include statements relating to the following:
(i) future capital expenditures, expenses, revenues, earnings,
synergies, economic performance, indebtedness, financial condition,
dividend policy, losses and future prospects; (ii) business and
management strategies and the expansion and growth of either of the
Offeror or Baobab's operations and potential benefits and risks
resulting from or relating to the proposed De-Listing and the
Offer; and (iii) the effects of government regulation on either of
the Offeror or Baobab's business.
Such forward looking statements involve risks and uncertainties
that could significantly affect expected results and are based on
certain key assumptions. Many factors could cause actual results to
differ materially from those projected or implied in any forward
looking statements. Due to such uncertainties and risks, readers
are cautioned not to place undue reliance on such forward looking
statements, which speak only as of the date hereof. Each of the
Offeror, Baobab and the Independent Directors disclaims any
obligation to update any forward looking or other statements
contained herein, except as required by applicable law.
Responsibility Statements
The Independent Directors whose names are set out earlier in
this announcement accept responsibility for the information
contained in this announcement other than that relating to Redbird
and its Concert Parties for which Redbird accepts responsibility.
To the best of the knowledge and belief of the Independent
Directors (who have taken all reasonable care to ensure that such
is the case) the information contained in this announcement for
which they accept responsibility is in accordance with the facts
and does not omit anything likely to affect the import of such
information.
Redbird is a special purpose vehicle wholly owned by Fund I
which is managed by Explora. The sole director of Redbird is
Centaur Fiduciaries (Cyprus) Limited ("Centaur"), a corporate
director registered in Cyprus and appointed to comply with the
requirements of Cyprus law which require Cyprus registered
companies to have their place of management in Cyprus in order to
qualify for tax residence in Cyprus. Investment decisions relating
to Redbird are taken at shareholder level by Explora as fund
manager of Fund I, being the sole shareholder of Redbird. For that
reason the directors of Explora are considered to be persons in
accordance with whose instructions Centaur and Redbird are
accustomed to act.
Accordingly the directors of Explora accept responsibility for
the information contained in this document relating to Redbird and
its Concert Parties. To the best of the knowledge and belief of
directors of Explora (who have taken all reasonable care to ensure
that such is the case) the information contained in this document
for which they accept responsibility is in accordance with the
facts and does not omit anything likely to affect the import of
such information.
Disclosure requirements of the City Code on Takeovers and
Mergers (the "Code")
Under Rule 8.3(a) of the Code, any person who is interested in 1
per cent. or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1 per cent. or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 pm
(London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Publication on websites
In accordance with Rule 26.1 of the Code, a copy of this
announcement will be available on the Company's website at
www.baobabresources.com as soon as possible and in any event no
later than 12:00 noon (London time) on 27 February 2015 (being the
business day following the date of this announcement). The content
of the website referred to in this announcement is not incorporated
into and does not form part of this announcement.
In accordance with Rule 26.2 of the Code, the following
documents will be made available on the Company's website at
www.baobabresources.com as soon as possible and in any event as
soon as possible and in any event no later than 12:00 noon (London
time) on 27 February 2015 (being the business day following the
date of this announcement):
-- Irrevocable Undertaking dated 26 February 2015 executed by Jeremy Dowler;
-- Irrevocable Undertaking dated 26 February 2015 executed by Ben James;
-- Irrevocable Undertaking dated 26 February 2015 executed by Redbird and the Company; and
-- Bridging loan agreement dated on or around 31 October 2014
between Fund I and the Company and the related deed of variation
and novation dated 26 February 2015 between Fund I, Fund II and the
Company.
In accordance with Rule 2.10 of the Code, the Company confirms
that there are currently 342,338,426 ordinary shares of 1 pence
each in issue (ISIN: GB00B19HQ991). There are no other classes of
shares in Baobab.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
FOR IMMEDIATE RELEASE
27 February 2015
Baobab Resources Plc
De-Listing Proposal
and
Cash Takeover Offer
by
Redbird Investments Limited
to acquire the entire issued and to be issued ordinary share
capital of
Baobab Resources Plc
not already owned by Redbird or its associated entities
1. INTRODUCTION
The Independent Directors of Baobab are pleased to announce
that, following discussions with its major shareholder Redbird, a
wholly owned investment vehicle of Fund I, they have reached
agreement on the terms of a proposal for seeking the cancellation
of the admission of the Company's Shares to trading on AIM and the
making of a cash offer for all of the Company's Shares not already
owned by Redbird for a cash consideration of 6.0 pence per
Share.
2. THE OFFER
Under the terms of the Offer, which will be subject to the
Conditions and further terms set out in Appendix I to this
announcement and to the full terms and conditions to be set out in
the Offer Document and, in respect of Shares held in certificated
form, the Form of Acceptance, Shareholders shall be entitled to
receive:
for each Share: 6.0 pence in cash
The Offer values the existing issued share capital of Baobab at
approximately GBP20.5 million (approximately US$31.7 million), and
represents a premium of approximately:
-- 45.5 per cent. to 4.125 pence, being the closing mid-market
price per Share on 26 February 2015 (being the last Business Day
prior to the date of this announcement);
-- 41.8 per cent. to 4.23 pence, being the VWAP per Share for
the 20 trading days prior to the date of this announcement;
-- 31.3 per cent. to 4.57 pence, being the VWAP per Share for
the three months prior to the date of this announcement; and
-- 7.3 per cent. to 5.59 pence, being the VWAP per Share for the
six months prior to the date of this announcement
Shares acquired pursuant to the Offer will be acquired fully
paid and free from all liens, charges, equitable interests,
encumbrances, rights of pre-emption and any other rights and
interests of any nature whatsoever and together with all rights now
and hereafter attaching thereto, including voting rights and the
right to receive and retain in full all dividends and other
distributions (if any) declared, made or paid on or after the date
of this announcement.
The Offer is subject to the Conditions set out in Appendix I,
including, inter alia, receipt of applicable regulatory approvals
in Mozambique, and a minimum acceptance condition of 72.31 per
cent. of the entire Issued Share Capital (or such lower percentage
as Redbird may decide), representing a shareholding of 75 per
cent., sufficient to approve the Resolutions to be proposed in
connection with the De-Listing, less the percentage of Shares held
by the Independent Directors who are Shareholders, namely Jeremy
Dowler and Ben James, in respect of which irrevocable commitments
have been given to vote in favour of the De-Listing as outlined in
Appendix I.
3. INFORMATION ON BAOBAB
Baobab's Shares were admitted to trading on AIM in February
2007. Since that time, the Company has been wholly focused on
discovering and developing mineral resources in Mozambique. The
Company's portfolio includes the decommissioned Mundonguara
copper/gold mine (where exploration during 2007 - 2008 defined a
JORC compliant resource of 3.1 million tonnes ("Mt") @ 1.4 per
cent. copper, open at depth and along strike), Changara Broken Hill
type base metal and manganese project and the Monte Muande joint
venture with North River Resources plc, where Baobab's consultants
have estimated a magnetite/phosphate exploration target of 200Mt to
250Mt to an average depth of c.40m below surface.
Baobab's principal asset is the Tete pig iron and ferro-vanadium
project (the "Project"), which it is developing in partnership with
the International Finance Corporation who hold a 12.9 per cent.
interest in the Project. The Project is located in the Tete
province of Mozambique, one of the region's fastest growing mining
and industrial centres. Exploration activities commenced in 2008
and included more than 80,000m of drilling which has culminated in
the estimation of a high grade, iron, vanadium and titanium JORC
compliant resource of 759Mt.
Due to the Project's strategic access to core iron and steel
making commodities of iron ore, coal power and water, Baobab has
been pursuing an unique opportunity to add real value in-country
through the development of a vertically integrated 'mine-mouth'
smelting operation producing pig iron and ferro-vanadium. Pig iron
is used alongside scrap iron in Electronic Arc Furnaces ("EAFs") to
produce steel products. EAFs account for roughly 30 per cent. of
global steel production and up to 100 per cent. in regions such as
the Middle East.
Baobab's resource base is sufficient to underpin production
scenarios that would rank the Project amongst the longest life
operations worldwide, and at first quartile production costs. The
Company has completed a Pre-Feasibility Study that underlined a
compelling commercial case for the development of a 1Mtpa pig iron
operation and has embarked on a BFS.
4. CURRENT TRADING AND OUTLOOK
In response to the challenges faced by a rapidly shifting global
raw materials sector and risk averse capital markets, as previously
announced, the Company has been investigating reduced production
scenarios with smaller capital requirements and has engaged with
leading Chinese EPC contractors to consider reduction in capital
costs and routes to fast-track project execution. As part of these
investigations the Company, alongside potential EPC contractors,
has been assessing the viability of full vertical integration
beyond pig iron and into production of high demand steel products
such as billets and construction stocks (reinforcing bars and wire
rods) for growing domestic and regional markets. This would involve
the addition of a basic oxygen furnace, ladle furnace, continuous
casting machine and rolling mill to the current pig iron flow
sheet.
The Company believes this would potentially provide the
opportunity to become the sole supplier to a rapid growth domestic
steel market in Mozambique, currently entirely dependent on
imports, to access substantially larger regional markets with less
complex pricing structures and to mitigate port and rail
requirements as all production would be sold at the gate.
Before commencing a process to procure this development funding
or an alternative transaction to realise value from the Project,
the Independent Directors are of the opinion that the BFS for the
Project must first be completed, which will itself require
additional equity funds to be raised in the short term.
In addition to the requirement to finance the completion of the
BFS as described above, the Company requires additional funding to
satisfy near term working capital requirements. As at 31 January
2015, the Company had net working capital of approximately US$0.2
million (cash at bank less current liabilities excluding loans from
entities Affiliated with Redbird of approximately US$1.8 million).
As at the date of this announcement, with further expenses incurred
since 31 January 2015, the Company has a net working capital
deficit, excluding its existing loans, and therefore requires
immediate additional funding.
5. REASONS FOR THE DE-LISTING AND THE OFFER
Notwithstanding the attractions of the Project and the Company's
wider asset base, the Independent Directors are of the view that
the market has to date failed to appropriately recognise the value
proposition as market conditions for junior listed resource
companies have become increasingly challenging as investors reduce
their exposure to global raw materials and commodities and that, in
the face of significant further capital requirements for the
development of the Project significantly in excess of the Company's
current market capitalisation, this value discount may persist, and
affect the Company's ability to raise such capital.
The Independent Directors are of the view that the capital
requirements needed to bring the Project into production are most
likely to be sourced from industry partners or other strategic
investors rather than from institutional and other investors via
AIM and that negotiations and discussions with such parties would
be best conducted for the benefit of all Shareholders at the
appropriate time as an unquoted company.
Despite its long history as a quoted company, liquidity in the
Company's shares remains relatively limited with an average daily
volume in the six months to 26 February 2015 of 455,276 Shares or
approximately GBP25,450. Conversely there are significant direct
and indirect costs associated with the maintenance of the AIM
listing. The completion of the proposed De-Listing would remove the
burden of such costs and enable management to focus exclusively on
the delivery of the Project for the benefit of all
Shareholders.
Redbird has been a significant and supportive shareholder of
Baobab since acquiring a significant interest in the Company in
July 2012, as demonstrated by:
-- an initial strategic investment via the issue of Shares to
Redbird announced on 6 July 2012, raising GBP4,000,000 before
expenses;
-- the issue of Shares to Redbird announced on 11 October 2013
and admitted to trading on 16 October 2013 to raise GBP750,000
before expenses;
-- the issue of Shares to Redbird announced on 11 October 2013
and completed on 31 December 2013 to raise GBP1,275,000 before
expenses;
-- the exercise by Redbird of warrants to subscribe for Shares
to raise GBP3,000,000 announced on 30 January 2013;
-- the exercise by Redbird of certain of its options to
subscribe for Shares to raise GBP3,125,061.14 announced on 14 March
2014;
-- the US$1.0 million unsecured and interest free bridging
finance facility provided by Redbird as announced on 5 November
2014; and
-- the GBP700,000 funding agreement announced on 11 December
2014 with Topaz, a company indirectly controlled by Fund II,
pursuant to which Topaz has (i) provided an unsecured and
unsubordinated and convertible loan for GBP500,000 to the Company
to be used at its discretion for the Project and (ii) agreed to
advance exploration funds of up to GBP200,000 to the Company to
progress its Monte Muande joint venture.
As noted above, as at the date of this announcement, the Company
has a net working capital deficit, excluding its existing loans,
and therefore requires immediate additional funding.
To finance the completion of the BFS, to repay the Company's
existing (and future) indebtedness to Redbird and Affiliated
entities and to finance the Company's near term working capital
requirements to 31 December 2015, the Company requires additional
equity in the amount of at least US$12 million. In current market
conditions, it is likely that such equity, if raised, would have to
be raised at a discount to the recent trading price of the
Company's Shares on AIM, and therefore at a significant discount to
the price of the Offer.
It is likely that any such equity funding would require the
support of Redbird, which has indicated to the Company that it is
no longer willing to provide further funding to the Company while
its Shares remain publicly quoted but is willing to provide
continuing support to the Company, and thereby safeguard
shareholder value, as an unquoted company.
As described below, the Independent Directors and Redbird have
therefore reached agreement on the terms of the De-Listing and the
Offer. As further described below, following Completion and the
completion of the proposed De-Listing, the Company intends to
launch a discounted equity offering sufficient for its financing
requirements, as far as practicable on a pre-emptive basis without
triggering a requirement to file a prospectus or making the offer
available in jurisdictions where regulatory or filing requirements
would be unduly onerous.
While the Independent Directors and Redbird are firmly of the
view that it is in the interests of Shareholders that the proposed
De-Listing is completed, the Independent Directors and Redbird
recognise that not all Shareholders may be able, or willing, to
hold shares in an unquoted company, and that some Shareholders may
not be willing, or be able, to participate in the Company's future
fundraising activity, which is likely to be at a significant
discount to the value of the Offer.
Accordingly, Redbird, as the Company's largest Shareholder, is
prepared to make the Offer in order to enable Shareholders to
realise their Shares for cash at a significant premium to the
recent trading price of the Company's Shares on AIM.
6. PRINCIPAL EFFECTS OF THE PROPOSED DE-LISTING AND THE OFFER
The principal effects of the Offer and proposed De-Listing, if
completed, and the factors the Independent Directors believe that
Shareholders should take into consideration when deciding whether
or not to accept the Offer and, in due course, whether to support a
vote in favour of the resolutions to give effect to the proposed
De-Listing, include the following:
-- there would be no public market or trading facility on any
recognised investment exchange for the Shares and, consequently,
there can be no guarantee that a Shareholder would be able to
purchase or sell any Shares. Hence, the opportunity for
Shareholders to realise their investment in the Company would be
significantly more limited;
-- it is probable that the liquidity and marketability of the
Shares would be significantly reduced and the value of such Shares
may be adversely affected as a consequence;
-- the regulatory and financial reporting regime applicable to
companies whose Shares are admitted to trading on AIM will no
longer apply. The Company would therefore achieve cost savings as a
result of no longer being subject to the provisions of this regime.
However, Shareholders would no longer be afforded the protections
given by the AIM Rules;
-- the Company would cease to have a nominated adviser and broker; and
-- Redbird may propose the re-registration of Baobab as a private company.
It should be noted that the Independent Directors have
negotiated certain minority shareholder protections with Redbird in
the event that the proposed De-Listing completes, which are set out
in paragraph 12 of this announcement, with a view to safeguarding
interests of minority Shareholders following the De-Listing, if
completed. However, these protections are very limited, and are
accompanied by certain additional restrictions (as also set out in
paragraph 12 of this announcement), and should be considered
accordingly.
7. INDEPENDENT DIRECTOR INTENTIONS AND RECOMMENDATION REGARDING THE DELISTING AND THE OFFER
Recommendation regarding the De-listing
The Independent Directors are of the view that the capital
requirements needed to bring the Project into production are most
likely to be sourced from industry partners or other strategic
investors rather than from institutional and other investors via
AIM and that negotiations and discussions with such parties would
be best conducted for the benefit of all Shareholders at the
appropriate time as an unquoted company.
Despite the Company's long history as a quoted company,
liquidity in the Shares remains relatively limited with an average
daily volume in the six months to 26 February 2015 of 455,276
Shares or approximately GBP25,450. Conversely there are significant
direct and indirect costs associated with the maintenance of the
AIM listing. The completion of the proposed De-Listing would remove
the burden of such costs and enable management to focus exclusively
on the delivery of the Project for the benefit of all
Shareholders.
It is clear that the Company must raise additional equity both
for its immediate working capital shortfall and to advance the
Project by the completion of a BFS to the stage where development
capital can be raised or an alternative value creating transaction
can be realised.
Given the recent challenging equity market conditions facing the
junior listed resource companies, the Independent Directors believe
that they would not be able to raise the required capital without
the continued support of Redbird. Redbird has made it clear that it
is only willing to support the Company further and provide
additional equity into the Company in a private setting.
For the reasons set out above, the Independent Directors are
unanimously of the view that the proposed De-Listing is in the best
interests of all Shareholders. The Independent Directors will, even
if the Offer does not complete, propose a General Meeting and
unanimously recommend that Shareholders vote in favour of the
Resolutions to give effect to the proposed De-Listing.
As outlined above, including Redbird's existing shareholding and
irrevocable undertakings received by Redbird, an aggregate of
130,397,827 Shares representing approximately 38.09 per cent. of
the Company's Issued Share Capital are currently committed to
support the proposed De-Listing, which requires 75 per cent. of
votes cast to vote in favour at the General Meeting.
It should be noted that, if the requisite number of Shareholders
vote against the Resolutions at the General Meeting to be proposed
and the De-Listing does not occur, there will be no guarantee of
continued support from Redbird and the Company would have to make
immediate alternative plans to source additional capital for the
Company which would potentially be on inferior terms than those
currently proposed by Redbird. As outlined in paragraph 4, as at 31
January 2015, the Company had net working capital of approximately
US$0.2 million (cash at bank less current liabilities excluding
loans from entities Affiliated with Redbird of approximately US$1.8
million). As at the date of this announcement, with further
expenses incurred since 31 January 2015, the Company has a net
working capital deficit, excluding its existing loans, and
therefore requires immediate additional funding.
Recommendation regarding the Offer
The Independent Directors believe that, given the current
financial status of the Company, the Offer represents a certain
opportunity for Shareholders to realise the value of their Shares
at a significant premium of 41.2 per cent. to the previous closing
price. The Independent Directors, who have been so advised by
Canaccord Genuity Limited, as the independent financial adviser for
the purposes of Rule 3 of the Takeover Code, when taking into
account the current financial status of the Company, believe the
terms of the Offer to be fair and reasonable and recommend that
Shareholders accept the Offer.
In providing its advice to the Independent Directors, Canaccord
Genuity Limited has taken into account the commercial assessments
of the Independent Directors.
Despite their recommendation, the Independent Directors who are
Shareholders, namely Ben James and Jeremy Dowler, are not intending
to accept the Offer for their entire shareholding. Ben James is not
intending to accept the Offer for any of his Shares and Jeremy
Dowler is intending to accept the Offer in relation to 1,500,000
Shares of the 8,840,169 Shares he beneficially owns, and to retain
the balance of his Shares. Jeremy Dowler further intends to
reinvest the proceeds from his partial acceptance of the Offer in
any future capital raise of the Company.
Ben James and Jeremy Dowler believe that the inherent value of
the Project may be able to be realised in the future as part of an
unquoted company and are therefore willing to maintain a
shareholding in the Company. However, in maintaining such a holding
they are aware of the associated risks including, inter alia:
-- the Independent Directors have set out in paragraph 6 above
the principal effects of the proposed De-Listing, should it occur,
including, inter alia, that there would be no public market or
trading facility for the Company's shares following completion of
the proposed De-listing and hence, the opportunity for Shareholders
to realise their investment in the Company will be significantly
more limited in an unquoted company; and
-- the Independent Directors have noted in paragraph 5 the
intention following Completion of the Offer and the proposed
De-listing for the Company to conduct a significant equity raise
(relative to the Company's current market capitalisation) which
would likely be at a discount to the current share price and would
result in significant dilution to existing Shareholders who are
unwilling or unable to participate in such financing activity.
Notwithstanding the Independent Directors' recommendation above,
since Ben James and Jeremy Dowler are themselves wholly or
primarily not accepting the Offer, the Independent Directors note
that those Shareholders, who, like Ben James and Jeremy Dowler, are
comfortable with the risks and implications of maintaining a
shareholding following Completion, may wish to take no action in
relation to the Offer.
8. BRIDGING FINANCE ARRANGEMENTS
As described above, the Company must raise additional financing
for its near term requirements ahead of a larger financing for the
completion of a BFS and to repay its existing indebtedness ahead of
sourcing development finance for the Project or an alternative
value realising transaction.
Fund I and Topaz currently have loans outstanding to the Company
totalling approximately US$1.8 million. In order to address the
near term funding requirements of the Company, Fund I has today
agreed to novate its existing unsecured loan (the "Bridging Loan")
of US$1.0 million to Fund II and Fund II has today agreed with the
Company to increase the same to US$2.0 million and extend the
repayment term to 31 December 2015. The Bridging Loan (as novated,
increased and extended) does not bear interest and is repayable
upon the earlier of (i) the completion of a successful rights issue
or any other form of financing by Baobab if, in the sole discretion
of Redbird, the financial position of Baobab is such that the
Bridging Loan can be repaid in full; (ii) a change of control of
the Company (other than to Fund II or any related Concert Party,
including Redbird); or (iii) 31 December 2015.
The novation, increase and extension of the Bridging Facility is
deemed to be a related party transaction under the AIM Rules. The
Independent Directors of the Company consider, having consulted
with its nominated adviser Canaccord Genuity Limited, that the
terms of the Bridging Loan (as novated, increased and extended) are
fair and reasonable insofar as its Shareholders are concerned.
9. REDBIRD SHAREHOLDING
Redbird currently holds 121,193,158 Shares representing
approximately 35.4 per cent. of the Company's Issued Share Capital.
These Shares have been acquired through a combination of several
direct investments made in the Company since July 2012, as well as
market purchases. In addition, Redbird owns 13,500,000 options to
subscribe for additional Shares at an exercise price of 20 pence
per Share, expiring on 30 June 2016. If exercised, the options are
equivalent to 3.79% of the enlarged issued share capital assuming
no other options are exercised.
10. IRREVOCABLE UNDERTAKINGS TO SUPPORT THE DELISTING
Certain of the Independent Directors who are Shareholders,
namely Jeremy Dowler and Ben James, have given irrevocable
undertakings in favour of Redbird to put forward the Resolutions to
give effect to the De-Listing following Completion, and to vote the
9,204,669 Shares to be held by them in aggregate following
Completion of the Offer (accounting for intended acceptances under
the Offer in respect of 1,500,000 Shares held by Jeremy Dowler) or
approximately 2.69 per cent. of the Company's Issued Share Capital
in favour of the Resolutions at the General Meeting. These
undertakings will continue to be binding even in the event of a
higher offer for Baobab.
Accordingly, together with the 121,193,158 Shares currently held
by Redbird, an aggregate of 130,397,827 Shares representing
approximately 38.09 per cent. of the Company's Issued Share Capital
are committed to support the proposed De-Listing.
If the Minimum Acceptance Condition is achieved, Redbird would
own at least 247,549,151 Shares and, together with the Irrevocable
Undertakings, at least 256,753,820 Shares representing at least 75
per cent. of the Company's Issued Share Capital that would be
committed to support the De-Listing and the Resolutions when
proposed at the General Meeting.
11. CONCERT PARTY
For the purpose of the Code, Redbird is acting in concert with
Fund I, Fund II, Explora and Topaz (the "Concert Party").
Redbird is a special purpose vehicle incorporated in, and with
its registered office in, Cyprus. It was established on 17 May 2012
for the purpose of investing in the Company pursuant to a placing
letter dated 5 July 2012.
The sole corporate director of Redbird is Centaur, a company
incorporated and with its registered office in Cyprus, whose
purpose is to provide corporate director services to special
purpose vehicles incorporated in Cyprus. The directors of Centaur
are Barbora Aniftu, Constantinos Constantinides and Elena
Constantinidou.
The Funds are separate Luxembourg investment companies in risk
capital (societé d'investissement en capital à risque (SICAR)) in
the form of corporate partnerships limited by shares (société en
commandite par actions (SCA)). The Funds are governed by the
Luxembourg Law and regulated by the Commission de Surveillance du
Secteur Financier (CSSF).
Fund I was established on 31 January 2012 for the purpose of
investing in mineral exploration and development projects in
sub-Saharan Africa. Fund II was established on 17 December 2013
with the same investment strategy. Both Funds have closed with a
combined value of US$395.4 million, as per the adherence letters
entered into at that time.
Explora is a société anonyme regulated under Chapter 16 of the
Undertakings for Collective Investment ("UCI") Law and is entrusted
with the management of the Funds. Explora is governed by the laws
of Luxembourg, and regulated by the CSSF and has its registered
office in Luxembourg. Since 11 September 2014, Explora has acted as
the sole manager of the Funds and makes all investment decisions
for the Funds in line with the investment strategy, as described on
the website www.amedfunds.com. The managers of Explora are Dr.
David Twist, Mr. Carlo Baravalle, Mr. Arnaud Bon, Mr. Steven Steyn,
Mr. Rudolph de Bruin and Mr. Christoph Kossmann. The shareholders
of Explora are Dr. David Twist, Mr. Carlo Baravalle and Mr. Rudolph
de Bruin.
Topaz is a special purpose vehicle incorporated and with its
registered office in the Netherlands. It was established on 25 July
2014 and has provided a convertible loan to the Company to advance
both the Monte Muande joint venture and the Project, pursuant to
the funding agreement announced by the Company on 11 December 2014.
Topaz is indirectly controlled by Fund II and its sole director is
SGG Management (Netherlands) B.V.
The Funds have a number of investors (the "Limited Partners"),
each of which has entered into a confidentiality agreement with the
Funds, which prohibits the disclosure of their identities. The
Limited Partners have no voting rights in the Funds that would
permit or enable the Limited Partners to control or have any
involvement in the management of the Funds.
12. INTENTIONS AND COMMITMENTS FOLLOWING COMPLETION OF THE
OFFER
Following the Completion, Redbird intends that, should it
achieve sufficient acceptances and/or acquire sufficient Shares to
take its shareholding to 75 per cent. or more of the Issued Share
Capital, it will procure the De-Listing.
Even if Redbird does not reach a holding of 75 per cent. of the
Shares as a result of the Offer, following its Completion, the
Independent Directors intend to convene the General Meeting to
consider the Resolutions to give effect to the De-Listing, and the
Independent Directors who are Shareholders, namely Jeremy Dowler
and Ben James, have irrevocably committed to Redbird to vote the
9,204,669 Shares expected to be held by them on Completion,
representing 2.69 per cent. of the Issued Share Capital, in favour
of such Resolutions. The Resolutions would therefore be approved
provided Redbird receives acceptances under the Offer or completes
Market Purchases in respect of at least 126,355,993 Shares
representing 36.91 per cent. of the Issued Share Capital and
declares the Offer unconditional.
As described above, in order to complete a BFS for the Project,
to repay its existing indebtedness of approximately US$1.8 million,
to refinance the Bridging Loan (as novated, increased and extended)
and to provide working capital ahead of sourcing development
finance for the Project or an alternative value realising
transaction, the Company will need to complete a further equity
financing in the amount of at least US$12 million to fund the
Company through to 31 December 2015. The Company intends that such
equity financing will proceed as soon as practicable following
Completion and the proposed De-Listing and will be conducted at a
discount to the recent trading price, and as far as practicable on
a pre-emptive basis without triggering a requirement to file a
prospectus or making the offer available in jurisdictions where
regulatory or filing requirements would be unduly onerous. Redbird
intends to fully support such equity financing.
The Independent Directors and Redbird also intend to procure
that the Company will, as soon as practicable following the
Completion and in conjunction with the De-Listing process, propose
the adoption of new articles of association for the Company that
will provide for:
(i) Pre-emption rights in respect of any issuance of new
securities that would be subscribed for by a Shareholder holding
more than 50 per cent. of the issued and outstanding Shares at the
relevant time, together with its Concert Parties and Affiliates,
subject to certain exceptions that would not cause undue regulatory
burdens upon the Company in any jurisdiction;
(ii) Tag-along rights in respect of the sale, transfer or other
disposition by one or more Shareholders representing more than 30
per cent. of the Shares issued and outstanding at the relevant time
(whether in a single transaction or a series of transactions);
(iii) Drag-along rights providing for the right of the Company
to transfer a Shareholder's Shares on the Company Registry to a
third party purchaser, or to cancel a Shareholder's Shares, for
consideration reflecting the value per Share consideration that has
been accepted by Shareholders of the Company representing not less
than 75 per cent. of all Shares; and
(iv) So long as there are one or more minority Shareholders
holding 10 per cent. or more of the Issued Share Capital, the right
for such minority Shareholders to appoint an independent director
to the board of the Company.
Redbird has irrevocably committed to Baobab, following
Completion: (a) to procure, insofar as it is able, that the Company
proposes, and to vote in favour of, the adoption of such new
articles of association; and (b) not to vary, or procure or vote in
favour of the variation of, the rights set out above for a period
of five years from the adoption of such new articles of
association. In addition Redbird and Baobab have undertaken to
co-operate with each other with a view to minimising applicable
taxes, if any, in Mozambique relating to the Offer.
Shareholders should note that the protections identified above
are in addition to any protections which continue to be available
to Shareholders pursuant to the provisions of the Code.
Shareholders should also note that the drag-along rights set out
above are in excess of the "squeeze-out" rights provided for in
section 979 of the 2006 Act which, broadly, permit an offeror under
a takeover offer to buy out minority Shareholders at the offer
price once it has received acceptance for 90 per cent. of the
shares subject to the takeover offer. In this regard, Shareholders
should note that Redbird does not intend to exercise such
"squeeze-out" rights (should it become entitled to do so) in
respect of any remaining Shares which have not been accepted
pursuant to the Offer or otherwise acquired by Redbird.
Finally, Shareholders should note that Redbird's commitment to
preserve the above rights and restrictions in the Company's new
articles of association cease five years after they come into
existence and, further, that this commitment will not apply to, and
may not be honoured by, any person other than Redbird.
13. MARKET PURCHASES
As required by the Code, the Independent Directors have agreed,
following a request from Redbird, that Redbird may make
acquisitions of Shares other than acquisitions of such Shares by
way of acceptance of the Offer ("Market Purchases").
The restrictions contained in rule 5.1 of the Code which would
otherwise prohibit such acquisitions do not therefore apply to
Market Purchases.
Shareholders should note, however, that rule 6.2(a) of the Code
requires that if any Market Purchases are made at above the Offer
Price, the Offer Price must be adjusted upwards accordingly.
14. MANAGEMENT AND EMPLOYEES
Redbird has confirmed to the Board of Baobab that it believes
the skills and experience of the existing executive directors,
management and employees of Baobab are an important part of its
business. Redbird confirms that it has given assurances to the
Independent Directors of Baobab that, upon and following
Completion, it intends to safeguard fully the existing contractual
and statutory employment rights (including pension rights where
applicable) of all Baobab executive directors, management and
employees in accordance with applicable law and it does not intend
to make material changes to the conditions of employment of
Baobab's employees. Redbird has also confirmed that it intends to
maintain the location of Baobab's place of business as well as
Baobab's material fixed assets.
As described above, so long as there are minority Shareholders
holding 10 per cent. or more of the Issued Share Capital, it is
intended that such minority Shareholders have the right to appoint
an independent director to the Board. It is intended that Jeremy
Dowler fulfils this role from Completion until at least 31 December
2016 unless otherwise directed by minority Shareholders.
15. FINANCING OF THE OFFER
Fund II has irrevocably committed to Redbird to provide
financing for the Offer of up to GBP13,268,716, being the maximum
consideration payable pursuant to the Offer (the "Financing
Commitment"). Redbird has agreed, following Completion, to issue
new common shares in Redbird ("Redbird Shares") to Fund II in
consideration for funds advanced by Fund II pursuant to the
Financing Commitment. The number of Redbird Shares to be issued
shall be that number that results in Fund II holding that
percentage of Redbird Shares that is equal to the percentage of the
Shares acquired by Redbird during the Offer period as a proportion
of the Shares held by Redbird following Completion.
GMP Securities Europe LLP, financial adviser to Redbird, is
satisfied that sufficient resources are available to satisfy in
full the cash consideration payable to Shareholders under the terms
of the Offer.
16. OPTIONS AND WARRANTS
The Offer will extend to any Shares which are unconditionally
allotted or issued as a result of the exercise of any existing
warrants and existing options and vesting of awards under the
Company's share option schemes before the date on which the Offer
closes.
17. TAXATION
The Company and Redbird are investigating the possible capital
gains or other tax consequences of the Offer in Mozambique for
Shareholders and members of the Redbird Group as these are
currently not clear. The Independent Directors and Redbird aim to
provide further clarity on such consequences in the Offer Document
or subsequent announcements to the extent then available.
Shareholders who are in any doubt about their tax position should
consult their own independent financial or tax advisers without
delay.
18. OFFER DOCUMENT
The Offer Document and the Form of Acceptance accompanying the
Offer Document will be published no later than 28 days from the
date of this announcement (or such later date as may be agreed by
the Offeror and the Independent Directors). The Offer Document,
when published, will contain important information on the
De-Listing and the Offer and how Shareholders may accept the Offer
and, accordingly, Shareholders are urged to read the Offer Document
and any accompanying Form of Acceptance when published.
19. ADVISERS
Canaccord Genuity Limited is acting as financial adviser to the
Independent Directors. GMP Securities Europe LLP is acting as
financial adviser to Redbird. Watson Farley & Williams LLP is
acting as legal adviser to the Independent Directors. Fasken
Martineau LLP is acting as legal advisor to Redbird.
20. GENERAL
The Offer will be made subject to the Conditions and on the
terms set out in Appendix I to this announcement and to be set out
in the Offer Document. Appendix II to this announcement contains a
summary of the irrevocable undertakings received in relation to the
Offer, Appendix III contains the sources of information and bases
of calculation of certain information contained in this
announcement, and Appendix IV contains definitions of certain
expressions used in this announcement.
APPENDIX I
CONDITIONS AND FURTHER TERMS OF THE OFFER
Conditions of the Offer
The Offer will be conditional upon valid acceptances being
received (and not, where permitted, withdrawn) by not later than
1.00 pm (London time) on the First Closing Date (or such later
time(s) and/or date(s) as Redbird may, subject to the rules of the
Code or with the consent of the Panel, decide) which, together with
any Shares acquired, or agreed to be acquired, by Redbird or
persons acting in concert with it before or during the Offer
Period, will result in Redbird and any persons acting in concert
with it holding not less than 72.31 per cent. (or such lower
percentage as Redbird may decide) (1) in nominal value of the
Shares to which the Offer relates; and (2) of the voting rights
attached to those shares, provided that this Condition will not be
satisfied unless Redbird and/or any of its associates shall have
acquired or agreed to acquire (whether pursuant to the Offer or
otherwise) Shares carrying in aggregate more than 50 per cent. of
the voting rights then normally exercisable at general meetings of
Baobab.
The Offer will also be subject to the satisfaction or waiver of
the following conditions:
(a) since the date of this announcement, Baobab's business
continuing to operate in the ordinary course of business, which
shall include but not be limited to it refraining from entering
into new material contracts and that no changes to the terms and
conditions of any existing material contracts shall be made without
the prior written consent of Redbird;
(b) since the date of this announcement, that there has been no,
and will be no (as a result of Completion) material adverse change
in the financial or operating position, or prospects, of Baobab or
impacting the ability of the Company to operate now or in the
future, as currently contemplated, in Mozambique or on the status
of its mineral licences; and
(c) Redbird has received all regulatory approvals required in
Mozambique as a result of any direct or indirect change of control
of Capitol Resources, LDA (the holder of Baobab's mineral licences)
including, without limitation, such approvals required pursuant to
the Mining Law No 20/2014, dated 18 August 2014; and
(d) no tax or other monetary liability (which is material in the
context of the Offer) whether actual or contingent has been created
or imposed by any tax, governmental, quasi-governmental or
regulatory body in Mozambique on any member of the Redbird Group in
consequence of the Offer, or the proposed acquisition of any shares
in Baobab by Redbird, or because of a change in the control of
Capitol Resources, LDA
For the purposes of the Conditions:
(a) Shares which have been unconditionally allotted, but not
issued, before the Offer becomes or is declared unconditional as to
acceptances, whether pursuant to the exercise of any outstanding
subscription or conversion rights or otherwise, shall be deemed to
carry the voting rights they will carry on being entered into the
register of members of Baobab;
(b) the expression "Shares to which the Offer relates" and
"associates" shall be construed in accordance with sections 974 to
991 of the 2006 Act; and
(c) valid acceptances shall be deemed to have been received in
respect of Shares which are treated for the purposes of section 979
of the 2006 Act as having been acquired or contracted to be
acquired by Redbird by virtue of acceptances of the Offer.
Certain terms of the Offer
The Offer will be made on the terms and is subject to the
Conditions which is set out in this Appendix I and to be set out in
the Offer Document and, in the case of Shares held in certificated
form, the Form of Acceptance and such further terms as may be
required to comply with the provisions of the Code. This
announcement does not constitute an offer or invitation to purchase
any securities.
The Shares will be acquired by Redbird under the Offer fully
paid and free from all liens, charges, encumbrances, rights of
pre-emption and any other third party rights of any nature
whatsoever and together with all rights attaching to them as at the
date of this announcement or subsequently attaching or accruing to
them, including, without limitation, voting rights and the right to
receive and retain, in full, all dividends and other distributions
(if any) declared, made or paid, or any other return of capital
(whether by way of reduction of share capital or share premium
account or otherwise) made on or after the date of this
announcement. Accordingly, insofar as a dividend and/or
distribution and/or a return of capital is proposed, declared,
made, paid or payable by Baobab in respect of a Share on or after
the date of this announcement, Redbird reserves the right to reduce
by the amount of the dividend and/or distribution and/or return of
capital, the price payable under the Offer in respect of a Share,
except insofar as the Share is or will be transferred pursuant to
the Offer on a basis which entitles Redbird alone to receive the
dividend and/or distribution and/or return of capital but if that
reduction in price has not been effected, the person to whom the
price payable under the Offer is paid in respect of that Share will
be obliged to account to Redbird for the amount of such dividend
and/or distribution and/or return of capital.
The Offer will be governed by the laws of England and Wales and
will be subject to the jurisdiction of the courts of England and
Wales.
APPENDIX II
DETAILS OF IRREVOCABLE UNDERTAKINGS
As at 26 February 2015, irrevocable undertakings to vote in
favour of the De-Listing have been given by the following Baobab
Directors (and certain of their immediate family members) in
respect of the following numbers of Shares in which they and their
connected persons and related trusts are interested. In the case of
Jeremy Dowler, the number of Shares shown below in respect of which
Jeremy Dowler has given an irrevocable undertaking, excludes
1,500,000 Shares beneficially owned by Jeremy Dowler, which Jeremy
Dowler intends to tender in connection with the Offer (as more
fully detailed in the announcement):
Name Percentage of
Number of Shares Issued Share
irrevocably committed Capital
Jeremy Dowler 7,340,169 2.14%
Ben James 1,864,500 0.54%
Total 9,204,669 2.69%
Notes:
These undertakings will continue to be binding even in the event
of a higher offer for Baobab.
APPENDIX III
SOURCES AND BASES OF INFORMATION
1. The value attributed to the existing and to be issued share
capital of Baobab is based upon the 342,338,426 Shares in issue as
at the date of this announcement.
2. The value attributed to the ordinary share capital of Baobab
is based upon the issued share capital of Baobab as set out in (1)
above.
3. References to a percentage of Baobab's issued ordinary share
capital are based on the number of Shares in issue as set out in
paragraph (1) above.
4. Share prices and premiums have been derived from the Daily
Official List and represent the closing mid-market prices on the
relevant date.
5. VWAPs and premiums have been derived from Bloomberg L.P.
6. US$ figures have been converted from GBP at an exchange rate
of US$:GBP of 1.5415:1, extracted from Bloomberg L.P. on 26
February 2015, being the latest practicable date prior to the date
of this announcement.
APPENDIX IV
DEFINED TERMS
The following definitions apply throughout this announcement,
the Offer Document and the accompanying Form of Acceptance unless
the context otherwise requires:
2006 Act the Companies Act 2006 (as amended,
modified, consolidated, re-enacted or
replaced from time to time);
Affiliate has the meaning provided in the Code
(and Affiliated shall be construed accordingly);
AIM the AIM market operated by the London
Stock Exchange;
AIM Rules means the AIM Rules for Companies;
Appendix or Appendices an appendix or appendices (as applicable)
to this document;
Associate has the meaning provided in Chapter
3, Part 28 of the 2006 Act;
Baobab or the Company Baobab Resources Plc a company registered
in England and Wales with company number
05590467 and whose registered office
is at 27-28 Eastcastle Street, London,
W1W 8DH;
BFS Bankable Feasibility Study;
Board the board of directors of Baobab;
Bridging Loan The unsecured interest free loan of
US$1 million made by Fund I to the Company
on or around 31 October 2014 and novated
to Fund II, increased to US$2 million
and extended on 26 February 2015;
Business Day any day (other than a public holiday,
Saturday or Sunday) on which clearing
banks in London are open for normal
business;
Centaur Centaur Fiduciaries (Cyprus) Limited;
Certificated or In Certificated a Share which is not in uncertificated
Form form (that is, not in CREST);
Code or Takeover Code the City Code on Takeovers and Mergers;
Completion means completion of the Offer in accordance
with its terms;
Conditions the conditions as to acceptance as set
out in Appendix I of this announcement;
Concert Party Redbird, Fund I, Fund II, Explora and
Topaz;
CREST the relevant system (as defined in the
Regulations) in respect of which Euroclear
UK & Ireland Limited is the Operator
(as defined in the Regulations);
Daily Official List the daily publication of official quotations
for all securities traded on the London
Stock Exchange;
Dealing Disclosure has the same meaning given to it in
the Code;
De-Listing The cancellation of the Shares to trading
on AIM;
EAFs Electronic Arc Furnaces;
EPC Engineering, procurement and construction;
Euroclear Euroclear UK & Ireland Limited, the
operator of CREST;
Explora Explora means Explora S.A, a société
anonyme regulated under Chapter 16 of
the UCI Law and governed by the laws
of Luxembourg, which is entrusted with
the management of Fund I and Fund II;
Financing Commitment Fund II's irrevocable commitment to
Redbird to provide financing for the
Offer of up to GBP13,268,716;
First Closing Date the date which is 21 days after the
expected date of the posting of the
Offer Document;
FCA or Financial Conduct the United Kingdom Financial Conduct
Authority Authority and any successor or replacement
regulatory body or bodies;
Form of Acceptance the form of acceptance and authority
for use in connection with the Offer
which will be enclosed with the Offer
Document and which may only be completed
by holders of Shares in certificated
form;
Fund I African Minerals Exploration & Development
Fund SICAR S.C.A;
Fund II African Minerals Exploration & Development
Fund II SICAR S.C.A;
Funds means Fund I and Fund II;
General Meeting means the general meeting of the Company
to approve the Resolutions;
Independent Directors means Jeremy Dowler, Francis Eagar and
Ben James;
Irrevocable Undertakings irrevocable undertakings received by
Redbird to vote in favour of the De-Listing
in respect of a total of 9,204,669 Shares,
representing, in aggregate, approximately
2.69 per cent. of Baobab's existing
issued share capital. These undertakings
will continue to be binding even in
the event of a higher offer for Baobab;
Issued Share Capital the existing 342,338,426 Shares;
JORC or JORC Code means the Joint Ore Reserves Committee
2012 edition of the "Australasian Code
for Reporting of Exploration Results,
Mineral Resources and Ore Reserves";
Limited Partners Limited partners in the Funds;
London Stock Exchange London Stock Exchange plc or its successor;
Market Purchases Any purchases of Shares by Redbird or
any party deemed to be acting in concert
with it following the publication of
this announcement prior to Completion;
Minimum Acceptance Condition means the acceptance condition as set
out in Appendix I of this announcement;
Mt million tonnes
Offer the cash offer to be made by Redbird
to acquire the entire issued and to
be issued Shares (other than any Shares
held by Redbird within the meaning of
section 974(2) of the 2006 Act or any
of its Associates) in accordance with
Part 28 of the 2006 Act, on the terms
and subject to the Condition to be set
out in the Offer Document and, in the
case of Shares held in certificated
form, the Form of Acceptance, and, where
the context admits, any subsequent revision,
variation, extension or renewal thereof;
Offeror means Redbird;
Offeree means Baobab;
Offer Document the offer document which is expected
to be posted to Shareholders within
28 days of the date of this announcement
and any subsequent document containing
the Offer;
Offer Period the period commencing on 27 February
2015 (being the date of this announcement)
until the latest of (i) the First Closing
Date, (ii) the date on which the Offer
lapses or is withdrawn and (iii) the
date on which the Offer becomes or is
declared unconditional;
Offer Price 6.0 pence per Share in cash;
Opening Position Disclosure an announcement containing details of
interests of short positions in, or
rights to subscribe for, any relevant
securities of a party to the Offer if
the person concerned has such a position;
Overseas Shareholders holders of Shares whose registered addresses
are outside the UK or who are citizens
or residents of countries other than
the UK;
Panel the Panel on Takeovers and Mergers;
Project The Company's Tete pig iron and ferro-vanadium
project in Mozambique;
Redbird Redbird, a company registered in Cyprus
with company number 306489 and whose
registered office is at 2 Apostolos
Varnavas, Centaur House, 2571 Nisou,
PO Box 28779 2082
Nicosia, Cyprus;
Redbird Group Redbird, its subsidiaries, subsidiary
undertakings and associated undertakings
and any other body corporate, partnership,
joint venture or person in which Redbird
and such undertakings (aggregating their
interests) have a direct or indirect
interest of 20 per cent. or more of
the voting or equity capital or the
equivalent;
Redbird Shares Common shares in Redbird;
Regulations the Uncertificated Securities Regulations
2001 (SI 2001 No. 3755) (as amended,
modified, consolidated, re-enacted or
replaced from time to time);
Resolutions the resolutions proposed at the General
Meeting to approve the De-Listing and
adoption of new articles of association
containing the provisions outlined in
paragraph 12 of this announcement;
Restricted Jurisdiction the United States and any jurisdiction
where local laws or regulations may
result in a significant risk of civil,
regulatory or criminal exposure if information
concerning the Offer is sent or made
available to Shareholders in that jurisdiction;
Rule the relevant rule of the Code;
Shareholders the holders of Shares from time to time;
Shares comprises:
(a) the existing unconditionally allotted
or issued and fully paid ordinary shares
of 1 pence each in the capital of Baobab;
and
(b) any further ordinary shares of 1
pence each in the capital of Baobab
which are unconditionally allotted or
issued and fully paid before the Offer
closes or before such earlier date as
Redbird (subject to the Code) may determine
not being earlier than the date on which
the Offer becomes or is declared unconditional
as to acceptance;
Subsidiary and Subsidiary have the meaning given to them by the
Undertaking 2006 Act;
Tavistock means Tavistock Communications Limited;
Topaz means Topaz EX B.V., a company indirectly
controlled by Fund II;
Uncertificated or In Uncertificated a Share which is for the time being
Form recorded on the register of members
of Baobab as being held in uncertificated
form, and title to which, by virtue
of the Regulations, may be transferred
by means of CREST;
United Kingdom or UK the United Kingdom of Great Britain
and Northern Ireland (and its dependent
territories);
United States or US the United States of America, its territories
and possessions and any state of the
United States of America and the District
of Columbia;
VWAP The volume weighted average price;
$, US$ and USD the lawful currency of the United States;
and
GBP, sterling, pence and the lawful currency of the United Kingdom.
p
References to an enactment include references to that enactment
as amended, replaced, consolidated or re-enacted by or under any
other enactment before or after the date of this announcement.
Words importing the singular shall include the plural and vice
versa, and words importing the masculine gender shall include the
feminine or neutral gender.
All references to time in this announcement are to London time
unless otherwise stated.
This information is provided by RNS
The company news service from the London Stock Exchange
END
OFBLFFILFRIRFIE
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