NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
20 June 2017
Response to firm offer announcement by Fosun Gold1
The Independent Committee of the Board of Gemfields plc ("Gemfields" or the "Company") notes the announcement issued today by Fosun Gold with respect to a firm offer for the entire issued and to be issued share capital of the Company at 45 pence per share in cash (the "Fosun Offer").
The Independent Committee of Gemfields, who have been so advised by J.P. Morgan Cazenove as to the financial terms of the Fosun Offer, consider that the financial terms of the Fosun Offer are not fair and reasonable. In providing its advice, J.P. Morgan Cazenove has taken into account the commercial assessments of the Independent Committee.
Notwithstanding the above, the Independent Committee are of the belief that the certain cash exit on offer from Fosun Gold is materially more attractive than the unsolicited all-share nil-premium offer from Pallinghurst Resources Limited ("Pallinghurst") announced on 19 May 2017 (the "Unsolicited Pallinghurst Offer"), and would note that the Fosun Offer is at a 18.2 per cent. premium to the implied value of the Unsolicited Pallinghurst Offer2. The Independent Committee also reiterate their belief that the Unsolicited Pallinghurst Offer would dilute Gemfields shareholders with inferior assets that offer exposure to more volatile commodities and with less attractive prospects.
Pallinghurst has announced that it has secured irrevocable undertakings that require certain Gemfields shareholders to accept the Unsolicited Pallinghurst Offer (notwithstanding that these irrevocable undertakings cease to be binding in certain circumstances including where there is a rival firm offer at a greater than 10 per cent. premium to the Unsolicited Pallinghurst Offer and such offer has not been matched by Pallinghurst within seven days of such offer) which, when taken together with Pallinghurst's current holding in Gemfields, would result in Pallinghurst exceeding their 75% acceptance condition. In this event, the Unsolicited Pallinghurst Offer would become unconditional as to acceptances and, in the event that the offer was to become unconditional in all respects, Pallinghurst have stated that they intend to delist the Company from AIM. Consequently, given the challenges that the Unsolicited Pallinghurst Offer poses to the independent future of the Company, and given the derisory nature of the Unsolicited Pallinghurst Offer, the Independent Committee intend to recommend that shareholders accept the Fosun Offer so as to secure a relatively more attractive outcome for their investment, as the Independent Committee, Ian Harebottle (Chief Executive Officer of Gemfields) and Janet Boyce (Chief Financial Officer of Gemfields) have irrevocably undertaken to do in respect of their own shares (representing approximately 0.08 per cent. of the issued ordinary share capital of Gemfields) and/or, as applicable, share options (representing approximately 1.61 per cent. of the issued ordinary share capital of Gemfields on a fully diluted basis), absent a higher offer for Gemfields emerging.
As outlined in the Fosun Offer, Fosun Gold has agreed management co-investment arrangements (the "Management Co-Investment Arrangements") with Ian Harebottle, with an agreement in principle also reached with Janet Boyce, subject to the approval of the independent shareholders of Gemfields at a general meeting. J.P. Morgan Cazenove consider the terms of the Management Co-Investment Arrangements to be fair and reasonable so far as the independent shareholders of Gemfields are concerned.
Given the Management Co-Investment Arrangements concerning Ian Harebottle and Janet Boyce referred to above, the Independent Committee now comprises Graham Mascall (as Chairman of the Independent Committee), Clive Newall and Finn Behnken, each of whom the board of the Company considers to be free from conflicts of interest in respect of both the Fosun Offer and the Unsolicited Pallinghurst Offer.
Given the circumstances, the Company has agreed to pay a break fee to Fosun Gold (or to any subsidiary undertaking of Fosun Gold that proposes to make the Fosun Offer, at Fosun Gold's sole written election) of $2.0 million (subject to any applicable VAT) by way of compensation if a Competing Proposal becomes or is declared wholly unconditional. For these purposes, "Competing Proposal" means any firm offer for the Company in accordance with and pursuant to Rule 2.7 of the Takeover Code (whether to be implemented by way of a scheme of arrangement or a takeover offer or otherwise) and that is made or announced by a third party which is not acting in concert (as defined in the Takeover Code) with Fosun Gold (and shall include, without limitation, the Unsolicited Pallinghurst Offer and any revision to it).
In addition, Gemfields will provide Fosun Gold with all relevant information and assistance reasonably necessary or requested to identify and/or satisfy any regulatory or competition conditions to the Fosun Offer.
1 Fosun Gold Holdings Limited ("Fosun Gold"), a wholly owned subsidiary of Fosun International Limited ("Fosun International"), a company listed on the Hong Kong Stock Exchange with stock code 00656 (collectively with its affiliates and investment funds advised or managed by Fosun International and/or its affiliates as "Fosun").
2 Based on the exchange rate as at close of business (London time) of ZAR16.5526=£1.00 and the closing share price of Pallinghurst of ZAR3.3 on 19 June 2017 (being the last business day prior to this announcement) the Unsolicited Pallinghurst Offer values each Gemfields share at 38.1 pence.
J.P. Morgan Cazenove +44 20 7742 4000
Jamie Riddell / James Robinson
Grant Thornton UK LLP (Nominated Adviser) +44 20 7383 5100
Philip Secrett / Richard Tonthat
BMO Capital Markets Limited +44 20 7236 1010
Jeff Couch / Neil Haycock
Macquarie Capital (Europe) Limited +44 20 3037 2000
Raj Khatri / Nick Stamp
Tavistock (PR Adviser) +44 20 7920 3150
Jos Simson / Emily Fenton
J.P. Morgan Limited, which conducts its UK investment banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), BMO Capital Markets Limited and Macquarie Capital (Europe) Limited are authorised and regulated in the United Kingdom by the Financial Conduct Authority. J.P. Morgan Cazenove, BMO Capital Markets Limited and Macquarie Capital (Europe) Limited are acting as financial advisers exclusively for Gemfields and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than Gemfields for providing the protections afforded to clients of J.P. Morgan Cazenove, BMO Capital Markets Limited and Macquarie Capital (Europe) Limited or their affiliates, or for providing advice in relation to any matter referred to herein.
Grant Thornton UK LLP is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is acting as nominated adviser for Gemfields and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than Gemfields for providing the protections afforded to clients of Grant Thornton UK LLP or for providing advice in relation to any matter referred to herein.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1% 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 Takeover Code, any person who is, or becomes, interested in 1% 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.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
Publication on website
A copy of this announcement will be made available, subject to certain restrictions relating to persons resident in restricted jurisdictions, on Gemfields' website at www.gemfields.co.uk by no later than 12 noon London time the day following this announcement.
The content of the websites referred to in this announcement is not incorporated into and does not form part of this announcement.
This information is provided by RNS