On 23 April 2007 the directors of R&E and JCI proposed a merger of the companies (“the merger proposal”) to be effected by way of a scheme of arrangement (“the scheme”) in terms of Section 311 of the Companies Act, 1973, as amended, (“Companies Act”).
If acceptable to the shareholders of R&E and JCI, and subject to various regulatory approvals, including sanction by the High Court of South Africa, JCI shareholders will be required to exchange their shares in JCI for shares in R&E, thereby effectively merging the two companies. The proposed exchange ratio, which has been recommended by the boards of directors of both companies, is 1 R&E share for every 95 JCI shares in issue, excluding those held by R&E (“the exchange ratio”).
The concept of a merger was also supported by the mediators as described in their interim recommendation published on 28 February and 5 March 2007.
As reported on 29 June 2007, the companies applied for relaxation of certain disclosure requirements of the Securities Regulation Panel (“the SRP”) and JSE Limited.
Shareholders are hereby advised that the companies have submitted a draft scheme circular incorporating documentation relied upon by each company to support its respective claim including additional information to the SRP in support of their application referred to above. As soon as possible following a ruling from the SRP, the companies will finalise their draft circulars and commence the formal regulatory approval process with the SRP and JSE.
Following the requisite regulatory approvals, the circulars, incorporating notices of general meetings of both companies to approve the merger proposals, will be posted to shareholders
Shareholders will be kept updated on further developments in this regard.
Renewal of cautionary announcements to R&E and JCI shareholders
Until the publication of further information as set out above, shareholders in both companies are advised to continue to exercise caution in trading their shares over-the-counter until the merger proposal documentation is finalised.
FORWARD-LOOKING STATEMENT DISCLAIMER FOR R&E AND JCI
Certain statements in this circular, as well as oral statements that may be made by the officers, directors or employees of each of R&E or JCI acting on its behalf relating to such information, contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, specifically Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. All statements, other than statements of historical facts, are “forward-looking statements”. These include, without limitation, those statements concerning completion of the relinquishment by R&E and JCI and certain of their subsidiaries of rights contiguous to the South Deep gold mine to GFO; the value of the net assets of R&E and JCI; the pro forma effects of the relinquishment of the contiguous rights on the financial information and NAV statement of R&E; the ability of R&E and JCI to successfully consummate a merger that is approved by the shareholders and is acceptable to the necessary governmental authorities, the fraud and misappropriation that are alleged to have occurred and the time periods affected thereby; the ability of R&E and JCI to recover any misappropriated assets and investments; the outcome of any proceedings on behalf of, or against R&E or JCI; the ability of each of R&E and JCI to complete its forensic investigation and prepare audited financial statements; the time period for completing the forensic investigation and audited financial statements; the amount of any claims R&E is or is not able to recover against others, including JCI, and the success of its mediation with JCI; the likelihood and economic parameters of any merger arrangement between JCI and R&E; and the ultimate impact on the previously released financial statements and results, assets and investments, including with respect to Randgold Resources Limited, business, operations, economic performance, financial condition, outlook and trading markets of R&E and JCI. Although R&E and JCI believe that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct, particularly in light of the extent of the alleged frauds and misappropriations uncovered to date. Actual results could differ materially from those implied by or set out in the forward-looking statements.
Among other factors, these include the inherent difficulties and uncertainties in ascertaining the values of the net assets of R&E and JCI, particularly in light of the absence of any independent valuations, the existence of any unknown liabilities, the willingness of any governmental authority to sanction any merger in light of the absence of independent valuations or otherwise; the extent, magnitude and scope of any fraud and misappropriation that may be ultimately determined to have occurred and the time periods and facts related thereto following the completion of the forensic investigation and any other investigations that may be commenced and the ultimate outcome of such forensic investigation; the ability of R&E to successfully assert any claims it may have against other parties for fraud or misappropriation of R&E assets or otherwise and the solvency of any such parties, including JCI; the determinations of the mediators and acceptance of any such determinations by the shareholders of R&E and JCI; the ability of R&E to defend successfully any counterclaims or proceedings against it; the ability of each of R&E and JCI and the forensic investigators to obtain the necessary information with respect to the transactions, assets, investments, subsidiaries and associated entities of R&E and JCI to complete the forensic investigation and prepare audited financial statements; the willingness and ability of the forensic investigators and auditors to issue any final opinions with respect thereto; the ability of R&E to implement improved systems and to correct its late reporting; the JSE Limited’s willingness to lift its suspension of the trading of R&E’s securities on that exchange; changes in economic and market conditions; fluctuations in commodity prices and exchange rates; the success of any business and operating initiatives, including any mining rights; changes in the regulatory environment and other government actions; business and operational risk management; other matters not yet known to R&E or JCI or not currently considered material by R&E or JCI; and the risks identified in Item 3 of R&E’s most recent annual report on Form 20-F filed with the SEC and its other filings and submissions with the SEC.
All forward-looking statements attributable to R&E, or persons acting on its behalf, are qualified in their entirety by these cautionary statements. R&E expressly disclaims any obligation to release publicly any update or revisions to any forward-looking statements to reflect any changes in expectations, or any change in events or circumstances on which those statements are based, unless otherwise required by law.
30 October 2007
Sponsor to R&E and JCI
(A division of Sasfin Bank Limited)