Proposed Tender Offer to purchase up to 13.5% of the Company’s
issued ordinary shares
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ANNOUNCEMENT
Kenmare Resources plc
(“Kenmare” or “the Company” or
“the Group”)
16 November 2021
Proposed Tender Offer to purchase up to
13.5% of the Company’s issued ordinary shares
Publication of Circular and Notice of
EGM
Kenmare Resources plc (LSE:KMR, ISE:KMR), one of
the leading global producers of titanium minerals and zircon, which
operates the Moma Titanium Minerals Mine (the
"Mine" or "Moma") in northern
Mozambique, today announces the launch of a proposed tender offer
(the “Tender Offer”) to purchase up to 13.5% of
the Company’s issued ordinary shares (“Ordinary
Shares”).
The Tender Offer executes on the Company’s
stated intention to increase shareholder returns after the
successful completion of its major capital projects and is
supported by strong operational performance of Kenmare and its
subsidiaries (the “Group”) and commodity market
strength in 2021.
Highlights
- The Company
proposes to return up to £61.8 million (approximately US$82.7
million) to Eligible Shareholders by way of a Tender Offer at £4.17
per Ordinary Share (being the average of the closing prices per
Ordinary Share as derived from the London Stock Exchange Daily
Official List for the 10 Business Days up to and including 12
November 2021, the latest practicable date before publication of
the Tender Offer circular to Shareholders).
- The Tender Offer
is for up to 13.5% of the Company’s issued share capital. Under the
Tender Offer, each Shareholder is entitled to have up to 13.5% of
its shareholding purchased by the Company at the Tender Price.
- The Tender Offer
is to be funded from the Company’s existing and available cash
resources and borrowings under the Group’s borrowing facilities and
remains open until 1.00 p.m. on 9 December 2021.
- Eligible
Shareholders will be able to decide whether to tender none, some or
all of their Ordinary Shares within the overall limits of the
Tender Offer.
- The Tender Offer
will provide Eligible Shareholders with an opportunity to sell part
or all of their Ordinary Shares and to receive their respective
share of the cash which the Company is seeking to return.
- Directors who
are beneficially interested in Ordinary Shares have indicated that
they will not tender Ordinary Shares pursuant to the Tender
Offer.
- The Tender Offer
will provide Eligible Shareholders holding 500 Ordinary Shares or
fewer in certificated form an opportunity to sell their entire
shareholding in the Company without the dealing costs or
commissions that might otherwise make such sale uneconomic (subject
to there being capacity to purchase those Ordinary Shares in
accordance with the terms of the Tender Offer; if there is
insufficient capacity to purchase all of such Ordinary Shares, as
many tenders as possible from such Eligible Shareholders will be
accepted in full).
Background to and reasons for the Tender
OfferIn October 2018, the Company announced a dividend
policy to return a minimum of 20% of profit after tax to
shareholders. In 2021, the Company is generating stronger free cash
flow, providing an opportunity to deliver increased shareholder
returns. The Company announced in March 2021 that it was targeting
an increased dividend pay-out for 2021 of 25% of profit after
tax.
The Tender Offer executes on the Company’s
stated intention to increase shareholder returns after the
successful completion of its major capital projects and is
supported by strong operational performance of the Group and
commodity market strength in 2021. In its financial results for the
six-month period ended 30 June 2021, the Group reported profit
after tax of US$48.0 million in H1 2021 (H1 2020: US$12.7
million).
Having regard to the Group’s ongoing earnings
and cash flow generation, the Board (with the exception of Mr.
Sameer Oundhakar, who, as the representative on the Board of the
Company’s largest shareholder, absented himself from deliberations
relating to the proposed Tender Offer) unanimously determined that
a return of capital is in the best interests of the Company and its
Shareholders as a whole. The Board believes that a return of
capital in the amount proposed represents an effective use of
shareholder funds and that the continued strength of the Group’s
balance sheet, and its cashflow generation after the return of
those funds, will be sufficient to pursue the Group’s strategic
objectives.
EGMThe Tender Offer is subject
to shareholder approval. A circular (the
“Circular”) containing a notice of an
extraordinary general meeting to be held at the Company’s offices
at 4th Floor, Styne House, Hatch Street Upper, Dublin, D02 DY27,
Ireland at 11:00 a.m. on Thursday, 9 December 2021 (the
“EGM”) and details of the resolution (the
“Resolution”) to be proposed at the EGM will be
posted today on the Investors section of the Company’s website and
will be mailed to Eligible Shareholders. This Circular has been
submitted to the UK Financial Conduct Authority via the Nation
Storage Mechanism (the “NSM”) and will be
available for inspection on the NSM’s website at
www.morningstar.co.uk/uk/nsm.
The Company plans to conduct the EGM in
accordance with the Irish Government’s COVID-19 related public
health measures and public health advice. Shareholders should
expect the EGM to take place under constrained circumstances and
are strongly recommended to vote by proxy. The Company will ensure
that all legal requirements of the meeting, in accordance with its
Articles of Association, are satisfied with the minimum necessary
quorum of three Shareholders and physical distancing measures will
be in place. The Company reserves the right to refuse entry to the
meeting where reasonably necessary to comply with the COVID-19
related public health measures and advice. The Company will
continue to closely monitor the developing situation around
COVID-19 as well as any further advice from the Irish Government.
If it becomes necessary to amend the arrangements for the EGM, as
much notice as possible will be given to Shareholders via RIS
announcement.
To facilitate shareholder communication, the EGM
will be broadcast by conference call. The conference call
will commence at 11.00 a.m. on Thursday, 9 December 2021.
Shareholders will be able to access the call using the numbers
below:
Ireland
(Local): |
+353 1 53 695 84 |
United Kingdom
(Local): |
+44 (0)20 3936 2999 |
United States of America
(Local): |
+1 646 664 1960 |
The access code is: 865447. Please dial-in 5-10
minutes prior to the start time using the applicable phone number
above.
Shareholders should be aware that attendance on
the conference call will not constitute attendance at the meeting
and so Shareholders who attend the call and who wish to vote should
submit their proxies in advance, so as to reach the Registrar by
11.00 a.m. on Tuesday, 7 December 2021.
Irrevocable undertakingAfrican
Acquisition S.à r.l. (“AAS”), an investment
vehicle of the Oman Investment Authority (“OIA”,
formerly the State General Reserve Fund of the Sultanate of Oman),
which holds approximately 29.10% of the issued ordinary share
capital of the Company has entered into an irrevocable undertaking
in connection with the Tender Offer. Under the irrevocable
undertaking, AAS has committed to offer to sell in the Tender Offer
3,546,811 Ordinary Shares, being the minimum number of Ordinary
Shares as will, following completion of the Tender Offer, result in
the aggregate number of Ordinary Shares held by AAS representing
29.9% (less than 30%) of the then total issued Ordinary Shares,
thereby ensuring that no requirement to make a mandatory offer
under Rule 37 of the Irish Takeover Rules will arise for AAS or
OIA.
AAS has reserved the right to tender in the
Tender Offer more Ordinary Shares than it has undertaken to tender
under this irrevocable undertaking.
The Company has also received an irrevocable
undertaking from AAS to vote in favour of the Resolution to be
proposed at the EGM in respect of the 31,928,480 Ordinary Shares
owned by it, representing in aggregate 29.1% of the issued Ordinary
Shares as at the Latest Practicable Date.
The Tender OfferThe Tender
Offer is to be effected by Peel Hunt LLP (“Peel
Hunt”) (acting as principal and not as agent, nominee or
trustee) purchasing Ordinary Shares from Eligible Shareholders at
the Tender Price by means of on-market purchases. Peel Hunt, in
turn, has the right to require the Company to purchase from it, and
can be required by the Company to sell to it, such Ordinary Shares
at the Tender Price under a Repurchase Agreement by way of an
on-market transaction. All of these transactions will be carried
out on the London Stock Exchange's Main Market. All of the Shares
purchased by the Company pursuant to the Repurchase Agreement will
be cancelled and will not rank for any future dividends.
Each Eligible Shareholder will be entitled to
sell up to 13.5% of the Ordinary Shares registered in its name on
the Record Date under the Tender Offer, rounded down to the nearest
whole number of Ordinary Shares (that being an Eligible
Shareholder’s “Basic Entitlement”). Any resulting
fractional entitlements of Eligible Shareholders will be aggregated
and used to satisfy tenders in excess of Eligible Shareholders’
Basic Entitlements. Ordinary Shares validly tendered by Eligible
Shareholders up to their respective Basic Entitlement will be
accepted and repurchased in full. Tendering Shareholders may also
be able to participate in the Tender Offer in excess of their Basic
Entitlement to the extent that other Eligible Shareholders tender
less than their respective Basic Entitlement, resulting Ordinary
Shares in excess of the tendering Shareholders’ Basic Entitlement
becoming available for sale (known as “Excess Tender Offer
Shares”). Any Excess Tender Offer Shares will be purchased
from tendering Shareholders pro rata to the amount in excess of
each eligible shareholder’s Basic Entitlement so tendered (save
that tenders from Eligible Shareholders who hold no more than 500
Ordinary Shares in certificated form will be accepted in full
subject to there being capacity to purchase those Ordinary Shares
in accordance with the terms of the Tender Offer; if there is
insufficient capacity to purchase all of such Ordinary Shares, as
many tenders as possible from such Eligible Shareholders will be
accepted in full).
The formal terms and conditions of the Tender
Offer are set out in the Circular and the Tender Form. The results
of the Tender Offer will be announced on 10 December
2021 and published on the Company’s website
(www.kenmareresources.com).
Directors’
intentionsThe Board considers the Tender Offer and
the Resolution to be in the best interests of Shareholders as a
whole. Accordingly, the Board recommends that Shareholders vote in
favour of the Resolution to be proposed at the EGM, as the
Directors intend to do for their respective individual beneficial
holdings of, in aggregate, 827,539 Ordinary Shares, representing
approximately 0.75% of the issued Ordinary Share capital as at the
Latest Practicable Date.
The Directors are making no recommendation in
relation to participation in the Tender Offer itself. Whether or
not Shareholders, Euroclear Participants or CDI Holders decide to
tender their interests in Ordinary Shares will depend, amongst
other things, on their own individual circumstances, including
their own tax position. Shareholders, Euroclear Participants and
CDI Holders are recommended to consult their duly authorised
independent advisers in making their own decisions. Each of the
Directors who holds Ordinary Shares has confirmed to the Board that
he or she will not participate in the Tender Offer.
Peel Hunt and Davy are acting as joint brokers
to the Company in connection with the Tender Offer and the matters
described in the Circular. Davy is acting as financial adviser to
the Company.
Expected timetable |
2021 |
Tender Offer opens |
16
November |
Latest time and date for receipt of Forms of Proxy for the
EGM |
11.00 a.m.
on 7 December |
Extraordinary General Meeting |
11.00 a.m.
on 9 December |
Latest time and date for Admitted Institutions to communicate
tender instructions to Euroclear Bank |
12.00 noon
on 9 December |
Latest time and date for receipt of Tender Forms from Eligible
Shareholders and tender instructions from Euroclear Bank |
1.00 p.m.
on 9 December |
Closing Date for the Tender Offer |
1.00 p.m.
on 9 December |
Record Date for the Tender Offer |
6.00 p.m.
on 9 December |
Announcement of results of the Tender Offer and expected date
of debit of tendered Ordinary Shares |
10
December |
Euroclear Bank accounts credited with Tender
Offer proceeds (Settlement Date) |
by no later
than 10 Business Days following the Closing Date |
Despatch of cheques for Tender Offer proceeds for certificated
Ordinary Shares |
by no later
than 10 Business Days following the Closing Date |
Despatch of balance share certificates for unsold Ordinary
Shares and share certificates for unsuccessful
tenders (certificated holders only) |
by no later
than 10 Business Days following the Closing Date |
Information in connection with the Tender Offer
is available on the Company’s website
(www.kenmareresources.com).
Capitalised terms used in this announcement
(this “Announcement”), which have not been defined
have the meanings given to them in the Circular, unless the context
provides otherwise.
This Announcement does not constitute, or form
part of, an offer or any solicitation of an offer, to purchase or
repurchase securities in any jurisdiction or constitute a
recommendation or advice in respect of any securities or other
financial instruments or any other matter.
For further information, please contact:
Kenmare Resources plcJeremy DibbCorporate
Development & Investor Relationsir@kenmareresources.comTel:
+353 1 671 0411Mob: + 353 87 943 0367
Murray (PR advisor)Joe HeronTel: +353 1 498
0300Mob: +353 87 690 9735
Important Notice:This Announcement contains
inside information.
Forward-looking
StatementsCertain statements contained in this
Announcement are or may constitute “forward-looking statements”. By
their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend upon future
circumstances that may or may not occur, many of which are beyond
the control of the Company and all of which are based on its
current beliefs and expectations about future events. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual
results, performance or achievements of the Group, or industry
results, to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Such forward- looking statements are
based on numerous assumptions regarding the present and future
business strategies of the Group and the environment in which the
Group will operate in the future. These forward-looking statements
speak only as at the date of this Announcement. Forward-looking
statements are typically identified by the use of forward-looking
terminology such as “believes”, “expects”, “may”, “will”, “would”,
“should”, “intends”, “estimates”, “plans”, “assumes” or
“anticipates” or the negative of such words or other variations on
them or comparable terminology, or by discussions of strategy which
involve risks and uncertainties.
About Kenmare Kenmare Resources
plc is one of the world’s largest producers of mineral sands
products. Listed on the London Stock Exchange and the Euronext
Dublin, Kenmare operates the Moma Titanium Minerals Mine in
Mozambique. Moma’s production accounts for approximately 5% of
global titanium feedstocks and the Company supplies to customers
operating in more than 15 countries., Kenmare produces raw
materials that are ultimately consumed in everyday “quality-of
life” items such as paints, plastics and ceramic tiles.
Peel Hunt LLP, which is authorised and regulated
in the United Kingdom by the Financial Conduct Authority in the
conduct of investment business, is acting exclusively for the
Company and no-one else in connection with the Tender Offer and the
matters described in this Announcement. Peel Hunt LLP will not
regard any other person as its customer or be responsible to any
other person for providing the protections to customers of Peel
Hunt LLP nor for providing advice in relation to the transactions
and arrangements described in this Announcement.
Davy, which is regulated in Ireland by the
Central Bank, is acting exclusively for the Company and no-one else
in connection with the Tender Offer and the matters described in
this Announcement. Davy will not regard any other person as its
customer or be responsible to any other person for providing the
protections to customers of Davy nor for providing advice in
relation to the transactions and arrangements described in this
Announcement.
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