TIDMZCC
RNS Number : 7938X
ZCCM Invs.Hldgs PLC
22 December 2023
SENS ANNOUNCEMENT
(the "Notice" or "Announcement")
ISSUER
ZCCM INVESTMENTS HOLDINGS PLC ("ZCCM-IH")
[Incorporated in the Republic of Zambia]
Company registration number: 771
Share Code: ZCCM-IH
ISIN: ZM0000000037
Authorised by: Charles Mjumphi - Company Secretary
SPONSOR
Stockbrokers Zambia Limited
[Founder Member of the Lusaka Securities Exchange]
[Regulated and licensed by the Securities and Exchange
Commission of Zambia]
Contact Number: +260-211-232456
Website: www.sbz.com.zm
APPROVAL
The captioned Notice or Announcement has been approved by:
i. The Lusaka Securities Exchange ("LuSE")
ii. The Securities and Exchange Commission ("SEC")
iii. ZCCM Investments Holdings Plc
RISK WARNING
The Notice or Announcement contained herein contains information
that may be of a price-sensitive nature.
Investors are advised to seek the advice of their investment
advisor, stockbroker, or any professional duly licensed by the
Securities and Exchange Commission of Zambia to provide securities
advice.
ISSUED: 22 December 2023
ZCCM INVESTMENTS HOLDINGS PLC
[Incorporated in the Republic of Zambia]
Company registration number: 771
Share Code: ZCCM-IH
ISIN: ZM0000000037
["ZCCM-IH" or "the Company"]
TRANSACTION ANNOUNCEMENT
Regarding
Mopani Copper Mines Plc
The shareholders of ZCCM Investments Holdings Plc ("ZCCM-IH" or
"the Company"), and other market participants, are referred to the
cautionary announcements issued on 10 November 2023 and 30 November
2023 in relation to the Board of Directors of ZCCM-IH ("the Board")
selecting International Resources Holding RSC Limited ("IRH"), as
the preferred Strategic Equity Partner ("SEP") for Mopani Copper
Mines Plc ("MCM" or "Mopani").
The Board is pleased to announce that on 22 December 2023 ,
ZCCM-IH entered into an agreement with IRH pursuant to which IRH
has committed to invest a total of US$1.1 billion into MCM as a
Strategic Equity Partner (the "Transaction"), subject to the
fulfilment of Conditions Precedent defined herein. Consequently,
upon the satisfaction of those Conditions Precedent, the
relationship between Glencore International AG ("Glencore") and MCM
will be restructured.
ZCCM-IH, in consultation with its Transaction Advisors, is
preparing a Transaction Circular providing all the relevant
information in respect of the Transaction, including financial and
technical information. Shareholders will be able to vote on the
Transaction at an Extraordinary General Meeting ( "EGM ") due to
take place in the first quarter of 2024.
In compliance with the requirements of Section 9 of the Listings
Requirements of the Lusaka Securities Exchange ( "LuSE ") , the key
features of the Transaction are set out below.
1. Brief Particulars of the Transaction
-- IRH to invest a total of US$1.1 billion into MCM to fund
MCM's Project Development Plan ("PDP"), provide working capital and
restructure certain existing Glencore liabilities as set out
below:
o US$620 million will be provided in the form of new equity
capital in return for a 51% stake in MCM, which will be used for
MCM's capital projects, and to stabilise the working capital
position of the business;
o Approximately US$400 million will be provided as a Shareholder
Loan to MCM by way of novation of the Glencore debt, that will be
used as part of the consideration to settle the original Glencore
Transaction Debt of US$1.5 billion plus interest and the Glencore
Super Senior procured letters of credit;
o Further capital may be made available to MCM as shareholder
loans, if required, based on the future working capital
requirements of the business.
-- ZCCM-IH will retain a 49% equity stake in MCM at Closing;
-- The executive management of MCM will be retained and will be
supplemented by industry experts from IRH with the relevant skills
and expertise to complete MCM's capital projects and turnaround its
operational performance;
-- A new Board of Directors, reflective of the revised
shareholding structure , will be constituted ; and
-- IRH will, subject to certain conditions precedent being met,
provide up to US$ 220 million in interim funding . This funding
will be available to MCM prior to the Closing , to ensure that the
business has sufficient liquidity until Closing . The interim
funding will form part of the US$620 million new equity
investment.
2. Consideration
The total consideration is US$1.1 billion which will be split
between equity and debt in the following proportion:
-- US$620 million in new equity;
-- US$300 million as a shareholder loan by way of novation of
part of the Glencore Transaction Debt;
-- Up to US$100 million for settlement of the Glencore procured letters of credit;
-- Up to US$80 million in shareholder loans, if required.
3. Transaction Rationale
MCM is one of the most important copper mining operations in
Zambia, with a long history that is synonymous with the growth and
development of the Copperbelt. ZCCM-IH took full control of MCM
from Glencore in 2021, with a plan to find a suitable SEP to
contribute to the expansion of the business and provide the
necessary capital for growth.
IRH's strategy aims to invest in critical minerals in the
region, across the entire mining value chain. The selection of IRH
as the preferred SEP was carefully considered against the key
criteria outlined above. The Board of ZCCM-IH believes that IRH's
partnership with ZCCM-IH and MCM represents an important strategic
step towards the revitalisation of the Zambian economy, the Zambian
mining industry, and the continued development of the Copperbelt by
enabling the long-term sustainability of MCM.
IRH's investment into MCM will recapitalise its balance sheet,
secure direct and indirect jobs, and provide both funding and
technical experience to complete MCM's Project Development Plan,
all of which underpin MCM's strategy to achieve its target of
becoming a 200,000 ton per annum producer of copper cathodes in the
next 3 years. Beyond this, ZCCM-IH and IRH will work with MCM and
the Government of the Republic of Zambia ("GRZ") to pursue other
opportunities in the Zambian mining industry that will attract
further investment into the region.
Strong track record across the mining value chain
IRH has a technical team of over 120 professionals working with
major global mining companies and possessing a variety of
experience, including in geology, engineering, metallurgy, and
project management. The IRH team will provide support and expertise
to the existing MCM management team to ensure a successful
turnaround of the mine's operations. IRH will also leverage the
expertise of its various subsidiaries and joint venture companies
as required, to support the development of ancillary opportunities
across the entire mining value chain.
Environmental, social and governance (ESG)
IRH's investment into MCM embraces a strict focus on multiple
ESG principles. In collaboration with GRZ, IRH will not undertake
staff redundancies at MCM as part of the Transaction. Any staff
separations to occur will be strictly performance-related and
carried out purely in the ordinary course of business. IRH has also
committed to work with ZCCM-IH and MCM to optimise the local supply
chains to benefit the Zambian economy and will ensure that, inter
alia, MCM continues to be managed by the existing local management
team. MCM's existing Corporate Social Responsibility programs,
including its investments in schools, hospitals and sports clubs
will continue to receive funding and other support.
4. Key Financial Terms
US$620 million Equity Investment into MCM
IRH, through its wholly owned subsidiary, Delta Mining Limited
("Delta"), will, subject to certain conditions precedent, provide
an equity investment of US$620 million through the subscription of
new shares in MCM. Delta will thus subscribe for 7,181,633 shares
("Investor Shares"), issued at $86.33 a share (the "Subscription
Price").
The Investor Shares, when issued, shall constitute 51% of the
entire issued share capital of MCM, with the balance of 49% being
held by ZCCM-IH. The equity investment will be used to undertake
MCM's Project Development Plan and stabilise the working capital
position of the business.
US$400 million of loans to MCM
In addition to the equity investment, IRH will provide US$400
million in loans by way of novation of the Glencore debt as
outlined below. IRH will also, subject to certain conditions
precedent, make available additional shareholder loans, if
required, to support MCM's working capital and short-term liquidity
requirements.
Glencore and MCM Capital Restructuring
As part of the overall restructuring of MCM's balance sheet,
agreement has been reached between IRH, ZCCM-IH and Glencore to
restructure US$1.5 billion of Glencore Transaction Debt that
resulted when ZCCM-IH acquired 100% of MCM in 2021, as well as up
to US$100 million of the letter of credit support that has been
provided to MCM by Glencore since ZCCM-IH's acquisition. The final
terms of this restructuring are still being finalised and further
detail will be provided once definitive agreements are signed.
5. Conditions Precedent
Closing or completion of the Transaction is subject to the
fulfilment or waiver of, inter alia, the following Conditions
Precedent:
-- Approval of the Transaction by the shareholders of ZCCM-IH at
a general meeting ("ZCCM-IH Shareholder Approval");
-- Receipt of the renewal of MCM's Mining Licences pursuant to
section 76 of the Mines and Minerals Development Act, 2015 (No. 11
of 2015) from the Minister of Mines and Minerals Development for a
period of 25 years, on the basis of the revised mine plan;
-- Receipt of approval and/or consent of the Transaction
pursuant to section 67 of the Mines and Minerals Development Act,
2015 (No. 11 of 2015) from the Minister of Mines and Minerals
Development;
-- Delivery by Delta to ZCCM-IH of the final PDP;
-- Execution and delivery by Delta of commitment letters
undertaking to pay the Subscription Price and US$400 million of
loans to MCM in order to settle the Glencore debt;
-- Receipt of a duly signed tax covenant in respect of MCM's tax position at Closing;
-- Agreement by Delta and ZCCM-IH of the list of unanimous
shareholder consent matters to be scheduled to the shareholders'
agreement in respect of MCM to be entered into a Completion;
-- The SEC approving the change of control of MCM in connection with the Transaction; and
-- Reaching agreement with Glencore on the documents governing
the restructure mentioned above.
6. Effective Date
The Transaction will close and become effective once all of the
Conditions Precedent listed have been completed. It is estimated
that Closing will occur during the first quarter of 2024.
Accordingly, shareholders are advised to continue to exercise
caution when dealing in the Company's securities until the
completion of the Transaction.
ZCCM-IH is working with its sub-advisors and MCM to firm up on
the required technical and financial information and, therefore,
the information relating to the proforma effect of the Transaction
on ZCCM-IH shall be published in a subsequent announcement. In
accordance with section 9 of the LuSE Listings Requirements,
ZCCM-IH has commenced preparation of the Circular to be distributed
to shareholders to convene a General Meeting of the members of the
Company to approve the Transaction. ZCCM-IH shall continue to give
further updates in this regard.
By Order of the Board
Charles Mjumphi
Company Secretary
Issued in Lusaka, Zambia on 22 December 2023
T | +260-211-232456
E | advisory@sbz.com.zm
W | www. sbz.com.zm
Stockbrokers Zambia Limited (SBZ) is a member of the Lusaka Securities Exchange and is regulated
by the Securities and Exchange Commission of Zambia.
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First Issued on 22 December 2023
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