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EXXARO RESOURCES LIMITED - EXX - Announcement regarding Exxaros stake in Tronox Limited and the proposed redomiciliation of Tronox

Release Date: 27/11/2018 08:00
Code(s): EXX     PDF:  
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EXX - Announcement regarding Exxaro’s stake in Tronox Limited and the proposed redomiciliation of Tronox

EXXARO RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 2000/011076/06)
JSE share code: EXX
ISIN: ZAE000084992
ADR code: EXXAY
(“Exxaro” or “the Company”)

Announcement regarding Exxaro’s stake in Tronox Limited (“Tronox”) and the proposed
redomiciliation of Tronox

a) Introduction

    Shareholders are referred to a press release today by Tronox Limited, a global leader in the mining of
    titanium-bearing minerals sands and the production of titanium dioxide listed on the NYSE, regarding
    its intention to redomicile from Australia, where it is currently incorporated, to the United Kingdom (the
    “Redomicile”), and an agreement reached between Tronox and Exxaro to support Exxaro's
    monetisation of its Tronox stake, amongst other matters. As previously announced, Exxaro remains
    committed to monetising its remaining 24% interest in Tronox to focus on core activities, fund capital
    commitments, repay debt and make distributions to shareholders.

    The agreement reached today between Exxaro and Tronox addresses the following key matters:

        a. The terms of Exxaro's support for the Redomicile by the first half of 2019;
        b. Exxaro's accelerated disposal of its 26% member’s interest in Tronox Sands Limited Liability
           Partnership in the United Kingdom ("Tronox UK”) for a consideration of R2.0bn in cash,
           representing Exxaro’s indirect share of the loan accounts in Tronox’s South African subsidiaries
           (“Tronox SA”) at 30 September 2018;
        c. A further clarification of the terms and conditions agreed between Exxaro and Tronox in 2012,
           when Tronox was formed, by which Exxaro can dispose of its 26% equity interest in Tronox SA
           in exchange for 7.2 million Tronox shares or the cash equivalent thereof (the "Disposal”). In
           addition to the existing triggers, Exxaro and Tronox have agreed that the Disposal can be
           triggered upon the occurrence of certain events, including confirmation or agreement that
           Tronox SA has met the relevant ownership requirements in relation to their existing mining
           rights, in the context of the newly published Broad-Based Black Socio-Economic
           Empowerment Charter for the South African Mining and Minerals Industry, 2018; and
        d. The terms on which Exxaro can proceed with a staged process to monetise its remaining
           Tronox stake of 28.7mm shares during 2019, subject to market conditions, including Exxaro's
           grant to Tronox of a right to acquire such shares at a market related price in lieu of Exxaro
           selling them in the market or to any third parties.

b) Rationale

    The transactions provide Exxaro with greater certainty regarding the process and timing for Exxaro's
    monetization of its interest in Tronox and its English and South African subsidiaries, whilst supporting
    Tronox’s intention to effect the Redomicile and manage Exxaro's exit in an efficient way. Any proceeds
    from the transactions will be utilized in core activities, to fund capital commitments, to repay debt and
    to make distributions to shareholders.
c) Conditions precedent to the transactions

     The various transactions are subject, in whole or in part, to the following conditions:
         - Tronox court approval and shareholder approval of the Redomicile;
         - approval by the Financial Surveillance Department of the South African Reserve Bank; and
         - other applicable South African regulatory approvals.

d) Effective date

     The Redomicile and Exxaro's disposal of its interest in Tronox UK are expected to be completed by the
     first half of 2019, and the timing of the other transactions will be subject to the receipt of regulatory
     approvals and market conditions.

e) Financial information

     Exxaro applies the equity method of accounting for its equity interest in Tronox SA and Tronox UK. At
     30 June 2018, Exxaro carried its current investment in Tronox UK and Tronox SA at a carrying value
     of ZAR 1 735 million and ZAR 1 966 million, respectively. For the six-month period ended 30 June
     2018, Exxaro’s share of equity-accounted income amounted to ZAR 58 million and ZAR 166 million for
     Tronox UK and Tronox SA, respectively.

     Following Exxaro's sale of its interests in Tronox UK and Tronox SA, Exxaro will no longer apply the
     equity method of accounting for or receive dividends from such entities.

f)   Categorisation

     Exxaro's disposal of its equity interest in Tronox SA and its interest in Tronox UK, in aggregate,
     constitute a Category 2 transaction in terms of Section 9 of the JSE Listings Requirements.

     In relation to the Tronox's right to buy Exxaro's Tronox shares, which right is triggered at Exxaro’s
     election, this transaction will be categorised for JSE purposes once such a transaction is consummated.
     Shareholders are reminded that Exxaro shareholders previously approved the disposal of the remaining
     28.7 million Tronox shares on 24 May 2018.

     Pretoria
     27 November 2018

     Financial adviser to Exxaro
     J.P. Morgan

     Legal advisers to Exxaro
     Orrick, Herrington & Sutcliffe (UK) LLP
     Norton Rose Fulbright South Africa Incorporated

     Sponsor to Exxaro
     Absa corporate and investment bank, a division of Absa Bank Limited

Date: 27/11/2018 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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