RNS Number:1410N
Exploration Co PLC
04 July 2003
4 July 2003
Not for release, distribution or publication in whole or in part into the United
States, Canada, Australia or Japan.
Recommended Merger of El Oro Mining and Exploration Company p.l.c. with The
Exploration Company p.l.c. by means of a scheme of arrangement
* The boards of El Oro and Exploration announce that they have reached
agreement on the terms of a recommended merger of the two companies.
* The Merger will be implemented through the acquisition of El Oro by
Exploration via a scheme of arrangement whereby Scheme Shareholders will
receive a certain number of New Exploration Stock Units for each Scheme
Share held.
* The Scheme Exchange Ratio will be based on the underlying value of each
company's net assets ("Formula Asset Values"), which will be calculated
following approval of the Merger by both Exploration Stockholders and El Oro
Shareholders. The way in which the Formula Asset Values will be calculated
is set out in Appendix I to this announcement.
* For illustrative purposes only and based on the relative Formula Asset
Values as at 20 June 2003 (being, for these purposes, the latest practicable
date prior to the announcement of the Merger.), Scheme Shareholders would
receive 2.509 New Exploration Stock Units for each El Oro Share. On this
basis 5,676,151 New Exploration Stock Units would be issued, representing
approximately 47.5 per cent. of the Enlarged Group's share capital following
the Merger and Exploration Capital Reduction becoming effective. The actual
Scheme Exchange Ratio will be calculated on the date upon which the Scheme
is approved by El Oro Shareholders at the Class Meetings and El Oro EGM.
* On the basis of the closing mid-market price of an Exploration Stock Unit
as derived from the London Stock Exchange Daily Official List of 245.0p as
at 20 June 2003 (as at the close of business on 2 July 2003, the Exploration
Stock Unit price was unchanged), each El Oro Share would be valued at
614.7p. As at 20 June 2003, the closing mid-market price of an El Oro Share
price (as derived from the London Stock Exchange Daily Official List) was
612.5p. As at the close of business on the 2 July 2003, the El Oro Share
price was unchanged at 612.5p.
* Upon the Merger becoming effective, Exploration will take steps to cancel
the Exploration Stock Units owned by El Oro (or its nominee) by way of a
reduction of share capital and Exploration will change its name to El Oro
and Exploration Company p.l.c.
* There will be two separate El Oro Class Meetings. Due to the Parish
Family's significant holding in El Oro, El Oro Shareholders who are members
of or nominees of members of the Parish Family and their respective related
trusts will be treated as a separate shareholder class from the other Scheme
Shareholders for Scheme approval purposes.
* The El Oro Directors who are Class A Shareholders (El Oro Shareholders who
are members of or nominees of the Parish Family and their related trusts)
intend to vote in favour of the resolution to be proposed at the Class
Meeting of Class A Shareholders in respect of their own beneficial holdings.
* The El Oro Directors who are Class B Shareholders (El Oro Shareholders who
are not members of or nominees of the Parish Family and their respective
related trusts, excluding Exploration and Danby Registrars) intend to vote
in favour of the resolution to be proposed at the Class Meetings of Class B
Shareholders in respect of their own beneficial holdings.
* The El Oro Directors intend to vote in favour of the resolution to be
proposed at the El Oro EGM in respect of their own beneficial holdings.
* As all of the El Oro Directors are also directors of Exploration, they are
precluded by the Code from providing advice to El Oro Shareholders on the
terms of the Merger and on an appropriate course of action. Consequently, as
there are no independent directors of El Oro, BDO Stoy Hayward Corporate
Finance, El Oro's financial adviser, has advised the board of El Oro with
regard to the terms of the Merger. BDO Stoy Hayward Corporate Finance
considers the terms of the Merger to be fair and reasonable and in the
interests of El Oro Shareholders as a whole and recommends El Oro
Shareholders to vote in favour of the resolutions to be proposed at the
Class Meetings and at the El Oro EGM.
* Due to the relative sizes of Exploration and El Oro, the Merger
constitutes a "Class 1" transaction for Exploration for the purposes of the
Listing Rules and therefore requires the approval of Exploration
Stockholders under the Listing Rules. Furthermore, approval of the
Exploration Stockholders is required by virtue of the fact that the Merger
constitutes a substantial property transaction under Section 320 of the Act
between Exploration and certain of its directors. The issue of the New
Exploration Stock Units pursuant to the Merger to certain directors of
Exploration, who are also El Oro Shareholders, will constitute related party
transactions under the Listing Rules between Exploration and each such
director which will also require the approval of the Rainbow Stockholders.
* The directors of Exploration consider that the Merger, the Exploration
Capital Reduction and all the matters contained in the Resolutions to be
proposed at the Exploration EGM (except for the related party resolutions
recommended below) are in the best interests of Exploration Stockholders as
a whole and unanimously recommend Exploration Stockholders to vote in favour
of such resolutions as they intend to do in respect of their own beneficial
holdings.
* The Independent Directors of Exploration, who have been so advised by
Soditic, the Company's financial adviser, consider the terms of each
transaction with a related party as described above to be fair and
reasonable as far as the Exploration Stockholders are concerned and in the
best interests of the Exploration Stockholders as a whole. The Independent
Directors recommend Exploration Stockholders to vote in favour of the
related party resolutions, as the Independent Directors, who are Exploration
Stockholders, intend to do in respect of their own beneficial holdings. In
providing advice to the Independent Directors, Soditic has taken into
account the Independent Directors' commercial assessment.
* Applications have been made to the UK Listing Authority for the New
Exploration Stock Units to be admitted to the Official List and to the
London Stock Exchange for the New Exploration Stock Units to be admitted to
trading.
Commenting on the Scheme, Robin Parish, Chairman and Managing Director of
Exploration and El Oro said:
"The Merger will simplify the structure and should also result in cost and
operational efficiencies. The Directors believe that this ought to eliminate
some of the market discount to net asset values at which both companies trade.
The Merger also increases the free float, which should improve liquidity. I am
confident that the merged group will move forward from strength to strength and
will continue to reward its shareholders, for whose loyalty over the years I am
very grateful.
Many shareholders, including my family, have been with one or both companies for
a considerable period of time and will, along with myself, have twinges of
sadness at the passing of these two long-lived names, which were both
successfully re-incarnated by my father. However the simplification of the
structure is, I believe, a prize worth grasping and the names will live on in
the combined entity. "
El Oro's and Exploration's Annual Financial Statements have been posted today.
The El Oro AGM, the Class Meetings, the El Oro EGM, the Exploration AGM and
Exploration EGM will all be held on 31 July 2003.
This summary should be read in conjunction with the full text of the attached
press release.
Enquiries
Exploration 0207 581 2782
Robin Parish
El Oro 0207 581 2782
David Hunting
Soditic Limited 0207 872 7000
Mark Katzenellenbogen
Jarrod Castle
BDO Stoy Hayward Corporate Finance 0207 486 5888
Michael Cobb
Philip Brady
As regards persons, resident in, or citizens of, jurisdictions outside the
United Kingdom ("overseas shareholders"), the Merger may be affected by the laws
of the relevant jurisdictions. Such overseas shareholders should inform
themselves about and observe all applicable legal requirements. It is the
responsibility of each of the overseas shareholders to satisfy themselves as to
the full observance of the laws of the relevant jurisdiction in connection
therewith, including the obtaining of any governmental exchange control or other
consents which may be required, and the compliance with other necessary
formalities which are required to be observed and the payment of any issue,
transfer or other taxes due in such jurisdiction.
Soditic, which is regulated in the United Kingdom by The Financial Services
Authority, is acting for Exploration as financial advisor in connection with the
Merger and no-one else and will not be responsible to anyone other than
Exploration for providing the protections afforded to customers of Soditic nor
for providing advice in relation to the Merger.
BDO Stoy Hayward Corporate Finance, a division of BDO Stoy Hayward, Chartered
Accountants, which is regulated in the United Kingdom by The Financial Services
Authority, is acting for El Oro as financial adviser in connection with the
Merger and no-one else and will not be responsible to anyone other than El Oro
for providing the protections afforded to customers of BDO Stoy Hayward
Corporate Finance nor for providing advice in relation to the Merger.
Grant Thornton Corporate Finance is acting for Exploration as sponsor in the
listing of the New Exploration Stock Units with respect to the Merger and no-one
else and will not be responsible to anyone other than Exploration for providing
the protections afforded to customers of Grant Thornton Corporate Finance nor
for providing advice in relation to the listing. Grant Thornton Corporate
Finance is a division of Grant Thornton, which is authorised and regulated in
the United Kingdom by the Financial Services Authority for investment business.
4 July 2003
Recommended Merger of El Oro Mining and Exploration Company p.l.c. and The
Exploration Company p.l.c.
1. Introduction
The boards of El Oro and Exploration announce that they have reached agreement
on the terms of a recommended merger of the two companies. The Merger will be
implemented through the acquisition of El Oro by Exploration via a scheme of
arrangement whereby Scheme Shareholders will receive a certain number of New
Exploration Stock Units for each Scheme Share held. The number of New
Exploration Stock Units to be issued to the Scheme Shareholders will be based on
the relative Formula Asset Values of Exploration and El Oro (calculated in
accordance with Appendix I to this announcement). Upon the Scheme becoming
effective, Exploration will take steps to cancel the Exploration Stock Units
owned by El Oro (or its nominee) by way of a reduction of capital. Upon the
Merger becoming effective, Exploration will change its name to El Oro and
Exploration Company p.l.c.
2. Reasons for the Merger
(a) Simplification of corporate structure and cancellation of cross
shareholding
El Oro and Exploration were founded in 1899 and 1886 respectively and the
companies and their subsidiaries have developed over this time into the somewhat
opaque and complex structure that currently exists. The cross shareholding of
Exploration in El Oro (49.9%) and of El Oro in Exploration (48.0%) will be
cancelled on implementation of the Scheme and the Exploration Capital Reduction.
By undertaking the Scheme, the structure will be simplified and become more
transparent for existing shareholders of both companies and potential investors
in the Enlarged Group.
(b) Removal of the "double" discount
Both companies currently trade at a discount to the underlying net asset value
of their respective investments, a position that has endured for a considerable
period of time. As a consequence, the current cross shareholdings are also
reflected at market value in their respective share prices and not at their
higher underlying net asset value. In the views of the directors, there is
therefore a "double" discount for shareholders. The directors believe that the
implementation of the Scheme should help eliminate some of this "double"
discount.
(c) Increased liquidity
The free float of the merged entity will be substantially increased through the
elimination of the cross shareholdings. In the view of the directors, this
factor should result in improved liquidity in the merged entity's shares, which
should facilitate dealing in the shares both for small and larger shareholders.
(d) Cost and operational efficiencies
The Enlarged Group should achieve certain modest savings in overall
administration costs and other ancillary costs. Operational efficiencies will
include single board meetings and annual general meetings and a single
shareholder base. In addition, it is anticipated that there will be less
compliance and management time involved in running one investment company rather
than two. Furthermore, the pooling of the Enlarged Group's liquid resources and
external investments should allow for more efficient cash management.
3. Implementation of the Merger
The Merger will be implemented by the acquisition of El Oro by Exploration by
means of a scheme of arrangement under Section 425 of the Act. As a result of
the Merger, El Oro will become a wholly-owned subsidiary of Exploration. Upon
the Scheme becoming effective, Exploration will take steps to cancel the
5,781,624 Exploration Stock Units owned by El Oro (or its nominee) by way of a
capital reduction under Section 135 of the Act.
Under the Scheme:
(a) all of the El Oro Shares (other than those already owned by
Exploration (or its nominee)) will be cancelled and an equal number of new El
Oro Shares will be issued to Exploration (or its nominee); and
(b) in consideration for such cancellation, New Exploration Stock Units
will be issued to holders of El Oro Shares cancelled pursuant to paragraph (a)
above, on the register of members at the Record Time.
The number of New Exploration Stock Units to be issued to Scheme Shareholders
will be determined by calculating a Scheme Exchange Ratio based on the relative
Formula Asset Values of Exploration and El Oro as at the Calculation Date
(calculated in accordance with the formulae set out in Appendix I to this
Announcement). BDO Stoy Hayward will review the relevant directors' calculations
and confirm that the El Oro FAV, the Exploration FAV and the Scheme Exchange
Ratio are calculated in accordance with the terms of the Scheme. The Scheme
Exchange Ratio will then be applied to the number of Scheme Shares held by each
Scheme Shareholder to determine the number of New Exploration Stock Units to be
issued to each Scheme Shareholder.
The number of New Exploration Stock Units to which a Scheme Shareholder will
become entitled under the Scheme cannot therefore be determined until after the
Calculation Date.
For illustrative purposes only, based on an estimated Exploration FAV of # 43.4
m (359.7p per existing issued Exploration Stock Unit) and El Oro FAV of # 40.7 m
(902.3p per existing issued El Oro Share) as at close of business on 20 June
2003 (being, for these illustrative purposes, the latest practicable date prior
to the announcement of the Merger) and assuming that no further El Oro Shares or
Exploration Stock Units (other than the New Exploration Stock Units) are issued
after 20 June 2003, a Scheme Shareholder would receive:
for each El Oro Share 2.509 New Exploration Stock Units
and so in proportion for any greater number of El Oro Shares, except that
fractions of New Exploration Stock Units will not be issued to Scheme
Shareholders. The New Exploration Stock Units representing the aggregate of
these fractional entitlements will be sold in the market and the net cash
proceeds will be distributed pro rata to Scheme Shareholders entitled thereto,
except that individual entitlements of less than #3.00 will be retained for the
benefit of the Company.
On the basis of the closing mid-market price of an Exploration Stock Unit as
derived from the London Stock Exchange Official List of 245.0p as at 20 June
2003 (as at the close of business on 2 July 2003, the Exploration Stock Unit
price was unchanged.), each El Oro Share would therefore be valued at 614.7p.
As at 20 June 2003, the closing mid-market price of an El Oro Share as derived
from the London Stock Exchange Daily Official List was 612.5p. As at the close
of business on 2 July 2003, the El Oro Share price was unchanged at 612.5p.
Using the illustrative value of 614.7p per El Oro Share and on the bases and
assumptions set out in Appendix III, the entire issued share capital of El Oro
is valued at # 27.7 m. Accordingly, under the Scheme and on the bases and
assumptions set out in Appendix III, 5,676,151 New Exploration Stock Units would
be issued representing approximately 47.5 per cent of the enlarged issued share
capital of Exploration upon the Scheme and the Exploration Capital Reduction
becoming effective. Based on the closing mid-market price of an Exploration
Stock Unit as at 20 June 2003, the aggregate value of the New Exploration Stock
Units is # 13.9 m.
The New Exploration Stock Units will be issued, credited as fully paid and will
rank pari passu in all respects with the existing issued Exploration Stock Units
(save that they will not rank for the final dividend to be paid in respect of
the financial year ended 31 December 2002). The rights attaching to the New
Exploration Stock Units are summarised in Part 5 of the Listing Particulars.
Applications have been made for the New Exploration Stock Units to be admitted
to the Official List and to be admitted to trading on the London Stock Exchange.
It is expected that the New Exploration Stock Units will be admitted to the
Official List and will be admitted to trading on the London Stock Exchange at
8.00 am on the first dealing date following the day on which the Scheme becomes
effective.
Upon the Scheme becoming effective, the El Oro Shares will cease to be listed on
the Official List and will no longer be admitted to trading on the London Stock
Exchange.
4. Financial effects of acceptance
The financial effects of the acceptance of the Scheme are set out in the Scheme
Circular.
5. Information on El Oro
El Oro is an investment dealing company which was founded at the end of the 19th
century. El Oro has a spread of investments both geographically and across a
variety of industries. These include investments in a mixture of commercial and
industrial companies with a historical emphasis on the natural resource sector,
particularly mining, especially gold and oil. Furthermore, there has been some
investment in early stage companies. El Oro's audited financial statements for
the year ended 31 December 2002 have been published today showing group net
assets, taking investments at market value, of #36,830,273 (2001: #37,942,826)
and profit on ordinary activities after taxation of #1,054,077 (2001:
#1,237,521).
6. Information on Exploration
Exploration is an investment dealing company which was founded at the end of the
19th century. Exploration has a spread of investments both geographically and
across a variety of industries. Although Exploration's investment portfolio is
diverse, at present there is substantial exposure to the brewery, energy and
natural resource sectors. Furthermore there has been some investment in early
stage companies. Exploration's audited financial statements for the year ended
31 December 2002 have been published today showing group net assets, taking
investments at market value, of #37,324,826 (2001:# 40,924,033) and profit on
ordinary activities after taxation of #1,546,978 (2001: (#224,549)). Further
information relating to Exploration and the Enlarged Group is set out in the
Listing Particulars.
7. Exploration Stockholders' Approvals
Due to the relative sizes of Exploration and El Oro, the Merger constitutes a
"Class 1" transaction for Exploration for the purposes of the Listing Rules and
therefore requires the approval of the Exploration Stockholders under the
Listing Rules. Furthermore, approvals of the Exploration Stockholders are
required by virtue of the fact that the purchase of shares in El Oro by
Exploration constitutes a substantial property transaction under Section 320 of
the Act between Exploration and certain of its directors and because the issue
of the New Exploration Stock Units by Exploration pursuant to the Merger to
certain of its directors, who are also El Oro Shareholders, constitutes separate
related party transactions (as defined in the Listing Rules) between Exploration
and each such director.
As at the close of business on 2 July 2003 (being, the latest practicable date
prior to the announcement of the Merger), the following directors of Exploration
(and their immediate families and related trusts) held the following interests
in El Oro Shares (all of which are beneficial) which on the bases and
assumptions set out in Appendix III would entitle them to receive the number of
New Exploration Stock Units representing the percentage of New Exploration Stock
Units to be issued pursuant to the Scheme upon the Merger becoming effective as
set out below:
No. of El No. of Exploration Stock Units Percentage of New
Oro to be issued pursuant to the Exploration Stock
Shares Scheme Units (%)
Robin Parish 334,880 840,214 14.8
The Hon. Mrs. 8,335 20,913 0.4
Elizabeth
Parish
Emma Houston 258,504 648,587 11.4
Each of the above-named directors of Exploration is a related party of
Exploration (as defined in the Listing Rules) and the issue of New Exploration
Stock Units to each of the above-named directors (and their respective
associates (as such term is defined in Chapter 11 of the Listing Rules))
pursuant to the Merger will be separate transactions with a related party (as
defined in the Listing Rules). As a result of the value of the New Exploration
Stock Units to be issued to each of the above-named directors (and their
respective associates) in relation to the market capitalisation of Exploration,
each of the above-mentioned transactions will require the separate approval of
the Exploration Stockholders. These approvals will be sought at the Exploration
EGM and the above- named directors of Exploration will not, and will take
reasonable steps to ensure that their respective associates will not, be voting
on the resolution relating to their respective related party transaction.
As a consequence of El Oro becoming a wholly-owned subsidiary of Exploration, El
Oro (or its nominee) will be prohibited by the Act from exercising its voting
rights attached to those Exploration Stock Units. As a result of this and the
reasons set out in paragraph 2 above, upon the Scheme becoming effective,
Exploration will take steps to cancel the Exploration Stock Units owned by El
Oro (or its nominee) by way of a capital reduction under Section 135 of the
Companies Act 1985. The Exploration Capital Reduction requires the approval of
the Exploration Stockholders under the Act which will be sought at the
Exploration EGM. The Exploration Capital Reduction also requires the sanction of
the Court and will not take place unless the Scheme becomes effective.
Subject to the approval of the Exploration Stockholders at the Exploration EGM,
Exploration will change its name to El Oro Mining and Exploration Company p.l.c.
on the Merger becoming effective.
8. Conditions of the Merger and the Exploration Capital Reduction
The Merger is subject to a number of conditions, including approval by both El
Oro Shareholders and Exploration Stockholders, the sanction of the Court and
agreement of the UK Listing Authority to admit the New Exploration Stock Units
to the Official List and of the London Stock Exchange to admit the New
Exploration Stock Units to trading. The full conditions to the implementation of
the Merger are set out in Appendix II.
The Exploration Capital Reduction is also subject to the approval of Exploration
Stockholders and the sanction of the Court and will not take place unless the
Scheme becomes effective.
9. Management and employees
As the management and employees of each of El Oro and Exploration are comprised
of the same individuals, no change will be made to the employment terms and
rights of the management and employees of either company following the Merger.
10. Meetings in connection with the Scheme
(a) Class Meetings
The Parish Family has a significant holding in El Oro. Accordingly, in order to
ensure that each group of Scheme Shareholders whose interests and rights are
similar are able to consult as to their common interests in connection with the
Scheme and that the approval of the Scheme fairly represents the views of each
such group, the Parish Family is being treated as a separate class from the
other Scheme Shareholders for these purposes.
As such, there will be two separate Class Meetings of El Oro Shareholders to
approve the Scheme. Class A Shareholders are comprised of El Oro Shareholders
who are members of or nominees of members of the Parish Family and their
respective related trusts. Class B Shareholders are comprised of El Oro
Shareholders who are not members of or nominees of members of the Parish Family
(and their respective related trusts) excluding Exploration and its associated
undertaking, Danby Registrars. The Scheme will require the approval of both
classes of El Oro Shareholders.
Pursuant to an order of the Court, the Class Meeting of Class A Shareholders has
been convened for 31 July 2003 at 10.15 a.m. (or, if later, immediately
following the conclusion or adjournment of the El Oro AGM) and the Class Meeting
of Class B Shareholders has been convened for the same day at 10.25 a.m. (or, if
later, immediately following the conclusion or adjournment of the Class Meetings
of Class A Shareholders) at which meetings, or at any adjournments thereof,
Class A Shareholders and Class B Shareholders, as appropriate, will consider
and, if thought fit, approve the Scheme. Both Class Meetings will be held at the
The Cavalry and Guards Club, 127 Piccadilly, London W1J 7 PX.
At each Class Meeting voting will be by poll and each El Oro Shareholder
entitled to attend and who is present in person or by proxy will be entitled to
one vote for each El Oro Share held. The statutory majority required to approve
the Scheme at each Class Meeting is a simple majority in number of the El Oro
Shareholders of the relevant class present and voting (either in person or by
proxy) at each Class Meeting representing not less than 75 per cent. in nominal
value of El Oro Shares held by such Scheme Shareholders.
It is important that as many votes as possible are cast at each Class Meeting so
that the Court may be satisfied that there is a fair representation of El Oro
Shareholder opinion.
If the Scheme becomes effective, it will be binding on all El Oro Shareholders
irrespective of whether (if so entitled) they attended their Class Meetings and
irrespective of the manner in which they voted.
(b) El Oro EGM
For the purpose of giving effect to the Scheme, the El Oro EGM has been convened
for 31 July 2003 at 10.35 a.m. (or, if later, immediately following the
conclusion or adjournment of the Class Meeting of Class B Shareholders). At the
El Oro EGM, or at any adjournment thereof, El Oro Shareholders will consider
and, if thought fit, pass the resolution set out in the notice of the El Oro
EGM. The El Oro EGM will be held at The Cavalry and Guards Club, 127 Piccadilly,
London W1J 7 PX.
The resolution to be proposed at the El Oro EGM is to approve:
(a) the Scheme; and
(b) the related reduction of capital by El Oro and subsequent issue of El Oro
Shares to Exploration (or its nominee) in accordance with the Scheme.
In order to pass the resolution not less than 75 per cent. of the votes cast by
El Oro Shareholders must be in favour. It is proposed that the voting at the El
Oro EGM will be conducted by way of poll, and accordingly El Oro Shareholders
present in person or by proxy will be entitled to one vote for each El Oro Share
held by them.
Implementation of the Scheme will also require the subsequent sanction of the
Court at a hearing at which all El Oro Shareholders who are entitled to attend
and vote at their respective Class Meeting may be present and be heard in person
or by counsel to support or oppose the sanctioning of the Scheme. The order of
Court sanctioning the Scheme will need to be registered by the Registrar of
Companies in England and Wales in order for the Scheme to become effective.
(c) Exploration EGM
As indicated above, the Merger is subject to approval by Exploration
Stockholders and an Exploration EGM has been convened for 31 July 2003 at 11.45
a.m. (or, if later, immediately following the conclusion or adjournment of the
Exploration AGM) to allow Exploration Stockholders to consider, amongst other
things, the Merger and the Exploration Capital Reduction.
11. Indications of Support for the Scheme
The El Oro Directors who are Class A Shareholders intend to vote in favour of
the resolution to be proposed at the Class Meeting of Class A Shareholders in
respect of their own beneficial holdings which amount in aggregate to 458,848 El
Oro Shares, representing approximately 45.8 per cent. of the El Oro Shares held
by the Class A Shareholders.
The El Oro Directors who are Class B Shareholders intend to vote in favour of
the resolution to be proposed at the Class Meeting of Class B Shareholders in
respect of their own beneficial holdings which amount in aggregate to 11,399 El
Oro Shares, representing approximately 0.9 per cent. of the El Oro Shares held
by the Class B Shareholders.
The El Oro Directors intend to vote in favour of the resolution to be proposed
at the El Oro EGM in respect of their own beneficial holdings which amount in
aggregate to 470,247 El Oro Shares, representing approximately 10.4 per cent. of
the existing issued El Oro Shares.
As at the close of business on 2 July 2003 (being the latest practicable date
prior to the announcement of the Merger), Exploration (or its nominee) held
2,248,819 El Oro Shares and Danby Registrars (an associated undertaking) held
5,000 El Oro Shares representing, in aggregate, approximately 50.0 per. cent of
the existing issued El Oro Shares. Both Exploration and Danby Registrars intend
to vote in favour of the resolution to be proposed at the El Oro EGM in respect
of their respective beneficial holdings. In addition each of Exploration and
Danby Registrars has given an undertaking consenting to be bound by the Scheme.
12. Recommendation to El Oro Shareholders
As all of the El Oro Directors are also directors of Exploration, they are
precluded by the Code from providing advice to El Oro Shareholders on the terms
of the Merger and on an appropriate course of action. Consequently, as there are
no independent directors of El Oro, BDO Stoy Hayward Corporate Finance, El Oro's
financial adviser, has advised the board of El Oro with regard to the terms of
the Merger. BDO Stoy Hayward Corporate Finance considers the terms of the Merger
to be fair and reasonable and in the interests of El Oro Shareholders as a whole
and recommends El Oro Shareholders to vote in favour of the resolutions to be
proposed at the Class Meetings and at the El Oro EGM.
13. Recommendation to Exploration Stockholders
The directors of Exploration consider that the Merger, the Exploration Capital
Reduction and all the matters contained in the resolutions to be proposed at the
Exploration EGM (except for the related party resolutions recommended below) are
in the best interests of Exploration Stockholders as a whole and unanimously
recommend Exploration Stockholders to vote in favour of such resolutions as they
intend to do in respect of their own beneficial holdings which amount, in
aggregate, to 1,678,376 Exploration Stock Units (representing approximately 13.9
per cent. of the existing issued share capital of Exploration).
The Independent Directors, who have been so advised by Soditic, the Company's
financial adviser, consider the terms of each transaction with a related party
as described in paragraph 7 above to be fair and reasonable as far as the
Exploration Stockholders are concerned and in the best interests of the
Exploration Stockholders as a whole. The Independent Directors recommend
Exploration Stockholders to vote in favour of the related party transaction
resolutions, as the Independent Directors, who are Exploration Stockholders,
intend to do in respect of their own beneficial holdings which amount to 953,279
Exploration Stock Units in respect of the related party transaction with Robin
Parish (representing approximately 8.5 per cent. of the existing issued
Exploration Stock Units not held by Robin Parish (or his associates (as defined
in the Listing Rules))), 1,069,053 Exploration Stock Units in respect of the
related party transaction with Emma Houston (representing approximately 9.6 per
cent. of the existing issued Exploration Stock Units not held by Emma Houston
(or her associates)) and 1,356,420 Exploration Stock Units in respect of the
related party transaction with The Hon. Mrs. Elizabeth Parish (representing
approximately 11.6 per cent. of the existing issued Exploration Stock Units not
held by The Hon. Mrs. Elizabeth Parish (or her associates)). In providing advice
to the Independent Directors, Soditic has taken into account the Independent
Directors' commercial assessment. Each of Robin Parish, Emma Houston and The
Hon. Mrs. Elizabeth Parish will not be voting, and will take all reasonable
steps to ensure that their respective associates will not vote, on the
resolution to be proposed at the Exploration EGM in respect of their own related
party transaction.
14. General
The Scheme Circular, the Listing Particulars and the Exploration Circular will
be posted later today. El Oro's and Exploration's Annual Financial Statements
have been posted today.
Appendix I
Formula for Calculation of the El Oro FAV and Exploration FAV
The Scheme Exchange Ratio will be based on the relative Formula Asset Values of
Exploration and El Oro. The Scheme Exchange Ratio will be applied to the number
of Scheme Shares held by each Scheme Shareholder to determine the number of New
Exploration Stock Units which each Scheme Shareholder is entitled.
The FAV of Exploration and El Oro will be calculated as at the close of business
on the Calculation Date as provided below:
El Oro FAV is (A+B+C+D+E) - (F+G+H+I) + (48.797% x FAV Exploration) - 0.441% x
El Oro Market Value of shares
Exploration FAV is (A+B+C+D+E) - (F+G+H+I) + (49.901% x FAV El Oro) - 0.788% x
Exploration Market Value of shares
where in relation to each company;
A is the value of those investments of the relevant company (excluding
their direct and indirect investment in each other), as at the close of business
on the Calculation Date, which are listed or dealt in on a recognised stock
exchange, calculated by reference to the middle market quotations or prices at
the close of business on the Calculation Date. In the case of debt related
securities (including convertible debt securities), the value of the investment
is the middle market quotation or price as at the close of business on the
Calculation Date, subject to adjustment to exclude any accrual of interest up to
the close of business on the Calculation Date. The quotation or price shall be
taken from the principal stock exchange or market where the relevant investment
is listed or dealt in, as shown by the exchange's or market's recognised method
of publication of prices for such investments;
B is the value of those investments of the relevant company, as at the
close of business on the Calculation Date, which are dealt in on an
"over-the-counter" market calculated by reference to the average of the average
prices marked for those investments on such of the 5 Business Days up to and
including the Calculation Date on which there were dealings recorded, as shown
by the relevant market's recognised method of publication of prices for such
investments;
C is the value of all those traded options and futures contracts to
which the relevant company is party as at the close of business on the
Calculation Date which are traded on a stock, commodities, financial futures or
other securities exchange, calculated by reference to the official middle
closing prices on the Calculation Date, as shown by the relevant exchange's
recognised method of publication of such prices;
D for all investments not falling within (A) to (C) above:
i. the value of investments (other than land and property) which will be
valued as at the Calculation Date as agreed between the directors of the
relevant company; and
ii. the value of land and property will be valued as at 31 December 2002,
as agreed between the directors of the relevant company, except for land and
property acquired since 31 December 2002 which will be valued at the purchase
price;
E is the actual amount as at the close of business on the Calculation
Date of fixed assets and any current assets not falling within (A) to (D) above
(for these purposes including any dividends receivable on investments quoted as
ex-dividend and any accrual of interest, up to the close of business on the
Calculation Date, on debt related securities) on the Calculation Date, and any
tax recoverable but excluding any dividend, distribution or interest not yet
received, the amount of which has been taken in account in the value of any of
the investments comprised in (A) to (D) above, cash and deposits with or
balances at banks, bills receivable, any money market instruments of the
relevant company (together in each case with accrued interest less an accrual
for any associated tax) and the fair value of any other tangible assets not
otherwise accounted for, determined by agreement between the directors of the
relevant company, or failing such agreement, as determined by an independent
expert;
F is the principal amount as at the close of business on the
Calculation Date of any outstanding borrowings of the relevant company plus
accrued but not paid interest, commitment fees incurred but not paid and other
charges up to and including that date and the higher of any premiums or
penalties on either early repayment (to the extent that notice of early
repayment has been given) or final repayment;
G is the costs of any dividend or other distribution of the relevant
company declared announced on or before the Calculation Date so far as not
previously paid;
H all fees and costs and expenses payable by the relevant company in
relation to the Scheme (all such costs to include value added tax where
applicable); and
I is the amount which fairly reflects at the close of business on the
Calculation Date all other accrued liabilities of the relevant company including
a fair provision for any contingent liabilities (including liabilities to
taxation, whether or not deferred and any liabilities arising on liquidation) or
losses (including disputed claims) in so far as not otherwise taken into
account.
Notes
1. For the purposes of the above calculations, the value of assets and
liabilities denominated in currencies other than sterling shall be notionally
converted at the middle market rates of exchange in London between sterling and
other such currencies at the close of business on the Calculation Date, as
certified by BDO Stoy Hayward Corporate Finance and Soditic or, failing such
agreement, as determined by an independent expert.
2. In the case of (A) and (C) above, if there has been general
suspension of trading on the relevant stock exchange or market, or if it was
closed for business, on the Calculation Date, the value of the investments
concerned shall be taken as at the close of business on the immediately
preceding date on which there was trading on the relevant stock exchange or
market, except that if there has been a material adverse change in the financial
position of the underlying investment, a fair provision determined by agreement
between the directors of the relevant company or, failing such agreement, as
determined by an independent expert, shall be made to reflect the adverse change
in the value of the investment.
3. Subject to Note 2 above, in the case of (A) to (D) inclusive above:
(a) where no price is quoted in respect of any such investment or where
dealings in such investment have been suspended on any relevant date or, in the
case of (B) above, if there have been no dealings recorded in respect of any
such investment for any of the 5 Business Days up to and including the
Calculation Date, the value will be determined in accordance with (D) above; and
(b) where any such investment as is referred to therein is, as the
Calculation Date, subject to any legally binding obligation on the relevant
company to dispose of the same, whether as a result of the Scheme or otherwise,
at a price lower or higher than that determined in accordance with (A) to (D)
above, as the case may be, then such investment shall be valued at such other
price unless that obligation or entitlement is unconditionally and irrevocably
waived or lapses before the close of business on the Calculation Date.
4. The independent expert referred to in this Appendix I shall mean a
member of the London Investment Banking Association or a member firm of the
London Stock Exchange or a member of the Institute of Chartered Accountants in
England and Wales selected by BDO Stoy Hayward Corporate Finance and Soditic. In
making any determination referred to in accordance with this Appendix, BDO Stoy
Hayward Corporate Finance and Soditic or any independent expert, as the case may
be, shall act as experts and not as arbitrators, and their determination shall,
in the absence of fraud (and subject to any agreement otherwise between
Exploration and El Oro), be final and legally binding on all interested parties
and, in the absence of fraud, none of them shall be under any liability to any
person by reason thereof or by anything done or omitted to be done by them for
the purposes thereof or in connection therewith.
5. With regard to (D) and/or (E) above, the directors of the relevant
company and, if appointed, any independent expert shall have regard, inter alia,
to the following when determining the valuation of any investment or other asset
(which shall be calculated on the basis of a notional sale by a willing seller
to a willing buyer, without regard to any additional value that might be
attributed to the investment or asset by any special category or potential
purchaser):
(a) the existence of any pre-emption rights or obligations of such
investment or asset or any other restrictions on the transfer or disposal of the
same which may exist or which may arise as a consequence of the transfer of such
investment or asset to any party on the winding up of the relevant company;
(b) the marketability of such investment or asset; and
(c) the terms of any recent dealings in such investment or asset.
6. With regard to E above, the directors of the relevant company and, if
appointed, the independent expert, shall, except in the case of debtors and
tangible assets, have regard to but shall not be bound by the accounting
policies used by the relevant company in their respective audited financial
statements for the year ended 31 December 2002.
7. The directors of the relevant company will prepare the calculations
of the FAV and accordingly, Scheme Exchange Ratio on the Calculation Date. Such
calculations will be reviewed by BDO Stoy Hayward and will then be submitted for
the approval of Soditic on behalf of Exploration and BDO Stoy Hayward Corporate
Finance on behalf of El Oro.
Appendix II
Conditions to the implementation of the Merger
The Merger will not become effective unless all the conditions of the Scheme
have been satisfied or, if permitted, waived by the close of business (if
required) on 31 October 2003, or such later date as El Oro and Exploration may
agree and (if required) the Court (in relation to the Scheme), and the Panel may
approve.
1. The Scheme is conditional on:
(a) the approval by a majority in number of the holders of El Oro Shares
present and voting at the Class Meeting of Class A Shareholders, either in
person or by proxy, representing not less than 75 per cent. in value of the El
Oro Shares held by such holders;
(b) the approval by a majority in number of the holders of El Oro Shares
present and voting at the Class Meeting of the Class B Shareholders, either in
person or by proxy, representing not less than 75 per cent. in value of the El
Oro Shares held by such holders;
(c) the special resolution required to approve and implement the Scheme
and set out in the attached notice of El Oro EGM of the El Oro Shareholders
being passed by the requisite majority at such El Oro EGM;
(d) the resolutions of Exploration Stockholders required in connection
with the approval and implementation of the Merger being passed at the
Exploration EGM;
(e) the sanction of the Scheme and confirmation of the reduction of
capital involved therein by the Court (in both cases with or without
modifications, on terms reasonably acceptable to El Oro and Exploration);
(f) an office copy of the El Oro Court Order, and the relevant minute,
being delivered for registration to the Registrar of Companies and being
registered by him; and
(g) the admission of the New Exploration Stock Units to the Official List
becoming effective in accordance with the Listing Rules and trading on the
London Stock Exchange's market for listed securities becoming effective in
accordance with paragraph 2.1 of the LSE Admission Standards or (if El Oro and
Exploration so determine and with the consent of the Panel) the UK Listing
Authority and the London Stock Exchange agreeing to admit such Stock Units to
listing and trading respectively.
2. Except where the context requires otherwise, any reference in this
paragraph 2 to: (i) the "wider El Oro Group" will mean El Oro or any of its
subsidiaries or subsidiary undertakings or any associated undertaking or any
company of which 20 per cent. or more of the voting capital is held by the El
Oro Group or any partnership or joint venture in which any member of the El Oro
Group may be interested; and to (ii) the wider Exploration Group will mean
Exploration or any associated undertaking or any company of which 20 per cent.
or more of the voting capital is held by the Exploration Group or any
partnership, joint venture, firm or company in which any other member of the
"Exploration Group" may be interested.
Subject as stated in paragraph 3 below, the Merger is also conditional upon and,
accordingly, the necessary action to make the Scheme effective will not be taken
unless the following conditions are satisfied or waived, as referred to below:
(a) no government or governmental, quasi-governmental, supranational,
statutory, administrative or regulatory body, authority, court, trade agency,
association, institution, environmental body or any other similar person or body
in any jurisdiction (each a "Relevant Authority") having decided to take,
instituted, implemented or threatened any action, proceedings, suit,
investigation, enquiry or reference, or made, proposed or enacted any statute,
regulation, order or decision or taken any other steps and there not continuing
to be outstanding any statute, regulation, order or decision, which would or
might reasonably be expected to:
(i) make the Scheme or the acquisition of any El Oro Shares, or control of El
Oro by Exploration void, illegal or unenforceable or otherwise materially
restrict, restrain, prohibit, delay or interfere with the implementation
thereof, or impose material additional conditions or obligations with respect
thereto, or require material amendment thereof or otherwise challenge or
interfere therewith;
(ii) require or prevent the divestiture by the wider El Oro Group or by the
wider Exploration Group of all or a material portion of their respective
businesses, assets or property or impose any material limitation on the ability
of any of them to conduct their respective businesses or own any of their
material assets or property;
(iii) impose any limitation on or result in a delay in the ability of any member
of the wider El Oro Group or the wider Exploration Group to acquire or to hold
or to exercise effectively any rights of ownership of shares or loans or
securities convertible into shares in any member of the wider El Oro Group or of
the wider Exploration Group respectively held or owned by it or to exercise
management control over any member of the wider Exploration Group or of the
wider El Oro Group respectively to an extent which is material in the context of
the wider El Oro Group or the wider Exploration Group (as the case may be) taken
as a whole;
(iv) require any member of the wider El Oro Group or the wider Exploration Group
to acquire or offer to acquire any shares or other securities in any member of
the wider Exploration Group or the wider El Oro Group where such acquisition
would be material in the context of the wider Exploration Group or the wider El
Oro Group taken as a whole; or
(v) otherwise materially and adversely affect the assets, business, profits or
prospects of any member of the wider El Oro Group or the wider Exploration
Group,
and all applicable waiting and other time periods during which any such Relevant
Authority could decide to take, institute, implement or threaten any such
action, proceedings, suit, investigation, enquiry or reference having expired,
lapsed or been terminated;
(b) each of El Oro and Exploration has received evidence reasonably
satisfactory to it that all material filings have been made, all applicable
waiting periods (including any extensions thereof) under any applicable
legislation or regulations of any jurisdiction have expired, lapsed or been
terminated, in each case in respect of the Scheme and the acquisition of any El
Oro Shares, and all material authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances, permissions and approvals
("Authorisations") necessary or appropriate in any jurisdiction for, or in
respect of, the Scheme and the proposed acquisition of any El Oro Shares, and to
carry on the business of any member of the wider El Oro Group or of the wider
Exploration Group having been obtained, in terms and in a form reasonably
satisfactory to El Oro and Exploration, from all appropriate Relevant
Authorities and from any persons or bodies with whom any member of the wider El
Oro Group or the wider Exploration Group has entered into material contractual
arrangements and all such Authorisations remaining in full force and effect at
the time at which the Scheme becomes effective and El Oro or Exploration have no
knowledge of an intention or proposal to revoke, suspend or modify or not to
renew any of the same and all necessary statutory or regulatory obligations in
any jurisdiction have been complied with;
(c) there being no provision of any arrangement, agreement, licence,
permit or other instrument to which any member of the wider El Oro Group or the
wider Exploration Group is a party or by or to which any such member or any of
their assets is or may be bound, entitled or be subject to and which, in
consequence of the Scheme or the acquisition of any El Oro Shares, or control of
El Oro, by Exploration or otherwise, would or might, to an extent which is
material in the context of the Enlarged Group result in:
(i) the creation of any mortgage, charge or other security interest over the
whole or any part of the business, property or assets of any such member or any
such security (whenever arising or having arisen) being enforced or becoming
enforceable;
(ii) any such arrangement, agreement, licence or instrument being terminated or
adversely modified or any action being taken of an adverse nature or any
obligation arising thereunder;
(iii) any assets of any such member being disposed of or charged, or right
arising under which any such asset could be required to be disposed of or
charged, other than in the ordinary course of business;
(iv) the interest or business of any such member of the wider Exploration Group
in or with any firm or body or person, or any agreements or arrangements
relating to such interest or business, being terminated or adversely modified or
affected;
(v) any such member ceasing to be able to carry on business under any name under
which it presently does so;
(vi) the creation of liabilities (actual or contingent) by any such member; or
(vii) the financial or trading position of any such member being prejudiced or
adversely affected;
(d) except as publicly announced by Exploration prior to 2 July 2003 no
member of the wider Exploration Group having, since 31 December 2002:
(i) issued, agreed to issue or proposed the issue of additional shares or
securities of any class, or securities convertible into, or exchangeable for or
rights, warrants or options to subscribe for or acquire, any such shares,
securities or convertible securities before the date hereof, or redeemed,
purchased or reduced any part of its share capital;
(ii) recommended, declared, paid or made or proposed to recommend, declare, pay
or make any bonus, dividend or other distribution other than to Exploration or a
wholly-owned subsidiary of Exploration;
(iii) agreed, authorised, proposed or announced its intention to propose any
merger or demerger or acquisition or disposal of assets or shares which are
material in the context of the Enlarged Group taken as a whole (other than in
the ordinary course of trading) or to any material change in its share or loan
capital;
(iv) issued, authorised or proposed the issue of any debentures or incurred any
indebtedness or contingent liability which is material in the context of the
wider Exploration Group taken as a whole;
(v) acquired or disposed of or transferred, mortgaged or encumbered any asset or
any right, title or interest in any asset (other than in the ordinary course of
trading) in a manner which is material in the context of the wider Exploration
Group taken as a whole;
(vi) entered into or varied or announced its intention to enter into or vary any
contract, arrangement or commitment (whether in respect of capital expenditure
or otherwise) which is of a long-term or unusual nature or magnitude or involves
or could involve an obligation of a long-term or unusual nature or magnitude,
and in either case which is material in the context of the wider Exploration
Group taken as a whole;
(vii) entered into or proposed or announced its intention to enter into any
reconstruction, amalgamation, transaction or arrangement (otherwise than in the
ordinary course of business) which is material in the context of the wider
Exploration Group taken as a whole;
(viii) taken or proposed any corporate action or had any legal proceedings
instigated or threatened against it for its winding-up, dissolution or
reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of all or any of its assets
and revenues (or any analogous proceedings or appointment in any overseas
jurisdiction);
(ix) been unable, or admitted in writing that it is unable, to pay its debts or
having stopped or suspended (or threatened to stop or suspend) payment of its
debts generally or ceased or threatened to cease carrying on all or a
substantial part of its business;
(x) entered into or varied or made any offer to enter into or vary the terms of
any service agreement or arrangement with any of the directors of Exploration;
(xi) waived, compromised or settled any claim which is material in the context
of the wider Exploration Group taken as a whole; or
(xii) entered into any agreement, arrangement or commitment or passed any
resolution with respect to any of the transactions or events referred to in this
paragraph (d);
(e) except as publicly announced by El Oro prior to 2 July 2003, no
member of the wider El Oro Group having, since 31 December 2002 (other than in
accordance with the Scheme):
(i) issued, agreed to issue or proposed the issue of additional shares or
securities of any class, or securities convertible into, or exchangeable for or
rights, warrants or options to subscribe for or acquire, any such shares,
securities or convertible securities before the date hereof, or redeemed,
purchased or reduced any part of its share capital;
(ii) recommended, declared, paid or made or proposed to recommend, declare,
pay or make any bonus, dividend or other distribution other than to El Oro or
a wholly-owned subsidiary of El Oro;
(iii) agreed, authorised, proposed or announced its intention to
propose any merger or demerger or acquisition or disposal of assets or shares
which is material in the context of the wider El Oro Group taken as a whole
(other than in the ordinary course of trading) or to any material change in its
share or loan capital;
(iv) issued, authorised or proposed the issue of any debentures or
incurred any indebtedness or contingent liability which is material in the
context of the wider El Oro Group taken as a whole;
(v) acquired or disposed of or transferred, mortgaged or encumbered any
asset or any right, title or interest in any asset (other than in the ordinary
course of trading) which is material in the context of the wider El Oro Group
taken as a whole;
(vi) entered into or varied or announced its intention to enter
into or vary any contract, arrangement or commitment (whether in respect of
capital expenditure or otherwise) which is of a long-term or unusual nature or
magnitude or involves or could involve an obligation of a long-term or unusual
nature or magnitude, and in either case which is material in the context of the
wider El Oro Group taken as a whole;
(vii) entered into or proposed or announced its intention to enter
into any reconstruction, amalgamation, transaction or arrangement (otherwise
than in the ordinary course of business) which is material in the context of the
wider El Oro Group taken as a whole;
(viii) taken or proposed any corporate action or had any legal
proceedings instigated or threatened against it for its winding-up, dissolution
or reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of all or any of its assets
and revenues (or any analogous proceedings or appointment in any overseas
jurisdiction);
(ix) been unable, or admitted in writing that it is unable, to pay
its debts or having stopped or suspended (or threatened to stop or suspend)
payment of its debts generally or ceased or threatened to cease carrying on all
or a substantial part of its business;
(x) entered into or varied or made any offer to enter into or vary the terms
of any service agreement or arrangement with any of the directors of El Oro;
(xi) waived, compromised or settled any claim which is material in the context
of the wider El Oro Group taken as a whole; or
(xii) entered into any agreement, arrangement or commitment or passed any
resolution with respect to any of the transactions or events referred to in this
paragraph (e);
(f) except as publicly announced by Exploration prior to 2 July 2003:
(i) there has been no adverse change in the business, assets, financial or
trading position or profits or prospects of any member of the wider Exploration
Group which in any such case is material in the context of the wider
Exploration Group taken as a whole; or
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings having been instituted, announced or threatened by or against
or remaining outstanding against any member of the wider Exploration Group and
no enquiry or investigation by or complaint or reference to any Relevant
Authority against or in respect of any member of the wider Exploration Group
having been threatened, announced or instituted or remaining outstanding which
in any such case could have a material effect in the context of the wider
Exploration Group taken as a whole.
(g) except as publicly announced by El Oro prior to 2 July 2003:
(i) there has been no adverse change in the business, assets, financial or
trading position or profits or prospects of any member of the wider
El Oro Group which in any such case is material in the context of the wider El
Oro Group taken as a whole; or
(ii) no litigation, arbitration proceedings, prosecution or other
legal proceedings having been instituted, announced or threatened by or against
or remaining outstanding against any member of the wider El Oro Group and no
enquiry or investigation by or complaint or reference to any Relevant Authority
against or in respect of any member of the wider El Oro Group having been
threatened, announced or instituted or remaining outstanding which in any such
case could have a material affect in the context of the wider El Oro Group taken
as a whole.
3. Subject to the requirements of the Panel, Exploration and El Oro reserve
the right (but shall be under no obligation) to waive, in whole or in part,
all or any of the conditions contained in paragraph 2 of this Appendix II.
The Scheme is governed by English law and will be subject to the jurisdiction of
the Courts of England. The Listing Rules and the Code, so far as they are
appropriate, also apply to the Scheme.
Appendix III
BASES AND ASSUMPTIONS
The statistics contained in this document relating to the Exploration Stock
Units and El Oro Shares have been calculated on the following principal bases
and assumptions each as at the close of business 20 June 2003 (being, for these
illustrative purposes, the latest practicable date prior to the announcement of
the Merger):
(a) The FAV of El Oro was # 40.7 m (902.3p per existing issued El Oro
Share) and the closing middle market price as derived from the London Stock
Exchange Daily Official List of an existing El Oro Share was 612.5p ;
(b) The FAV of Exploration was # 43.4 m (359.7p per existing issued
Exploration Stock Unit) and the closing middle market price as derived from the
London Stock Exchange Daily Official List of an existing Exploration Share was
245.0p; and
(c) No further El Oro Shares or Exploration Stock Units (other than the
New Exploration Stock Units) are issued by El Oro and Exploration after 20 June
2003.
Appendix IV
ADDITIONAL INFORMATION
1. Persons acting in concert
At the close of business on 2 July 2003 (being the latest practicable date prior
to the announcement of the Merger) the following persons (together with their
respective close relatives and related trusts) who are deemed to be acting in
concert (as defined in the Code) with Exploration, held the following interests
in El Oro Shares (all of which are beneficial):
Number of El Oro Shares Percentage of El Oro Shares (%)
Robin Parish 334,880 7.4
The Hon. Mrs 8,335 0.2
Elizabeth Parish
Emma Houston 258,504 5.7
Suzanne 265,651 5.9
Kumaramangalam
Caroline Zegos 135,488 3.0
Danby Registrars 5,000 0.1
Appendix V
DEFINITIONS
The following definitions apply throughout this document, unless the context
requires otherwise:
"Act" the UK Companies Act 1985 (as amended)
"Admission" admission to the Official List and admission to trading on
the London Stock Exchange of the New Exploration Stock Units
becoming effective by the decision of the UK Listing
Authority to admit such Exploration Stock Units to listing
being announced in accordance with paragraph 7.1 of the
Listing Rules and by the decision of the London Stock
Exchange to admit such Exploration Stock Units to trading
being announced in accordance with the LSE Admission
Standards
"Australia" the Commonwealth of Australia, its states, territories and
possessions
"BDO Stoy BDO Stoy Hayward, Chartered Accountants of 8 Baker Street,
Hayward" London W1U 3LL
"BDO Stoy Hayward BDO Stoy Hayward Corporate Finance, a division of BDO Stoy
Corporate Hayward, which is regulated in the United Kingdom by the
Finance" Financial Services Authority
"Business Day" any day on which lending banks in the London inter-banking
sterling markets are open for general non-automated business
in the City of London
"Calculation the date upon which the Scheme is approved by the El Oro
Date" Shareholders at the Class Meetings
"Canada" Canada, its provinces and territories and all areas subject
to its jurisdiction and any political sub-division thereof
"Class A El Oro Shareholders who are members of or nominees of members
Shareholders" of the Parish Family and their respective related trusts
"Class B El Oro Shareholders who are not members of or nominees of the
Shareholders" Parish Family and their respective related trusts, excluding
Exploration and Danby Registrars
"Class Meetings" the meeting of Class A Shareholders and the meeting of Class
B Shareholders, in each case convened by an order the Court
in connection with the Scheme
"Code" the City Code on Takeovers and Mergers
"Court" the High Court of Justice of England and Wales
"Danby Danby Registrars Limited, registered in England and Wales
Registrars" with number 342210 (an associated undertaking of El Oro and
Exploration)
"Effective Date" the date the El Oro Court Order is registered by the
Registrar of Companies and the Scheme becomes effective and
"Effective Time" means the time at which the Scheme becomes
effective as aforesaid
"El Oro" El Oro Mining and Exploration Company p.l.c., registered in
England and Wales with number 424098
"El Oro AGM" the annual general meeting of El Oro Shareholders
"El Oro Court the order of the Court sanctioning the Scheme and confirming
Order" the reduction of share capital of El Oro forming part of the
Scheme
"El Oro CRW Parish, The Hon. Mrs. EC Parish, EW Houston, DRL Hunting,
Directors" RE Wade, JA Wild
"El Oro EGM" the extraordinary general meeting of El Oro Shareholders
"El Oro Group" El Oro, its subsidiaries and subsidiary undertakings
"El Oro holders of El Oro Shares
Shareholders"
"El Oro Shares" ordinary shares of l0p each in the capital of El Oro
"Enlarged Group" Exploration (to be renamed El Oro Mining and Exploration
Company p.l.c) and its subsidiaries following the Merger
becoming effective
"Exploration" The Exploration Company p.l.c., registered in England and
Wales with number 80408
"Exploration the reduction of the issued share capital of Exploration by
Capital the cancellation of 5,781,624 Exploration Stock Units owned
Reduction" by El Oro (or its nominee) by way of a capital reduction
under section 135 of the Act
"Exploration the document to be sent to Exploration Stockholders
Circular" explaining the Merger and containing the notice of the
Exploration EGM
"Exploration Court the order of the Court confirming the Capital Reduction
Order"
"Exploration the annual general meeting of Exploration Stockholders
AGM"
"Exploration the extraordinary general meeting of Exploration
EGM" Stockholders
"Exploration Exploration, its subsidiaries and subsidiary undertakings;
Group"
"Exploration holders of Exploration Stock Units, excluding any holding of
Stockholders" New Exploration Stock Units arising pursuant to the Scheme
"Exploration Stock stock units of 5p each in the capital of Exploration
Units"
"FAV" or "Formula means the formula asset value of El Oro or Exploration
Asset Value" calculated as at the Calculation Date in accordance with
formulae set out in Appendix I to the Scheme and "El Oro FAV"
and "Exploration FAV" shall be construed accordingly
"Hearing Date" the date on which the Court shall, if it sees fit, sanction
the Scheme and confirm the reduction of capital of El Oro
which forms part of the Scheme
"Independent the directors of Exploration except Robin Parish, Emma
Directors" Houston and The Hon. Mrs. Elizabeth Parish in relation to
their individual related party transactions with
Exploration
"Listing the listing particulars of Exploration issued on the date
Particulars" hereof
"Listing Rules" the listing rules made by the UK Listing Authority under
Section 74 of the Financial Services and Markets Act 2000
"London Stock London Stock Exchange plc
Exchange"
"LSE Admission the rules issued by the London Stock Exchange in relation to
Standards" the admission to trading of, and continuing requirements for,
securities admitted to the Official List
"Merger" the proposed merger of El Oro and Exploration to be effected
by way of the Scheme described in this document
"New Exploration the new Exploration Stock Units to be issued to Scheme
Stock Units" Shareholders pursuant to the Scheme
"Official List" the list maintained by the UK Listing Authority pursuant to
Part VI of the Financial Services and Markets Act 2000
"Panel" The Panel on Takeovers and Mergers
"Parish Family" Robin Parish, Emma Houston, The Hon. Mrs. Elizabeth Parish,
Suzanne Kumaramangalam, Caroline Zegos and their respective
immediate families;
"PwC" PricewaterhouseCoopers LLP, Chartered Accountants of
Southwark Towers, 32 London Bridge Road, London SE1 9SY
Embankment Place, London, WC2N 6RH
"Record Time" 6.00 p.m., in the United Kingdom, on the Effective Date
"Registrar of the Registrar of Companies in England and Wales
Companies"
"Scheme" the scheme of arrangement of El Oro under Section 425 of the
Act in order to effect the proposed merger of El Oro and
Exploration
"Scheme the circular to be sent to the El Oro Shareholders containing
Circular" and setting out the terms and conditions of the Scheme and
notices of the El Oro EGM and the Class Meetings
"Scheme Exchange the ratio of the number of New Exploration Stock Units per
Ratio" Scheme Share to which a Scheme Shareholder is entitled
pursuant to the Scheme.
"Scheme holders of Scheme Shares
Shareholders"
"Scheme Shares" the El Oro Shares in issue at the date hereof and any El Oro
Shares issued prior to the Record Time, excluding any El Oro
Shares held by Exploration (or its nominee) at the Record
Time
"Soditic" Soditic Limited, Wellington House, 125 Strand, London, WC2R
0AP
"UK" or "United the United Kingdom of Great Britain and Northern Ireland
Kingdom"
"UK Listing the Financial Services Authority as the competent authority
Authority" for listing in the United Kingdom under Part VI of the
Financial Services and Markets Act 2000
"United States of the United States of America, its territories and
America", "US" possessions, any state of the United States of America, the
or "United States" District of Columbia, and all other areas subject to its
jurisdictions
"Voting Record 6.00 p.m. on 29 July 2003 or, if a Class Meeting or the El
Time" Oro EGM, as the case may be, is adjourned, 48 hours before
the time fixed for such adjourned meeting
"#" or pounds sterling and reference to "pence" and "p" shall be
"Sterling" construed accordingly
For the purposes of this document, "subsidiary" and "subsidiary undertaking"
have the respective meanings given in the Act
This information is provided by RNS
The company news service from the London Stock Exchange
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