CZA
CZA - Coal of Africa Limited - Notice of General Meeting and Explanatory
Memorandum to shareholders
Coal of Africa Limited
(Incorporated and registered in Australia)
(Registration number ABN 008 905 388)
ISIN AU000000CZA6
JSE/ASX/AIM share code: CZA
("CoAL or the "Company" or the "Group")
Notice of General Meeting AND Explanatory Memorandum to Shareholders
Date of Meeting
22 June 2012
TIME OF MEETING
11.00 am (London time)
PLACE OF MEETING
Tavistock Communications
8th Floor
131 Finsbury Pavement
London EC2A 1NT
A Proxy Form is enclosed
Please read this Notice and Explanatory Memorandum carefully.
If you are unable to attend the General Meeting please complete and return
the enclosed Proxy Form in accordance with the specified directions.
Notice is hereby given that a General Meeting of Shareholders of Coal of
Africa Limited ABN 98 008 905 388 (Company) will be held at Tavistock
Communication, 8th Floor, 131 Finsbury Pavement, London EC2A 1NT on 22 June
2012 at 11.00am (London Time) for the purpose of transacting the following
business referred to in this Notice of General Meeting.
AGENDA
ITEMS OF BUSINESS
1. Resolution 1 - Proposed issue of Shares to Mr John Wallington
To consider and, if thought fit, to pass the following resolution as an
ordinary resolution:
"That, for the purpose of Listing Rule 10.11 and for all other purposes, the
Directors be and are hereby authorised to allot and issue 250,000 Shares for
no consideration to John Wallington or his nominee(s) on the terms and
conditions set out in the Explanatory Memorandum accompanying this Notice of
Meeting."
The Company will disregard any votes cast on Resolution 1 by John Wallington
and/or any associate of John Wallington. However, the Company need not
disregard a vote if the vote is cast by a person as proxy for a person who
is entitled to vote, in accordance with the directions on the proxy form or
the vote is cast by the person chairing the meeting as proxy for a person
who is entitled to vote, in accordance with a direction on the proxy form to
vote as the proxy decides.
Further, a Restricted Voter(1) who is appointed as a proxy will not vote on
Resolution 1 unless:
(a) the appointment specifies the way the proxy is to vote on Resolution 1;
or
(b) the proxy is the Chair of the Meeting and the appointment expressly
authorises the Chair to exercise the proxy even though the Resolution
is connected directly or indirectly with the remuneration of a member
of the Key Management Personnel. Shareholders should note that the
Chair intends to vote any undirected proxies in favour of Resolution 1.
Shareholders may also choose to direct the Chair to vote against
Resolution 1 or to abstain from voting.
(1)"Restricted Voter" means Key Management Personnel and their Closely
Related Parties as defined in the glossary.
2. Resolution 2 - Proposed issue of Shares to Mr Wayne Koonin
To consider and, if thought fit, to pass the following resolution as an
ordinary resolution:
"That, for the purpose of Listing Rule 10.11 and for all other purposes, the
Directors be and are hereby authorised to allot and issue 175,000 Shares for
no consideration to Wayne Koonin or his nominee(s) on the terms and
conditions set out in the Explanatory Memorandum accompanying this Notice of
Meeting."
The Company will disregard any votes cast on Resolution 2 by Wayne Koonin
and/or any associate of Wayne Koonin. However, the Company need not
disregard a vote if the vote is cast by a person as proxy for a person who
is entitled to vote, in accordance with the directions on the proxy form or
the vote is cast by the person chairing the meeting as proxy for a person
who is entitled to vote, in accordance with a direction on the proxy form to
vote as the proxy decides.
Further, a Restricted Voter who is appointed as a proxy will not vote on
Resolution 2 unless:
(a) the appointment specifies the way the proxy is to vote on Resolution 2;
or
(b) the proxy is the Chair of the Meeting and the appointment expressly
authorises the Chair to exercise the proxy even though the Resolution
is connected directly or indirectly with the remuneration of a member
of the Key Management Personnel. Shareholders should note that the
Chair intends to vote any undirected proxies in favour of Resolution 2.
Shareholders may also choose to direct the Chair to vote against
Resolution 2 or to abstain from voting.
3. Resolution 3 - Special Resolution: Approval of Financial Assistance to
any Related or Inter-Related Company
To consider and, if thought fit, to pass the following resolution as a
special resolution:
"That, as a general approval, the Company may, in terms of section
45(3)(a)(ii) of the Companies Act and subject to compliance with the
remainder of section 45 of the Companies Act, provide any direct or indirect
financial assistance (as such term is defined in section 45(1) of the
Companies Act) that the Board may deem fit to any related or inter-related
company (as such terms are defined in section 2 of the Companies Act) on the
terms and conditions, in the form, nature and extent and for the amounts
that the Board may determine from time to time. The Board is granted all
authority that may be required in respect of the execution and
implementation of this resolution."
4. Resolution 4 - Proposed issue of Shares to Mr Simon Farrell
To consider and, if thought fit, to pass the following resolution as an
ordinary resolution:
"That, pursuant to and in accordance with section 208 of the Corporations
Act and Listing Rule 10.11 and for all other purposes, the Directors be and
are hereby authorised to allot and issue 1,833,150 Shares for no
consideration to Simon Farrell or his nominee(s) on the terms and conditions
set out in the Explanatory Memorandum accompanying this Notice of Meeting."
The Company will disregard any votes cast on Resolution 4 by Simon Farrell
and/or any associate of Simon Farrell. However, the Company need not
disregard a vote if:
(a) it is cast by a person as a proxy appointed by writing that specifies
how the proxy is to vote on the proposed resolution; and
(b) it is not cast on behalf of Simon Farrell or an associate of Simon
Farrell.
Further, a Restricted Voter who is appointed as a proxy will not vote on
Resolution 4 unless:
(a) the appointment specifies the way the proxy is to vote on Resolution 4;
or
(b) the proxy is the Chair of the Meeting and the appointment expressly
authorises the Chair to exercise the proxy even though the Resolution
is connected directly or indirectly with the remuneration of a member
of the Key Management Personnel. Shareholders should note that the
Chair intends to vote any undirected proxies in favour of Resolution 4.
Shareholders may also choose to direct the Chair to vote against
Resolution 4 or to abstain from voting.
5. Resolution 5 - Proposed issue of Shares to Mr Richard Linnell
To consider and, if thought fit, to pass the following resolution as an
ordinary resolution:
"That, pursuant to and in accordance with section 208 of the Corporations
Act and Listing Rule 10.11 and for all other purposes, the Directors be and
are hereby authorised to allot and issue 916,575 Shares for no consideration
to Richard Linnell or his nominee(s) on the terms and conditions set out in
the Explanatory Memorandum accompanying this Notice of Meeting."
The Company will disregard any votes cast on Resolution 5 by Richard Linnell
and/or any associate of Richard Linnell. However, the Company need not
disregard a vote if:
(a) it is cast by a person as a proxy appointed by writing that specifies
how the proxy is to vote on the proposed resolution; and
(b) it is not cast on behalf of Richard Linnell or an associate of Richard
Linnell.
Further, a Restricted Voter who is appointed as a proxy will not vote on
Resolution 5 unless:
(a) the appointment specifies the way the proxy is to vote on Resolution 5;
or
(b) the proxy is the Chair of the Meeting and the appointment expressly
authorises the Chair to exercise the proxy even though the Resolution
is connected directly or indirectly with the remuneration of a member
of the Key Management Personnel. Shareholders should note that the
Chair intends to vote any undirected proxies in favour of Resolution 5.
Shareholders may also choose to direct the Chair to vote against
Resolution 5 or to abstain from voting.
6. Resolution 6 - Proposed issue of Shares to Mr Peter Cordin
To consider and, if thought fit, to pass the following resolution as an
ordinary resolution:
"That, pursuant to and in accordance with section 208 of the Corporations
Act and Listing Rule 10.11 and for all other purposes, the Directors be and
are hereby authorised to allot and issue 458,300 Shares for no consideration
to Peter Cordin or his nominee(s) on the terms and conditions set out in the
Explanatory Memorandum accompanying this Notice of Meeting."
The Company will disregard any votes cast on Resolution 6 by Peter Cordin
and/or any associate of Peter Cordin. However, the Company need not
disregard a vote if:
(a) it is cast by a person as a proxy appointed by writing that specifies
how the proxy is to vote on the proposed resolution; and
(b) it is not cast on behalf of Peter Cordin or an associate of Peter
Cordin.
Further, a Restricted Voter who is appointed as a proxy will not vote on
Resolution 6 unless:
(a)the appointment specifies the way the proxy is to vote on Resolution 6;
or
(b) the proxy is the Chair of the Meeting and the appointment expressly
authorises the Chair to exercise the proxy even though the Resolution
is connected directly or indirectly with the remuneration of a member
of the Key Management Personnel. Shareholders should note that the
Chair intends to vote any undirected proxies in favour of Resolution 6.
Shareholders may also choose to direct the Chair to vote against
Resolution 6 or to abstain from voting.
7. Resolution 7 - Proposed issue of Shares to Mr Geoffrey Linnell
To consider and, if thought fit, to pass the following resolution as an
ordinary resolution:
"That, pursuant to and in accordance with section 208 of the Corporations
Act and Listing Rule 10.11 and for all other purposes, the Directors be and
are hereby authorised to allot and issue 114,570 Shares for no consideration
to Geoffrey Linnell or his nominee(s) on the terms and conditions set out in
the Explanatory Memorandum accompanying this Notice of Meeting."
The Company will disregard any votes cast on Resolution 7 by Geoffrey
Linnell and/or any associate of Geoffrey Linnell. However, the Company need
not disregard a vote if:
(a) it is cast by a person as a proxy appointed by writing that specifies
how the proxy is to vote on the proposed resolution; and
(b) it is not cast on behalf of Geoffrey Linnell or an associate of
Geoffrey Linnell.
Further, a Restricted Voter who is appointed as a proxy will not vote on
Resolution 7 unless:
(a) the appointment specifies the way the proxy is to vote on Resolution 7;
or
(b) the proxy is the Chair of the Meeting and the appointment expressly
authorises the Chair to exercise the proxy even though the Resolution
is connected directly or indirectly with the remuneration of a member
of the Key Management Personnel. Shareholders should note that the
Chair intends to vote any undirected proxies in favour of Resolution 7.
Shareholders may also choose to direct the Chair to vote against
Resolution 7 or to abstain from voting.
8. Resolution 8 - Proposed issue of Shares to Mr Stephen Rowse
To consider and, if thought fit, to pass the following resolution as an
ordinary resolution:
"That, for the purpose of Listing Rule 7.1 and for all other purposes, the
Company approves the allotment and issue of 91,660 Shares for no
consideration to Stephen Rowse or his nominee(s) on the terms and conditions
set out in the Explanatory Memorandum accompanying this Notice of Meeting."
The Company will disregard any votes cast on Resolution 8 by Stephen Rowse
and/or any associate of Stephen Rowse. However, the Company need not
disregard a vote if the vote is cast by a person as proxy for a person who
is entitled to vote, in accordance with the directions on the proxy form or
the vote is cast by the person chairing the meeting as proxy for a person
who is entitled to vote, in accordance with a direction on the proxy form to
vote as the proxy decides.
Further, a Restricted Voter who is appointed as a proxy will not vote on
Resolution 8 unless:
(a) the appointment specifies the way the proxy is to vote on Resolution 8;
or
(b) the proxy is the Chair of the Meeting and the appointment expressly
authorises the Chair to exercise the proxy even though the Resolution
is connected directly or indirectly with the remuneration of a member
of the Key Management Personnel. Shareholders should note that the
Chair intends to vote any undirected proxies in favour of Resolution 8.
Shareholders may also choose to direct the Chair to vote against
Resolution 8 or to abstain from voting.
9. Resolution 9 - Proposed approval of termination benefits for Mr John
Wallington
To consider and, if thought fit, to pass the following resolution as an
ordinary resolution:
"That, for the purposes of Listing Rules 10.11 and 10.19 and sections 200B,
200E and 208 of the Corporations Act and for all other purposes, approval is
given for the Company to provide benefits that might become payable to John
Wallington under and in accordance with his employment agreement in
connection with the termination of his employment with the Company, details
of which are set out in the Explanatory Memorandum accompanying this Notice
of Meeting."
The Company will disregard any votes cast on Resolution 9 by John Wallington
and/or any associate of John Wallington. However, the Company need not
disregard a vote if:
(a) it is cast by a person as a proxy appointed by writing that specifies
how the proxy is to vote on the proposed resolution; and
(b) it is not cast on behalf of John Wallington or an associate of John
Wallington.
Further, a Restricted Voter who is appointed as a proxy will not vote on
Resolution 9 unless:
(a) the appointment specifies the way the proxy is to vote on Resolution 9;
or
(b) the proxy is the Chair of the Meeting and the appointment expressly
authorises the Chair to exercise the proxy even though the Resolution
is connected directly or indirectly with the remuneration of a member
of the Key Management Personnel. Shareholders should note that the
Chair intends to vote any undirected proxies in favour of Resolution 9.
Shareholders may also choose to direct the Chair to vote against
Resolution 9 or to abstain from voting.
10. Resolution 10 - Proposed approval of termination benefits for Mr Wayne
Koonin
To consider and, if thought fit, to pass the following resolution as an
ordinary resolution:
"That, for the purposes of Listing Rules 10.11 and 10.19 and sections 200B,
200E and 208 of the Corporations Act and for all other purposes, approval is
given for the Company to provide benefits that might become payable to Wayne
Koonin under and in accordance with his employment agreement in connection
with the termination of his employment with the Company, details of which
are set out in the Explanatory Memorandum accompanying this Notice of
Meeting."
The Company will disregard any votes cast on Resolution 10 by Wayne Koonin
and/or any associate of Wayne Koonin. However, the Company need not
disregard a vote if:
(a) it is cast by a person as a proxy appointed by writing that specifies
how the proxy is to vote on the proposed resolution; and
(b) it is not cast on behalf of Wayne Koonin or an associate of Wayne
Koonin.
Further, a Restricted Voter who is appointed as a proxy will not vote on
Resolution 10 unless:
(a) the appointment specifies the way the proxy is to vote on Resolution
10; or
(b) the proxy is the Chair of the Meeting and the appointment expressly
authorises the Chair to exercise the proxy even though the Resolution
is connected directly or indirectly with the remuneration of a member
of the Key Management Personnel. Shareholders should note that the
Chair intends to vote any undirected proxies in favour of Resolution
10. Shareholders may also choose to direct the Chair to vote against
Resolution 10 or to abstain from voting.
OTHER BUSINESS
To deal with any other business which may be brought forward in accordance
with the Constitution and the Corporations Act.
For the purposes of these resolutions, the following definitions apply:
Accounting Standards has the meaning given to that term in the Corporations
Act.
ASX means ASX Limited ABN 98 008 624 691 and, where the context permits, the
Australian Securities Exchange operated by ASX Limited.
Board means the board of Directors of the Company.
Closely Related Party has the meaning given to that term in the Corporations
Act.
Companies Act means the South African Companies Act, 71 of 2008, as amended.
Company means Coal of Africa Limited ABN 98 008 905 388.
Constitution means the Company's constitution, as amended from time to time.
Corporations Act means Corporations Act 2001 (Cth).
Director means a director of the Company from time to time.
Explanatory Memorandum means the explanatory memorandum accompanying this
Notice.
Key Management Personnel has the meaning given to that term in the
Accounting Standards.
Listing Rules means the Listing Rules of the ASX.
Meeting means the general meeting the subject of the Notice.
Notice or Notice of Meeting means this notice of meeting.
Resolution means a resolution contained in this Notice.
Restricted Voter means Key Management Personnel and their Closely Related
Parties.
Shares means fully paid ordinary shares in the capital of the Company.
By order of the Board
Shannon Coates
Company Secretary
Dated: 26 April 2012
How to vote
Shareholders can vote by either:
- attending the meeting and voting in person or by attorney or, in the
case of corporate shareholders, by appointing a corporate
representative to attend and vote; or
- appointing a proxy to attend and vote on their behalf using the proxy
form accompanying this Notice and by submitting their proxy appointment
and voting instructions in person, by post or by facsimile.
Voting in person (or by attorney)
Shareholders, or their attorneys, who plan to attend the meeting are asked
to arrive at the venue 15 minutes prior to the time designated for the
meeting, if possible, so that their holding may be checked against the
Company's share register and attendance recorded. Attorneys should bring
with them an original or certified copy of the power of attorney under which
they have been authorised to attend and vote at the meeting.
Voting by a Corporation
A shareholder that is a corporation may appoint an individual to act as its
representative and vote in person at the meeting. The appointment must
comply with the requirements of section 250D of the Corporations Act. The
representative should bring to the meeting evidence of his or her
appointment, including any authority under which it is signed.
Voting by proxy
- A shareholder entitled to attend and vote is entitled to appoint not
more than two proxies. Each proxy will have the right to vote on a
poll and also to speak at the meeting.
- The appointment of the proxy may specify the proportion or the number
of votes that the proxy may exercise. Where more than one proxy is
appointed and the appointment does not specify the proportion or number
of the shareholder's votes each proxy may exercise, the votes will be
divided equally among the proxies (i.e. where there are two proxies,
each proxy may exercise half of the votes).
- A proxy need not be a shareholder.
- The proxy can be either an individual or a body corporate.
- If a proxy is not directed how to vote on an item of business, the
proxy may generally vote, or abstain from voting, as they think fit.
However, where a Restricted Voter is appointed as a proxy, the proxy
may only vote on Resolutions 1, 2, 4, 5, 6, 7, 8, 9 and 10, if the
proxy is the Chair of the Meeting and the appointment expressly
authorises the Chair to exercise the proxy even if the Resolution is
connected directly or indirectly with the remuneration of a member of
the Key Management Personnel.
- Should any resolution, other than those specified in this Notice, be
proposed at the meeting, a proxy may vote on that resolution as they
think fit.
- If a proxy is instructed to abstain from voting on an item of business,
they are directed not to vote on the shareholder's behalf either on a
show of hands or on the poll and the shares that are the subject of the
proxy appointment will not be counted in calculating the required
majority.
- Shareholders who return their proxy forms with a direction how to vote
but do not nominate the identity of their proxy will be taken to have
appointed the Chairman of the meeting as their proxy to vote on their
behalf. If a proxy form is returned but the nominated proxy does not
attend the meeting, the Chairman of the meeting will act in place of
the nominated proxy and vote in accordance with any instructions.
Proxy appointments in favour of the Chairman of the meeting, the
secretary or any Director that do not contain a direction how to vote
will be used where possible to support each of the resolutions proposed
in this Notice, provided they are entitled to cast votes as a proxy
under the voting exclusion rules which apply to some of the proposed
resolutions. These rules are explained in this Notice.
- To be effective, proxies must be lodged by 11.00am (London time) on 20
June 2012. Proxies lodged after this time will be invalid.
- Proxies may be lodged using any of the following methods:
* by returning a completed proxy form in person or by delivery or post
using the pre-addressed envelope provided with this Notice to:
Coal of Africa Limited
Level 1, 173 Mounts Bay Road
Perth WA 6000
* by faxing a completed proxy form to +61 8 9322 6778.
The proxy form must be signed by the shareholder or the shareholder's
attorney. Proxies given by corporations must be executed in accordance with
the Corporations Act. Where the appointment of a proxy is signed by the
appointer's attorney, a certified copy of the power of attorney, or the
power itself, must be received by the Company at the above address, or by
facsimile, and by 11.00am (London time) on 20 June 2012. If facsimile
transmission is used, the power of attorney must be certified.
Shareholders who are entitled to vote
In accordance with Regulations 7.11.37 and 7.11.38 of the Corporations
Regulations 2001, the Board has determined that a person's entitlement to
vote at the General Meeting will be the entitlement of that person set out
in the Register of Shareholders as at 5.00pm (London time) on 20 June 2012.
Changes in the register of shareholders after this time will be disregarded
in determining the rights of any person to attend and vote at the meeting.
EXPLANATORY MEMORANDUM
This Explanatory Memorandum is intended to provide shareholders with
sufficient information to assess the merits of the Resolutions contained in
the accompanying Notice of General Meeting of Coal of Africa Limited ("CoAL"
or the "Company").
Certain abbreviations and other defined terms are used throughout this
Explanatory Memorandum. Defined terms are generally identifiable by the use
of an upper case first letter. Details of the definitions and abbreviations
are set out in the Glossary to the Explanatory Memorandum
BACKGROUND TO RESOLUTIONS 1 AND 2 - APPROVAL OF ISSUE OF SHARES TO JOHN
WALLINGTON AND WAYNE KOONIN
Pursuant to their employment agreements:
- Mr Wallington is entitled to be issued 250,000 Shares on
completion of 12 months service, which occurred on 15 June 2011;
and
- Mr Koonin is entitled to be issued 175,000 Shares on completion of
12 months service, which occurred on 31 March 2012.
Under the terms of the employment agreements, the issue of 250,000 Shares to
Mr Wallington and 175,000 Shares to Mr Koonin is subject to shareholder
approval. Accordingly, Resolutions 1 and 2 seek shareholder approval for
the issue of 250,000 Shares to Mr Wallington and 175,000 Shares to Mr
Koonin.
Mr Wallington's employment agreement also specified certain criteria
relating to the market price of the Shares. Based on an assessment of Mr
Wallington's performance over the 12 month period and the subsequent
resolution of operational matters relating to the Vele Colliery in a manner
satisfactory to the Board, the Board has elected to waive those Share
performance criteria.
The issue of Shares to Mr Koonin pursuant to his employment agreement is not
subject to any criteria relating to the market price of the Shares or
otherwise.
Listing Rule 10.11
Listing Rule 10.11 requires shareholder approval by ordinary resolution for
any issue of securities by a listed company to a related party.
Accordingly, Listing Rule 10.11 requires shareholders to approve the grant
of Shares to the Mr Wallington and Mr Koonin.
Additional Information
The following information in relation to the Shares to be granted pursuant
to Resolutions 1 and 2 is provided to shareholders for the purposes of
Listing Rule 10.13:
(a) the Shares will be granted to Mr Wallington and Mr Koonin, or their
nominees, as noted above;
(b) the maximum number of Shares to be granted is 425,000 (being the
250,000 Shares the subject of Resolution 1 and the 175,000 shares the
subject of Resolution 2);
(c) the Shares will be allotted and granted on a date which will be no
later than 1 month after the date of this Meeting, unless otherwise
extended by way of ASX granting a waiver to the Listing Rules;
(d) the Shares will be granted for no consideration;
(e) no funds will be raised by the grant of the Shares; and
(f) the rights attaching to the Shares are set out in the Company's
Constitution.
If approval is given for the grant of the Shares the subject of Resolutions
1 and 2 under Listing Rule 10.11, approval is not required under Listing
Rule 7.1.
Voting
Note that a voting exclusion applies to Resolutions 1 and 2 in the terms set
out in the Notice of Meeting. In particular, the directors and other
Restricted Voters may not vote on this Resolution and may not cast a vote as
proxy, unless the appointment gives a direction on how to vote or the proxy
is given to the Chair and expressly authorises the Chair to exercise your
proxy even if the Resolution is connected directly or indirectly with the
remuneration of a member of the Key Management Personnel. The Chair will
use any such proxies to vote in favour of the Resolutions.
Shareholders are urged to carefully read the proxy form and provide a
direction to the proxy on how to vote on these Resolutions.
BACKGROUND TO RESOLUTION 3 - SPECIAL RESOLUTION TO APPROVE FINANCIAL
ASSISTANCE
Resolution 3 is a precaution, based on legal advice, to ensure compliance
with the South African companies legislation with regard to provision of
financial assistance by the Company to any related company or inter-related
company (for instance, in relation to an intragroup loan). The authority
given pursuant to this Resolution will be valid for a period of two years
from its passing. Any financial assistance provided by the Company to a
related or inter-related company would still be subject to liquidity and
solvency tests and would be required to be on fair and reasonable terms.
BACKGROUND TO RESOLUTIONS 4, 5, 6, AND 7 - APPROVAL OF ISSUE OF SHARES TO
SIMON FARRELL, RICHARD LINNELL, PETER CORDIN AND GEOFFREY LINNELL
Simon Farrell, Richard Linnell, Peter Cordin and Geoffrey Linnell (together,
the Optionholders) previously held certain Class A Options as set out in the
table below. The Class A Options each carried the right to be issued one
Share and had an exercise price of A$0.50 per Share. The Class A Options
were issued on 1 October 2006 and were exercisable for a five year period
expiring on 30 September 2011.
In the ordinary course the Optionholders would have been able to exercise
their Class A Options following publication of the Company's financial
statements for the 2011 financial year on 19 September 2011. Prior to the
Class A Option expiry date of 5.00pm Australian Western Standard Time on 30
September 2011, in accordance with the Terms and Conditions of the Class A
Options, each of Simon Farrell, Richard Linnell, Peter Cordin and Geoffrey
Linnell provided the Company Secretary of the Company with a validly
completed Notice of Exercise of Options purporting to exercise the full
number of Class A Options held by the respective Optionholder, together with
payment in full for those respective Class A Options. However, as a result
of the Company's intention to imminently proceed with the recently completed
placing of new Shares, the Optionholders were in an extended close period
and were unable to exercise their Class A Options prior to their expiry on
30 September 2011. After due consideration of the circumstances and in
recognition of the long and valued service which Simon Farrell, Richard
Linnell and Peter Cordin have provided to the Company, the Board (other than
Simon Farrell, Richard Linnell and Peter Cordin, who were not involved in
the decision) resolved to ask Shareholders to approve the issue of new
Shares, for no consideration, to the Optionholders as compensation for their
being unable to exercise the Class A Options.
Simon Farrell, Richard Linnell and Peter Cordin are all Directors of the
Company. Geoffrey Linnell is the son of Richard Linnell and the Class A
Options granted to him were part of the overall option package offered to
Richard Linnell at the time of grant.
The number of new Shares proposed to be issued to each of the Optionholders
is set out below.
Number of Class A Number of Shares
Options held proposed to be issued
Simon Farrell 4,000,000 1,833,150
Richard 2,000,000 916,575
Linnell
Peter Cordin 1,000,000 458,300
Geoffrey 250,000 114,570
Linnell
The number of shares has been calculated as the number of shares (with
rounding in each case) which the Optionholders could have acquired on 20
September 2011 (being the day after the publication of the Company's annual
financial statements for the 2011 financial year and the day on which the
Optionholders informed the Company of their intention to exercise the Class
A Options), based on the difference between the exercise price of A$0.50 and
the average Share price on the Australian Securities Exchange of A$0.923 on
that date.
Related Party Transactions Generally
Chapter 2E of the Corporations Act prohibits a public company from giving a
financial benefit to a related party of the public company unless either:
1. the giving of the financial benefits falls within one of the nominated
exceptions to the provision; or
2. shareholder approval is obtained prior to the giving of the financial
benefit and the benefit is given within 15 months after obtaining such
approval.
For the purposes of Chapter 2E of the Corporations Act, the Directors are
deemed related parties under section 228(2) of the Corporations Act. As a
child of a Director, Geoffrey Linnell is a related party of the Company
pursuant to section 228(3)(b) of the Corporations Act.
Resolutions 4, 5, 6, and 7 provide for the grant of Shares to the
Optionholders which is a financial benefit which requires shareholder
approval.
Current Holdings
Set out below are details of each of the Optionholders' relevant interest in
Shares of the Company as at the date of this Notice:
Optionholder Number of Shares
Mr Simon Farrell, or his 2,871,791
nominee(s)
Mr Richard Linnell, or his 787,550
nominee(s)
Mr Peter Cordin, or his 412,759
nominee(s)
Mr Geoffrey Linnell, or his 751,550
nominee(s)
Total 4,823,650
Set out below are details of each of the Optionholders' relevant interest in
Options of the Company as at the date of this Notice:
Optionholder Number of Options
Mr Simon Farrell, or his 8,000,000
nominee(s)
Mr Richard Linnell, or his 2,000,000
nominee(s)
Mr Peter Cordin, or his -
nominee(s)
Mr Geoffrey Linnell, or his -
nominee(s)
Total 10,000,000
INFORMATION REQUIREMENTS
For the purposes of Chapter 2E of the Corporations Act the following
information is provided.
The related parties to whom the proposed resolutions would permit the
financial benefit to be given:
Subject to shareholder approval, the following maximum number of Shares will
be granted to the following related parties, or their respective nominees:
Optionholder Number of Shares
Mr Simon Farrell, or his 1,833,150
nominee(s)
Mr Richard Linnell, or his 916,575
nominee(s)
Mr Peter Cordin, or his 458,300
nominee(s)
Mr Geoffrey Linnell 114,570
Total 3,322,595
The nature of the financial benefit
The proposed financial benefit to be given is the issue of Shares for no
consideration to the Optionholders as noted above.
Directors' recommendation
All the Directors were available to make a recommendation. For the reasons
noted above:
Messrs Linnell, Wallington, Nevhutanda, Bywater, Cordin, Mosehla, Torlage,
Xayiya, Murray and Koonin (who have no interest in the outcome of Resolution
4) recommend that Shareholders vote in favour of Resolution 4 as they
believe the granting of the 1,833,150 Shares to Mr Farrell will align his
rewards with the long-term creation of value for shareholders.
Mr Farrell declines to make a recommendation about Resolution 4 as he has a
material personal interest in the outcome of that particular Resolution as
it relates to the issue of Shares to him.
Messrs Koonin, Farrell, Nevhutanda, Bywater, Cordin, Mosehla, Torlage,
Xayiya, Murray and Wallington (who have no interest in the outcome of
Resolution 5) recommend that Shareholders vote in favour of Resolution 5 as
they believe the granting of the 916,575 Shares to Mr Richard Linnell will
align his rewards with the long-term creation of value for shareholders.
Mr Richard Linnell declines to make a recommendation about Resolution 5 as
he has a material personal interest in the outcome of that particular
Resolution as it relates to the issue of Shares to him.
Messrs Koonin, Farrell, Nevhutanda, Bywater, Linnell, Mosehla, Torlage,
Xayiya, Murray and Wallington (who have no interest in the outcome of
Resolution 6) recommend that Shareholders vote in favour of Resolution 6 as
they believe the granting of the 458,300 Shares to Mr Cordin will align his
rewards with the long-term creation of value for shareholders.
Mr Cordin declines to make a recommendation about Resolution 6 as he has a
material personal interest in the outcome of that particular Resolution as
it relates to the issue of Shares to him.
Messrs Koonin, Farrell, Nevhutanda, Bywater, Cordin, Mosehla, Torlage,
Xayiya, Murray and Wallington (who have no interest in the outcome of
Resolution 7) recommend that Shareholders vote in favour of Resolution 7 as
they believe the granting of the 114,570 Shares to Mr Geoffrey Linnell will
align Mr Richard Linnell's rewards with the long-term creation of value for
shareholders.
Mr Richard Linnell declines to make a recommendation about Resolution 7 as
he has a material personal interest in the outcome of that particular
Resolution as it relates to the issue of Shares to his son.
Other information that is reasonably required by members to make a decision
and that is known to the Company or any of its Directors.
The proposed ordinary Resolutions 4, 5, 6 and 7 would have the effect of
giving power to the Directors to grant a total of 3,322,595 Shares on the
terms and conditions as set out in this Explanatory Memorandum and as
otherwise mentioned above.
The Company currently has 662,484,573 listed Shares and the following
unlisted Options on issue:
Number Exercise Price Expiry Date
250,000 A$2.05 1 May 2012
7,000,000 A$1.25 30 September 2012
1,000,000 A$1.90 30 September 2012
600,000 A$1.25 1 May 2012
1,650,000 A$3.25 31 July 2012
5,000,000 A$2.74 30 November 2014
818,500 A$1.90 30 June 2014
2,500,000 A$1.20 9 November 2015
1,441,061 A$1.40 30 September 2015
2 60 pence 1 November 2014
1. The two options have been granted over a total of 50 million Shares.
If all Shares are granted as proposed above, assuming all existing Options
on issue have been exercised, the effect would be to dilute the share
holding of existing shareholders by 10.605%.
The Optionholders' fees per annum (including superannuation) and the total
financial benefit to be received by them in this current period as a result
of the grant of the Shares the subject of Resolutions 4, 5, 6 and 7 are as
follows:
Salary p.a. Value of the Total Financial
(A$) Shares (A$) Benefit (A$)
Mr Simon 550,000.00 1,604,006.25 2,154,006.25
Farrell
Mr Richard 120,000.00 802,003.13 922,003.13
Linnell
Mr Peter 118,809.60 401,012.50 519,822.10
Cordin
Mr Geoffrey N/A 100,248.75 100,248.75
Linnell1
1. Mr Geoffrey Linnell is not employed by the Company.
Valuation of Financial Benefit
The Shares are listed on ASX. The market value of the Shares may increase or
decrease in the future. The Company has valued the Shares on the basis of
the market price of A$0.875 per Share on the date of this Notice.
The following table gives details of the highest, lowest and latest closing
prices of the Company's Shares trading on ASX over the past 12 months ending
on 24 April 2012:
Highest Price (A$) Lowest Price (A$) / Latest Price (A$) /
/ Date Date Date
A$1.795 on 14 A$0.705 on 7 October A$0.875 on 24 April
January 2011 2011 and 14 October 2012
2011
Other Information
Under the Australian Equivalent of IFRS, the Company is required to expense
the value of the Shares in its statement of financial performance for the
current financial year. Other than as disclosed in this Explanatory
Memorandum, the Directors do not consider that from an economic and
commercial point of view, there are any costs or detriments including
opportunity costs or taxation consequences for the Company or benefits
foregone by the Company in granting the Shares pursuant to Resolutions 4, 5,
6 and 7.
Neither the Directors nor the Company are aware of other information that
would be reasonably required by shareholders to make a decision in relation
to the financial benefits contemplated by the proposed resolutions.
Listing Rule 10.11
Listing Rule 10.11 requires shareholder approval by ordinary resolution for
any issue of securities by a listed company to a related party.
Accordingly, Listing Rule 10.11 requires shareholders to approve the grant
of Shares to the Optionholders.
If approval is given under Listing Rule 10.11, approval is not required
under Listing Rule 7.1.
Additional Information
The following information in relation to the Shares to be granted pursuant
to Resolutions 4, 5, 6 and 7 is provided to shareholders for the purposes of
Listing Rule 10.13:
(a) the Shares will be granted to the Optionholders, or their nominees, as
noted above;
(b) the maximum number of Shares to be granted is 3,322,595 (divided
between the Optionholders as set out in the table above);
(c) the Shares will be allotted and granted on a date which will be no
later than 1 month after the date of this Meeting, unless otherwise
extended by way of ASX granting a waiver to the Listing Rules;
(d) the Shares will be granted for no consideration;
(e) no funds will be raised by the grant of the Shares; and
(f) the rights attaching to the Shares are set out in the Company's
Constitution.
Voting
Note that a voting exclusion applies to Resolutions 4, 5, 6 and 7 in the
terms set out in the Notice of Meeting. In particular, the directors and
other Restricted Voters may not vote on this Resolution and may not cast a
vote as proxy, unless the appointment gives a direction on how to vote or
the proxy is given to the Chair and expressly authorises the Chair to
exercise your proxy even if the Resolution is connected directly or
indirectly with the remuneration of a member of the Key Management
Personnel. The Chair will use any such proxies to vote in favour of the
Resolutions.
Shareholders are urged to carefully read the proxy form and provide a
direction to the proxy on how to vote on these Resolutions.
BACKGROUND TO RESOLUTION 8 - APPROVAL OF ISSUE OF SHARES TO STEPHEN ROWSE
Resolution 8 seeks shareholder approval to the issue of a maximum of 91,660
Shares for no consideration to Stephen Rowse. As noted above, Stephen Rowse
previously held 200,000 Class A Options with an exercise price of A$0.50
each expiring on 30 September 2011. Mr Rowse's options were in an extended
close period and, accordingly, he was unable to exercise his options before
they expired. Resolution 8 seeks shareholder approval for the issue of
91,660 new Shares, for no consideration, to Mr Rowse as compensation for his
being unable to exercise his options. Stephen Rowse is a long standing
member of the Company's senior management team but is not a related party of
the Company.
Listing Rule 7.1 requires shareholder approval for the proposed issue of
securities in the Company. Listing Rule 7.1 broadly provides, subject to
certain exceptions, that shareholder approval is required for any issue of
securities by a listed company, where the securities proposed to be issued
represent more than 15% of the Company's securities then on issue.
The following information in relation to the Shares to be issued is provided
to shareholders for the purposes of Listing Rule 7.3:
a) the maximum number of Shares the Company can issue is 91,660;
b) the Company will allot and issue the Shares no later than 3 months
after the date of the Meeting, unless otherwise extended by way of
ASX granting a waiver to the Listing Rules;
c) the shares will be allotted and issued on one date;
d) the Shares will be issued for no consideration;
e) the Shares will be issued and allotted to Stephen Rowse who is not
a related party of the Company;
f) the Shares will be fully paid ordinary shares in the capital of
the Company and rank equally in all respects with the existing
fully paid ordinary shares on issue; and
g) the purpose of the issue is to compensate Mr Rowse for not being
able to exercise his options prior to their expiry date.
Voting
Note that a voting exclusion applies to Resolution 8 in the terms set out in
the Notice of Meeting. In particular, the directors and other Restricted
Voters may not vote on this Resolution and may not cast a vote as proxy,
unless the appointment gives a direction on how to vote or the proxy is
given to the Chair and expressly authorises the Chair to exercise your proxy
even if the Resolution is connected directly or indirectly with the
remuneration of a member of the Key Management Personnel. The Chair will
use any such proxies to vote in favour of the Resolutions.
Shareholders are urged to carefully read the proxy form and provide a
direction to the proxy on how to vote on these Resolutions.
BACKGROUND TO RESOLUTIONS 9 AND 10 - APPROVAL OF NEW TERMINATION BENEFITS
FOR JOHN WALLINGTON AND WAYNE KOONIN
Resolutions 9 and 10 are proposed to seek shareholder approval for certain
termination benefits to be provided to Mr Wallington and Mr Koonin under
proposed amendments to their employment agreements, details of which are
provided below. Unless otherwise noted, these termination benefits are
proposed to be provided in addition to their existing statutory and
contractual entitlements.
Listing Rule 10.19
Listing Rule 10.19 provides that a listed company must ensure that, unless
shareholder approval is obtained, no officer of the company may be entitled
to termination benefits if the value of those benefits and the termination
benefits that are or may become payable to all officers together exceed 5%
of the equity interests of the company as set out in the latest accounts
given to ASX under the listing rules.
The equity interests of the Company as set out in the latest accounts given
to ASX under the listing rules were US$442,317,000. The total value of the
termination benefits proposed to be approved under Resolutions 9 and 10
cannot be ascertained in advance for the reasons set out the section of this
Explanatory Memorandum headed `Information Required to be Disclosed
Regarding the Termination Benefits'. Based on the closing share price of
the Company's Shares and Mr Wallington's and Mr Koonin's base remuneration
as at 24 April 2012 the maximum total value of the proposed termination
benefits is estimated to be GBP 3,178,548.74(2) (see table below for further
details).
((2) Based on an exchange rate of 1 AUD:0.637012 GBP as at 24 April 2012).
The Directors are of the opinion that although the termination benefits
contemplated in Mr Wallington's and Mr Koonin's employment agreements
should, when aggregated with any other termination benefits payable to
officers of the Company, fall within 5% of the Company's equity interests as
required by Listing Rule 10.19, it would be prudent to obtain shareholder
approval to ensure that the Company does not breach Listing Rule 10.19 if
the employment agreements are terminated in circumstances triggering the
payment of termination benefits. If shareholder approval is obtained
pursuant to Resolutions 9 and 10, it will enable the Company to make any
such termination payments without having to seek shareholder approval at the
time of any such termination.
Sections 200B and 200E of the Corporations Act
Sections 200B and 200E of the Corporations Act prohibit the Company from
giving a person who has held a managerial or executive office in the Company
a benefit in connection with that person's retirement from office or
position of employment that exceeds their average annual base salary, unless
shareholder approval is given or the benefit is exempt from the need for
shareholder approval.
The changes proposed to both Mr Wallington's and Mr Koonin's employment
agreements with the Company provide for termination benefits that exceed
their average annual base salary. Shareholder approval is being sought
pursuant to Resolutions 9 and 10 to enable the Company to pay the proposed
termination benefits (detailed in the table below) to Mr Wallington and Mr
Koonin without having to seek shareholder approval at the time of any such
termination of their employment with the Company.
Section 200E requires that the following information be provided to
shareholders when seeking an approval for the purposes of section 200B:
(a) if the proposed benefit consists of a monetary payment, the amount of
the payment or, if the amount cannot be ascertained at the time of
disclosure, the manner in which that amount is to be calculated and any
matter, event or circumstance that will or is likely to affect the
calculation; and
(b) if the proposed benefit is not a payment, the monetary value of the
proposed benefit or, if the value cannot be ascertained at the time of
disclosure, the manner in which that value is to be calculated and any
matter, event or circumstance that will or is likely to affect the
calculation.
The information required to be provided by section 200E is set out below.
Related Party Transactions under the Corporations Act
For the purposes of Chapter 2E of the Corporations Act, the Directors are
related parties of the Company under section 228(2) of the Corporations Act.
Chapter 2E of the Corporations Act prohibits a public company from giving a
financial benefit to a related party of the public company unless either:
1. the giving of the financial benefits falls within one of the nominated
exceptions to the provision; or
2. shareholder approval is obtained prior to the giving of the financial
benefit and the benefit is given within 15 months after obtaining such
approval.
If:
(a) the giving of the financial benefit is required by contract; and
(b) the making of the contract was approved by shareholders; and
(c) the contract was made:
(i) within 15 months after that approval; or
(ii) before that approval, if the contract was conditional on approval
being obtained,
member approval for the giving of the financial benefit is taken to have
been given and the benefit need not be given within the 15 months.
Resolutions 9 and 10 provide for the grant of additional termination
benefits to John Wallington and Wayne Koonin under their employment
agreements, which will be financial benefits requiring shareholder approval
under Chapter 2E. If shareholder approval is obtained pursuant to
Resolutions 9 and 10, it will enable the Company to make any such
termination payments without having to seek shareholder approval at the time
of any such termination.
Section 219 requires that the following information be provided to
shareholders when seeking an approval for the purposes of Chapter 2E:
(a) the related parties to whom the proposed resolutions would permit
financial benefits to be given;
(b) the nature of the financial benefits;
(c) each director's recommendations about the proposed resolutions and
reasons for such recommendations or, if no recommendations are made or
a director is unavailable, the reasons why;
(d) whether each director has an interest in the outcome of the proposed
resolutions and if so, such interest; and
(e) all other information known to the company or any of its directors that
is reasonably required by shareholders to decide whether the proposed
resolutions are in the company's interests.
The information required to be provided by section 219 is set out below.
Listing Rule 10.11
Listing Rule 10.11 requires shareholder approval by ordinary resolution for
any issue of securities by a listed company to a related party.
Accordingly, Listing Rule 10.11 requires shareholders to approve the grant
to Mr Wallington and Mr Koonin under their employment agreements of certain
proposed long term incentive entitlements which may be triggered on
termination of their employment agreements.
If approval is given under Listing Rule 10.11, approval is not required
under Listing Rule 7.1.
Information Required to be Disclosed Regarding the Termination Benefits
Shareholder approval is being sought in respect of the benefits set out in
the table below. These benefits are in addition to the statutory and
contractual entitlements that may be provided to Mr Wallington and Mr Koonin
without the need for shareholder approval under the Corporations Act and
which may or may not be linked to termination of their employment.
The termination benefits set out in the table below are proposed to be
provided to each of Mr Wallington and Mr Koonin under the following
circumstances (each, a Termination Event):
- the Company terminating the employment of the relevant executive
without cause;
- the relevant executive or the Company terminating the executive's
employment following a change in circumstances under which the relevant
executive remains employed by the Company but ceases to hold his
current management role; or
- the scope of his powers, duties or responsibilities is materially
diminished without his consent, which will be deemed to be termination
of the executive's employment by the Company without cause.
The actual value of the total termination benefits that may become payable
to Mr Wallington and Mr Koonin on termination of employment cannot be
ascertained in advance as various events and circumstances will or are
likely to affect the calculation of the value. In particular, the following
factors may affect the value of the termination benefits for which approval
is sought:
- the circumstances of cessation of employment;
- the period of service at the time of cessation of-employment;
- his base remuneration at the time of termination;
- the proportion of the relevant contractual year served by him as at the
date his employment ceases; and
- the market price of the Company's Shares on ASX at the relevant time.
Component Details of Financial Benefit Value
Base Entitlement under existing An amount equal to 1.75
remuneration employment agreements: both Mr times the annual base
termination Wallington and Mr Koonin are remuneration of the
payment currently entitled under their relevant executive at the
existing employment agreements time of the Termination
to three months remuneration in Event.
lieu of notice.
The value of this payment
Proposed new termination based on the current base
benefit: the Company will pay an remuneration is:
amount equal to 1.75 times the
annual base remuneration Mr Wallington: GBP
following a Termination Event. 763,000; and
This base remuneration Mr Koonin: GBP 525,000.
termination payment is in
addition to any payment in lieu
of notice to which Mr Wallington
or Mr Koonin may be entitled
under their existing employment
agreements.
The annual base remuneration
under their respective existing
employment agreements is
currently GBP 436,000 for Mr
Wallington and GBP 300,000 for
Mr Koonin. This base
remuneration amount is reviewed
on an annual basis.
Bonus Entitlement under existing The maximum value of the
termination employment agreements: Mr bonus termination payment
payment Wallington is currently entitled for each of Mr Wallington
under his existing employment and Mr Koonin will be an
agreement at the end of each 12 amount equal to 0.75 times
month period of service to such the annual base
bonuses as the Board may decide remuneration of the
in its absolute discretion, to a relevant executive at the
maximum of 75% of his annual time of the Termination
base remuneration per annum. Event.
The amount of such bonuses is
determined having regard to This amount will depend on
agreed key performance the date of the
indicators. termination of the
relevant executive and
Mr Koonin is also currently will be reduced pro rata
entitled to such bonuses as the as described in the
Board may decide from time to previous column.
time, to a maximum of 75% of his
annual base remuneration per The current value of this
annum. This maximum percentage payment based on the
bonus may be renegotiated current base remuneration
upwards should there be a and assuming a bonus
material change in the Company's termination payment for a
value and size. full year is:
Proposed new termination Mr Wallington: GBP
benefit: following a Termination 327,000; and
Event the Company will pay an
amount equal to 75% of the Mr Koonin: GBP 225,000.
annual base remuneration pro
rated:
(i) In the case of Mr
Wallington, for the period from
the beginning of the relevant 12
month period of service until
the date on which he ceases to
be employed by the Company. For
example, if a Termination Event
occurs, and Mr Wallington's last
day of service is at the end of
three months into a particular
twelve month period of service,
Mr Wallington's bonus
termination payment will
calculated as 3/12 x 75% x
annual base remuneration.
(ii) In the case of Mr Koonin,
for the period from the
beginning of the relevant
financial year of the Company
until the date on which he
ceases to be employed by the
Company. For example, if a
Termination Event occurs, and Mr
Koonin's last day of service is
at the end of four months into a
particular financial year, Mr
Koonin's bonus termination
payment will calculated as 4/12
x 75% x annual base
remuneration.
The bonus termination payment is
not subject to meeting any key
performance indicators.
Long Term Entitlement under existing The value of Mr
Incentive employment agreements: Mr Wallington's and Mr
Options Wallington is currently entitled Koonin's Long Term
to the issue of the following Incentive Options will
tranches of securities under his depend on the number of
existing employment Long Term Incentive
agreement(3)subject to meeting Options ultimately
certain Share price performance exercisable and exercised
conditions: following a Termination
Event and the price of
up to 500,000 Shares following each Share in the Company
24 months service (Tranche 1 JW at the time the Long Term
Shares); and Incentive Options are
up to 500,000 Shares following exercised, or if the
36 months service (Tranche 2 JW Company elects to pay cash
Shares). in lieu of issuing Shares
under the Long Term
Mr Koonin is currently entitled Incentive Options, the
to the issue of the following price payable for each
tranches of securities under his Share as calculated in
existing employment agreement(4) accordance with the terms
subject to meeting certain Share of the Long Term Incentive
price performance conditions: Options.
up to 350,000 Shares following Based on the closing Share
24 months service (Tranche 1 WK price on ASX of A$0.875
Shares); per Share as at 24 April
up to 350,000 Shares following 2012 and assuming all the
36 months service (Tranche 2 WK Long Term Incentive
Shares); Options are validly
up to 350,000 Shares following exercised immediately
48 months service (Tranche 3 WK after their issue, the
Shares); and estimated current value of
up to 350,000 Shares following the Long Term Incentive
60 months service (Tranche 4 WK Options is:
Shares). Mr Wallington: A$875,000;
and
Proposed new termination Mr Koonin: A$1,225,000.
benefit: the Company proposes to
issue 1,000,000 Long Term
Incentive Options to Mr
Wallington and 1,400,000 Long
Term Incentive Options to Mr
Koonin within one month of the
date of the Meeting for no
consideration.
The Long Term Incentive Options
are exercisable within 6 months
of the occurrence of a
Termination Event and expire on
different expiry dates. Each
Long Term Incentive Option will,
on exercise, entitle the holder
to the issue of one fully paid
Share in the Company.
Upon exercise of any Long Term
Incentive Option, the Company
may at its absolute discretion
elect to pay the holder cash in
lieu of and in full satisfaction
of issuing Shares under the Long
Term Incentive Option.
The key terms of the Long Term
Incentive Options are set out
below under the heading `Long
Term Incentive Option Terms'.
TOTAL Mr Wallington: GBP
ESTIMATED 1,647,773.98; and
CURRENT Mr Koonin: GBP
VALUE(5) 1,530,774.76.
(3) Note Mr Wallington's employment contract also provides for the issue of
250,000 Shares on completion of 12 months service, which occurred on 15 June
2011. Approval for these shares is sought under Resolution 1.
(4) Note Mr Koonin's employment contract also provides for the issue of
175,000 Shares on completion of 12 months service, which occurred on 31
March 2012. Approval for the issues of these shares is sought under
Resolution 2.
(5) Based on an exchange rate of 1 AUD: 0.637012 GBP as at 24 April 2012.
The following additional information is provided in relation to the Long
Term Incentive Options to be granted in accordance with Listing Rule 10.13:
(a) the persons to whom the Long Term Incentive Options will be issued are
Mr John Wallington and Mr Wayne Koonin;
(b) the maximum number of Long Term Incentive Options to be granted is
2,400,000 (divided between Mr Wallington and Mr Koonin as set out in
the table above);
(c) the Long Term Incentive Options will be issued on a date which will be
no later than one month after the date of this Meeting, unless
otherwise extended by way of ASX granting a waiver to the Listing
Rules;
(d) the Long Term Incentive Options will be granted for no consideration
and the terms of the Long Term Incentive Options are set out in the
table below; and
(e) no funds will be raised by the grant of the Long Term Incentive Options
or any issue of Shares upon exercise of the Long Term Incentive
Options.
Long Term Incentive Option Terms
Term Description
Long Term Each Long Term Incentive Option will, on
Incentive Options exercise, entitle the holder to the issue
of one fully paid Share in the Company. All
Shares allotted upon exercise of the Long
Term Incentive Options rank pari passu in
all respects with Shares previously issued
and, in particular, entitle the holders of
Shares to participate fully in:
dividends declared by the Company after the
date of allotment; and
all issues of securities made or offered
pro rata to holders of Shares.
Exercise period The Long Term Incentive Options may be
exercised by a Long Term Incentive Option
holder at any time during the six month
period following a Termination Event
relating to that holder.
Long Term Incentive Options not validly
exercised during the Exercise Period will
automatically lapse.
Expiry date All Long Term Incentive Options issued to a
holder lapse and are of no further force or
effect if a Termination Event has not
occurred by the expiry dates set out below.
In relation to Mr John Wallington's Long
Term Incentive Options:
500,000 Long Term Incentive Options will
lapse if a Termination Event has not
occurred within 24 months of service or
upon the issue of any Tranche 1 JW Shares,
whichever is earlier; and
500,000 Long Term Incentive Options will
lapse if a Termination Event has not
occurred within 36 months of service or
upon the issue of any Tranche 2 JW Shares,
whichever is earlier.
In relation to Mr Wayne Koonin's Long Term
Incentive Options:
350,000 Long Term Incentive Options will
lapse if a Termination Event has not
occurred within 24 months of service or
upon the issue of any Tranche 1 WK Shares,
whichever is earlier;
350,000 shares Long Term Incentive Options
will lapse if a Termination Event has not
occurred within 36 months service or upon
the issue of any Tranche 2 WK Shares,
whichever is earlier;
350,000 Long Term Incentive Options will
lapse if a Termination Event has not
occurred within 48 months service or upon
the issue of any Tranche 3 WK Shares,
whichever is earlier; and
350,000 Long Term Incentive Options will
lapse if a Termination Event has not
occurred within 60 months service or upon
the issue of any Tranche 4 WK Shares,
whichever is earlier.
Exercise price No amount is payable by a Long Term
Incentive Option holder on exercise of a
Long Term Incentive Option.
Exercise of The Long Term Incentive Options may be
options exercised by notice in writing by the
holder delivered to the registered office
of the Company. Within 10 Business Days
after the notice of exercise is received,
the Company must allot and issue the number
of Shares to be issued in the respect of
the Long Term Incentive Options to be
exercised, or if the Company has elected to
pay cash in lieu of the issue of Shares,
the Company must make this payment to a
bank account nominated by the holder.
Transferability The Long Term Incentive Options are not
transferable.
Performance There are no performance conditions
conditions attached to the exercise of any Long Term
Incentive Option.
New issues Long Term Incentive Option holders are not
entitled to participate in any new issue of
securities to existing holders of Shares in
the Company unless:
they have become entitled to exercise their
Long Term Incentive Options; and
they do so before the record date for the
determination of entitlements to the new
issue of securities and participate as a
result of being holders of Shares.
The Company must give Long Term Incentive
Option holders, in accordance with the
Listing Rules, notice of any new issue of
securities before the record date for
determining entitlements to the new issue.
Reorganisation of If, prior to the expiry of any Long Term
capital Incentive Options, there is a
reorganisation of the issued capital of the
Company, then the rights of a Long Term
Incentive Option holder (including the
number of Long Term Incentive Options to
which each holder is entitled and the
exercise price) is changed to the extent
necessary to comply with the Listing Rules
applying to a reorganisation of capital at
the time of the reorganisation.
Pro rata and There will be no change to the number of
bonus issues Shares over which the Long Term Incentive
Options are exercisable in the event of the
Company making a pro rata issue or a bonus
issue to holders of Shares.
Cash payment in Upon exercise of any Long Term Incentive
lieu of Share Option, the Company may at its absolute
issue discretion elect to pay the holder cash in
lieu of and in full satisfaction of its
obligation to issue Shares under the Long
Term Incentive Option.
The cash amount payable for each Long Term
Incentive Option will be calculated as
follows:
if the Company is listed on ASX, the last
closing price at which each Share traded is
on ASX prior to the exercise date; or
if the Company has been removed from the
official list of ASX:
in connection with a compromise or
arrangement under section 411 of the
Corporations Act, the consideration for
each Share (or monetary equivalent in the
case of non cash consideration) under the
compromise or arrangement;
in connection with a takeover bid under
Chapter 6 of the Corporations Act,
including as a result of a compulsory
acquisition or a buyout of bid class
securities under Part 6A.1 of the
Corporations Act, the consideration for
each Share (or monetary equivalent in the
case of non cash consideration) under the
takeover bid;
in connection with a general compulsory
acquisition or buyout under Part 6A.2 of
the Corporations Act, the consideration
paid for each Share under Part 6A.2;
as a result of any other event, or series
of events, the closing price of each Share
on the last day that the Shares traded on
ASX.
Directors' recommendation and disclosure of interests
All the Directors were available to make a recommendation. For the reasons
noted above:
Messrs Linnell, Farrell, Nevhutanda, Bywater, Cordin, Mosehla, Torlage,
Xayiya, Murray and Koonin (who have no interest in the outcome of Resolution
9) recommend that Shareholders vote in favour of Resolution 9 as they
believe that Mr Wallington's proposed termination benefits are reasonable
and fair in all the circumstances.
Mr Wallington declines to make a recommendation about Resolution 9 as he has
a material personal interest in the outcome of that particular Resolution as
it relates to the grant of termination benefits to him.
Messrs Linnell, Farrell, Nevhutanda, Bywater, Cordin, Mosehla, Torlage,
Xayiya, Murray and Wallington (who have no interest in the outcome of
Resolution 10) recommend that Shareholders vote in favour of Resolution 10
as they believe that Mr Koonin's proposed termination benefits are
reasonable and fair in all the circumstances.
Mr Koonin declines to make a recommendation about Resolution 10 as he has a
material personal interest in the outcome of that particular Resolution as
it relates to the grant of termination benefits to him.
Other information known to the Company or any of its Directors that is
reasonably required by shareholders to make a decision
The proposed ordinary Resolutions 9 and 10 would have the effect of giving
power to the Directors to grant a maximum of 2,400,000 Long Term Incentive
Options on the terms and conditions as set out in this Explanatory
Memorandum and as otherwise mentioned above.
The Company currently has 662,484,573 listed Shares. If all Long Term
Incentive Options are granted as proposed above and exercised, the effect
would be to dilute the share holding of existing shareholders by 0.362%
(note this calculation does not take into consideration any dilution that
may occur as a result of the proposed issue of Shares under Resolutions 1,
2, 4, 5, 6, 7 and 8).
Mr Wallington's and Mr Koonin's fees per annum (including superannuation)
and the total financial benefit to be received by them in this current
period as a result of the Termination Benefits proposed to be granted which
are the subject of Resolutions 9 and 10 are as follows:
Salary p.a. Value of the Total
Termination Financial
Benefits Benefit (A$)
(A$)(6)
Mr John GBP 436,000 2,585,200.55 3,269,167.61
Wallington (A$683,967.06 )
Mr Wayne GBP 300,000 2,401,597.59 2,872,176.95
Koonin (A$470,579.36 )
(6) This calculation is subject to the assumptions set out in
the table on page 14 and assumes an exchange rate of 1 AUD:
0.637012 GBP as at 24 April 2012.
Under the Australian Equivalent to IFRS, the Company is required to expense
the value of the Long Term Incentive Options in its statement of financial
performance for the current financial year. Other than as disclosed in this
Explanatory Memorandum, the Directors do not consider that from an economic
and commercial point of view, there are any costs or detriments including
opportunity costs or taxation consequences for the Company or benefits
foregone by the Company in granting the Long Term Incentive Options.
As Mr Wallington and Mr Koonin are both tax resident in South Africa, the
grant and subsequent exercise of the Long Term Incentive Options may result
in the creation of a tax event which is subject to personal income tax and
payable to the South African Revenue Service. If such an event occurs, the
Company will be obliged to deduct and remit such taxes as employees' tax
from the gross proceeds arising out of the disposal of Long Term Incentive
Options.
Other than as disclosed in this Explanatory Memorandum, the Directors do not
consider that from an economic and commercial point of view, there are any
costs or detriments including opportunity costs or taxation consequences for
the Company or benefits foregone by the Company in granting the Shares
pursuant to Resolutions 9 and 10.
Neither the Directors not the Company are aware of other information that
would be reasonably required by shareholders to make a decision in relation
to the financial benefits contemplated by the proposed resolutions.
Voting
Note that a voting exclusion applies to Resolutions 9 and 10 in the terms
set out in the Notice of Meeting. In particular, the directors and other
Restricted Voters may not vote on this Resolution and may not cast a vote as
proxy, unless the appointment gives a direction on how to vote or the proxy
is given to the Chair and expressly authorises the Chair to exercise your
proxy even if the Resolution is connected directly or indirectly with the
remuneration of a member of the Key Management Personnel. The Chair will
use any such proxies to vote in favour of the Resolutions.
Shareholders are urged to carefully read the proxy form and provide a
direction to the proxy on how to vote on these Resolutions.
GLOSSARY
A$, $ or AUD means Australian dollars.
Accounting Standards has the meaning given to that term in the Corporations
Act.
ASX means ASX Limited ABN 98 008 624 691 and, where the context permits, the
Australian Securities Exchange operated by ASX Limited.
Board means the board of Directors of the Company.
Class A Options means the class A options issued by the Company on 1 October
2006.
Closely Related Party has the meaning given to that term in the Corporations
Act.
Companies Act means the South African Companies Act, 71 of 2008, as amended.
Company means Coal of Africa Limited ABN 98 008 905 388.
Constitution means the Company's constitution, as amended from time to time.
Corporations Act means Corporations Act 2001 (Cth).
Director means a director of the Company from time to time.
Explanatory Memorandum means this explanatory memorandum accompanying the
Notice.
GBP means Great British pounds.
Key Management Personnel has the meaning given to that term in the
Accounting Standards.
Listing Rules means the Listing Rules of the ASX.
Long Term Incentive Options means the options proposed to be issued to Mr
John Wallington and Mr Wayne Koonin in Resolutions 9 and 10 the terms of
which are described in the Explanatory Memorandum under the heading `Long
Term Incentive Option Terms'.
Meeting means the general meeting the subject of the Notice.
Notice or Notice of Meeting means the notice of meeting accompanying this
Explanatory Memorandum.
Optionholders means Simon Farrell, Richard Linnell, Peter Cordin and
Geoffrey Linnell.
Resolution means a resolution proposed by the Company in the Notice
accompanying this Explanatory Memorandum.
Restricted Voter means Key Management Personnel and their Closely Related
Parties.
Shares means fully paid ordinary shares in the capital of the Company.
Tranche 1 JW Shares and Tranche 2 JW Shares have the meaning set out in the
table under `Information Required to be Disclosed Regarding the Termination
Benefits' in the `Background to Resolutions 9 and 10'.
Tranche 1 WK Shares, Tranche 2 WK Shares, Tranche 3 WK Shares and Tranche 4
WK Shares have the meaning set out in the table under `Information Required
to be Disclosed Regarding the Termination Benefits' in the `Background to
Resolutions 9 and 10'.
US$ means United States dollars.
Date: 24/05/2012 07:05:01 Produced by the JSE SENS Department.
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