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MMG LIMITED
五礦資源有限公司
(Incorporated in Hong Kong with limited liability)
(HKEX STOCK CODE: 1208) (ASX STOCK CODE: MMG)
DISCLOSEABLE TRANSACTION
CONDITIONAL DISPOSAL OF ASSETS ASSOCIATED WITH THE GOLDEN GROVE MINE
On 30 December 2016, Album Investment Private Limited (Album Investment), a wholly owned subsidiary of MMG Limited (Company), entered into the conditional Share Sale Agreement with EMR Golden Grove Holdings Pty Ltd (EMR BidCo) to transfer Album Investment's 100% equity interest in MMG Golden Grove Pty Ltd (MMG Golden Grove) to EMR BidCo (Share Sale).
The Share Sale Agreement is subject to the approval of the directors of both Album Investment and the Company.
The parties to the Share Sale Agreement also agreed that MMG Australia Limited (MMG Australia), a wholly owned subsidiary of the Company, will enter into the Transitional Services Agreement with EMR BidCo and MMG Golden Grove to provide transitional services to MMG Golden Grove for an agreed period after the completion of the Share Sale.
IMPLICATIONS UNDER THE LISTING RULES
Album Investment and MMG Australia are wholly owned subsidiaries of the Company. The Share Sale Agreement and its associated arrangements together constitute a "transaction" pursuant to Listing Rule 14.04(1) (Notifiable Transaction).
As at least one of the applicable percentage ratios under Listing Rule 14.07 in respect of the Notifiable Transaction is more than 5% but all are less than 25%, the Notifiable Transaction constitutes a discloseable transaction for the Company and is subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.
SHARE SALE AGREEMENT
On 30 December 2016, Album Investment entered into the Share Sale Agreement with EMR BidCo. The principal terms of the Share Sale Agreement are set out below.
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Parties:
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Seller: Album Investment
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Buyer: EMR BidCo
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Shares to be transferred:
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100% equity interest in MMG Golden Grove (Shares)
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Conditions precedent:
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The Share Sale Agreement shall become effective upon the following conditions precedent being satisfied:
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the directors of the Company and Album Investment approving the transaction; and
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Album Investment obtaining necessary consents from each financier which has provided debt financing to the Group which Album Investment requires in order to perform its obligations under the Share Sale Agreement, in a form acceptable to Album Investment acting reasonably.
If the conditions precedent are not satisfied or waived by 31 January 2017, EMR BidCo is entitled to terminate the Share Sale Agreement.
If the conditions precedent are not satisfied or waived by 31 March 2017, either party is entitled to terminate the Share Sale Agreement.
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Consideration:
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The consideration payable by EMR BidCo is US$210,000,000 (equivalent to approximately HK$1,638,000,000) (Initial Purchase Price) which is to be adjusted as set out below. The consideration shall be satisfied by EMR BidCo from its internal resources.
The consideration shall be payable as follows:
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Immediately after the execution of the Share Sale Agreement, EMR BidCo must pay a US$15,000,000 (equivalent to approximately HK$117,000,000) deposit (Deposit) to a designated escrow agent;
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On completion of the Share Sale (Completion), Album Investment is entitled to the Deposit. If Album Investment repudiates the Share Sale Agreement before Completion or if the Share Sale Agreement is terminated other than due to buyer default, EMR BidCo is entitled to the Deposit;
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On Completion, EMR BidCo must pay the balance of the Initial Purchase Price to Album Investment;
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If the Golden Grove mine's working capital amount (as at 11:59pm (in Melbourne, Australia) on 31 December 2016) exceeds the working capital target amount (US$19,438,725 (equivalent to approximately HK$151,622,055)), the Initial Purchase Price will be adjusted up by the amount by which the working capital amount exceeds the working capital target amount;
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If the Golden Grove mine's working capital amount (as at 11:59pm (in Melbourne, Australia) on 31 December 2016) is less than the working capital target amount (US$19,438,725 (equivalent to approximately HK$151,622,055)), the Initial Purchase Price will be adjusted down by the amount by which the working capital amount is less than the working capital target amount;
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If MMG Golden Grove's net debt at Completion exceeds its net debt at 11:59pm (in Melbourne, Australia) on 31 December 2016, the Initial Purchase Price will be adjusted up by the amount by which MMG Golden Grove's net debt (particularly, intercompany loans between MMG Golden Grove and members of the Group) at Completion exceeds its net debt at 11:59pm (in Melbourne, Australia) on 31 December 2016 (to reflect economic risk and benefit of the Golden Grove mine passing to EMR BidCo from 1 January 2017);
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If MMG Golden Grove's net debt at Completion is less than its net debt at 11:59pm (in Melbourne, Australia) on 31 December 2016, the Initial Purchase Price will be adjusted down by the amount by which MMG Golden Grove's net debt (particularly, intercompany loans between MMG Golden Grove and members of the Group) at Completion is less than its net debt at 11:59pm (in Melbourne, Australia) on 31 December 2016 (to reflect economic risk and benefit of the Golden Grove mine passing to EMR BidCo from 1 January 2017); and
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On the date which is five Business Days after the date on which Golden Grove mine's working capital amount is determined (or any other date agreed between Album Investment and EMR BidCo), EMR BidCo must pay to Album Investment the amount of the increase in the Initial Purchase Price or Album Investment must pay to EMR BidCo the amount of the decrease in the Initial Purchase Price.
The Initial Purchase Price as adjusted will not exceed an amount which is equivalent to 24.9% of the market capitalisation of the Company as at the date of Completion.
Provided that Completion occurs, economic risk and benefit of the Golden Grove mine will pass to EMR BidCo from 1 January 2017.
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Completion: Completion will take place on the later of 28 February 2017 and 12 business days after satisfaction or waiver of the conditions precedent. Upon Completion, Album Investment will cease to have any interest in MMG Golden Grove and MMG Golden Grove will cease to be a subsidiary of the Company.
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Material Adverse Prior to Completion, if there has been a Material Adverse Event and Album Event termination Investment does not remedy such Material Adverse Event, EMR BidCo may right: terminate the Share Sale Agreement.
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Transitional The principal terms of the Transitional Services Agreement will be as set out
Services below.
Agreement:
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Parties:
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MMG Australia
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EMR BidCo
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MMG Golden Grove
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Term:
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The Transitional Services Agreement will be effective from the date of Completion and end four months from the date of Completion (subject to, where applicable, extensions of time to be agreed by the parties, up to a maximum extension of three months in aggregate).
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Underta
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kings: MMG Australia or one or more of its related entities (Supplier) must provide certain transitional services to MMG Golden Grove for agreed periods of up to four months including: (i) people services including payroll services, reporting and analytics services; (ii) financial services including accounting, reconciliation and maintenance of data and systems management; and (iii) procurement services including processing of purchasing and payment services and management of procurement master data (together, the Transitional Services).
The Supplier must ensure that the Transitional Services provided are materially consistent with and at least to the standard of which such services were provided to MMG Golden Grove prior to Completion.
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Consideration: MMG Golden Grove agrees to pay the Supplier all the costs and expenses the Supplier incurs in providing the Transitional Services, including remuneration, contractor fees and employee and contractor costs. The parties' intention is that the Supplier does not make a profit or suffer a loss out of providing the Transitional Services.
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