TAKEOVER OFFER BY CATHAY FORTUNE INVESTMENT LIMITED
THESE QUESTIONS ARE NOT INTENDED TO ADDRESS ALL ISSUES THAT MAY BE RELEVANT TO YOU. THIS SECTION SHOULD BE READ TOGETHER WITH THE TARGET’S STATEMENT.
What is the Offer?
The Bidder is offering $1.70 for each Share you hold.
What choices do I have as a Shareholder?
As a Shareholder you have the choice to:
- REJECT THE OFFER and remain a Shareholder, subject to your Shares not being compulsorily acquired by the Bidder (see Section 3.4 of the Target’s Statement for further explanation);
- Accept the Offer for all of your Shares; or
- Sell your Shares on market.
Shareholders should carefully consider the Directors’ recommendation and other important issues set out in the Target’s Statement before making a decision.
What do your Directors recommend?
Your Directors recommend that you REJECT THE OFFER. The reasons for your Directors’ recommendation are detailed in Section 1 of the Target’s Statement. If there is a change in this recommendation or any material developments in relation to the Offer, Discovery Metals will lodge a supplementary Target’s Statement.
What should I do?
To follow the Directors’ recommendation to REJECT THE OFFER, simply do nothing. If you do not understand the Offer or are in doubt as to how to act, you should seek independent financial and taxation advice from your professional adviser in relation to the action that you should take.
What do the Directors intend to do with their Shares?
Each Director who holds Shares intends to REJECT THE OFFER in relation to those Shares.
What does the Independent Expert say?
The Independent Expert has concluded that the Offer is NEITHER FAIR NOR REASONABLE.
The Independent Expert’s Report accompanies the Target’s Statement at Annexure A.
If I accept the Offer now, can I withdraw my acceptance?
No, once you have accepted the Offer, you will be legally bound to sell those Shares to the Bidder and you cannot later withdraw your acceptance, except in limited circumstances (see Section 2.11 of the Target’s Statement).
Can the Bidder vary the Offer?
Yes. The Bidder has not declared the Offer final. The Bidder can vary the Offer by extending the Offer Period by 6 December 2012 or increasing the Offer Price. The Directors do not know if the Bidder will vary its Offer.
When does the Offer close?
The Bidder has stated that the Offer remains open until 7:00pm AEDST on 13 December 2012. It is possible that the Bidder may choose to extend the Offer Period in accordance with the Corporations Act. The Offer Period may also be automatically extended in certain circumstances.
What will happen if the Bidder raises its Offer Price?
The Bidder has not declared the Offer Price final. The Bidder may decide to increase the Offer Price. If this occurs, the Directors will carefully consider the revised Offer and advise Shareholders accordingly. There is no guarantee that the Bidder will increase the Offer Price. If you have already accepted the Offer, you will be entitled to any increase in the Offer Price, subject to the comments noted in Section 2.11 of the Target’s Statement.
What happens if I accept the Offer and a Superior Offer is made for my Shares after I accept?
If you accept the Offer, you are only able to withdraw your acceptance in limited circumstances. This will only be if the Bidder varies the Offer in a way that postpones for more than one month the time by which the Bidder must meet its obligations under the Offer (for example, by extending the Offer Period for more than one month while the Offer remains conditional).
Accordingly, if you accept the Offer, you may be unable to accept a Superior Offer if one is made. At this time, the Directors have not received a firm proposal in relation to a Superior Offer and do not know whether a Superior Offer will be made.
What happens if I do nothing?
You will remain a Shareholder. If the Bidder acquires 90% or more of Shares and the Offer becomes unconditional, the Bidder intends to compulsorily acquire your Shares. See Section 3.4 of the Target’s Statement for more details.
If the Bidder acquires between 50% and 90% of Shares and the Offer becomes unconditional, you will be a minority shareholder in Discovery Metals. The implications of this are described in Section 3.3 of the Target’s Statement.
Can I be forced to sell my Shares?
You cannot be forced to sell your Shares unless the Bidder proceeds to compulsory acquisition of Shares. The Bidder and their associates will need to acquire at least 90% (by number) of Shares (under the Offer or otherwise) AND 75% (by number) of Shares the Bidder offered to acquire under the Offer, in order to exercise compulsory acquisition rights. If the Bidder achieves this and proceeds to compulsory acquisition, then you will be paid the same consideration as is payable by the Bidder under the Offer and you will be forced to sell your Shares.
If I continue to hold my Shares, are there risks?
Yes, Discovery Metals is subject to a number of risks. These risks include (but are not limited to) those outlined in Section 4.3 of the Target’s Statement.
Will there be any costs associated with accepting the Offer?
A general description of the taxation treatment for certain Australian resident Shareholders accepting the Offer is set out in Section 7 of the Bidder’s Statement. Shareholders who are resident in a jurisdiction other than Australia should seek their own professional tax advice. Because this advice is general in nature and does not take into account your individual circumstances, you should not rely on those descriptions as advice for your own affairs. You should consult your taxation adviser for detailed taxation advice before making a decision as to whether or not to accept the Offer for your Shares. You may, for example, be liable for CGT if you sell your Shares.
Can I sell my Shares on market?
Yes, unless you have accepted the Offer you can sell your Shares on market. If you sell your Shares on market:
- you will not benefit from any possible increase in the value of Shares; and
- you will not benefit from any possible increase in the consideration that may be provided under the Offer or a Superior Offer, if one is made.
Can Foreign Shareholders accept the Offer?
Foreign Shareholders can accept the Offer like any other Shareholder.
What are the Conditions to the Offer?
There are a number of Conditions to the Offer. The Conditions of the Offer include:
- 51% minimum acceptance;
- Botswana regulatory approvals;
- written confirmation from the Minister of Mines (Botswana) that the Government of Botswana’s option to acquire an interest in the Boseto copper project will not/ cannot be exercised. As previously advised by Discovery Metals, the Government of Botswana chose not to exercise this option at the time of grant of the current mining licence;
- no order, action or application is made (other than an application to, or a decision of, ASIC or the Takeovers Panel) which restrains, prohibits or impedes or otherwise materially adversely impacts upon the making of the Offer or requires divestiture of Shares or assets;
- no material adverse events occurring, including that there be no material restraint on or hindrance to the development, timely completion, feasibility, operation, profitability or marketability of the Boseto copper project;
- no material acquisitions, disposals or new commitments (generally in aggregate of more than $10 million);
- no transaction tax;
- the Offer has not triggered any repayment, acceleration or alteration provisions of the Debt Financing or other financing arrangements and Discovery Metals makes an announcement on the same. As noted in Section 6.4 of the Target’s Statement, if the Bidder obtains voting power in Discovery Metals of 30% or more, a ‘Change of Control’ event under the Debt Financing will be deemed to have occurred which, at the lenders’ discretion, may trigger a requirement for immediate repayment of the Debt Financing;
- the Offer has not triggered any change of control provisions in any material contracts of the Discovery Metals Group and Discovery Metals makes an announcement on the same;
- no corporate type transactions (such as declaration of a dividend, share split or consolidation or share buyback or issuing Shares (other than on the exercise of Options already on issue));
- Discovery Metals announces that Sedgman has not made, nor stated an intention to make, a claim for an amount greater than $20,027,470.07 or amended any claim to a greater amount; and
- no litigation (other than with Sedgman) is threatened or commenced against the Discovery Metals Group which may result in a judgement of more than $5 million, unless previously disclosed.
The Conditions are set out in full in Section 10 of the Bidder’s Statement and discussed in more detail in Section 3.2 in the Target’s Statement.
What happens if I accept the Offer and the Conditions are not satisfied?
If the Conditions are not satisfied and the Bidder has not waived the Conditions by the end of the Offer Period, your acceptance of the Offer will be of no effect and you will:
- not receive any consideration from the Bidder; and
- remain the holder of those Shares.
In this case you will be free to deal with your Shares in the normal course. If the Conditions are satisfied or waived before the end of the Offer Period, you will be paid the Offer Price (see Section 2.21 of the Target’s Statement). Even where the Offer remains conditional, you cannot withdraw your acceptance before the end of the Offer Period except in limited circumstances (see Section 2.11 of the Target’s Statement).
What happens if I am an employee?
Your employment will continue. Section 4 of the Bidder’s Statement contains further information.
If the Bidder acquires more than 33% of the Shares, you will be entitled to receive an accelerated payment of your accrued annual leave and a pro-rata payment of any entitlement you have under the Company’s short term incentive and long term incentive arrangements.
What happens if I am a participant under the Share Plan?
Under the Share Plan Rules, all Shares held on behalf of participants in the Share Plan will automatically vest effective on, and subject to, a ‘vesting event’ occurring. A ‘vesting event’ will be deemed to have occurred if the Bidder acquires a relevant interest in at least 33% of the total issued capital in Discovery Metals during the Offer and the Offer is unconditional.
If a ‘vesting event’ occurs all vesting conditions under the Share Plan will automatically be waived, and the Shares issued under the Share Plan will automatically vest and be capable of withdrawal from the Share Plan in accordance with the Share Plan Rules.
If I accept the Offer, when will I be paid?
If you accept the Offer, you may have to wait until the earlier of:
- one month after the Offer is validly accepted by you or, if the Offer is subject to a defeating condition, within one month of the Offer becoming unconditional; and
- 21 days after the end of the Offer Period, provided the Offer has become unconditional, before you will be paid.
It is uncertain when or if the Offer will become unconditional.
What if I have any questions on the Offer?
Discovery Metals has established a Shareholder Information Line for Shareholders in relation to the Offer. The telephone number is 1800 207 622 (within Australia), and +61 2 8280 7220 (outside of Australia). It is available Monday to Friday between 8.30am and 7.30pm AEDST.
Announcements made to ASX by Discovery Metals and other information relating to the Offer will be available on the website. Alternatively, you should obtain independent advice from your professional adviser, as necessary.
What are the head office contact details for Discovery Metals Limited?
Level 23, 333 Ann Street, Brisbane, QLD 4000
GPO Box 3261 Brisbane, QLD 4001
Phone: +61 7 3218 0222
Fax: +61 7 3218 0233
Which stock exchange is Discovery Metals Limited listed on?
Discovery Metals Limited is listed on:
Australian Securities Exchange (ASX: DML)
Botswana Stock Exchange (BSE: DML)
Who is the auditor for Discovery Metals Limited?
Ernst & Young
111 Eagle Street
Brisbane QLD 4000
Who is Discovery Metals Limited’s principal share registry?
Computershare Investor Services Pty Ltd
117 Victoria Street
West End QLD 4101
How can I obtain a copy of Discovery Metals Limited's Annual Report?
A copy of the Company’s annual report can be downloaded in the Annual Report page of this website.
The report is available for download in Adobe Acrobat format. You will need to have Adobe Acrobat Reader installed on your computer to view it.
You may also request a hard copy by contacting the Company’s share registry.
Can I subscribe to receive alerts about Discovery Metals Limited's progress?
Yes, you can register to receive email alerts from Discovery Metals Limited by subscribing to our email alert service. Please click here for more information.
How can I unsubscribe from Email Alerts, change my preferences or personal details?
If you no longer want to receive Email Alerts from Discovery Metals Limited click here to go to the Member Login. You can also update your personal details and preferences.