RE:Maybe a stupid question 2023-05-14 23:59 ET - News Release
Mr. Peter Tomsett reports
NEWCREST ENTERS INTO BINDING SCHEME IMPLEMENTATION DEED WITH NEWMONT
Newcrest Mining Ltd. has entered into a binding scheme implementation deed with Newmont Corp. in relation to a proposal for Newmont to acquire 100 per cent of the issued shares in Newcrest by way of a scheme of arrangement.
Under the terms of the Newmont transaction, Newcrest shareholders will be entitled to receive 0.400 Newmont share for each Newcrest share held. In addition, Newcrest will be permitted to pay a franked special dividend of up to $1.10 (U.S.) per share (2) on or around the implementation of the scheme of arrangement.
The scheme consideration, which would be received by Newcrest shareholders under the Newmont transaction, when aggregated with the franked special dividend, represents:
- An implied Newcrest share price of $29.27 (Australian) per share (3);
- An implied equity value of $26.2-billion (Australian) and enterprise value for Newcrest of $28.8-billion (Australian) (4);
- 31-per-cent ownership of the combined group by Newcrest shareholders on implementation;
- A 30.4-per-cent premium to Newcrest's undisturbed closing price of $22.45 (Australian) per share on Feb. 3, 2023 (5);
- A 39.1-per-cent premium to Newcrest's undisturbed 30-day volume-weighted average price (VWAP) of $22.22 (Australian) per share on Feb. 3, 2023 (4, 6).
In addition to the significant premium to Newcrest's undisturbed share price in early February, the Newmont transaction provides a number of benefits to Newcrest shareholders through exposure to the combined group, including:
- Increased diversification across a premier portfolio of gold and copper assets in low-risk jurisdictions;
- Increased flexibility in project sequencing and growth optionality;
- Market-leading position in safety and sustainability;
- Improved efficiencies from economies of scale;
The Newcrest board unanimously recommends that shareholders vote in favour of the Newmont transaction (1) in the absence of a superior proposal (as defined in the SID) and subject to the independent expert concluding and continuing to conclude that the Newmont transaction is in the best interests of Newcrest shareholders.
Newcrest's chairman, Peter Tomsett, said: "This transaction will combine two of the world's leading gold producers, bringing forward significant value to Newcrest shareholders through the recognition of our outstanding growth pipeline. In addition to the ongoing benefits of merging these premier portfolios, the combined group will set a new benchmark in gold production while benefiting from a material and growing exposure to copper and a market-leading position in safety and sustainability. The Newcrest board is unanimously recommending the proposal. We are very proud of the entire Newcrest team for building a world-class metals business, which will form a key part of the combined group. We believe our shareholders and other stakeholders can look forward to an exciting and prosperous future."
Newmont has agreed to establish a foreign exempt listing on the Australian Securities Exchange to allow Newcrest shareholders to trade Newmont shares through Chess depositary interests (CDIs) on the ASX. Newcrest shareholders will be able to elect whether to receive the scheme consideration in New York Stock Exchange-listed Newmont shares or Australian Securities Exchange-listed CDIs.
Key conditions and terms
In summary, conditions for implementation of the scheme of arrangement include:
- Approval by Australia's Foreign Investment Review Board (FIRB);
- Approvals required under the Hart Scott Rodino Act, clearances required from the Canadian Competition Bureau and the Independent Consumer and Competition Commission of Papua New Guinea, and other competition approvals;
- Newcrest shareholder approval in respect of the scheme of arrangement;
- Newmont shareholder approval authorizing the issuance of Newmont shares as consideration under the scheme of arrangement;
- Approval of the Federal Court of Australia;
- the independent expert issuing an independent expert's report, which concludes (and continues to conclude) that the Newmont transaction is in the best interests of Newcrest shareholders;
- No material adverse change and no prescribed occurrence in relation to either Newmont or Newcrest;
- Approval for quotation of the scheme consideration securities on NYSE (Newmont shares) and ASX (CDIs);
- Receipt of confirmation of an ATO class ruling;
- Other customary conditions.
The SID is subject to customary deal protections for both Newmont and Newcrest, including no shop, no talk, no due diligence and notification obligations. Newcrest is also bound by other customary provisions, including a matching right in the event of a competing proposal (as defined in the SID).
The SID includes certain circumstances in which a break fee of $174-million (U.S.) (7) would be payable to Newmont, or a reverse break fee of $375-million (U.S.) (8) would be payable to Newcrest.
Under the SID, both parties are permitted to pay certain ordinary dividends in the ordinary course. Newcrest is also permitted to pay certain quarterly dividends if the transaction is delayed beyond Dec. 1, 2023. For Newcrest, any ordinary dividend declared will be additional to the special dividend.
Indicative timetable and next steps
Newcrest shareholders do not need to take any action at this stage.
As outlined above, the scheme of arrangement is subject to a number of conditions, including approval of Newcrest shareholders at a scheme meeting, which is expected to be held in September or October, 2023.
Newcrest will send a scheme booklet to Newcrest shareholders in due course. The scheme booklet will contain information relating to the Newmont transaction and an independent expert's report on whether the Newmont transaction is in the best interests of Newcrest shareholders. The Newcrest board has appointed Grant Samuel & Associates Pty. Ltd. as the independent expert.
If the Newmont transaction is approved by Newcrest shareholders and the other conditions precedent are satisfied or waived, the scheme is expected to be implemented by the end of 2023 (9).
(1) In the absence of a superior proposal and subject to the independent expert concluding and continuing to conclude that the Newmont transaction is in the best interests of Newcrest shareholders.
(2) Newcrest expects to have sufficient franking credits available to frank a dividend to an amount of $1.10 (U.S.) per share. The franking of the special dividend amount is subject to change based on timing of completion of the transaction, business performance, foreign exchange movements and ATO ruling.
(3) Based on: (1) exchange ratio of 0.400 times (with implied Newcrest price calculated using Newmont's closing price on the New York Stock Exchange of $45.94 (U.S.) per share as of May 12, 2023); (2) a franked special dividend of up to $1.10 (U.S.) per share; and (3) an Australian-dollar/U.S.-dollar foreign exchange rate of 0.665 as of May 12, 2023.
(4) Equity value based on: (1) exchange ratio of 0.400 times (with implied Newcrest price calculated using Newmont's closing price on the NYSE of $45.94 (U.S.) per share as of May 12, 2023); (2) a franked special dividend of up to $1.10 (U.S.) per share; (3) an Australian-dollar/U.S.-dollar foreign exchange rate of 0.665 as of May 12, 2023; and (4) 894,230,732 Newcrest shares outstanding. Newcrest enterprise value calculated as implied equity value and net debt of $1.7-billion (U.S.).
(5) Represents the last trading day prior to Newcrest's Feb. 6, 2023, market release confirming Newmont's previous proposals.
(6) Based on: (1) exchange ratio of 0.400 times (with implied Newcrest price calculated using Newmont 30-day volume-weighted average price on the NYSE of $49 (U.S.) per share up to May 12, 2023); (2) a franked special dividend of up to $1.10 (U.S.) per share; and (3) an Australian-dollar/U.S.-dollar foreign exchange rate of 0.670.
(7) Calculated as 1 per cent of Newcrest's market capitalization based on Newcrest five-day VWAP on the ASX of $28.94 (Australian) per share up to May 12, 2023; an Australian-dollar/U.S.-dollar foreign exchange rate of 0.673 as of May 12, 2023; and 894,230,732 Newcrest shares outstanding.
(8) Calculated as 1 per cent of Newmont's market capitalization based on Newmont five-day VWAP on the NYSE of $47.16 (U.S.) per share up to May 12, 2023, and 794,712,201 Newmont shares outstanding.
(9) The scheme implementation date is indicative and may be subject to change due to a range of factors, including (but not limited to) the expected timing of necessary regulatory approvals.
We seek Safe Harbor.
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