/ 22 July 2008

JCI, Randgold try to avoid merger

JCI and Randgold & Exploration (R&E) have signed a memorandum of understanding to conclude a settlement agreement in place of the merger of the two companies, said a statement issued on Tuesday.

”The settlement agreement, if concluded, is an alternative to the proposed merger and will result in a similar financial outcome for the shareholders of the companies,” the statement said.

Both companies were headed by the late Brett Kebble.

In terms of the memorandum, and subject to the fulfilment of conditions precedent, ”JCI shall cause 8 650 000 Gold Fields Limited shares to be registered in the name of R&E; JCI shall cause 6 196 868 R&E shares, which are registered in the name of JCI, to be registered in the name of R&E;

”R&E shall cause 265 935 854 JCI shares, which are registered in the name of R&E, to be transferred to JCI; and JCI shall register 357 374 000 Jaganda (Pty) Limited preference shares in the name of R&E — being 80% of JCI’s interest in the preference shares.”

The companies will try to conclude a binding settlement agreement within 21 days, which is intended to provide for a full and final settlement of all claims by R&E against JCI and vice versa, the statement said.

”It is intended that should the settlement agreement become binding on JCI and R&E, the proposed merger (which has not been aborted at this stage) will not proceed,” the statement said.

It is alleged that the late Kebble looted billions of rands’ worth of shares from R&E and sold them for cash. Large amounts of cash were allegedly channelled to JCI and then on to Western Areas, which held 50% of South Deep.

South Deep became the owner of a crippling hedge book.

In 2007, Gold Fields acquired all of South Deep for a total of $3-billion, including $528-million to extinguish the South Deep hedge book.

Earlier this month, Peter Gray resigned as CEO of R&E, and chairperson David Nurek also submitted his resignation. The reasons for their departures were not given.

Both were appointed after shareholders at Western Areas, JCI and R&E became worried about the companies’ financial positions, following the departure of Brett Kebble.

Shortly after, Kebble was murdered. — Sapa