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UNICORN CAPITAL PARTNERS LIMITED - Nkomati Business Rescue Application

Release Date: 05/10/2020 17:11
Code(s): UCP     PDF:  
Wrap Text
Nkomati Business Rescue Application

Incorporated in the Republic of South Africa
(Registration number 1992/001973/06)
Share code: Unicorn ISIN: ZAE000244745
(“UCP” or “the Company”)



Shareholders are referred to the SENS announcement released today, 5 October 2020 by Afrimat
Limited (“Afrimat”), advising that it has launched a High Court application for an order, inter alia, placing
UCP’s subsidiary, Nkomati Anthracite Proprietary Limited (“Nkomati”), under supervision and
commencing business rescue proceedings, in terms of section 131 of the Companies Act, No. 71 of
2008 (“Companies Act”).

UCP is currently considering the court papers received, as well as the Company’s response, and will
apprise shareholders of further developments in this regard.


UCP has an indirect 60% shareholding in Nkomati, which operates a high-grade anthracite mine
focused on both opencast and underground mining.

As previously advised, Nkomati’s debt levels are high and its liquidity constrained, with the business
continuing to face operational uncertainty following the Fall of Ground during September 2019 as
previously announced. These challenges were exacerbated by the shut down for the initial Covid-19
lockdown period followed by an extended illegal strike, both of which resulted in significant losses.

UCP has been engaging with Nkomati’s funders with a view to securing additional financing. As part of
these discussions, UCP approached Afrimat, a shareholder of UCP, and Afrimat provided assistance
by advancing unsecured loans and by subsequently granting Nkomati and UCP an extension for
repaying certain tranches which were due and repayable. Nkomati has, however, to date been unable
to settle these loans. Further funds were also injected in relation to the illegal strike.

On 29 September 2020, Nkomati requested an urgent additional cash injection of R20 million as it has
exhausted all of its cash reserves. However, Afrimat has indicated that it is unwilling to contribute any
further funding to Nkomati on an unsecured basis. In its court application, Afrimat has indicated that,
should Nkomati be placed under business rescue, it would be willing to provide post-commencement
finance to Nkomati, as and when needed for its operational requirements.


Shareholders are referred to the various SENS announcements by Afrimat and UCP, regarding the
offer by Afrimat to acquire all the ordinary shares in UCP not already held by Afrimat (or by its
subsidiaries) or by subsidiaries of UCP, by way of a scheme of arrangement (“the Scheme”) in terms
of section 114 of the Companies Act. A circular (“Circular”), detailing the Scheme, was distributed to
UCP shareholders on 9 September 2020.

The abovementioned business rescue application does not directly impact on the Scheme, which is due
to be presented to UCP shareholders for their approval at a general meeting on 9 October 2020. In
addition to such shareholder approval, the Scheme remains subject to the fulfilment of various material
conditions precedent outlined in the Circular, including, inter alia:

 -   that the Mpumalanga Economic Growth Agency, as minority shareholder in Nkomati, agrees to the
     terms of the strategic and mining management agreement to be concluded with Afrimat, as
     previously approved by the UCP Board on 20 March 2020, to the reasonable satisfaction of Afrimat;

 -   that written consent to the transfer of UCP shares in terms of the Scheme be obtained from the
     Industrial Development Corporation of South Africa and ABSA Bank Limited (collectively, the
     “Lenders”) in terms of the change of control provisions under their respective loan/funding
     agreements with subsidiaries of UCP and that the Lenders agree not to proceed in foreclosing on
     outstanding debt due by those subsidiaries; and

 -   that all regulatory approvals required to implement the Scheme are obtained, including (i) the
     Takeover Regulation Panel issuing a compliance certificate in terms of section 121(b) of the
     Companies Act; and (ii) the relevant competition authorities granting such approvals as are
     required in terms of the Competition Act, No. 89 of 1998 and other applicable laws to implement
     the Scheme, either unconditionally or subject to conditions acceptable to Afrimat.

The UCP independent board constituted for purposes of the Scheme accepts responsibility for the
information contained in this announcement which relates to UCP and confirms that, to the best of its
knowledge and belief, such information which relates to UCP is true and this announcement does not
omit anything likely to affect the importance of such information.


5 October 2020


Questco Corporate Advisory Proprietary Limited

Date: 05-10-2020 05:11:00
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