Firestone Diamonds Offer For Kopane Diamond -8-

21st Jul 2010 11:55

(b) the Firestone Directors have recommended any Competing Proposal in relation to Firestone; or (c) Firestone is in material breach of any provision of the Implementation Agreement such that the Kopane Directors determine, acting in good faith and having taken appropriate advice, that such recommendation should not be given or should be withdrawn or modified or qualified in order to comply with their fiduciary duties; or (iii) the Kopane Directors recommend any Competing Proposal in relation to Kopane and subsequently the Acquisition lapses or is withdrawn. In addition, under the terms of the Implementation Agreement, Firestone has agreed with Kopane to pay an inducement fee of approximately GBP400,000 million (inclusive of VAT). The inducement fee shall be payable by Kopane, if in summary: (i) a Competing Proposal in relation to Firestone (or any amendment, variation or revision of such proposal) is announced pursuant to Rule 2.5 of the Code prior to the Acquisition lapsing or being withdrawn and such Competing Proposal subsequently becomes or is declared wholly unconditional or is otherwise completed; or (ii) the Firestone Directors either (i) fail to recommend or (ii) withdraw or adversely modify or qualify their recommendation to Firestone Shareholders to vote in favour of the Firestone Resolution at the Firestone General Meeting or withdraw or adversely modify or qualify their recommendation of the Acquisition generally in any statement contained in an announcement issued by Firestone through a Regulatory Information Service after the date of the Firestone General Meeting, and subsequently the Acquisition lapses, provided that an inducement fee will not be payable by Firestone in these circumstances if, prior to the Firestone Directors failing to recommend or withdrawing or adversely modifying, or qualifying, such recommendation: (a) the Kopane Directors have failed to recommend or have withdrawn or adversely modified or qualified their recommendation to Kopane Shareholders to vote in favour of the Scheme and the Kopane Resolution respectively at the Court Meeting and the Kopane GM or (as the case may be) accept a Takeover Offer or have withdrawn or adversely modified or qualified their recommendation of the Acquisition generally in any statement contained in an announcement issued by Kopane through a Regulatory Information Service after the date of the Kopane Shareholder Meetings; (b) the Kopane Directors have recommended any Competing Proposal in relation to Kopane; or (c) Kopane is in material breach of any provision of the Implementation Agreement such that the Firestone Directors determine, acting in good faith and having taken appropriate advice, that such recommendation should not be given or should be withdrawn or modified or qualified in order to comply with their fiduciary duties; or (iii) the Firestone Directors recommend any Competing Proposal in relation to Firestone and subsequently the Acquisition lapses or is withdrawn. However, nothing in the Implementation Agreement obliges Kopane or Firestone to pay any amount which the Panel would determine would not be permitted by Rule 21.2 of the Code. 15. Irrevocable Undertakings None of the Kopane Directors hold any Kopane Shares, although each Kopane Director has given an irrevocable undertaking to Firestone to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane GM in respect of any Kopane Shares acquired after the date of this Announcement. Firestone has received an irrevocable undertaking to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane GM from Obtala, a company associated with Francesco Scolaro, the chairman of Kopane, in respect of its direct and indirect holding of Kopane Shares amounting in aggregate to 48,695,000 Kopane Shares, representing approximately 16.15 per cent. of Kopane's existing issued ordinary share capital. This undertaking will continue to be binding even in the event of a higher Competing Proposal for Kopane being announced, and cannot be withdrawn other than in the event of the Scheme lapsing or being withdrawn. Firestone has also received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane General Meeting from certain other Kopane Shareholders representing, in aggregate, approximately 19.58 per cent. of Kopane's existing issued ordinary share capital. The circumstances when these undertakings cease to be binding are set out in Appendix III to this Announcement. In total Firestone has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane General Meeting from Kopane Shareholders representing approximately 35.73 per cent. of Kopane's existing issued ordinary share capital. Firestone and Kopane have received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone GM from the Firestone Directors who hold Firestone Shares in respect of their entire holding of Firestone Shares amounting to, in aggregate, 2,000,363 Firestone Shares, representing approximately 1.56 per cent. of the existing issued share capital of Firestone. In addition, Firestone and Kopane have also received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone GM from Firestone Shareholders representing, in aggregate, approximately 28.27 per cent. of Firestone's existing issued ordinary share capital. In total Firestone and Kopane have received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone General Meeting from Firestone Shareholders representing approximately 29.83 per cent. of Firestone's Ordinary existing issued ordinary share capital. Further details of these irrevocable undertakings are contained in Appendix III to this Announcement. 16. Structure of the Acquisition and shareholder meetings for both Kopane Shareholders and Firestone Shareholders It is intended that the Acquisition will be implemented by way of a scheme of arrangement between Kopane and the Scheme Shareholders under Part 26 of the Companies Act (including a reduction of capital under section 641 of the Companies Act). The purpose of the Scheme is to allow Firestone to become the owner of the entire issued ordinary share capital of Kopane. The procedure involves an application by Kopane to the Court to sanction the Scheme and confirm the cancellation of the Scheme Shares held by Scheme Shareholders at the Scheme Record Time, the application of the reserve arising from such cancellation in paying up in full a number of new shares in Kopane (which is equal to the number of the Scheme Shares cancelled) and issuing those new shares to Firestone in consideration for which Scheme Shareholders will receive New Firestone Shares on the basis set out in paragraph 2 of this Announcement. The implementation of the Scheme is subject to the satisfaction or (where appropriate) waiver of all the Conditions and the further terms set out in Appendix I. Implementation of the Scheme is subject, amongst other things, to the approval of a majority in number of the Scheme Shareholders present and voting in person or by proxy at the Court Meeting representing not less than 75 per cent. in value of the Scheme Shares voted by the Scheme Shareholders. Implementation of the Scheme will also require the passing of the Kopane Resolution, requiring the approval of Kopane Shareholders representing at least 75 per cent. of the votes cast at the Kopane GM. Application will shortly be made to the Court for leave to convene the Court Meeting which (subject to the approval of the Court) is expected to be held on 6 September 2010. It is expected that the Kopane GM will also be convened for 6 September 2010, immediately following the Court Meeting. The Acquisition is classified under the AIM Rules as a reverse takeover of Firestone due to the size of the Acquisition in relation to Firestone and therefore requires approval by Firestone Shareholders at the Firestone General Meeting. In addition, Firestone requires Firestone Shareholders to approve an increase to its authorised share capital and the allotment of the New Firestone Shares in order to implement the Acquisition. Accordingly, the Acquisition is conditional on the approval by Firestone Shareholders of the First Firestone Resolution at the Firestone GM. Following the passing of the relevant resolutions at the Meetings, the Scheme and the Reduction of Capital will become effective upon the Court sanctioning the Scheme and confirming the Reduction of Capital and copies of the Court Orders having been delivered to the Registrar of Companies in England and Wales. The Scheme is also conditional on Admission occurring (or the London Stock Exchange agreeing to admit the New Firestone Shares and agreeing to readmit the Existing Firestone Shares to trading on AIM). Once the Scheme becomes effective, it will be binding on all Kopane Shareholders whether or not they attended or voted at the Court Meeting or the Kopane GM. The Scheme Document setting out full details of the Acquisition and the Scheme, together with notices of the Court Meeting and the Kopane GM, and the Firestone Circular for information only, will be posted as soon as practicable to Kopane Shareholders. At the same time, Firestone will post the Firestone Circular, containing a notice convening the Firestone GM, to Firestone Shareholders. Subject to the terms of the Implementation Agreement, Firestone reserves the (MORE TO FOLLOW) Dow Jones Newswires July 21, 2010 06:55 ET (10:55 GMT)