1. Introduction
In conjunction with the release of its annual results for the year ended 31 December 2009, Hulamin announced on 11 February 2010 that the board of directors ("the Board") was assessing various opportunities to optimise the Company's capital structure in order to support its medium-term growth target. The Board has resolved to raise R750 million equity capital by way of a rights offer of ordinary shares to Hulamin ordinary shareholders (the "Rights Offer").
2. Rationale for the Rights Offer
Following the significant expansion of its rolled products facilities in 2000, Hulamin`s rolled products sales grew from 50 000 tons per annum to 190 000 tons per annum in 2008. The global recession in 2008 and 2009 resulted in sales reducing sharply and have since recovered strongly. The Company has completed a further expansion of its rolled products capacity, which was opened in November 2009, and this will enable it to increase sales volumes, particularly of higher margin products, to around 250 000 tons per annum in the medium term. The increased capacity is expected to result in growth in sales in the period from 2010 to 2014 which will require higher investment in working capital. Hulamin produces the majority of its rolling slab requirements from its own facilities, with the balance sourced from BHP Billiton Plc ("BHP Billiton"). The Company intends expanding its slab casting facilities, which will coincide with the exit by BHP Billiton from the production of rolling slab. In recent years the increased volatility in the price of aluminium has caused significant movements in the level of Hulamin`s borrowings. This has created the need for increased levels of available funding facilities. Hulamin`s current funding structure is not well aligned with its growth and operational objectives, and the Company therefore proposes applying the proceeds of the Rights Offer to reducing its current short term debt and to repay long term debt falling due in the next two years. This will enable the Company to fund the expected growth in sales volumes from the already installed capacity, cater for increased slab casting facilities, and reduce borrowing costs and liquidity risks.
3. Shareholder Support
Shareholders holding approximately 79% of the listed ordinary shares in Hulamin have indicated their support for the Rights Offer.
4. Cautionary announcement
Hulamin ordinary shareholders are advised that once the terms of the Rights Offer are finalised, a detailed terms announcement will be released on SENS and published in the press. Hulamin ordinary shareholders are accordingly advised to exercise caution when dealing in the Company`s securities until a further announcement is made.
6. Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of shareholders of Hulamin will be held at the Company`s registered offices, Moses Mabhida Road, Pietermaritzburg at 14h00 on Wednesday, 19 May 2010 to consider and, if deemed fit, to pass with or without modification, the ordinary and special resolutions proposed thereat.
26 April 2010
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 26/04/2010 07:05:04 Supplied by www.sharenet.co.za
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