Fleurette Group

February 13, 2017 18:08 ET

Fleurette Group: Sale of stake in Mutanda and Katanga to Glencore

- $3 billion in tax revenues generated by Mutanda and KCC since Fleurette's initial investment

- Fleurette invested over US$0.5 billion in the Mutanda mining project

- Mutanda operating consistently at full capacity of over 200,000 tonnes of copper p.a. - the right time to exit

KINSHASA, DEMOCRATIC REPUBLIC OF THE CONGO--(Marketwired - Feb. 13, 2017) - Fleurette Group ("Fleurette") is delighted to announce it has completed the sale of its 31% stake in Mutanda Mining Sarl ("Mutanda") to Glencore. Fleurette has also exited its remaining 11.05% shareholding in Katanga Mining Limited ("Katanga").

The consideration for the Mutanda shares and the Katanga shares has been determined based on an independent analysis by BMO Capital Markets of the value of the Mutanda and Katanga shares for the purposes of the transaction.

The consideration for the Mutanda shares is US$922 million and the Katanga Shares is US$38 million. The net aggregate cash consideration to be paid by Glencore in respect of the transactions is $534 million after taking into account the settlement of outstanding loans payable by Fleurette to Glencore and shareholder loans owed to Fleurette by Mutanda.

The sale of Fleurette's stake in Mutanda ends its equity interest in what is now one of the leading mining assets in the African Copperbelt, following a period of extensive investment and operational improvement by the partners. Fleurette's success with Mutanda, which has now reached its full operational capacity, highlights its ability to identify an opportunity, bring together the right parties and fully commit over the long term to building a flagship mining asset in a challenging environment, creating thousands of jobs and significant revenue for the DRC.

Fleurette has invested over $500 million in the acquisition and development of Mutanda, resulting in a huge boost to production, and in turn, significant revenues to the DRC State in the form of taxes and royalties. During Fleurette's involvement, employment of local Congolese has tripled and production has reached nameplate capacity, more than tripling from just over 60,000 tonnes of copper, to 213,000 tonnes of copper in 2016. Mutanda has also made extensive investments into the surrounding local community, as well as creating a flourishing micro economy around the mine site.

Mutanda and KCC (Katanga's DRC subsidiary) have generated some $3 billion in tax revenues since Fleurette's initial investment, providing a huge boost to the DRC Treasury. Fleurette has helped build a true DRC mining champion in Mutanda and shown how long-term commitment and huge investment can create significant value for the DRC people and all stakeholders. Mutanda highlights the positive benefits the resources industry can deliver to a local economy.

Dan Gertler, Senior Adviser to Fleurette Group commented:

"We are extremely proud of what we have achieved at Mutanda. Together with Glencore, Fleurette has enabled the mine to deliver on its full potential and it has become one of the largest taxpayers in the DRC. We have shown we can make massive investment decisions in challenging, complex operating environments, and expand great assets which in turn provide huge benefits to the people of the DRC. Mutanda and KCC have generated $3 billion in tax revenues since our investment - a significant contribution to the DRC economy. With the mine now operating at full capacity, we feel now is the right time to exit our investment and to re-invest in further brown and greenfield opportunities.

"The resources sector is core to the on-going development of the DRC. I call on the international mining community to look at the opportunity in the DRC. It is only through the involvement of the international investment community and the resources sector sharing its expertise that the country can capitalise on its resources heritage. We remain committed to the DRC and will continue to re-invest into the country as we have done for the last 20 years."

Fleurette has also exited its remaining shareholding in Katanga through the $38 million share sale to Glencore of 195,440,700 Katanga shares. Having originally invested in Katanga in 2007 at a share price of up to C$18 per share, Fleurette will have exited its shareholding in Katanga at a loss of over $190m since 2007.

As part of the transactions, Glencore also acquired 15,325,000 shares in Katanga which were held as security for a loan provided to Fleurette's wholly-owned subsidiary Ruwenzori Limited.

About Fleurette - www.fleurettegroup.com / LinkedIn / Twitter

The Fleurette Group of Companies ("Fleurette") is an entrepreneurial business with significant investment in diverse sectors, including natural resources, infrastructure, agriculture and technology. Fleurette has substantial investments and operations in the Democratic Republic of Congo (DRC). The parent company of the group, Fleurette Properties Limited, is owned by Line Trust Corporation Limited strictly and solely as trustees of the Ashdale Settlement, a trust established in 2006 for the benefit of the family of Dan Gertler. Mr Gertler is a citizen and resident of Israel and the DRC (and honorary counsel to the DRC) and is committed to developing the country's natural resources and infrastructure, while investing in the Congolese people and their communities.

Fleurette has a proven track record of successful co-operation with diverse parties, including the DRC State-owned mining company Gécamines, and to date has brought more than USD $7 billion of investment into the DRC, on top of its USD $2 billion in private investment. As a result, Fleurette's subsidiaries and partnerships support around 30,000 jobs in the DRC and are amongst the DRC's leading taxpayers, contributing significant revenues to the State.

Fleurette is also a major contributor to social development in the DRC through the Gertler Family Foundation (GFF) and through direct investment in social infrastructure. The GFF is the largest charitable organization in the DRC, funding more than 50 programs and projects across the DRC, which help tens of thousands of Congolese every year. These include rebuilding key hospitals, notably the Kisangini "Hospital du Cinquantenaire"; supporting the Operation Smile campaign in Lubumbashi and Kinshasa; rebuilding Blaise Pascal School in Lubumbashi; and supporting the Lubumbashi Zoo.

Additional information about the transaction consideration

The consideration for the Mutanda shares is US$922 million and the Katanga shares is US$38 million. The Katanga shares were purchased for a purchase price of US$0.19285 per share, equating to C$0.25214 per share. Fleurette and its affiliates owe Glencore outstanding loans, secured over the Mutanda shares, amounting to US$556 million of which US$120 million comprises accrued interest. In addition, Glencore has acquired shareholder loans owed to the Fleurette group by Mutanda in the amount of approximately US$130 million.

Accordingly, the aggregate cash consideration payable by the Glencore group in respect of the transactions is US$534 million.

Additional disclosure pursuant to Canadian securities laws

On February 13, 2017, Lora Enterprises Limited (Lora), Palm Grove House, PO 438, Road Town, Tortola, British Virgin Islands, and Breton Global (Breton), Palm Grove House, PO 438, Road Town, Tortola, British Virgin Islands, two companies controlled by Line Trust Corporation Limited, in its capacity as Trustee of The Ashdale settlement (the Trust), and as such, joint actors, transferred to Glencore International AG (Glencore) ownership of 164,252,139 Common Shares and 31,188,561 Common Shares, respectively, pursuant to a private agreement (the Sale Disposition). The aggregate of 195,440,700 Common Shares transferred by Lora and Breton (the Sale Shares) pursuant to the Sale Disposition were transferred to Glencore pursuant to a share purchase agreement, dated February 13, 2017.

On the same date, Ruwenzori Limited (Ruwenzori), 4th Floor, Harbour Centre, P.O. 613 George Town, Grand Cayman, Cayman Islands, a company controlled by the Trust, and as such, a joint actor, transferred to Glencore Finance (Bermuda) Ltd (Glencore Bermuda) ownership of 15,325,000 Common Shares, pursuant to a private transaction (the Security Disposition and together with the Sale Disposition, the Dispositions). The 15,325,000 Common Shares transferred by Ruwenzori (the Security Shares) were previously held by Glencore Bermuda as security pursuant to a facility agreement, dated August 23, 2007, as amended (the Facility Agreement) and, on February 13, 2017, the Security Shares were transferred to Glencore Bermuda pursuant to a termination agreement in respect of the Facility Agreement dated February 13, 2017 (the Termination Agreement).

The aggregate transferred shares, being 210,765,700 Common Shares, represent approximately 11.05% of the outstanding Common Shares. As a result of the Dispositions, the Trust and its joint actors currently hold no Common Shares of Katanga.

Immediately prior to the Dispositions, the Trust held 210,765,700 Common Shares representing approximately 11.05% of the issued and outstanding Common Shares. After giving effect to the Dispositions, the Trust and its joint actors currently hold no Common Shares of Katanga.

The Sale Shares were disposed of at a price of US$0.19285 (approx. CDN$0.25214) per Sale Share for aggregate consideration of US$37,691,546.73 (approx. CDN$49,277,929.50). Conversion between United States dollars and Canadian Dollars herein is based on a US$:CDN$ exchange rate of US$1.00:CDN$1.3074, being the Bank of Canada noon rate on February 10, 2017. The Security Shares were transferred pursuant to the Termination Agreement as consideration for the termination of the Facility Agreement.

A copy of the early warning report to be filed by the Trust with Canadian securities regulators may be obtained by contacting: Peter Ogden, Powerscourt +44(0)20 7250 1446.

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