Member Info for Valency

Arrived in UK early hours of the morning. Although the weather's "brass monkeys", waking up to this update gives one a much warmer feeling.

An interesting development - NEF merges with IDC to advance development of black industrialists, 15th February 2017 By: Megan van Wyngaardt "The decision is also in line with government policy to consolidate South Africa’s development finance institutions (DFIs) to provide effective support to emerging and existing black entrepreneurs and, thereby, enhance efficient service delivery." "The departments of trade and industry and economic development will appoint a technical team to drive the process expeditiously. Trade and Industry Minister Dr Rob Davies would also continue to provide legislative and policy guidance to the NEF". The departments are confident that the integration of these two leading DFIs will enhance the country’s developmental aspirations as outlined by President Jacob Zuma in his State of the Nation Address. In doing so they will “open up the economy to new players, give black South Africans opportunities in the economy and . . . help make the economy more dynamic, competitive and inclusive. This is our vision of radical economic transformation.” Read the full article - http://www.engineeringnews.co.za/article/nef-merges-with-idc-to-advance-development-of-black-industrialists-2017-02-15/rep_id:4136 ----------------------------------- It remains to be seen whether IDC will can make a formidable impact on the future of labourers at the Lace mine. Also perhaps prudent to ask if anyone else has considered where DCP's BEE partners sit in all of this as I have neither seen nor heard them offering any rescue assistance?

MrP, thanks for advising & trust you managed to recharge over the weekend. You mentioned - "Think this will again get extended till mid-March if no agreement finalised by 28 Feb....and so on....until agreement is finally reached with IDC, no matter how long it takes. imho" - I agree proceedings may be extended until mid or perhaps end March. My concern however is daily escalating costs in terms of repair, remediation & salaries as well as that of BRP cost & practitioners fees. Question is; When does it become unsustainable in the reasonable view of the Practitioner & the Court?

Thanks MrP, have you perhaps had any reply from Deloitte in regard to EOI from shareholders? tozerk, I have those same thoughts. The AMCU would not need to review a previous in-principle agreed proposal that is implemented within a reasonable timeframe but the IDC stalling tactic seems to be creating additional stress & concerns for labour as their suffering becomes protracted as opposed to a swift conclusion through decisive action.

Einvestein, thanks mate. Whogarth, the drill rig can only be brought to surface once eroded road surfaces of the twin declines has been repaired. It's really getting a bit stale at the moment but we'll just have to hang in & be patient. ATB

Whogarth, 14 Feb update confirmed insurance claim concluded for prior incident - "LDM has however received net insurance proceeds of c.ZAR1.36 million from the successful conclusion of an insurance claim in respect of an incident prior to the mine flood". - Likely referring to the truck fire (due overheating turbo charger) & section 54 stoppage. I think the current flood claim may only be finalised once the drill rig (still underground) can be brought to surface & damage assessed? Tozerk, not at all. Deloitte requested Expressions of Interest from parties interested to participate in post-commencement Finance as advertised.

Could well be Einvestein as there was no further mention of "loan restructuring" discussions so possibly sorted but I'm taking a cautious approach on this though. ATB.

Similar update as issued for DCP on 14 Feb 2017 was issued yesterday on Soapstone Convertible Bond (DMCCB) on JSE. http://www.sharenet.co.za/v3/sens_display.php?tdate=20170221103000&seq=21 Though similar, there's a very slight change in word structure referring to the IDC - "Discussions also continue between DiamondCorp and the Industrial Development Corporation of South Africa ("IDC") in relation to the provision of Post-Commencement Funding ("PCF") for the Lace Diamond Mines (Pty) Limited subsidiary, currently in business rescue. No assurances can be made that such IDC Approval will be forthcoming, either in time for PCF to be sought to be raised promptly, or at all." - No mention of terms relating to the secured loan continuing in discussion? Perhaps that hurdle has been ticked? If so then PCF remains as well as of course AMCU terms. Compare the relevant IDC paragraphs in the latest (21 Feb) Soapstone update above to that of DMC update 14 Feb - http://www.lse.co.uk/share-regulatory-news.asp?shareprice=DCP&ArticleCode=3eoewzz6&ArticleHeadline=Further_Update_re_Placing_and_Corporate_Update Thoughts welcome?

MrP. thanks really appreciate your effort!! I located a link to contact Deloitte in S.A. re. Corporate Finance via "contact us" link on the page - https://www2.deloitte.com/za/en/pages/finance/solutions/corporate-finance.html Perhaps a good idea to submit a direct enquiry for attention Edward Dyer through the link requesting info on the same as backup of your email - https://www2.deloitte.com/za/en/footerlinks/contact-us.html?icid=nextsteps_contact-us

MrP. details as in Jaf's linked article - "Deloitte has invited potential investors to submit their expressions of interest documents by email, by no later than 17h00 on Friday, 17 February 2017, to Edward Dyer (contact details listed below), noting that binding offers will be required by Thursday, 9 March 2017. Terblanche briefly added that expressions of interest will be followed by a formal correspondence from the Business Rescue Practitioner which will set out the requirements by which an interested party is to comply in order to participate in the Process. The initial requirements (which are more fully set-out in the process letter) are that interested parties must: • Sign a confidentiality agreement; and • Pay a fee of ZAR 10,000 (ten thousand South African Rand) ------------- The email address was not published in the article. ATB

MrP, contact name was stated in the article posted by Jaf1948 on 9 Feb. http://www.miningweekly.com/article/strategic-investor-into-the-business-of-lace-diamond-mines-2017-02-08/rep_id:3650 I hope it helps & will look in tomorrow as it's 1am local time and need to get some ZZZZ's.

Thanks MrP. Banksman, the idea of crowd funding is a good one but would have to be structured in an alternative way though as "rough" diamonds in S.A. and most other jurisdictions may only be sold to licenced sight holders/dealers which is strictly controlled and renewed on an annual basis tying in with Mineral resources act as well as (KP) Kimberly Process compliance.

MrP, just a suggestion although your call as it's your initiative; Why not title the email "Expression of Interest" as Deloitte - Practitioner advertised to the market. You can always expand on methods open to funding within the email and that leaves options open for earlier participation ahead of any rights issue if required at all as one can't 2nd guess whether early funding may negate the need for a rights issue? I'm sure you read the Deloitte article with examples of structured funding I posted yesterday. The practitioner will likely be responsible for structuring terms for such EOI. Einvestein, yes It's both pre-emptive and proactive and sure everyone understands it's subject to IDC progress but depending on participation interest, it may potentially also have a positive effect on current negotiations? It must also be borne in mind that even as pre-commencement senior secured creditor (2nd only to DCP), the IDC is still subjected & bound to the practitioner's restructuring authority as empowered by the court during BRP. The practitioner will however do everything possible to get IDC on board voluntarily rather than forced to ensure a vote is accepted and final court approval is gained to commence the rescue plan. ATB

Banksman, a link would be helpful to assess medium term outlook. MrP. Appreciate the effort & perhaps worth asking if "collective" expressions of interest would be acceptable as opposed to individual? Deposit & NDA's were mentioned so a collective expression as shareholders may qualify for single deposit? Friday was intimated as closure but given continued talks, it's likely the term for EOI will continue for a few more days. Thanks again for your effort as I haven't received my laptop back from the 'medics' yet & if I end up travelling tomorrow or the next I'll at least have access to a tablet to check in here. ATB

MrP, in the event business rescue proceedings are superseded by liquidation - Post-commencement finance is paid in order of preference as follows; 1) Practitioner's remuneration & fees + claims arising out of the costs of business rescue proceedings. 2) Employees remuneration, reimbursement of expenses or other amounts of money (UIF/Med/Pension etc.) related to employment (e.g. UIF/Med/Pension etc.) due & payable by a company during BRP and has not been paid to an employee. 3) Financing (PCF) obtained whether secured/unsecured during BRP receives preference in the order in which they were incurred. Thereafter pre-commencement creditors secured, unsecured, etc. etc. etc. Read the following (BVR Business Rescue copyright) which also provides examples of structured PCF incl. shareholder loans etc. - http://www.postcommencementfinance.co.za/index.php/articles/65-post-commencement-finance-a-fresh-perspective-needed -"The preferent status that PCF enjoys in terms of the Companies Act and also recent case law makes investments in this field extremely attractive to investors with the right risk profile. PCF offers huge potential for good solid investments over the whole spectrum, from the conservative (low risk) to the more aggressive (higher risk) investors looking for higher returns." - Note - Business Rescue act in S.A. is a relatively recent law and elements within will be tested in future but recent rulings upheld the prioritised payment order as set out in Section 135 so suggest you read to avail yourselves!! http://www.postcommencementfinance.co.za/index.php/post-commencement-finance-act NB. I am not in the legal fraternity nor qualified in the field. I have read the act and a couple of test case rulings/judgements i.e.(Merchant West case + Redpath Mining) as reference. Certainly seems that shareholders expression of interest in PCF will be taken seriously and can be structured accordingly. MrP. Perhaps if you wish to make such suggestion, try to email it to Deloitte & Touche - Edward Dyer (PL may be able to provide email address for expressions of interest) as in the article links posted by 2 of our good fellows 9 Feb. (expressions of interest to be submitted 17 Feb today.) ATB

Pleasure MrP, Apology for late reply but as mentioned my laptop is playing up! Using the other half's & hers was acquired locally so keypad is dual English/Arabic & I might as well be typing using braillewriter. If things progress to a rights issue, I will also participate & have structured my funds well in advance having not been able to participate in the recent placing due nominee inability. A rapid resolve is required though if DCP is to proceed with rescue proceedings and if investors are fortunate enough to get to a rights issue, strong participation would go a long way towards securing the future of the investment. Each will make up their own mind but if investors expect creditors to restructure & commit to Post-commencement finance then as a shareholder I will be happy to do the same as the solid resource economics are not the issue and have not changed. Having said that, some changes need to be implemented if it progresses & past cash deficiencies must not be allowed to repeat. ATB

It's a tough question Tozerk & would all like to know why the IDC are dragging heels? Restructuring terms of the existing loan? In addition it seems the practitioner wants them to participate in PCF, to what extent & terms? The practitioner seems to be following some aspects of the successful 'Mintails' model where the primary lender contributed substantially to future chances of succeeding. Perhaps worth considering that the IDC did not have a good 2016 financial year nor the previous, mainly due to the commodities slump which is likely adding to decisiveness here? Regardless and as many have stated on this forum, expeditious solutions are required if the IDC wish to afford the institution & all other affected parties the best opportunity of coming out on top. Very well stated Bainbo1, it's the sensible path but then again, sense is not always common... Just to clarify; A rights issue or any other form of new funds may be sought and secured during rescue proceedings but as post-commencement finance towards restructuring & under the proviso that a rescue plan receives vote of approval from affected parties. PCF becomes available when the plan receives final court approval to proceed with implementation. ATB

My laptop hard drive had a meltdown so apology for late reply. MrP, a rights issue can be offered during business rescue under the terms of business rescue & is considered (PCF) post-commencement finance which can only be implemented once a rescue plan has been accepted by affected parties. It must be used to fund the business going forward rather than be allocated to existing pre-commencement creditors and PCF thus receives priority over any existing creditors in 'future' if the business fails. Tozerk it is complex and becoming more so the longer proceedings drag on. If I interpret the update correctly, it seems that IDC approval delays have led/prompted the AMCU to reconsider previously in-principle approved deal with the BRP? The longer the IDC take to consider restructuring of the loan and possibly participating in PCF, the worse it becomes for labourers in terms of desperate remuneration. Considering the AMCU did initially agree in-principle quite expeditiously perhaps with a view to rescue proceedings concluding quickly but they clearly did not anticipate the IDC prolonging the pain? It seems to me that current escalating complexity results from IDC approval delays rather than simply AMCU? Folks views on this would be appreciated. It still remains in everyone's interest to proceed with rescue proceedings but most definitely "sooner rather than later" as repair & remediation costs escalate together with growing retrenchment & labour remuneration. One can clearly see the courts requirement to conclude rescue proceedings as expeditiously as possible as prolonged proceedings lead to further complexity and diminishes the chances of successful business rescue. There remains a chance here but it's slipping on a daily basis if the IDC don't get off their @rse damned soon and show some initiative & leadership in adversity.

Leither, a good find thanks. The successful rescue of 'Mintails' sought & secured similar new outside investment to strengthen the balance sheet & cash flow. It's no surprise as posted Wednesday - "There are likely a number of options/items on the table i.e. Capitalised interest, repayment terms & commencement date, interest rate, partial debt to equity conversion, sufficient additional funding needs etc." I will repost the 'Mintails" rescue article in which many of the various strategies/options available to a practitioner are mentioned. The following paragraph refers - "Several investment offers from outside Mintails were secured and negotiated. It was ultimately agreed, however, that the controlling shareholder (already the major lender) would be the provider of around R100 million of new funding into the business rescue plan. This was critical – as it meant that the loan owing to the shareholder would not require immediate repayment or short-term servicing. R100 million of cash in plus the R530 million claim resolved – a big win!" - I recommend reading the full article again as it does provide a good idea of the restructuring process and options the practitioner may explore in order to achieve successful rescue - https://www.moneyweb.co.za/mybusiness/business-rescue-does-work/

Tozerk, it's a tough time for all concerned & understandably so. Of all the least likely probabilities, collusion doesn't fit the profile of the IDC and there is simply no way they'd place a country's entire future investment profile & Industry at risk in the eyes of global investors & financial markets. As stated previously, restructuring requires all parties to "take a haircut" in some way or another. Laurelton (Tiffany) seem reasonably relaxed about pushing back repayments & as yet we don't know to what other extent they're required to restructure their loan. AMCU & Labour have reached agreement in principal and existing shareholders will be diluted in 1 form or another while making more cash available as per phase 1 & 2 funding requirements. Bondholders have agreed to a standstill until restructuring conclusion or later as may be required. Although DCP is the largest creditor, the IDC is 2nd largest and they don't gain anything by forcing liquidation in the hope of recovering a fraction of their Rand investment. There are likely a number of options/items on the table i.e. Capitalised interest, repayment terms & commencement date, interest rate, partial debt to equity conversion, sufficient additional funding needs etc. requiring varying expertise such as Chief Investment Officer, Accountants, Assessors, Financial & legal advisors. Keep in mind the practitioner is dealing with a semi-state institution which is seldom simple nor expeditious. It's their prerogative to negotiate the lowest impacting compromise (best deal) that may be required under restructuring and to consider options put forward by the practitioner as well as to explore all other avenues that may contribute to an agreement, successful restructuring & to achieve the unified aim amounting to best ROI. I don't like the delay primarily because of concerns for escalating repair/remediation costs but for what it's worth, I think it's exactly as it states on the box i.e. Discussions with the Primary lender (IDC) are continuing. ATB