Merger Update

16 Mar 2007 07:00

Gravity Diamonds Limited16 March 2007 RELEASED ON BEHALF OF: GRAVITY DIAMONDS LIMITED (ASX & AIM : GRN) 16 March 2007 GRAVITY DIAMONDS - MERGER WITH MWANA AFRICA PLC SUPREME COURT ISSUES ORDERS FOR SECURITY HOLDER MEETINGS TO BE HELD On 17 November 2006, Gravity Diamonds Limited (Gravity) and Mwana Africa plc(Mwana) announced a proposal under which Mwana would acquire all of the issuedshares in Gravity. The proposed acquisition is to be implemented by way of scheme of arrangementbetween Gravity and all of its shareholders (apart from Mwana) (GravityShareholders) pursuant to which all Gravity shares will be transferred to Mwanafor either: - $0.28 in cash for every Gravity share held; or- one Mwana share for every four Gravity shares held (Share Consideration), at the record date (Share Scheme). It should be noted that the previously advised threshold requirement of aholding of 20,000 Gravity shares before an election to accept the ShareConsideration is no longer applicable. In addition to the Share Scheme, a further scheme of arrangement is proposedbetween Gravity and the holders of its ASX-listed options (GravityOptionholders) under which all outstanding ASX-listed options will betransferred to Mwana for cash consideration of $0.06 (Option Scheme). The OptionScheme is dependent upon the Share Scheme proceeding. However, the Share Schemeis not dependent upon the Option Scheme proceeding. Further, Mwana has come to agreement with each holder of Gravity unlistedoptions to acquire their options for cash consideration between $0.01 and $0.09per option, subject to the Share Scheme proceeding. Gravity advises that the Supreme Court of Victoria has today made orders undersection 411(1) of the Corporations Act 2001 (Cth) directing Gravity to convenemeetings of the Gravity Shareholders and Gravity Optionholders to consider andvote on the proposed Share Scheme and Option Scheme. These meetings, as convened by the orders made today by the Supreme Court ofVictoria, will be held on Thursday, 26 April 2007 and constitute: - a meeting of all Gravity Shareholders to consider and vote on the ShareScheme; and - a meeting of all Gravity Optionholders to consider and vote on the OptionScheme. The meetings will be held at Gravity's offices at Level 7 Exchange Tower, 530Little Collins Street, Melbourne, Victoria, Australia, with the Share Schememeeting commencing at 10.00am (Melbourne time). The Option Scheme meeting willcommence at 10.30am (Melbourne time) or immediately following the conclusion oradjournment of the Share Scheme meeting, whichever is later. The Gravity directors unanimously support the proposed transaction with Mwanaand recommend that in the absence of a superior proposal: - Gravity Shareholders vote in favour of the Share Scheme; and- Gravity Optionholders vote in favour of the Option Scheme. In the absence of a superior proposal, each Gravity director intends to vote infavour of the Share Scheme and Option Scheme, in respect of all Gravity sharesand ASX-listed options held by him or in which he has a relevant interest,respectively. The notices convening the meetings will be included in an explanatory booklet tobe dispatched to Gravity Shareholders and Gravity Optionholders shortly. Theexplanatory booklet will contain all material information in relation to theproposals outlined above, including an independent expert's report by Nexia ASRPty Ltd. The independent expert has concluded that, in the absence of a superiorproposal from another party: - the Share Scheme is in the best interests of Gravity Shareholders; and- the Option Scheme is in the best interests of Gravity Optionholders. If all of the conditions and approvals required for the proposals are satisfiedor waived, Gravity expects to seek court approval for the Share Scheme andOption Scheme on or about 4 May 2007, with implementation on or about 21 May2007. The effective date of the merger is expected to be Monday, 7 May post whichthere will be no trading of the company's quoted securities. Further Information: Phil Harman, Managing Director, Gravity Diamonds Ltd. Tel: +61-3-9909-7655 Elisa Bartlett, Assistant to the Managing Director, Gravity Diamonds Ltd. Tel: +61-3-9909-7655 This information is provided by RNS The company news service from the London Stock Exchange