Draft Linklaters LLP 30/03/2015
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
IF YOU HOLD 30,000 GLENCORE SHARES OR FEWER AND ARE ELIGIBLE TO RECEIVE
LONMIN SHARES UNDER THE LONMIN DISTRIBUTION, YOU ARE REQUIRED TO TAKE
ACTION IF YOU WISH TO RETAIN YOUR LONMIN SHARES
The contents of this document, which have been prepared by and are the sole responsibility of Glencore plc (Glencore or
the Company), have been approved by Citigroup Global Markets Limited (Citi) solely for the purposes of section 21(2)(b)
of the UK Financial Services and Markets Act 2000 (FSMA).
Citi, which is authorised and regulated in the UK by the Financial Services Authority, is acting exclusively for Glencore and
no one else in connection with the Lonmin distribution (as defined below) and will not be responsible to any other person
other than Glencore for providing the protections afforded to clients of Citi or for providing advice in relation to the Lonmin
distribution.
Apart from the responsibilities and liabilities, if any, which may be imposed on Citi by FSMA or the regulatory regime
established thereunder, Citi accepts no responsibility whatsoever for the contents of this document, including its accuracy,
completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection
with the Company or the Lonmin distribution. Citi accordingly disclaims all and any liability whether arising in tort, contract
or otherwise (save as referred to above) which it might otherwise have in respect of this document or any such statement.
Glencore plc
FURTHER DETAILS OF THE LONMIN
DISTRIBUTION
This document is a supplement to the Notice of Annual General Meeting of Glencore dated 2 April 2015 (the AGM Notice).
This document does not constitute an offer to sell nor a solicitation to buy securities as such terms are defined under the
U.S. Securities Act of 1933 (the U.S. Securities Act). The ordinary shares of Lonmin plc (Lonmin Shares) have not been
and will not be registered under the U.S. Securities Act or under any securities laws of any state or other jurisdiction of the
United States (U.S.) and may not be offered, sold, taken up or renounced, directly or indirectly, within the U.S. except
pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S.
Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the U.S. There will
be no public offer of the Lonmin Shares in the U.S.
The Lonmin Shares being offered outside the U.S. are being offered in reliance on Regulation S under the U.S. Securities
Act (Regulation S). Subject to certain exceptions, any person who acquires Lonmin Shares will be deemed to have
declared, warranted and agreed, by accepting delivery of this document or accepting delivery of the Lonmin Shares, that
they are not, and that at the time of acquiring the Lonmin Shares they will not be, in the U.S. or acting on a nondiscretionary basis on behalf of, or for the account or benefit of, a person in the U.S.
Notwithstanding the foregoing, Glencore reserves the right to offer and deliver the Lonmin Shares to a limited number of
shareholders in the U.S. reasonably believed to be “qualified institutional buyers” within the meaning of Rule 144A under
the U.S. Securities Act (QIBs), in offerings exempt from, or in a transaction not subject to, the registration requirements
under the U.S. Securities Act. If you are in the U.S. (within the meaning of Regulation S) or acting on a non-discretionary
basis on behalf of, or for the account or benefit of, a person in the U.S., in order to acquire any Lonmin Shares, you must
sign and deliver a U.S. QIB Letter (as defined and explained in this document). No representation has been or will be made
by Glencore as to the availability of an exemption under the U.S. Securities Act or any state securities laws for the re-offer,
sale, pledge or transfer of the Lonmin Shares by any investor.
Glencore reserves the right not to distribute any Lonmin Shares to shareholders with a registered address in the U.S., that
provide an address in the U.S. for the acceptance of Lonmin Shares or that otherwise appear to Glencore to be located in
the U.S., where Glencore believes delivery of the Lonmin Shares may infringe on applicable legal or regulatory
requirements.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Other than in respect to the date and time for the Glencore annual general meeting, the dates and
times given in the table below in connection with the Lonmin distribution are indicative and are
based on Glencore’s current expectations and may be subject to change (including being
conditional on the passing of Resolution 3 in the AGM Notice).
If any of the times and/or dates below change, the revised times and/or dates will be notified to
Glencore shareholders through a Regulatory Information Service.
All references in this document to times and dates are to Central European Summer Time (CEST)
times and dates unless otherwise stated.
Capitalised terms used in the table below have the meaning given to them within this document.
Glencore Annual General Meeting
11 a.m. CEST
7 May 2015
All cross border movements of Glencore shares between the Jersey register and Hong
Kong and South Africa branch registers halted
7 May 2015 to
15 May 2015
(inclusive)
Election entitlement stock line to be credited for CREST shareholders, CREST nominee
holders (Jersey register) and CSDP (South Africa branch register)
9 a.m. CEST
11 May 2015
Ex-dividend date in respect of the Lonmin distribution (South Africa branch register)
11 May 2015
Ex-dividend date in respect of the Lonmin distribution (Hong Kong branch register)
14 May 2015
Ex-dividend date in respect of the Lonmin distribution (Jersey register)
14 May 2015
Last time for U.S. QIB Letter and U.S. Non-QIB Letter to be received
1 p.m. CEST
15 May 2015
Last time for elections in respect of the Lonmin distribution to be received (where
applicable)
1 p.m. CEST
15 May 2015
Lonmin distribution record date
7 p.m. CEST
15 May 2015
Transfer of Lonmin Shares to relevant Glencore shareholders (certificated Lonmin Shares
distributed and CREST/CSDP accounts credited)
9 June 2015
Payment of net cash proceeds of sale to relevant Glencore shareholders
9 June 2015
2
PART I: DESCRIPTION OF THE LONMIN DISTRIBUTION
Overview
On 11 February 2015, Glencore announced its intention to divest its non-core 23.9% stake in
Lonmin plc (Lonmin), which it inherited through the acquisition of Xstrata plc in May 2013.
Glencore proposes to implement the divestment by way of a capital distribution in specie to
shareholders out of the capital contribution reserves of the Company (the Lonmin distribution).
The Lonmin distribution will enable shareholders to manage the investment in Lonmin for their own
account.
Lonmin Shares are admitted to the premium listing segment of the official list and to trading on the
London Stock Exchange’s main market for listed securities, and also have a secondary listing on
the Johannesburg Stock Exchange.
The Lonmin Distribution
The Lonmin distribution will be made pursuant to Article 8.13 of Glencore’s existing articles of
association and the Directors propose that it is to be paid only from the capital contribution
reserves of the Company. The Lonmin distribution requires shareholder approval, which is
being sought by way of resolution 3 set out in the AGM Notice.
If approved, shareholders will, subject to certain exclusions described below in this Part I under the
headings “Fractional Entitlements”, “Excluded Shareholders”, “Eligible Smaller Glencore
Shareholders” and “Hong Kong Shareholders”, receive their pro rata share of Glencore’s holding
of 139,513,430 Lonmin Shares. Glencore has appointed a financial institution (the Sale Agent) to
conduct the sale of any Lonmin Shares subject to these exclusions (the Managed Sale). The
Managed Sale is described below in this Part I under the heading “Conduct of the Managed Sale
by the Sale Agent”.
The Lonmin distribution will not impact Glencore's cash distribution programme.
Fractional Entitlements
In accordance with Article 8.13, entitlements to fractions of Lonmin Shares arising as a result of
the Lonmin distribution will be aggregated and included in the Managed Sale, with Glencore
retaining the proceeds of sale.
Excluded Shareholders
Due to regulatory and practical difficulties, the Directors consider Glencore shareholders in the
U.S. who are not QIBs (together, Excluded Shareholders) to be in a different position from other
Glencore shareholders with regard to the Lonmin distribution. The treatment of Excluded
Shareholders in light of these difficulties is set out below.
U.S.
Any person in the U.S who obtains a copy of this document should inform themselves about and
observe any legal restrictions. The Lonmin Shares being offered outside the U.S. are being offered
in reliance on Regulation S. Subject to certain exceptions, any person who acquires Lonmin
Shares will be deemed to have declared, warranted and agreed, by accepting delivery of this
document or accepting delivery of the Lonmin Shares, that they are not, and that at the time of
acquiring the Lonmin Shares they will not be, in the U.S. (within the meaning of Regulation S) or
acting on a non-discretionary basis on behalf of, or for the account or benefit of, a person in the
U.S. Glencore reserves the right to offer and deliver the Lonmin Shares to a limited number of
shareholders in the U.S. reasonably believed to be QIBs in offerings exempt from, or in a
transaction not subject to, the registration requirements under the U.S. Securities Act.
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Accordingly, if you are in the U.S. (within the meaning of Regulation S) or acting on a nondiscretionary basis on behalf of, or for the account or benefit of, a person in the U.S., you
must sign and deliver an investor letter which certifies that EITHER:
(i)
the Glencore shares held by you are held on behalf of a QIB (a U.S. QIB Letter); or
(ii)
the Glencore shares held by you are not held on behalf of a QIB (a U.S. Non-QIB
Letter).
Glencore shareholders signing and delivering a U.S. QIB Letter will receive Lonmin Shares
in the Lonmin distribution.
Glencore shareholders signing and delivering a U.S. Non-QIB Letter will have the Lonmin
Shares attributable to such shareholders sold in the Managed Sale and the net cash
proceeds from the sale delivered to them.
Where necessary, the relevant investor letter must be signed and delivered to
Computershare at the address or email address stated on it by no later than 1 p.m. CEST on
15 May 2015. You can also request a copy of either investor letter by contacting
Computershare Investor Services PLC by telephone between 8.30 a.m. (UK time) and 5.30
p.m. (UK time) Monday to Friday (except UK public holidays) on +44 (0)870 707 4040.
IF YOU ARE NOT, AND AT THE TIME OF ACQUIRING LONMIN SHARES YOU WILL NOT BE,
IN THE U.S. (WITHIN THE MEANING OF REGULATION S) AND ARE NOT ACTING ON A NONDISCRETIONARY BASIS ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A
PERSON IN THE U.S., YOU DO NOT NEED TO SIGN AND DELIVER AN INVESTOR LETTER.
Hong Kong Shareholders
Due to legal and practical difficulties under the laws and regulations applicable to shareholders
holding shares on Glencore’s Hong Kong branch register (including those who hold their Glencore
shares through CCASS, being the Hong Kong clearing system) (Hong Kong Shareholders),
separate arrangements are being made for them with regard to the Lonmin distribution, which will
be communicated to Hong Kong Shareholders as soon as practicable. Accordingly, the contents
of this document do not apply to Hong Kong Shareholders, who must refer to the specific
communications disseminated to them for this purpose.
Eligible Smaller Glencore Shareholders
The Lonmin distribution will allow Glencore shareholders to manage the investment in Lonmin for
their own account. Based on the issued share capital of Glencore (excluding treasury shares) and
the market price of Lonmin Shares, in each case as at 27 March 2015, the latest practicable date
prior to publication of this document, the value of the Lonmin distribution is equivalent to
approximately 1.3 pence per Glencore share.
If a holder of a relatively small number of Glencore shares were to attempt to sell the Lonmin
Shares to which he is entitled under the Lonmin distribution, it is likely that the cost of disposal
would account for a material proportion of the proceeds of sale.
With this cost in mind, the Directors consider holders of 30,000 Glencore shares or fewer (Smaller
Glencore Shareholders) to be in a different position from holders of larger numbers of Glencore
shares (i.e. holders of more than 30,000 Glencore shares) with regard to the Lonmin distribution,
and have put in place the arrangements described below.
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The arrangements described below are available only to Smaller Glencore Shareholders who are
not Excluded Shareholders (Eligible Smaller Glencore Shareholders). You should read carefully
the four categories described below and act according to your circumstances:
(i)
Eligible Smaller Glencore Shareholders Holding in Certificated Form;
(ii)
Eligible Smaller Glencore Shareholders Holding Directly in CREST;
(iii)
Eligible Smaller Glencore Shareholders Holding Through a CREST Nominee; or
(iv)
Eligible Smaller Glencore Shareholders Holding Shares in STRATE
1. Eligible Smaller Glencore Shareholders Holding in Certificated Form
The default position is that the Lonmin Shares of Eligible Smaller Glencore Shareholders who hold
their Glencore shares in certificated form at 7 p.m. CEST on 15 May 2015 will be sold on their
behalf pursuant to the Managed Sale, and such Eligible Smaller Glencore Shareholders will
receive the net cash proceeds from the sale.
However, Glencore is implementing a facility (the Share Election Facility) whereby Eligible
Smaller Glencore Shareholders may elect not to have their Lonmin Shares sold, and to receive
their Lonmin Shares instead, if they so wish. If you held your current holding of Glencore shares
on 30 March 2015, you will have received a form of election (Form of Election) with this
document. If you are an Eligible Smaller Glencore Shareholder and wish to receive your Lonmin
Shares rather than have them sold on your behalf, you should sign and return the Form of Election
to the address stated on the Form of Election so as to arrive by 1 p.m. CEST on 15 May 2015.
You may not submit a Form of Election in respect of part only of your holding of Glencore shares.
You may not submit a Form of Election if you are, or at the time of acquiring the Lonmin Shares
you will be, in the U.S. (within the meaning of Regulation S) or you are acting on a nondiscretionary basis on behalf of, or for the account or benefit of, a person in the U.S, unless you
also sign and deliver a U.S. QIB Letter.
Part II of this document sets out further information on completing your Form of Election.
2. Eligible Smaller Glencore Shareholders Holding Directly in CREST
The default position is that the Lonmin Shares of Eligible Smaller Glencore Shareholders who hold
their Glencore shares in CREST at 7 p.m. CEST on 15 May 2015 will be sold on their behalf
pursuant to the Managed Sale, and such Eligible Smaller Glencore Shareholders will receive the
net cash proceeds from the sale.
However, Eligible Smaller Glencore Shareholders may elect pursuant to the arrangements
described below not to have their Lonmin Shares sold, and to receive their Lonmin Shares instead
if they so wish.
Holders of Glencore shares in CREST will, for the purposes of allowing an election in CREST only,
be credited at 9.00 a.m. CEST on 11 May 2015 (or such other date as the Directors may
determine) with one interim CREST entitlement under the ISIN JE00BW4NK640 for each Glencore
share held in CREST at 7 p.m. CEST on 8 May 2015.
The interim CREST entitlement security will allow CREST holders who are Eligible Smaller
Glencore Shareholders to elect electronically through the CREST system to receive their Lonmin
Shares instead of having them sold on their behalf.
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Eligible Smaller Glencore Shareholders in CREST will not have received a Form of Election with
this document and, if they wish to retain their Lonmin Share entitlement, should instead take (or
procure to be taken) the action set out below once their CREST accounts have been credited on
11 May 2015 (or such other date as the Directors may determine) with interim CREST
entitlements, and in any event before 1 p.m. CEST on 15 May 2015.
If Eligible Smaller Glencore Shareholders are CREST personal members, they should refer to their
CREST sponsor before taking any action. CREST sponsors will be able to confirm details of a
shareholder’s participant ID and the member account ID under which their Glencore shares are
held. In addition, only CREST sponsors will be able to give the USE Instruction to Euroclear by
which Eligible Smaller Glencore Shareholders make their election.
To make an election to keep your Lonmin Shares, Smaller Glencore Shareholders should give (or,
if they are a CREST personal member, procure that their CREST sponsor gives) a USE
Instruction, which must be properly authenticated in accordance with Euroclear’s specifications
and must contain, in addition to the other information that is required for settlement in CREST, the
following details:
(1)
the number of interim CREST entitlements being elected;
(2)
the participant ID of Computershare, which is 8RA28;
(3)
the member account ID of Computershare, which is RETLONSH;
(4)
the ISIN for the interim CREST entitlements, which is JE00BW4NK640;
(5)
the corporate action number of the option to retain Lonmin Shares (this is allocated by
Euroclear and can be found by viewing the relevant corporate action details in CREST);
(6)
the intended settlement date for the USE Instruction, which should be as soon as possible
and in any event not later than 1 p.m. CEST on 15 May 2015;
(7)
the standard delivery instruction priority of 80; and
(8)
the name and contact number inserted in the shared note field.
If you are in any doubt as to the procedure described above, please contact Computershare
Investor Services PLC at Computershare, Corporate Actions Projects, Bristol, BS99 6AH or by
telephone between 8.30 a.m. (UK time) and 5.30 p.m. Monday to Friday (except UK public
holidays) on +44 (0)870 707 4040. You are reminded that, if you are a CREST personal member,
you should contact your CREST sponsor before taking any action.
3. Eligible Smaller Glencore Shareholders Holding Through a CREST Nominee
CREST nominee holders registered as holding more than 30,000 Glencore shares may elect to
have some or all of their Lonmin Shares sold pursuant to the Managed Sale, provided they are
acting on behalf of underlying clients who hold beneficially 30,000 Glencore shares or fewer.
Holders of Glencore shares in CREST will, for the purposes of allowing an election in CREST only,
be credited at 9.00 a.m. CEST on 11 May 2015 (or such other date as the Directors may
determine) with one interim CREST entitlement under the ISIN JE00BW4NK640 for each Glencore
share held in CREST at 7 p.m. CEST on 8 May 2015. The interim CREST entitlement security will
allow CREST nominee holders to elect electronically through the CREST system to sell some or all
of the Lonmin Shares pursuant to the Managed Sale, if their underlying clients so wish.
Holders of Glencore shares in CREST who hold on behalf of underlying clients who hold 30,000
Glencore shares or fewer should take (or procure to be taken) the action set out below once their
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CREST accounts have been credited on 11 May 2015 (or such other date as the Directors may
determine) with interim CREST entitlements, and in any event before 1 p.m. CEST on 15 May
2015, if such underlying clients wish to sell their Lonmin Shares pursuant to the Managed Sale.
To make an election to sell Lonmin Shares, CREST nominee shareholders should give (or, if they
are a CREST personal member, procure that their CREST sponsor gives) a USE Instruction, which
must be properly authenticated in accordance with Euroclear’s specifications and must contain, in
addition to the other information that is required for settlement in CREST, the following details:
(1)
the number of interim CREST entitlements being elected;
(2)
the participant ID of Computershare, which is 8RA28 ;
(3)
the member account ID of Computershare, which is SELLONSH;
(4)
the ISIN for the interim CREST entitlements, which is JE00BW4NK640;
(5)
the corporate action number of the option to sell Lonmin Shares (this is allocated by
Euroclear and can be found by viewing the relevant corporate action details in CREST);
(6)
the intended settlement date for the USE Instruction, which should be as soon as possible
and in any event not later than 1 p.m. CEST on 15 May 2015;
(7)
the standard delivery instruction priority of 80; and
(8)
the name and contact number inserted in the shared note field.
If you are in any doubt as to the procedure described above, please contact Computershare
Investor Services PLC at Computershare, Corporate Actions Projects, Bristol, BS99 6AH or by
telephone between 8.30 a.m. (UK time) and 5.30 p.m. (UK time) Monday to Friday (except UK
public holidays) on +44 (0)870 707 4040.
By electing for the sale of a Lonmin Share entitlement, a CREST holder warrants that the election
relates to underlying beneficiaries’ entire individual holdings of Glencore shares that each
comprise 30,000 Glencore shares or fewer, and that the total election does not include any
underlying beneficiary holding that exceeds 30,000 Glencore shares.
4. Eligible Smaller Glencore Shareholders Holding Shares in STRATE
Due to the manner in which the STRATE settlement system operates, holders of 30,000 Glencore
shares or fewer in STRATE who wish to receive cash rather than Lonmin Shares must instruct
their Central Securities Depositary Participant (CSDP) or broker accordingly in terms of the
custody agreement entered into between them and their CSDP or broker. A CSDP will be able to
make an election(s) (if any) through the STRATE system in the normal manner for such corporate
actions.
STRATE CSDPs holding more than 30,000 Glencore shares may elect to have some or all of their
Lonmin Shares sold provided they are acting on behalf of underlying clients in STRATE who hold
beneficially 30,000 Glencore shares or fewer.
By electing for the sale of a Lonmin Share entitlement, a CSDP warrants that the election relates
to underlying beneficiaries’ entire individual holdings of Glencore shares that each comprise
30,000 Glencore shares or fewer, and that the total election does not include any underlying
beneficiary holding that exceeds 30,000 Glencore shares.
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Conduct of the Managed Sale by the Sale Agent
The Sale Agent will sell the Lonmin Shares representing fractional entitlements, those of Excluded
Shareholders and those of Eligible Smaller Glencore Shareholders whose entitlements are
(whether pursuant to an election or otherwise) to be sold as described above. The Sale Agent will
conduct the sale of the Lonmin Shares in such manner as the Sale Agent determines in good faith,
in its absolute discretion, with the objective of seeking to achieve the best price reasonably
obtainable, having regard to a number of factors such as prevailing market conditions. It is
currently expected that the sale of the Lonmin Shares will be carried out over a number of days.
In providing services to Glencore in connection with the Managed Sale and the sale of Lonmin
Shares to which Excluded Shareholders and Eligible Smaller Glencore Shareholders would
otherwise have been entitled, the Sale Agent is not acting as agent or sub agent of any Excluded
Shareholder or Eligible Smaller Glencore Shareholder, does not have any duties or obligations
(fiduciary or otherwise) to Excluded Shareholders or Smaller Glencore Shareholders and is not
underwriting the sale of any Lonmin Shares. The Sale Agent, together with its affiliates, is a full
service financial institution engaged in various activities, which may include trading, financing,
financial advisory, investment management, investment research, principal investment, hedging,
market making, brokerage and other financial and non-financial activities and services.
The proceeds from such sales of Lonmin Shares, net of dealing costs (which will include the Sale
Agent’s brokerage commission of 0.2 per cent. of the sale price), will be aggregated and the
amount due to each Glencore shareholder whose Lonmin Shares have been sold will be
calculated on an averaged basis so that all such shareholders will receive the same price per
Lonmin Share, subject to currency conversions (where applicable) at prevailing FX rates and to
rounding to the nearest whole cent, penny, rand, centime or equivalent measure of currency (as
applicable). Consequently, the amount per Lonmin Share received by Glencore shareholders
whose Lonmin Shares have been sold will be different from the actual price that is received by the
Sale Agent for that particular Lonmin Share.
Settlement
Settlement of net cash proceeds
Glencore shareholders whose Lonmin Shares are sold through the Managed Sale can expect to
be sent the net cash proceeds of the sale on 9 June 2015 in the same manner and in the same
currency as they receive cash distributions on Glencore shares.
Settlement of Lonmin Shares
Eligible Glencore shareholders on the register of members on the Lonmin distribution record date
will receive their Lonmin Shares on 9 June 2015. If a Glencore shareholder receives Lonmin
Shares in respect of his Glencore shares:
(a)
and the Glencore shares are held on the Jersey register of members in certificated form,
the Glencore shareholder will receive his Lonmin Shares in certificated form on Lonmin’s
UK register of members;
(b)
and the Glencore shares are held on the Jersey register of members through CREST, the
Glencore shareholder will receive his Lonmin Shares through CREST on Lonmin’s UK
register of members;
(c)
and the Glencore shares are held on the South African branch register and in STRATE, the
Glencore shareholder will receive his Lonmin Shares in STRATE on Lonmin’s South
African branch register; or
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(d)
and the Glencore shares are held on the South African branch register and in certificated
form, the Glencore shareholder will receive his Lonmin Shares in certificated form on
Lonmin’s South African branch register.
Tax
Part III of this document provides a description of taxation in respect of the Lonmin distribution.
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PART II: HOLDERS OF CERTIFICATED GLENCORE SHARES
COMPLETING YOUR FORM OF ELECTION
If you are an Eligible Smaller Glencore Shareholder holding in certificated form, you will find
your white Form of Election enclosed with this document. Elections will not become effective until
1 p.m. CEST on 15 May 2015. Smaller Glencore Shareholders will only be able to make one
election in respect of their entire holding of Glencore shares.
OPTION 1: RECEIVE THE CASH PROCEEDS FROM THE AUTOMATIC SALE OF YOUR
LONMIN SHARES
Eligible Smaller Glencore Shareholders who wish to receive cash for their Lonmin Shares DO
NOT need to sign or return the white Form of Election as they will automatically receive cash
proceeds from the sale of their Lonmin Shares so long as they have not elected for Option 2.
OPTION 2: RECEIVE YOUR LONMIN SHARES
Eligible Smaller Glencore Shareholders who wish to receive Lonmin Shares DO need to sign and
return the white Form of Election in accordance with the following instructions:
Step 1
The name and address of the shareholder, or the names of joint shareholders and their addresses,
are shown at the top of the Form of Election. Please check the name(s) and address(es) are
correct.
If you do not buy, sell or otherwise transfer any Glencore shares between 7.00 p.m. CEST on 30
March 2015 and the Lonmin distribution record date, an indication of the number of Lonmin Shares
you will be entitled to under the Lonmin distribution is shown in the box at the top of the Form of
Election.
The indicative number of Lonmin Shares is calculated based on the number of Glencore shares
you held as of 30 March 2015 and the issued share capital of Glencore as at the same date, being
the latest practicable date before the publication of this document and the Form of Election.
If you sell or transfer any Glencore shares held in your name before the Lonmin distribution record
date or purchase additional Glencore shares before the Lonmin distribution record date, your
election or deemed election will be in respect of ALL your shares held as at the Lonmin distribution
record date, provided that the number of Glencore shares you hold at that time is 30,000 or fewer.
The actual number of Lonmin Shares to which you will be entitled will be determined on the
Lonmin distribution record date, and may differ from the indicative number shown on your Form of
Election.
Step 2
Sign the white Form of Election in the appropriate box(es).
Once signed, the white Form of Election should be returned in the reply-paid envelope provided
(no stamps will be required if posted in the UK) to be received no later than 1 p.m. CEST on 15
May 2015. If you do not use the envelope provided, the white Form of Election should be sent to
the address stated on the Form of Election.
If the Form of Election is incorrectly completed
Notwithstanding the instructions set out above, Glencore reserves the right at its sole discretion to
accept completed white Forms of Election received after the relevant due date for receipt of such
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forms by Computershare, and to accept incomplete or incorrectly completed white Forms of
Election.
Glencore further reserves the right at its sole discretion to reject any white Forms of Election if to
act on the election would be illegal. All questions as to the form and validity (including the time of
receipt) of any white Form of Election will be determined by Glencore, in its absolute discretion,
which determination shall be final and binding. None of Glencore, Computershare, or any of their
respective employees, directors, officers or agents will be under any duty to give notification of any
defect or irregularity in any white Form of Election or incur any liability for failure to give any such
notification.
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PART III: TAXATION IN RESPECT OF THE LONMIN DISTRIBUTION
Taxation
The following section is a summary guide only to certain aspects of the Lonmin distribution in the
UK, Switzerland, Jersey, the U.S and South Africa. This does relate to the specific tax position of
all shareholders in all jurisdictions. This summary does not purport to be a legal or tax opinion.
Shareholders are advised to consult their own tax advisers. The summary does not address the
tax effects of holding and disposing of Lonmin Shares other than pursuant to the Managed Sale.
The description of the taxation consequences is written on the basis that the Company is and will
be solely resident in Switzerland for tax purposes and will therefore be subject to the Swiss tax
regime and not (except as noted below) the Jersey tax regime. As a consequence, please refer to
the section Swiss Taxation below for information about withholding tax on dividends and similar
cash or in-kind distributions.
UK Taxation
The comments set out below are based on current UK tax law as applied in England and Wales
and HM Revenue & Customs practice (which may not be binding on HM Revenue & Customs) as
at the date hereof, both of which are subject to change, possibly with retrospective effect. They are
intended as a general guide as to certain UK tax consequences of the Lonmin distribution and
apply only to shareholders who hold their Glencore shares as an investment and who are the
absolute beneficial owners thereof. Certain categories of shareholder, including those carrying on
certain financial activities, those subject to specific tax regimes or benefitting from certain reliefs or
exemptions, those connected with Glencore and those for whom the shares are employment
related securities may be subject to special rules and this summary does not apply to such
shareholders. Save in the case of comments on UK stamp duty and stamp duty reserve tax
(SDRT), the comments below apply only to shareholders who are resident in the UK for tax
purposes.
Lonmin Distribution
Glencore has been advised that a distribution out of its capital contribution reserves, which would
include the Lonmin distribution, should be a capital distribution for the purposes of UK tax law. On
this basis, a UK tax resident shareholder receiving Lonmin Shares on the Lonmin distribution
should, depending on his circumstances (and subject to the availability of any exemptions or
reliefs), be treated as making a part disposal of his Glencore shares for a consideration equal to
the market value of the Lonmin Shares received for the purposes of UK taxation of chargeable
gains. The chargeable gain will be computed on the basis of an apportionment of the allowable
cost of the holding in the shareholder’s Glencore shares between the interest disposed of and the
Glencore shares retained by reference to the value of the Lonmin Shares on the one hand and the
market value of the Glencore shares retained on the other.
However, if the value of the Lonmin Shares received is “small” in comparison with the value of the
Glencore shares prior to the Lonmin distribution, then no disposal will be treated as having been
made on the occasion of the Lonmin distribution. Instead an amount equal to the value of the
Lonmin Shares will be deducted from the holder’s base cost in his Glencore shares. Based on
current HMRC practice, the value of the Lonmin Shares received should generally be treated as
“small” if the market value of the Lonmin Shares received is £3,000 or less or (if greater) is 5% or
less of the market value of the Glencore Shares.
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UK resident shareholders should obtain a market value base cost in the Lonmin Shares received
pursuant to the Lonmin distribution.
Where a Glencore shareholder receives net proceeds of sale of Lonmin Shares pursuant to the
Managed Sale, the Company has been advised that this is likely to be treated as a capital
distribution (with the consequences described above) and as a sale of the entitlement to Lonmin
Shares.
Stamp Duty and SDRT
Where Lonmin Shares are delivered in certificated form or within CREST, the Lonmin distribution
should not give rise to a charge to UK stamp duty or SDRT. Where Lonmin Shares are delivered
within STRATE, on the basis of the Company’s understanding of HMRC practice, no charge to
stamp duty or SDRT should arise.
Where Lonmin Shares are sold on behalf of a Glencore shareholder, a charge to UK stamp duty or
SDRT may arise on such disposal. Such cost will generally be borne by the purchaser pursuant to
the Managed Sale.
Jersey Taxation
The following summary of the anticipated treatment of the Lonmin distribution for holders of
Glencore shares (other than residents of Jersey) is based on current Jersey taxation law and
practice. It does not constitute legal or tax advice and does not address all aspects of Jersey tax
law and practice.
Glencore will not be required to withhold or deduct any amount for, or on account of, Jersey tax on
making the Lonmin distribution. The holders of Glencore shares (other than residents of Jersey)
will not be subject to any tax in Jersey in respect of the Lonmin distribution (or receipt of the
proceeds of disposal of Lonmin Shares).
No stamp duty is payable in Jersey on the Lonmin distribution or on a disposal of Lonmin Shares.
Swiss Taxation
The following paragraphs are a general summary and discuss Swiss withholding tax and certain
Swiss tax consequences for Glencore shareholders in respect of the Lonmin distribution. The
summary is based, as applicable, on the tax laws, regulations, decrees, rulings, administrative
practice and judicial decisions of Switzerland as in effect on the date of this document which are
subject to change (or subject to changes in interpretations), possibly with retrospective effect. It
does not take into account investors’ individual circumstances. Tax consequences may differ
according to the shareholder’s particular circumstances. The statements and discussion of Swiss
taxes set out below are of a general nature and do not relate to persons in the business of buying
and selling shares or other securities.
Lonmin Distribution
The Lonmin distribution will not be subject to Swiss withholding tax.
Individuals who are resident in Switzerland for tax purposes and hold Glencore shares as part of
his or her private assets (Privatvermögen) who receive the Lonmin distribution will not be subject
to federal, cantonal and communal income tax.
Swiss resident individuals holding Glencore shares as business assets, as well as non-Swiss
resident individuals holding the shares as part of a permanent establishment or a fixed place of
business will normally be required to include the Lonmin distribution in his or her income statement
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and will be subject to federal, cantonal and communal income tax on any net taxable income for
the relevant tax period.
Legal entities resident in Switzerland or non-Swiss resident entities holding Glencore shares as
part of a Swiss permanent establishment are normally required to include all taxable distributions
received on the Glencore shares (which will include the Lonmin distribution) in their profit and loss
statement relevant for profit tax purposes and will be subject to federal, cantonal and communal
corporate profit tax on any net taxable earnings for such period.
Where a Glencore shareholder receives net proceeds of sale of Lonmin Shares pursuant to the
Managed Sale, this is likely to be treated as a capital distribution (with the consequences
described above) and as a sale of the entitlement to Lonmin Shares in which shareholders should
have obtained a market value basis.
Transfer Taxes
The Lonmin distribution and any sale of Lonmin Shares on behalf of a Glencore shareholder will
not be subject to Swiss transfer taxes provided that such transfer does not occur through or with a
Swiss or Lichtenstein bank or securities dealer as defined in the Swiss Federal Stamp Tax Act.
U.S. Taxation
The following is a summary of certain U.S. federal income tax consequences of the receipt of the
Lonmin Shares pursuant to the Lonmin distribution or the receipt of the sales proceeds from the
sale of the Lonmin Shares pursuant to the Managed Sale by a U.S. Holder (as defined below).
This summary deals only with U.S. Holders that hold Glencore shares as capital assets. The
discussion does not cover all aspects of U.S. federal income taxation that may be relevant to, or
the actual tax effect that any of the matters described herein will have on, the receipt of the Lonmin
Shares pursuant to the Lonmin distribution or the receipt of the sales proceeds from the sale of the
Lonmin Shares as contemplated in this document by particular investors (including consequences
under the alternative minimum tax or net investment income tax) or the consequences of holding
or disposing of the Lonmin Shares (other than the consequences of the receipt of proceeds from
the sale of the Lonmin Shares as contemplated in this Circular), and does not address state, local,
non-U.S. or other tax laws. This summary also does not address tax considerations applicable to
investors that own (directly, indirectly or by attribution) 5 per cent. or more of the voting stock of
Glencore, nor does this summary discuss all of the tax considerations that may be relevant to
certain types of investors subject to special treatment under the U.S. federal income tax laws
(such as financial institutions, insurance companies, individual retirement accounts and other taxdeferred accounts, tax-exempt organisations, dealers in securities or currencies, investors that
hold Glencore shares as part of straddles, hedging transactions or conversion transactions for
U.S. federal income tax purposes, persons that have ceased to be U.S. citizens or lawful
permanent residents of the U.S., investors holding Glencore shares in connection with a trade or
business conducted outside of the U.S., U.S. citizens or lawful permanent residents living abroad
or investors whose functional currency is not the U.S. dollar).
As used herein, the term U.S. Holder means a beneficial owner of Glencore shares that is, for
U.S. federal income tax purposes, (i) an individual citizen or resident of the U.S., (ii) a corporation
created or organised under the laws of the U.S. or any State thereof, (iii) an estate the income of
which is subject to U.S. federal income tax without regard to its source or (iv) a trust if a court
within the U.S. is able to exercise primary supervision over the administration of the trust and one
or more U.S. persons have the authority to control all substantial decisions of the trust, or the trust
has validly elected to be treated as a domestic trust for U.S. federal income tax purposes.
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The U.S. federal income tax treatment of a partner in an entity treated as a partnership for U.S.
federal income tax purposes that receives the Lonmin Shares pursuant to the Lonmin distribution
or receives sales proceeds from the sale of the Lonmin Shares will depend on the status of the
partner and the activities of the partnership. Prospective purchasers that are entities treated as
partnerships for U.S. federal income tax purposes should consult their tax advisers concerning the
U.S. federal income tax consequences to them and their partners of receipt of the Lonmin Shares
pursuant to the Lonmin distribution or the receipt of the sales proceeds from the sale of the Lonmin
Shares by the partnership.
Except as otherwise noted, the summary assumes that Glencore shares held by a U.S. Holder are
not treated as shares in a passive foreign investment company (a PFIC) for U.S. federal income
tax purposes.
This summary is based on the tax laws of the U.S., including the Internal Revenue Code of 1986,
as amended, its legislative history, existing and proposed regulations thereunder, published rulings
and court decisions, as well as on the income tax treaty between the U.S. and Switzerland (the
Treaty), all as of the date hereof and all subject to change at any time, possibly with retroactive
effect.
THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES SET OUT BELOW IS
FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED TO BE RELIED UPON BY
HOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER
THE U.S. INTERNAL REVENUE CODE. ALL HOLDERS SHOULD CONSULT THEIR TAX
ADVISERS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE RECEIPT OF
THE LONMIN SHARES PURSUANT TO THE LONMIN DISTRIBUTION OR THE RECEIPT OF
THE SALES PROCEEDS FROM THE SALE OF THE LONMIN SHARES, INCLUDING, THE
APPLICABILITY AND EFFECT OF STATE, LOCAL, NON-U.S. AND OTHER TAX LAWS AND
POSSIBLE CHANGES IN TAX LAW.
The Lonmin Distribution in General
The receipt of the Lonmin Shares pursuant to the Lonmin distribution or the receipt of the
sales proceeds from the sale of the Lonmin Shares should be treated as distributions of
property paid by Glencore for U.S. federal income tax purposes. Distributions paid by a
corporation out of current or accumulated earnings and profits (as determined for U.S.
federal income tax purposes), generally will be taxable to a U.S. Holder as dividend
income. Distributions in excess of current and accumulated earnings and profits will be
treated as a non-taxable return of capital to the extent of the U.S. Holder’s basis in the
shares and thereafter as capital gain. However, Glencore does not maintain calculations of
its earnings and profits in accordance with U.S. federal income tax accounting principles.
U.S. Holders should therefore assume that the receipt of the Lonmin Shares pursuant to
the Lonmin distribution or the receipt of the sales proceeds from the sale of the Lonmin
Shares will be reported as ordinary dividend income. Dividends paid by Glencore are not
eligible for the dividends received deduction allowed to corporations and are taxable to a
non-corporate U.S. Holder at the reduced rate normally applicable to long-term capital
gains, provided Glencore qualifies for the benefits of the Treaty, which Glencore believes to
be the case, and certain other requirements are met. U.S. Holders should consult their own
tax advisers with respect to the appropriate U.S. federal income tax treatment of any
distribution received from the Company.
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For U.S. Holders receiving the Lonmin Shares, the amount of the distribution will be equal
to the U.S. dollar value of the Lonmin Shares on the date the Lonmin Shares are received
by the U.S. Holder.
While not free from doubt, Glencore intends to treat U.S. Holders receiving net cash
proceeds from the sale of the Lonmin Shares as receiving a cash distribution equal to such
net cash proceeds. The cash distribution will be included in income in a U.S. dollar amount
calculated by reference to the spot rate in effect on the date the cash distribution is
received by the U.S. Holder, regardless of whether the distribution is converted into U.S.
dollars at that time. If the cash distribution received by a U.S. Holder is converted into U.S.
dollars on the day it is received, such U.S. Holder generally will not be required to
recognise exchange gain or loss in respect of the distribution.
Passive Foreign Investment Company Considerations
A foreign corporation will be a PFIC in any taxable year in which, after taking into account
the income and assets of the corporation and certain subsidiaries pursuant to applicable
“look-through rules,” either (i) at least 75 per cent. of its gross income is “passive income”
or (ii) at least 50 per cent. of the average value of its assets is attributable to assets which
produce passive income or are held for the production of passive income. Glencore does
not believe that it should be treated as a PFIC for U.S. federal income tax purposes but its
possible status as a PFIC must be determined annually and therefore may have been
different in the past. If Glencore is or has been treated as a PFIC for any taxable year
during which a U.S. Holder held its shares, such U.S. Holder may be required to pay a
special U.S. addition to tax on the receipt of the Lonmin Shares pursuant to the Lonmin
distribution or the receipt of the proceeds from the sale of the Lonmin Shares, as
applicable. In addition, if Glencore is or has been treated as a PFIC for any taxable year
during which a U.S. Holder held its shares or in the taxable year of the distribution or its
preceding taxable year, the reduced rate described above under “The Lonmin Distribution
in General” generally would not apply to the receipt of the Lonmin Shares pursuant to the
Lonmin distribution or the receipt of the proceeds from the sale of the Lonmin Shares. U.S.
Holders should consult their tax advisers regarding the potential application of the PFIC
regime.
Backup Withholding and Information Reporting
Dividends and other proceeds with respect to shares, such as the Lonmin Shares
distributed in the Lonmin distribution or the proceeds from the sale of the Lonmin Shares
as the case may be, paid by a U.S. paying agent or other U.S. intermediary will be
reported to the IRS and to the U.S. Holder as may be required under applicable
regulations. Backup withholding may apply to these payments if the U.S. Holder fails to
provide an accurate taxpayer identification number or certification of exempt status or fails
to comply with applicable certification requirements. Certain U.S. Holders are not subject to
backup withholding. U.S. Holders should consult their tax advisers as to their qualification
for exemption from backup withholding and the procedure for obtaining an exemption.
South African Taxation
The tax consequences of the distribution in specie are governed by the South African Income Tax
Act No. 58 of 1962 (as amended) (the Act).
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A dividend from a company which is not a resident of South Africa (a non-resident company) is
defined in the Act as a foreign dividend, while a reduction of capital is referred to as a foreign
return of capital.
Whether the amount received is a foreign dividend or a foreign return of capital will be determined
by reference to the laws relating to tax on income on companies of the country in which the nonresident company making the distribution has its place of effective management; or, where such
country does not have any applicable laws relating to tax on income, the country in which the
company is incorporated, formed or established. Glencore has its place of effective management
in Switzerland.
The Lonmin distribution is expected to represent a foreign return of capital, and where the share is
held on revenue account, i.e. not as a fixed capital asset, the receipt will be subject to ordinary
income tax.
Where the share is held as a capital asset, the foreign return of capital will be applied to reduce
the base cost of the share in the shareholder’s hands.
The treatment described above will also apply where a Glencore shareholder receives the cash
proceeds of sale of Lonmin Shares pursuant to the Managed Sale.
To the extent that the foreign return of capital exceeds the base cost of the share, the excess will
be treated as a capital gain, which gain will be subject to tax (CGT) (and if prior returns of capital
have already reduced the base cost to zero, then the entire amount received will be subject to
CGT). Except in certain specific circumstances, a person who is not a resident of South Africa is
not subject to CGT on the disposal of a share.
Whether the Glencore share is held on revenue account or capital account, the cost for tax
purposes or base cost for CGT purposes, as the case may be, of the Lonmin Share received by
any shareholder of Glencore, will be an amount equal to the market value of the Lonmin Share at
the date of the distribution.
Securities Transfer Tax will be payable on the delivery of Lonmin Shares to a shareholder within
STRATE at the rate of 0.25% on the “closing price” as defined in the Securities Transfer Tax Act
No 25 of 2007 of such shares (which should broadly equate to their market value on the date of
delivery into STRATE). Any such Securities Transfer Tax arising in respect of the delivery of
Lonmin Shares to a shareholder within STRATE will in practice be payable by the relevant
shareholder.
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