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30.11.2020 Article

Rejoinder: Understanding the Golden Star Bogoso Prestea Share Purchase Agreement

...“Understanding the “certain employees” of GSR Bogoso Prestea Mine”
Rejoinder: Understanding the Golden Star Bogoso Prestea Share Purchase Agreement
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In the last quarterly report by GSR (see Key Events Q3 2020 of GSR at http://www.gsr.com/investors/news/news-details/2020/Golden-Star-Resources-Reports-Results-for-the-Three-and-Nine-Months-Ended-September-30-2020/default.aspx), and a publication by the leading business newspaper Business and Financial Times (https://thebftonline.com/17/11/2020/understanding-the-golden-star-bogoso-prestea-share-purchase-agreement/) the phrase "certain employees" was used in reference to permanent workers who had filed a suit against her in court. The use of the phrase is quite surprising as it is indicative of an employer GSR who is either dismissive of its human resources information system records or obligations.

In this rejoinder to the above we would like to explain for the information of the readers and the well-meaning Ghanaians what the real truth is and who are these “certain employees” are, whether they are contract staff or full time/permanent workers of the firm GSR.

Who are permanent workers of Golden Star Bogoso Prestea Limited?

Permanent workers are a category of employees spanning Managers, Superintendents, Senior Staff and Junior Staff who do not have fixed-term employment contracts. They make up 45% of the workforce of the company. Permanent workers are a loyal, hard-working group who have survived several rounds of company right-sizing, redundancy, and voluntary redundancy exercises because they are reliable enough to form a typical skeleton staff. They are the longest serving group of workers. Describing this group as GSR has done, demonstrates to the public the type of employer (and corporate citizen) GSR is.

Separating contracts from conditions of contract

Permanent workers have “form of contract”, “Particular Conditions of Contract”, “General Conditions of Contract” and “Position Description”: all documents forming “The Employment Contract”. The general conditions of contract exist as “Exempt Conditions of Contract” for Managers and Superintendents and “Collective Bargaining Agreements” for Senior and Junior staff agreed between Bogoso Gold Enterprise Based Union, BGEBU (affiliated with Ghana Federation of Labour, GFL) and Branch Unions represented by Ghana Mine Workers Union, GMWU respectively. The employment contract is executed between each worker and Golden Star Bogoso Prestea Limited as the employer. This individual contract of employment is the foundation on which union negotiated (for unionised workers) general conditions are based. The employer cannot therefore seek to discuss the matter of individual employment contracts with a union because that is outside the remit of unions. Furthermore, managers and superintendents are not unionised workers and so cannot be represented by unions.

In the absence of an employment contract between workers and an employer, there are no conditions of contract. At present, no permanent worker has proof of employment with FGR. Any future legal challenge against the new employer for non-performance of any agreement obligations (or modifications to conditions of service) can easily be dismissed for having no legal basis.

What is the case for severance from GSR

It is apparent that permanent workers are not out to simply get a financial payout because of the sale of Bogoso Prestea Mine. It is a fact that the requirement to severe employment contracts with Golden Star Bogoso Prestea Limited results in a financial payout based on existing general conditions of contract and collective agreements. However, a more pressing reason is the freedom to choose an employer (just as GSR, a publicly listed company, was chosen). Severance of existing employment contracts with permanent workers permit entry into new employment contracts with any other employer: a worker cannot legally be a full-time employee of two separate employers at a given time.

The non-solicitation clauses in sections 3.11 and 3.12 of the SPA (pp.29-31 http://d18rn0p25nwr6d.cloudfront.net/CIK-0000903571/8618f086-3af2-4aaf-ad0d-64601b5e35e1.pdf) between FGR and GSR is reproduced below for convenience

“3.11 Non-Solicit by Seller

(a) From the Execution Date until the date arising on the 2 year anniversary of the Closing Date, without the prior written consent of the Buyer, the Seller will not, and will not permit any of its Affiliates or its and their respective representatives to, knowingly solicit or cause to be solicited for employment, or hire, any Employee, provided that nothing in this Section

3.11(a) shall prevent the Seller or any of its Affiliates from:

(i) hiring any Employee whose employment has been terminated by a Company Group member after the Closing Date; or (ii) hiring any Employee who responds to any general solicitation not specifically targeted at an Employee or Employees.

(b) The Seller acknowledges and agrees that, in the event that an Employees hired or employed by the Seller or any of its Affiliates (other than in the circumstances permitted under Section 3.11(a) during the period specified in Section 3.11(a),the Seller shall pay to the Buyer an amount calculated as follows:

i. if such person is hired or employed by the Seller or any of its Affiliates during the period commencing on the Execution Date and ending prior to the date arising 6 months after the Closing Date, an amount equal to 5 times the relevant employees’ annual salary under its contract for employment with the Company Group; or

ii. if such person is hired or employed by the Seller or any of its Affiliates during the period commencing on the date arising 6 months after the Closing Date and ending on the 2-year anniversary of the Closing Date, an amount equal to 2 times the relevant employees’ annual salary under its contract for employment with the Company Group.

The Seller shall be required to make a payment calculated in accordance with this Section 3.11(b) for each Employee (or former Employee) who is hired or employed by the Seller or any of its Affiliates (other than in the circumstances permitted

under Section 3.11(a) during the period specified in Section 3.11(a).

(c) The Seller shall pay such amount owing to the Buyer under Section 3.11(b) in immediately available funds within 15 days of the Employee ceasing to be employed by a member of the Company Group or if such Employee ceased employment in the period between the Execution Date and the Closing Date, within 15 days of the Closing Date. The Buyer acknowledges and agrees that receipt of any payment owing under Section 3.11(b) will be in full and final settlement of any Claim that the Buyer may have for the respective breach by the Seller of its obligations under 3.11(a).

(d) Notwithstanding anything to the contrary, the Seller’s obligations under this Section 3.10 are not limited or otherwise reduced by any other provision of this Agreement.

(e) Notwithstanding anything to the contrary, the obligations contained in this Section 3.10 shall not apply in relation to those Employees listed in Schedule 3.3(f) of the Seller Disclosure Letter (collectively, the “Excluded Employees”).

3.12 Non-Solicit by Buyer or the Company Group

(a) From the Execution Date until the date arising on the 2 year anniversary of the Closing Date, without the prior written consent of the Seller, the Buyer and the Company Group will not, and will not permit any of their respective Affiliates or its and their respective representatives to, knowingly solicit or cause to be solicited for employment, or hire, any employee of the Seller or its Affiliates (not including the Company Group) as at the Closing Date and all individuals employed by any member of the Seller and its Affiliates within the period commencing on Closing and ending 6 months later, provided that written notice of the names of such individuals is provided in writing to the Buyer (collectively, “Seller Affiliated Employees”), provided that nothing in this Section 3.12(a) shall prevent the Buyer, the Company Group or any of its

Affiliates from: (i) hiring any Seller Affiliated Employee whose employment has been terminated by the Seller or its Affiliates after the Closing Date; or (ii) hiring any Seller Affiliated Employee who responds to any general solicitation not

specifically targeted at persons employed by the Seller or its Affiliates.

(b) The Buyer acknowledges and agrees that, in the event that a Seller Affiliated Employees is hired or employed by the Buyer, the Company Group or any of their Affiliates (other than in the circumstances permitted under Section 3.12(a) during the period specified in Section 3.12(a), the Buyer shall pay to the Seller an amount calculated as follows:

i. if such person is hired or employed by the Buyer, the Company Group or any of their Affiliates during the period commencing on the Execution Date and ending prior to the date arising 6 months after the Closing Date, an amount equal to 5 times the relevant employees annual salary under its contract for employment with the Seller or its Affiliates; or

ii. if such person is hired or employed by the Buyer, the Company Group or any of their Affiliates during the period commencing on the date arising 6 months after the Closing Date and ending on the 2 year anniversary of the Closing Date, an amount equal to 2 times the relevant employees annual salary under its contract for employment with the Seller or its Affiliates.

The Buyer shall be required to make a payment calculated in accordance with this Section 3.12(b) for each Seller Affiliate Employee (or former Seller Affiliated Employee) who is hired or employed by the Buyer, the Company group or any of their Affiliates (other than in the circumstances permitted under Section 3.12(a) during the period specified in Section 3.12(a).

(c) The Buyer shall pay such amount owing to the Seller under Section 3.12(b) in immediately available funds within 15 days of the Seller Affiliated Employee ceasing to be employed by a member of the Seller or its Affiliates or if such Seller Affiliated Employee ceased employment in the period between the Execution Date and the Closing Date, within 15 days of the Closing Date. The Seller acknowledges and agrees that receipt of any payment owing under Section 3.12(b) will be in full and final settlement of any Claim that the Seller may have for the respective breach by the Buyer of its obligations under 3.12(a).

(d) Notwithstanding anything to the contrary, the Buyer’s obligations under this Section 3.12 are not limited or otherwise reduced by any other provision of this Agreement.”

It is evident that the parties appreciate there are two separate employers in the transaction. The question therefore is how workers transition from being seller-affiliated to buyer-affiliated without cessation of one employment and the start of another.

GSR maintains that workers are still employed by Golden Star Bogoso Prestea Limited and that employment and conditions of service stay the same with the new owner, FGR. This may be the case on the day of signing of the agreement of sale. It is however not guaranteed days after the sale. In a November 17 publication, the public was made aware of a negotiated 5% salary increment and 400USD lumpsum negotiated between worker unions and GSR for the 2020 production year. It was also mentioned that bonuses accrued up to 3rd quarter of 2020 with GSR would be paid by the new owner FGR in November. GSR has been able to honor this condition with workers at its Wassa mine. Contrary to the claim in the publication, the new owner, FGR has not been able to fulfill both agreed conditions (and has informed workers of this) as at now. GSR is not able to control the decisions/actions of the new owner as is evident in this instance. The claim of employment and conditions of service remaining the same with FGR is therefore just a wish with no relation to the stark reality.

The conditions of service which the transaction parties claim to remain the same and unchanged do not yet exist between workers and FGR. The new owner must sign a binding document directly with workers indicating acceptance of, and outlining, those conditions to bring her legal obligations regarding workers’ conditions of service into existence. Before FGR can sign such a document with workers into existence however, GSR must first severe workers at Bogoso Prestea mine ergo, the position of “certain employees.”

Parting Question

Endeavour Mining is acquiring Terenga Gold in a deal worth $1.86billion with “La Mancha, the vehicle which Egyptian billionaire Naguib Sawiris holds his stake in Endeavour, …[investing] a further $200 million into the combined miner, leaving it with a 19% stake” (https://www.mining.com/endeavour-mining-to-buy-teranga-gold-creating-top-10-gold-miner/)

Ghana’s own Engineers and Planners “on Tuesday, November 24, 2020 formally launched [an] all cash offer in Cardinal Resources in order to obtain the company's mining interest in Ghana” (https://www.graphic.com.gh/business/business-news/engineers-planners-launches-cash-offer-for-cardinal-resources-interest-in-ghana.html).

The cost of the sale of the Bogoso Prestea mine to FGR has been made public thus far. What is however loudly silent, pardon the oxymoron, is how much FGR is bringing (or has brought) to the table.

---norvanreports.com

Disclaimer: "The views/contents expressed in this article are the sole responsibility of the author(s) and do not necessarily reflect those of Modern Ghana. Modern Ghana will not be responsible or liable for any inaccurate or incorrect statements contained in this article."

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