Sibanye-Stillwater has announced its intention to conduct a non pre-emptive cash placing of new ordinary no par value shares in the authorized but unissued share capital of the company to certain institutional investors, of up to 108,932,356 shares.
This represents approximately 5% of the its existing issued ordinary share capital base which is the maximum authorized issuance under current authorities.
Gross proceeds will amount to approximately ZAR1.8 billion / US$130 million, based on the closing share price as at 9 April 2019.
The Placing is being conducted through an accelerated bookbuild process, which will be launched immediately following this announcement.
J.P. Morgan Securities is acting as Sole Bookrunner in respect of the Placing.
The rationale is consistent with Sibanye-Stillwater's three-year strategic goals, proactive steps to address its balance sheet leverage were taken during 2018, with US$400 million of the US$500 million stream transaction successfully applied towards reducing long term debt.
Significant progress on its deleveraging strategy was however delayed by the sharp decline in adjusted EBITDA from its South Africa gold operations in 2018.
The safety related and other operational disruptions which severely impacted production from the South African gold operations in H1, 2018 were compounded by the AMCU strike, which began on 21 November 2018, resulting in adjusted EBITDA from the gold operations for FY 2018, declining by 75% relative to FY 2017.
Whilst the economic backdrop has improved significantly in 2019, with elevated PGM basket prices forecast to drive SSibanye-Stillwater's covenant leverage ratios lower and measurably improve Group liquidity, the ongoing strike at the South African gold operations and the commencement of upcoming SA PGM wage negotiations at the end of Q2 2019, pose potential operational risks that require due consideration.
In order to ensure that any potential upcoming events can be negotiated in a strategically appropriate manner, as well as to favorably position the Group for any unforeseen external macro-economic downside risks during this period, management deems it prudent to ensure sufficient financial flexibility for the Group through the proposed Placing.
The net proceeds from the Placing will enhance balance sheet flexibility and ensure that Group leverage is appropriately reduced.
Management has confirmed that should these uncertain events be successfully navigated and appropriate gearing levels maintained, the resumption of dividend payments, in line with the existing dividend policy, are anticipated.