Chinese capital management group Heaven-Sent has made a cash offer of about $58 million (R637 million) to buy junior South African gold producer Village Main Reef, one of the oldest mining listings on the JSE.
The offer is for R12.25 per share, a 14.5% premium on the company’s closing price on Tuesday on the JSE and a 45% premium to its 30-day average price of R8.41. The company is valued at R574 million. “Village considers this to be a significant premium given previous global and South African gold sector transactions,” Village said in a statement.
Heaven-Sent has entered into an implementation agreement with Village Main Reef, following the completion of a due diligence investigation on Village by Heaven-Sent, who intends to fund the transaction through its own cash resources, and replaces the term sheet concluded between the parties on 4 January 2015.
Village deal gets irrevocable shareholder support
Although Village intends to obtain shareholder approval and all other requisite approvals from the relevant Chinese and South African authorities by the end of July, Heaven-Sent has already secured irrevocable support from holders of 35% of the shares. The deal has been largely welcomed by shareholders, who have been concerned about the capital requirements and uncertainty surrounding some of the company’s projects.
Heaven-Sent looking to invest in South Africa
In South Africa, direct Chinese investment into precious metals is still relatively rare. Nevertheless, Heaven-Sent is committed to the spirit and intent of the MPRDA, and to sustain a culture of social investment within South Africa. “Village signifies an ideal investment into the South African market for Heaven-Sent and supports Heaven-Sent’s strategy of developing an attractive business portfolio in South Africa,” Village said in a statement.
Heaven-Sent is one of the top ten Chinese private equity, venture capital firms, having been a first mover in the industry in 2001. The major business sectors of Heaven-Sent include venture capital, private equity and private wealth management. Heaven-Sent has grown into a sizable asset manager with a team of over 200 professionals, invested in over 100 projects (among which over 60 are listed in China) and launched over 70 investment funds with total assets under management of over R 37 billion.
Considering Cons Murch
The transaction excludes Village’s Cons Murch gold operation in Limpopo, which has entered into Business rescue after Stibium failed to raise the $15 million needed to fulfil the conditions precedent to a transaction that would see Stibium buy Village’s 76.6% stake in the operation.
Village has committed R22 million as post commencement finance to Cons Murch to enable its continued operation until it is sold to a third party, taken out of business rescue or post commencement finance is depleted. Currently, no agreement has been concluded with respect to the sale of Cons Murch, which could be placed into provisional liquidation as soon as funds are depleted.
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