Northam Platinum has concluded a successful equity raising of R4.6 billion, in conjunction with a fully-funded R6.6 billion Black Economic Empowerment (BEE) transaction.
The dual and inter-related transactions will secure a sustainable 35.4% Historically Disadvantaged South African (HDSA) interest in Northam and, at the same time secure funding for the company’s growth ambitions.
HDSA shareholders will hold a 31.4% collective interest in Northam’s issued share capital. Combined with the existing HDSA profit share of 4% by way of the Toro Trust, the total HDSA benefits in Northam will rise to 35.4%, providing long-term headroom.
To ensure immediate economic participation by the HDSA shareholders and in the interests of securing lock-in agreements with the HDSA shareholders wherein they undertake not to compete with Northam, nor to dispose of or encumber their interests for a period of 10 years, the HDSA participants will realise immediate economic benefit of R400 million.
Upon completion of the transaction – expected in first or second quarter 2015 – Northam will receive unencumbered funds, net of costs, in excess of R4 billion to fund the company’s growth strategy
The current value and growth potential of the company recognised and supported by anchor shareholders, the Public Investment Corporation (PIC) and Coronation Asset Management. This resolves uncertainty relating to BEE and future fund-raising, so that Northam is well-positioned to deliver growth and value to a broad range of stakeholders.
A 10-year security of HDSA ownership will ensure that Northam exceeds the minimum Mining Charter equity requirements, and is well-positioned in the sector as a potential HDSA partner for further transactions. The transaction has the support of the Department of Mineral Resources (DMR).
All funding for the transaction is fully-secured through support of major shareholders. Northam shareholders will have the right to participate in the transaction funding on a pro rata basis.
Northam CEO, Paul Dunne said, “This landmark transaction recognises the fundamental value of the company and its growth potential. We expect to realise further upside, armed with a powerful balance sheet and with substantial and meaningful empowerment participation.
“Northam is well-positioned as a fully-integrated, fully-empowered South African mine-to-market PGM producer. The transaction effectively catapults Northam into the ‘1st division’ and, importantly, all stakeholders will share in the benefits of the business.”