A settlement agreement between International Ferro Metals’ (IFM) South African subsidiaries and Rustenburg Platinum Mines (RPM) regarding a UG2 chrome ore supply agreement, is expected to have a ‘material impact’ on the purchase consideration to be payable by Samancor for the assets of IFMSA, as per IFMSA’s business rescue plan.
The terms of the settlement are that RPM will supply IFMSA with 10 000 t of UG2 per month for calendar year 2016 at no cost and 7 500 tpm from January 2017 to November 2020 at a cost of R170/t.
The backlog of approximately 57 000 t at the end of December 2015 will be supplied at a rate of 10 000 tpm from January 2016, also at no cost.
The original contract provided for RPM to supply 15 000 tpm until November 2020 at no cost.
While the settlement has eliminated the uncertainty surrounding the supply agreement and will assist the asset sale process currently being conducted, it will however have a material impact on the agreement’s value and consequently on the value of the assets of IFMSA, IFM said in an announcement on Thursday.
The business rescue practitioner will therefore propose an amendment of the business rescue plan to the creditors of IFMSA to take account of the settlement agreement reached in respect of the supply agreement and the impact of the anticipated price adjustment and resultant distribution to creditors.
The company said that a meeting of creditors will be convened to vote on the proposed amendment to the business rescue plan.
It further said that this is not expected that that the timing of the proposed transaction with Samancor will be materially impacted.