Settlement with RPM to ‘materially’ impact IFMSA sales price – IFM
JOHANNESBURG (miningweekly.com) – A settlement agreement between International Ferro Metals’ (IFM’s) South African subsidiaries and Rustenburg Platinum Mines (RPM) in an upper-group two (UG2) chrome ore supply dispute, is expected to have a “material impact” on the purchase price that Samancor is to pay for the assets of International Ferro Metals South Africa (IFMSA).
IFM on Thursday said its South African subsidiaries, IFMSA and International Ferro Metals SA Holdings (IFMSAH), had entered into a settlement agreement with RPM regarding a UG2 chrome ore supply agreement that RPM had wanted to terminate.
The South African subsidiaries in December started legal proceedings against RPM, after the latter indicated that it would terminate the agreement that obliged it to supply IFMSA with 15 000 t a month of UG2 chrome ore at no cost.
Under the terms of the settlement agreement, RPM would supply IFMSA with 10 000 t a month of UG2 throughout 2016 at no cost. From January 2017 to November 2020, RPM would supply IFMSA with 7 500 t a month of UG2 at a cost of R170/t.
A backlog of about 57 000 t, as at end-December, would also be supplied to IFMSA at a rate of 10 000 t a month from this month at no cost.
“The settlement has eliminated the uncertainty surrounding the supply agreement and, accordingly, will assist the asset sale process currently being conducted. However, it has a material impact on the agreement's value and, consequently, on the value of the assets of IFMSA.
“As a result, there will be a material impact on the purchase consideration to be payable by Samancor for the assets of IFMSA,” IFM noted.
The IFMSA business rescue practitioner would, therefore, propose an amendment of the business rescue plan (BRP) to take the expected price adjustment and the resultant impact on the distribution to creditors into account.
Creditors, in early December, approved a BRP that recommended the sale of IFMSA to Samancor for R720-million.
A meeting of the creditors would be convened to vote on the amendment.
IFM said it did not expect any delay in the timelines for the proposed transaction with Samancor.
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