JOHANNESBURG (miningweekly.com) – As part of its restructure and recapitalisation, contract miner eXtract Group’s wholly-owned subsidiary MCC Contracts will remain indebted to enX Group for R250-million, with the remaining R1.87-billion MCC owes to enX to be repaid by enX subscribing for new ordinary shares in MCC.
enX then plans to dispose of these new MCC shares to eXtract for an equivalent number of new shares in eXtract in an asset for share transaction. enX will subsequently unbundle all of its eXtract shares to its shareholders in a ratio of 21.39799 eXtract shares for each enX share.
As a result of the lower quantum of debt to be converted into equity, the price of the debt-for-equity conversion has been increased from 40.38c a share to 50c a share to ensure that eXtract shareholders are kept in the same position, on a net asset value per share basis, when compared with the original proposal.
The R250-million that remains owing by MCC to enX will strengthen enX’s balance sheet and support enX's goal towards achieving an A-rated debt capital markets programme. This will further support enX's initiatives to diversify its sources of funding.
The eXtract board, led by Bernard Swanepoel and Clinton Halsey, believes that the capital that remains in eXtract, after repaying all debt, is sufficient for it to pursue its objective of transforming eXtract into an alternative investment fund that will be opportunistic in terms of the investments to be made.
As eXtract will over time monetise its contract mining assets, there may be value-accretive investment opportunities that present themselves, but initially opportunities will be pursued where the listed nature of eXtract may be used to unlock value.
The eXtract board further said it is open to considering any opportunity on a case-by-case basis and smaller fund-like investments will have certain parameters and hurdle expectations before cash is invested.
“This is a watershed in the life of MCC/eXtract in terms of finalising its debt obligations and looking towards a renewed future in deploying its cash as an investment fund.
“As assets are realised for cash, the proceeds will be used on specific opportunities that present themselves and which meet certain investment criteria,” said Swanepoel.