Paul Dunne
JOHANNESBURG (miningweekly.com) – In yet another landmark black economic-empowerment (BEE) deal for the South African platinum mining industry, Northam Platinum shareholders have approved a R6.6-billion transaction that will, in conjunction with a previously concluded equity raising of R4.6-billion, take ownership levels in the company by historically disadvantaged South Africans (HDSAs) to 35.4%.
Northam announced in October last year that the successful conclusion of the two “dual and interrelated transactions” ensured that the company exceeded the minimum Mining Charter BEE requirements and locked-in HDSA ownership levels for at least ten years.
This followed the unbundling of Mvelaphanda-owned Northam shares to its underlying shareholders, who then disposed of a significant porion of these shares, resulting in the subsequent erosion of BEE shareholding in the platinum producer.
“Northam is delighted to announce the approval of our landmark BEE transaction [and we] appreciate the overwhelming shareholder support.
“The exceptionally high shareholder turnout confirms the importance of this transaction to Northam’s shareholders and the deep level of support for the transaction,” CEO Paul Dunne said in a statement on Thursday, following a general meeting of the company at which the transaction was approved by the requisite majority of shareholders.
Northam outlined that the aims of the transaction were to ensure fair treatment of current shareholders through a transaction that was value-accretive and within acceptable risk parameters, while achieving meaningful empowerment, both at an employee and community level, and through the active participation of strategic HDSA partners.
The deal also allowed the company to raise further capital to fund its growth ambition.
TRANSACTION STRUCTURE
The two-pronged transaction would see Northam issuing 112-million new ordinary shares, representing 22% of the company’s issued share capital (after the issue), to a special purpose vehicle (SPV) representing all the HDSA parties, at a subscription price of R41 a share.
This amounted to an aggregate consideration of R4.6-billion.
The HDSA participants, through the BEE SPV, would acquire an additional 47-million existing ordinary shares from Northam’s anchor shareholder, the Public Investment Corporation (PIC), also at R41 apiece, for a total purchase consideration of R1.9-billion.
“The PIC had previously acquired these shares with the intention of furthering the objectives of BEE at Northam and has elected to use this transaction as the mechanism through which it will achieve this socioeconomic objective,” Northam outlined.
As a result of these transactions, HDSA shareholders would 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 would rise to 35.4%, providing long-term headroom.
Within the SPV, employees would receive 3% of the BEE shares through a share trust, while host communities would, through the Booysendal Community Trust and the Zondereinde Community Trust, secure a 5% equity stake.
HDSA women would, through the Khomelela Women’s Consortium, receive 6% of the BEE shares, while 17.4% would be held by “strategic” HDSA partners Atisa Consortium, Maludi Consortium and Mpilo Consortium, which would secure 4%, 4% and 9.4% of the BEE shareholding respectively.
Northam would facilitate the issuing of 159-million new HDSA-listed preference shares with an aggregate value of R6.6-billion by the HDSA shareholders to finance the subscription for and acquisition of Northam shares.
Eligible Northam shareholders would be able to subscribe for BEE preference shares at an issue price of R41 apiece.
Meanwhile, to ensure immediate economic participation by the HDSA shareholders and in the interests of securing lock-in agreements with the HDSA shareholders wherein they undertook not to compete with Northam, nor to dispose of or encumber their interests for a period of ten years, the HDSA participants would realise immediate economic benefit of R400-million.
“Upon completion of the transaction [which has today been confirmed], Northam will receive unencumbered funds, net of costs, in excess of R4-billion,” the group explained.