Aim-listed gold producer Goldplat’s share price on the LSE rose by 15% on the morning of July 20, as the company announced that it was increasing its interest in Goldplat Recovery Limited (GRL), its principal operating subsidiary, from 74% to 90.63% through the buyback of GRL shares from its minority shareholders.
GRL, which has operations in South Africa, has two minority shareholders – Amabubesi Property Holdings and Dartingo Trading 161, which hold 11% and 15% of GRL’s shares, respectively.
Following a notification received from the two minority shareholders indicating their intention to dispose of their shareholdings, GRL has agreed to buy back all of Dartingo’s shareholding and 7.33% of the shares held by Amabubesi for R89.3-million (about £4.5-million).
Amabubesi and Dartingo are companies connected with Goldplat nonexecutive director Sango Ntsaluba.
Subsequent to the transaction, GRL will issue to Aurelian Capital, a company associated with Ntsaluba, shares amounting to 4.9% of GRL, at the same valuation as the share repurchase, for R16-million (about £807 000).
As a result of the transaction, Goldplat will own 90.63% of GRL and Ntsaluba will own, directly and indirectly, 9.37% of GRL.
The consideration for the repurchased shares, of R89.3-million, will be settled in two instalments, with 50% settled when the first payment is received from the funding arrangement with Nedbank and the remainder not later than 180 days thereafter.
Separately, GRL has agreed with the minority shareholders to bring forward the settlement date of the second instalment as far as is practical for GRL.
The net cost to GRL of the transaction will be R73.4-million (about £3.7-million), and Goldplat's share of the net cost of the transaction to GRL will be 90.63%, effectively resulting in its additional 16.63% interest in GRL costing Goldplat R66.5-million (about £3.3-million).
The transaction values GRL at R400-million (about £20.2-million).
The transaction will be financed in part through a rand-denominated bank facility of R60-million (about £3-million) provided by Nedbank, of which 50% will be drawn within the next 30 days and the remainder 180 days later.
The remainder of the consideration will be settled through a set-off against the existing Amabubesi vendor loan of R12.6-million (about £635 000) outstanding to the group with the balance being paid in cash.
The principal on the bank facility will be repayable monthly over 36 months.
As a condition of the facility from Nedbank, the group's facility with Scipion, currently standing at £33 000, will be settled in full and its securities over GRL will be cancelled.
Further to the above, GRL will grant security over its debtors, as well as have a negative pledge over its moveable and any immovable property and a general notarial bond over all movable assets of GRL will be registered.
The group will further enter into a limited suretyship for R60-million in favour of Nedbank.
After the completion of the above transactions and cancellation of the repurchased shares, the group will hold 90.63% of GRL (an increase of 16.63%), Amabubesi will hold 4.47% and Aurelian 4.90%.
These transactions result in a reduction in the black economic empowerment (BEE) ownership of GRL.
However, none of GRL's current licences to operate are impacted by these changes, the company confirmed on July 20.
The reduction in the BEE ownership will impact on GRL's ability to renew its mining right in South Africa when it comes up for renewal in May 2023, though GRL does not plan to renew this mining right as it does not have an identified minerals deposit and can continue its current operations under the refining licence which only expires on November 1, 2040.
Nonetheless, the group and GRL said they remain cognisant of South African government policy to advance economic transformation and enhance the economic participation of previously disadvantaged people in South Africa and that they will, therefore, continue to look at means to do so through ownership, management representation, development of employee skills, local enterprise development and participation in local socioeconomic development.