Northam Signals Firm Intention To Acquire Remaining RBPlat Shares
Northam Signals Firm Intention To Acquire Remaining RBPlat Shares. Northam Platinum Holdings Limited has announced its firm intention to make an offer to acquire the remaining shares in RBPlat which it does not already own. Northam currently holds 34.52% in RBPlat, and together with call options and a right of first refusal secured with the Royal Bafokeng Holdings group (RBH), may increase its shareholding in RBPlat to 37.80%.
The offer price amounts to R172.70 and is equivalent to the R180.50 purchase price paid to RBH in November 2021, adjusted for the dividends subsequently declared by RBPlat in March 2022 (R5.35) and August 2022 (R2.45). The offer is priced at an approximate 15% premium to the value of Implats’ offer on 8 November 2022.
The offer consideration will be fully settled in cash, or a combination of cash and Northam Holdings shares depending on the level of acceptance of the offer by way of a cash ratchet mechanism. As at the date of the announcement, Northam has committed R10 billion for the cash consideration and has reserved the right to increase this amount. Based on the R10 billion upfront cash commitment, if RBPlat shareholders collectively holding less than 19.9% of the RBPlat shares in issue accept the offer, the offer consideration will be fully cash settled. If RBPlat shareholders holding more than 19.9% accept the offer, the cash consideration will ratchet down and the balance of the offer consideration will be settled in Northam Holdings shares. If all RBPlat shareholders accept the offer, the minimum cash consideration per RBPlat share will amount to R54.40 and the balance of the offer consideration amounting to R118.30 per RBPlat share will be settled in Northam Holdings shares. If all RBPlat shareholders other than Implats accept the offer, the cash consideration will ratchet up to R152.42 per RBPlat share, based on Implats’ shareholding in RBPlat of 40.71% as per the Implats announcement on 4 November 2022, and the balance of the offer consideration amounting to R20.28 per RBPlat share will be settled in Northam Holdings shares.
Northam has identified various initiatives for both unlocking value and creating additional value at RBPlat’s existing mines (BRPM and Styldrift), as well as at the currently undeveloped Styldrift II. It intends to pursue these initiatives if it obtains a controlling interest in RBPlat. Northam’s experience and expertise at its Booysendal mining complex, together with the innovative mode of development of the 3 shaft project at its Zondereinde mine, bodes well for modular development and growth initiatives at Styldrift II. Northam further believes that there is a good cultural fit between its current operations and those of RBPlat. This will harmonise the management, and consequently the performance, of the combined group’s assets, should Northam acquire a controlling interest in RBPlat.
Northam is supportive of an extension to the existing royalty arrangements with Implats in respect of the two Implats shafts (6 and 20) operating on the RBPlat mining area, on commercially reasonable terms, should Implats request an extension. Northam believes that this arrangement will strengthen regional job preservation and stability and will be a beneficial outcome for all affected parties.In the event that Northam obtains a controlling interest in RBPlat, RBPlat’s employees, together with host and affected communities, will be granted significant participation in Northam’s 15-year extended broad-based black economic empowerment transaction which received overwhelming support from Northam shareholders in 2021.
Paul Dunne, Northam’s chief executive officer, said “the offer is aligned with Northam’s growth strategy and presents a unique opportunity to acquire a controlling interest in a scarce, high-quality ore body with established and well capitalised infrastructure. We are confident in the rationale for all stakeholders in Northam and RBPlat, as well as the value unlock and value creation opportunities underpinned by the inherent value and growth potential embedded within RBPlat’s attractive asset base. Since acquiring our initial shareholding in RBPlat, our balance sheet, liquidity position and credit outlook have strengthened significantly, enabling Northam to present an offer construct to RBPlat shareholders with a compelling cash consideration and an attractive premium, whilst limiting the number of Northam shares to be issued.”
