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 | Wed, 07 Jan 2009 |
Posted: Wed, 15 Mar 2006 [miningmx.com] -- IT appears that the ‘on-off-on’ sale of Lesotho diamond producer Letseng has finally reached a conclusion with the mine being sold to Clifford Elphick’s Gem Diamond company. None of the parties involved will confirm it, however. Market sources said that the deal was completed last week at a price of around R900m. Elphick declined to comment when he was tracked down in London where he’s believed to be putting the finishing touches to the finance arrangements. Letseng is controlled by Letseng Investment Holdings (LIH) which owns 76% of the mine. Matodzi Resources owns 50% of LIH giving it an effective 38% stake in the mine while JCI owns 40% of LIH giving it an effective stake of 30.4%. But JCI and Matodzi are joined at the hip because JCI holds 200 million preference shares (prefs) in Matodzi which, in turn, holds a 9,9% stake in JCI. The Matodzi prefs plus JCI’s stake in LIH now sit in the special purpose vehicle which was set up to provide security to Investec Bank for the R460m it put up last August to save JCI from going under. Investec Bank has been running the bidding process for Letseng. Investec CEO, Stephen Koseff, said: "I am not in a position to discuss anything at the moment. “We have been going through a long process. We need a number of approvals including that of the shareholders and we are not at a point where anything can be put to the shareholders." "Nothing has been decided or taken to the board. Should the board decide to proceed with a sale it will still require shareholder approval," said JCI spokesman Brian Gibson. “Your understanding is wrong, be patient please,” said Matodzi CEO Sello Rasethaba in an e-mailed response. What is one to make of all this? It seems that there could be a dispute underway between Investec/JCI on the one hand which wants to sell Letseng, and Matodzi on the other which does not because Letseng is its only real asset. If that’s the case, Rasethaba is between a rock and a hard place because the latest interim results published this week by Matodzi for the six months to September show the company is technically insolvent. Matodzi’s only way out of the hole involves a deal with JCI. That, in turn, would require approval from Investec which is bankrolling JCI. Matodzi made a net loss of R31.7m in the six months to September and, as of end-September, its total liabilities exceeded the value of its assets by R258m. Rasethaba says Matodzi: "... is in the process of concluding two transactions that would restore the solvency of the company." The first is the purchase of 200 million Wit Nigel preference shares from JCI in return for the issue of new Matodzi shares worth R13.3m which will eliminate R184.5m of "external debt." Wit Nigel is a closed gold mine near Nigel on the Far East Rand. The second is the redemption of the 200 million Matodzi prefs by the issue of 200 million new Matodzi shares to JCI. That would remove another R171.8m in debt from Matodzi’s balance sheet. The end-result is that JCI would be the majority shareholder in Matodzi. JCI has also undertaken to support Matodzi financially should the company experience a "cash shortfall" post September 2005.Free news alerts: click here to subscribe
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