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Mvela sells 11m Gold Fields shares
Allan Seccombe
Posted: Mon, 30 Mar 2009
[miningmx.com] -- MVELAPHANDA Resources has cleared half the R2.024bn debt it incurred to acquire 50 million Gold Fields’ shares, selling a portion for a remarkably handsome profit.
Black empowerment group Mvela took possession of the Gold Fields shares on 17 March as part of the gold company’s empowerment transaction. Mvela has stated it has no intention of holding the shares, wanting to sell them to pay off debt and kick start its platinum ambitions.
Dividing the total debt incurred to acquire the Gold Fields shares by the number of shares it owns gives a price of R40.48 per share that it paid for the seven percent stake in one of the world’s largest gold producers.
Mvela sold 11 million of those shares at an average price of above R115 each, giving it a profit of at least R75 for each sold shares. The Gold Fields shares traded at R110.50 by close of trade on
Monday.
Gold Fields has first right of refusal on the sale of its shares by Mvela, a plan designed to thwart any hostile investor gaining a large foothold in the company in one easy move.
The shares were sold on the market instead of as a placement, so as not to disrupt the Gold Fields’ share price and not incur a discount that such a placement would entail.
The day before it took
ownership of the Gold Fields shares, Mvela refinanced R2bn of mezzanine debt at preferential rates to give itself breathing room of up to 12 months to make a more considered sale of those shares.
The funding was organised by a big international bank and has a 12-month term at a rate of 13.% per annum. This compares to the 14.25% for most of the mezzanine debt, which fell due on 17 March 2009.
The total of the mezzanine debt, including rolled-up coupons, is R2.024bn.
It has about another R2bn of debt on its books.
The remaining shares currently have a value of R4.3bn, which will leave it R1.3bn with which to carry out a potential plan of refinancing its 63% held Northam Platinum, capitalising that company so that it can begin developing its 100 million ounce Booysendal platinum asset.
The thinking is that Northam will hold a rights issue and Mvela will follow its rights, injecting the R1.3bn into the platinum miner. This should leave
to a re-rating of the Northam shares, which are suppressed by investor scepticism that it has the financial firepower to begin developing Booysendal.
Mvela could then unbundle its Northam shares and exit its 18% held JSE-listed diamond producer Trans Hex, ultimately ceasing to exist. Mvela has until August to tell the JSE how it intends eradicating the existing pyramid structure within the group.
This strategy would drag Mvela's empowerment partners, Lazarus Zim's Afri Palm and Tokyo Sexwale's Mvelaphanda Group, into Northam.
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