[miningmx.com] — SIMMER and Jack (Simmers) stock recovered from near 12-month lows on Thursday, following the release of a statement by the board clarifying an alternative financial structure to the proposed R360m rights offer.
The share price had slipped in recent days, apparently in response to an article in a daily newspaper suggesting the rights offer was going to be scrapped because it risked re-igniting tensions with empowerment partner Vulisango.
But Vulisango CEO – and Simmers director – Valence Watson commented in Thursday’s Stock Exchange News Service (Sens) statement that “Vulisango is fully supportive of Simmers’ approach’.
Said Watson: “The Simmers board will decide which funding option is best for the company – the sale of the First Uranium (FIU) rand notes or the proposed rights offer – and Vulisango will support their decision either way.
“The beauty of the sale of the rand FIU notes is the flexibility it provides as it does not preclude Simmers from pursuing the proposed rights offer should it wish to do so,’ Watson said.
The rand FIU notes were issued as part of the recapitalisation programme for First Uranium, which ran into serious liquidity problems in February and had to be rescued by Simmers which owns 37% of the company.
On May 24, Simmers said it would offer R360m in secured convertible bonds by way of rights offer to repay a R220m bridging loan facility from Rand Merchant Bank, and to replenish cash reserves.
The statement said: “While this remains a suitable option, the Simmers board has since had the opportunity to consider alternative funding mechanisms.’
Sovereignty Capital Advisors CEO Simon Koch is now checking with investors to assess their appetite for the listing and sale of part of the R463.9m rand FIU notes that were issued by operating subsidiary Mine Waste Solutions as part of the First Uranium recapitalisation programme.
The rand FIU notes will provide Simmers shareholders with a mechanism to get a direct stake in First Uranium.
Watson said: “Although First Uranium has a secondary listing on the JSE, it barely trades as there is insufficient liquidity. This instrument changes that.’
Aquarius Platinum CEO Stuart Murray -an independent non-executive director of Simmers – said: “This is a viable alternative to the rights offer and will be considered by the Simmers board on June 24.’
The sale of the rand FIU notes could raise R450m, which would allow Simmers to repay the R220m RMB loan facility and keep the balance as working capital.
Watson said: “The sale of the notes is important, as it will obviate the need for all Simmers’ assets to be provided for the next three years as security for the secured convertible redeemable notes to be issued in terms of the proposed rights offer.’
According to a source, the listing of the rand FIU notes instead of holding a Simmers rights issue would also simplify the next stage in the Simmers/First Uranium saga – the need to merge the two companies.
That will be complicated by the fact that First Uranium is a foreign company domiciled in Canada.
The writer owns shares in Simmers.
