Bushveld minority to vote against firm’s Vanchem proposal

BUSHVELD Minerals’ plans to sell its Vanchem vanadium processing facilities in South Africa have run into opposition after a shareholder said it was “disappointed” with the proposed transaction.

Portillion Capital, which says it speaks for about 11% of Bushveld’s share capital, also questioned the firm’s liaision with shareholders during the last six months as it sought to save the company from bankruptcy.

On May 7, Bushveld announced a proposal to sell 100% of Vanchem to Southern Point Resources (SPR) for $40.6m. SPR, an investment firm led by former Anglo Coal engineer Mathews Senosi, came to prominence last year after proposing to invest $77.5m in Bushveld. However, most of that investment has not yet materialised while the proposed consideration on Vanchem is at a 50% discount to the earlier rescue package.

“The sale of all of Vanchem is unfortunate and could and should be avoided,” said Kamran Sattar, CEO of Portillion Capital in a letter to Bushveld’s board.

He argued that the sale price of $35m-$40m of Vanchem to SPR reflects a 50% write-down on a total investment by the company of more than $70m. It also comes as Vanchem ahead of expected operational improvements and so fails to make sufficient account for the facility’s future value to Bushveld.

Sattar also questioned the strategic sense of selling Vanchem as produces a range of vanadium products such as ferrovanadium, vanadium pentoxide, and vanadium chemicals. The transaction leaves Bushveld with only one operating asset: the Vametco plant which produces steel feed vanadium from facilities in Brits in the North West province. Vanchem, which is a processing plant, is situated in Mpumalanga province.

“Portillion is disappointed with the transaction as announced today and the way management have communicated with shareholders and is inclined not to support it when presented to shareholders at the general meeting,” he said.

Bushveld is likely to argue, as it did on Tuesday that having consulted with its “key stakeholders” it has no other option but to sell Vanchem.

“The proposed sale of Vanchem will enable the group to move forward in a more agile and lean manner and help pay down our creditors,” said Craig Coltman, CEO of Bushveld when the deal was announced this wee.