Simmers drops proposed rights issue

[] — SIMMER and Jack Mines (Simmers) has decided not to hold a R360m rights offer, and has withdrawn the cautionary trading notice over its shares.

Simmers has also agreed with Rand Merchant Bank (RMB) to restructure a R220m bridging loan. The main reason for the proposed rights offer was to repay that loan.

The terms of the restructured loan are that a capital payment of R100m must be made by July 31. After that, four equal instalments of R30m will be made monthly starting from September 2010.

Interest will be paid at one month Jibar (a daily updated South African Money Market rate, as indicated by a number of local and international banks) plus 7% payable monthly in arrears.

According to the Simmers statement, “the Simmers board is confident it will be able to settle the bridge loan and increase its cash reserves through the selected fund raising options, in conjunction with the cash to be generated from the operations over the next six months.

“The fund raising will limit the length of time Simmers’ assets will be granted as security and, in addition, there will be no dilutionary impact on Simmers’ shareholders.’

Simmers will raise the money through the sale of up to R150m of JSE-listed domestic medium-term notes, as well as the sale of a portion of the First Uranium-secured convertible rand notes issued by Mine Waste Solutions as part of the First Uranium recapitalisation programme.

Chief financial officer Marius Saaiman said the initial focus would on the sale of the domestic medium-term notes.

Depending on how that went as well as the level of cash generation within the group a decision would then be taken on the amount of First Uranium convertible notes to be either placed or offered to shareholders.

A key factor in the level of cash generated by the group will be how quickly it completes the acquisition of the Tau Lekoa mine.

CEO Nico Schoeman had hoped to announce completion of the deal on June 29 when the group presented its year-end results.

He said the mining right was “awaiting registration’ and final closure of the deal was “tantalisingly close’.

According to Saaiman closure of the deal remains “imminent’.

The writer owns shares in Simmer and Jack Mines.