Sibanye-Stillwater continues balance sheet clean with $353.7m bond redemption

SIBANYE-Stillwater continued to chip away at its balance sheet announcing today it would close out a $353.7m corporate bond.

It rubbed out the balance of a $450m convertible bond in September last year issuing shares worth $354m. It has two bonds left on its balance sheet including the 2022 that it is closing today and a bond that matures in 2025 which is still trading at a premium.

The bonds relate to the massive $2.5bn Sibanye-Stillwater raised in 2016 to pay for Stillwater Mining, the firm’s first foray outside South Africa as it embarked on a commodity diversification programme.

In addition to the 2025 bond, Sibanye-Stillwater has a $600m revolving credit facility (RCF) of which $287m was drawn at end-2020, and an undrawn R5.5bn RCF.

“Strong operational performance and commodity prices have enabled an early reduction of gross debt and related interest costs,” said Neal Froneman, CEO of Sibanye-Stillwater.

“This is consistent with our published capital allocation model, and is complementary to other value-enhancing initiatives such as the recent share buyback. The group remains well on track to create superior value for all stakeholders,” he said.

It’s clear Sibanye-Stillwater has a cash ‘challenge’ insofar as it needs to wisely allocate the funds it is generating from high platinum group metal (PGM) prices.

It announced in June that it would buy back a total of 147.7 million shares between June 2 and April 6, 2022 worth about R10bn.

Froneman said at the time that there was no intention of the buy-back altering the firm’s commitment to a dividend policy which is to pay 25% to 35% of normalised earnings.

Sibanye-Stillwater announced in February that it would pay a R10.7bn final dividend after recommencing the payout at the interim stage in August.

In May, Froneman promised “future windfalls” as a result of record PGM prices after the firm’s mines generated R15.3bn in first quarter earnings before interest, tax, depreciation and amortisation.