NORTHAM Platinum was considering buying out the largest shareholders in its empowerment scheme held in Zambezi Platinum, including its chairman, Lazarus Zim, said Bloomberg News.
Citing people familiar with the matter, Bloomberg News said that the possible acquisition would also benefit Zim’s fellow directors, Sipho Mseleku and Brian Mosehla. Together the three are sole directors of companies that own 55.4% of Zambezi Platinum.
Zambezi Platinum currently owns 31.4% of Northam, a stake currently valued at about R29bn, said Bloomberg News.
The Zambezi stake is held in preference shares that were issued at R41 per share and need to be redeemed at that price by 2025. Northam is obligated to make up the difference if the share price falls below that level. So far, Northam has already bought back R5.6bn of the preference shares since 2016, and currently holds 46.7% of them.
“We have a number of options open to us and the board continues to review these,” Northam said in a response to Bloomberg queries. This was the view of Paul Dunne, CEO of Northam Platinum as per comments in the firm’s most recent annual report.
“He also stated that we will be both aggressive and proactive in returning value to shareholders,” said Northam.
Northam has registered record earnings and cash flow but has chosen to buy back the preference shares rather than pay dividends to shareholders. It argues this is the best way of returning value to shareholders considering Northam shares are just over R180/share compared to the issue price to Zambezi of R41/share.