IMPALA Platinum (Implats) has increased its stake in Royal Bafokeng Platinum (RBPlat) to 35% which means its general offer for the company in January will become mandatory.
The platinum group metals (PGM) producer said today it had bought a further 3% of RBPlat shares for a combination of cash at R90 per share and 0.3 Impala shares per RBPlat share – the same price at which it had built its RBPlat stake.
“Following the final settlement of the most recent share acquisitions, Implats’ ownership of RBPlat shares will exceed 35%,” said Implats. “In terms of South African regulations, this level of shareholding requires Implats to make a mandatory offer to all RBPlat shareholders for the remaining shares not already acquired”.
A Competition Commission approval process will begin. A circular to RBPlat shareholders detailing Implats’ offer would be issued no later than January 17 at which time the salient dates relating to the offer would also be published, Implats said.
“Our attractive offer has been presented to all RBPlat shareholders on an equal basis,” said Nico Muller, CEO of Implats in a statement.
The move comes on a day of corporate drama in which RBPlat said in a mid-morning statement to the Johannesburg Stock Exchange (JSE) it had received an “unsolicited approach by Northam” on December 8 to acquire a portion or all of its shares. This was despite its board having rejected an earlier offer by Northam in October.
RBPlat added it had alerted the Takeover Regulation Panel (TRP) to a possible mandatory offer having been triggered by Northam’s dealings in RBPlat. This refers to options attached to the initial 32.7% stake Northam bought in RBPlat from Royal Bafokeng Holdings (RBH).
Northam later responded in a statement to the JSE that RBPlat had agreed to continue discussions regarding its interest in the company. It added that RBPlat’s submission to the TRP was “misleading”, adding that it was “…. firmly of the view that a mandatory offer has not been triggered”.
Northam approach mandatory?
So far, Northam CEO Paul Dunne has declined to comment to media on the matter. According to a report by RMB Morgan Stanley, however the status of Northam’s interest in RBPlat is captured in the question of whether the options Northam has in RBPlat count as breaching the 35% level triggering a mandatory offer.
Northam bought a 32.8% stake in RBPlat on November 9 from RBH, RBPlat’s largest shareholder, for about R180/share worth about R17bn in total. (Since a portion of its offer is in shares, its value moves with Northam’s share price but can’t exceed R180/share). The move surprised Implats which had previously announced its intention for a takeover of RBPlat.
As part of Northam’s share acquisition it also negotiated a put and call option agreement with RBH and one of its subsidiaries that would see it inch up its stake to 36.1%.
According to a market source that may be a major source of concern for Northam as there’s some doubt as to whether it has the balance sheet right now for a mandatory offer. “They could issue shares but that would be so dilutive the executives would lose their jobs,” said the source.