TRP rules Northam’s purchase of RBPlat stake did not trigger mandatory offer

NORTHAM Holdings did not trigger a mandatory offer for Royal Bafokeng Platinum (RBPlat) when it bought shares in the firm, South Africa’s Takeover Regulation Panel (TRP) today ruled.

Northam bought a 32.7% stake in RBPlat in November through the issue of 34.4 million Northam shares to Royal Bafokeng Holdings (RBH) – equal to 8.7% in Northam – as well as R8.6bn in cash.

On December 8, Northam announced it had increased its holding in RBPlat to 34.95% following the acquisition of another 6.3 million shares, bought at an average cost of R162,70 a share and a maximum cash consideration of R165 per share.

RBPlat subsequently asked the TRP to assess whether a mandatory takeover had been triggered by Northam as it also had options potentially taking its stake in RBPlat beyond 35% – a threshold requiring a Northam to offer the same terms to all shareholders.

Said Northam: “Following, inter alia, Northam’s submission to the TRP in response to the RBP TRP submission, Northam is pleased to advise that the TRP has today, 30 March 2022, ruled in favour of Northam’s position that the Alleged Mandatory Offer has not been triggered and accordingly, the RBP TRP Submission has been dismissed.”

Northam Platinum is due to report its interim results ended December 31 tomorrow (Thursday, March 31) in which CEO Paul Dunne will be asked to open up on the group’s plans for RBPlat now it has a significant stake.

Northam’s purchase of the RBPlat stake stymied a proposed 100% takeover by Impala Platinum (Implats) and led to claims by RBPlat’s outgoing CEO Steve Phiri that RBH had sold his heritage.

Commenting in a trading statement last week, Northam said the investment in RBPlat provided “inherent optionality” and a complementary metal mix with a higher relative platinum contribution which “fits well within the broader Northam basket”.

It added: “The RBPlat assets are young, shallow, well capitalised and occupy a stratetically important position in the Western Bushveld”.

Northam’s interim earnings could be as much as 65% higher as platinum group metal (PGM) prices offset a significant uplift in unit costs.

Northam’s unit costs increased 18.6% to R32,814 per ounce. The increase was also a result of flat year-on-year production of 351,359 4E oz. Inflation played an important factor as well with consumables such as chemicals and diesel proving more costly while the electricity tariff from Eskom rose. Northam’s wage bill also grew as it employed more people amid its expansion in annual production to a million oz of 4E.

Set against this was another period of strong PGM pricing. The average US dollar basket price increased 22.5% to $2,647/oz 4E. The outcome was earnings before interest, tax, depreciation and amortisation (EBITDA) of R6.4bn, some 19.1% higher year-on-year.

Basic interim earnings would be 55.9% to 65.9% higher or 935 to 995 cents a share. Headline earnings would be 931 to 991.5 cents per share.