IMPALA Platinum (Implats) extended its offer for Royal Bafokeng Platinum (RBPlat) after rival Northam Platinum intervened in its application for Competition Tribunal approval.
Implats’ offer to RBPlat shareholders will now become wholly unconditional on August 8, the company said in an announcement to the Johannesburg Stock Exchange. Implats reserved the right to extend the date further.
The Competition Commission had previously recommended the takeover of RBPlat by Implats to the tribunal. Johan Theron, Implats spokesman said Northam had raised some objections regarding this decision.
Said Implats in its announcement: “The launching of this intervention application has delayed the finalisation of the process before the Competition Tribunal … and Implats accordingly hereby extends the date set for fulfilment or waiver of the conditions precedent to 8 August …”.
Northam’s ‘intervention’ potentially buys it time. It has a 34.7% stake in RBPlat, just below the threshold requiring it to make an offer to all RBPlat shareholders. Up until last Friday (May 20) it was required of Northam to make this general offer to shareholders on the same terms and structure it bought its current stake from Royal Bafokeng Holdings. It is now released from this condition should it trigger a mandatory offer to all shareholders.
There is no sign yet as how Northam intends to proceed. Its CEO Paul Dunne said in March that whilst Northam desired control of RBPlat “… there are a number of potential outcomes other than the obvious”.
Implats said on May 23 it had increased its stake in RBPlat to 37.8%. This is roughly the same holding Northam could control in RBPlat were it to exercise its options. In that scenario, this would leave 20% to 25% of RBPlat potentially still up for grabs of which about 10% is owned by the government-owned Public Investment Corporation (PIC) which hasn’t indicated whether it intends to vend into Implats’ offer.
Implats is permitted in terms of its offer to increase its stake in RBPlat to 42% – enough to control the company. “We’re confident of getting there,” said Theron.
In order to exercise its options to about 38% Northam probably needs to see a deleveraging in its balance sheet. The company said in its interim results announcement for the period ended December 31 it had net debt of R14.3bn, excluding the impact of some R5.7bn representing a deferred portion of its initial acquisition of the RBPlat stake.
Dunne argued that the pressure on Northam’s balance sheet would ease in the second half of its financial year once operational problems had been ironed out, and a capital lock-up of metal had been released.