IMPALA Platinum (Implats) accused Northam Platinum of attempting to delay its proposed buy-out of Royal Bafokeng Platinum (RBPlat) until it was able to afford a buy-out of its own.
This is one of the claims made in a fractious Competition Tribunal hearing on Wednesday as Implats’ sought to win approval for its takeover of RBPlat. Northam had last month applied to intervene in the hearing.
Northam’s argument is that in allowing Implats to buy RBPlat it will prejudice smaller miners in the platinum group metals (PGM) industry in South Africa. Northam said that Implats’ current capacity to process PGM concentrate for smaller miners – conducted through its Impala Refining Services (IRS) – will be absorbed by concentrate from RBPlat if the takeover is approved. As such it will fail competition regulations.
Implats argued that Northam has no right to speak on behalf of junior miners. It added that it intended to expand its refining capacity. But it’s most hard-hitting claim was that Northam’s attempt to intervene in the Tribunal’s process was aimed at improving its own chances of controlling RBPlat.
Attorney Tembeka Ngcukaitobi, acting for Implats and RBPlat told BusinessLive that: “Northam’s own rights are not impacted by the merger. The tribunal should not allow a busybody to intervene when its own interests are not at stake.
“The name of the game is delay, delay, delay delay,” Ngcukaitobi said, adding that Northam has “financing problems” that are preventing it from making a counter-offer for RBPlat. This is as Miningmx reported on May 27 when Northam made its application to interven in Implats’ application for Competition Tribunal approval.
Implats said on May 23 that in terms of its takeover offer, 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 options it has in RBPlat in addition to its current holding of 34.7%.
In order to exercise those options and trigger a buy-out of RBPlat of its own, Northam needs to first deleverage in its balance sheet otherwise it’s struggling to afford the deal. As of end December 31, Northam 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.
Paul Dunne, CEO of Northam, 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.
The head-to-head between Northam and Implats/RBPlat at the Competition Tribunal hearing is a gloves-shedding moment in the rivalry between the two companies. Until now, Dunne has argued that it was “quite natural” for his company to be competing with Implats for a prized asset such as RBPlat and there was no personal rancour.
