Implats’ Muller “disappointed” as PIC silence takes RBPlat takeover bid into sixth month

Nico Muller, CEO, Impala Platinum

IMPALA Platinum (Implats) CEO, Nico Muller said he was “disappointed” the Public Investment Corporation (PIC) had taken more than five months over his firm’s bid for control of Royal Bafokeng Platinum (RBPlat) which had “widespread support”.

“We understand and respect the governance that the PIC applies. It has taken rightful opportunity to consult with all stakeholders,” Muller said in an interview on June 3. “The PIC is a material shareholder in the company, but it is unclear and it is disappointing that it is taking this long,” he said.

Implats acquired just under 25% of RBPlat on November 29 and then built up its stake ahead of making a mandatory offer to all RBPlat shareholders on December 9 in terms of which it offered R90 per share in cash and 0.3 Impala shares per RBPlat share.

Implats owned about 37.83% of RBPlat as of May 23 – a holding that would increase to an unassailable 46.83% if the PIC voted its shares in RBPlat in favour of Implats.

However, Implats’ offer is complicated by Northam Platinum which pre-empted the takeover offer for RBPlat by buying a 34.7% stake of its own and options in the company – yet to be exercised – that could see it own about 38%.

Northam has not yet triggered a mandatory offer to RBPlat shareholders of its own, although Northam CEO Paul Dunne stated in March he was desirous of owning RBPlat outright. He described the company’s minority stake in RBPlat as “the silver medal” and has promised to apprise the market of the firm’s intentions regarding RBPlat in the future.

Muller said that any decision the PIC made in respect of Implats’ offer – which has now been extended to August – should be able to withstand scrutiny. “The decision it takes will have to stand up to public scrutiny one way or the other regardless of the direction it goes,” said Muller.

“There will be public scrutiny on how the outcome was derived.”

Muller has argued previously that Implats’ offer for RBPlat was logical as it would allow for the extension of mining at the firm’s Rustenburg mines which employ about 40,000 people – roughly 40% of total people directly employed in platinum group metals (PGM) production in Rustenburg.

Northam shareholder Allan Gray said in April that it did “… not see the logic in Northam Platinum’s actions although Northam previously invested very competently at the bottom of the cycle which is the right behaviour”. Commenting in a recent Miningmx article, former CEO of Royal Bafokeng Holdings Niall Carroll said the logic of Implats owning RBPlat “… is much more compelling than the alternative offer from Northam”.

PIC “frozen”

The PIC, which manages government employee pensions, is yet to respond to questions submitted by Miningmx on June 17 regarding its outlook on Implats’ offer for RBPlat.

“What I would say about the PIC is that it is an organisation absolutely frozen,” said a senior South African banking source when asked why the PIC had taken more than five months to make a decision on Implats’ offer. “It would be very cautious following the Mpati Commmission,” he said.

The Mpati Commission of Inquiry, initiated in 2018 by South African president Cyril Ramaphosa, found “substantial impropriety” had occurred at the PIC. Testimony from one former employee alleged staff were awarded bonuses to help cover up mismanagement and corruption, according to a report by BusinessLive.

Turnover of senior staff has also been a problem at the PIC. Most recently, its interim chief investment officer (CIO), Sholto Dolamo, left the company shortly after the appointment of Kabelo Rikhotso, a relative unknown in the financial services industry into his position. Lusandi Kali, acting executive head of developmental institutions and private equity also resigned. In a separate development, a third executive – PIC COO, Vuyani Hako – was suspended.

Northam conflict

Muller also said that Northam’s recent intervention in Competition Tribunal proceedings regarding Implats’ offer for RBPlat was “a clear conflict of interest”.

“We respect the regulator’s process, but the intervention application from Northam … is not purely to act on behalf of public interest,” he said. “It is the unique position of it [Northam] being a competitor. The argument Northam is holding was previously heard by the [Competition] commission and so we would be surprised and disappointed in this decision was not upheld in by the Tribunal.”

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.

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.