NORTHAM Platinum’s net debt hit R16bn at end-June which included R8.4bn spent on acquiring more shares in Royal Bafokeng Platinum (RBPlat) but that is a level of debt the group says it is comfortable with.
In a voluntary trading statement for the year to end-June issued late on Wednesday Northam said its net debt to EBITDA (earnings before income tax depreciation and amortisation) ratio stood at 0.97 at end-June which was within the group’s self-imposed target of a ratio of 1:1 “during the pursuance of the group’s growth strategy”.
The amount of net debt was approximately equal to the value of the 34.5% stake held in RBPlat by Northam at end-June which was “a liquid asset”. Northam also pointed out it had received R536.2m in dividends from its shareholding in RBPlat during the year to end-June with a further R245.5m in dividends declared after the year end.
As at end-June Northam held 110.2 million shares in RBPlat with an option to buy up to a further 6.1 million shares as well as a right of first refusal to acquire a further 3.37 million shares. The total shares currently held combined with the option shares and right of first refusal shares represent 37.8% of RBPlat’s total issued shares.
Northam is locked in a bitter contest with Impala Platinum (Implats) for control of RBPlat with Implats building its stake up to 37.8% in terms of a general offer to RBPlat shareholders at R90 cash per RBPlat share plus 0.3 of an Implats share.
Northam and Implats are due to clash over the takeover at a meeting to be held by the Competition Commission tribunal.
According to the Northam update, if it acquired all the option shares as of end-June at R137.38 per option share then Northam’s weighted average cost per RBPlat share would amount to R164.63 net of dividends declared.
Northam indicated this cost drops to R150.26 per RBPlat share if its share of the R4.2bn net cash-on-hand that RBPlat reported as of end-June is taken into account.
Northam management once again did not provide any specifics over its strategic plans for RBPlat should it succeed in taking over the company.
The statement said only that, “Northam believes its investment in RBPlat holds the potential for substantial long-term value creations. It provides inherent optionality and its complementary metal mix – with a higher relative platinum contribution – fits well within the broader Northam basket.
“The RBPlat assets are young, shallow, large, well-capitalised and occupy a strategically important position in the Western Bushveld.”
