NORTHAM Platinum has raised R411m in new funds after selling more new notes than it had initially planned as part of a previously announced restructuring of its R10bn Domestic Medium Term Note Programme (DMTN).
The company said on May 11 that it would extend the maturity dates on certain notes in the programme – about R1.9bn worth of notes – and issue new notes in the process. At the time it worked on selling R281m in new notes.
Northam said in an announcement today that an additional R130m in new notes had been sold over and above the R281m it had planned taking total new notes to R411m. It had also agreed to ‘switch notes’ (extend the maturity date on notes) of an additional R350m in note holders over and above the R1.9bn it had planned.
All in all, Northam had completed a R2.65bn restructure of its DMTN. In terms of the DMTN, the company has capacity to raise up to R10bn of which about half has been currently utilised. Paul Dunne, CEO of Northam, said the restructuring was a vote of confidence in the company’s prospects.
“This will assist significantly in preserving and strengthening Northam’s liquidity position during the ongoing COVID-19 pandemic,” he said in a statement. “We believe the company is well placed to weather the ongoing COVID-19 challenges and we remain appreciative of the support of our investors.”
The DMTN programme has been powerful for Northam in managing its financial obligations, specifically the purchase of preference shares in Zambezi Platinum, a company created out of Northam’s black economic empowerment initiative.
Arranged in 2015/16, Northam raised R4bn by selling shares to then newly created Zambezi Platinum. The shares were then backed by Northam Platinum shares on a one-to-one basis and listed on the JSE as convertible preference shares. Zambezi Platinum, owned by black shareholding groups, originally had a 32% stake in Northam.
The Zambezi preference shares fall due in 2025 so it’s in Northam’s interest to redeem them provided it can buy them below the redeemable price.
In early April, Northam took its ownership of Zambezi Platinum to 33.4% from 22% previously after buying 16.7 million of the firm’s preference shares on April 3. The cost of the purchase totalled R1.27bn was funded through new notes in terms of the DMTN.
JP Morgan Cazenove’s Dominic O’Kane said in April that Northam was well capitalised to withstand the impact of COVID-19 production disruption which at the time was limited to a 21-day lockdown. “With R5.4bn notes issued under the R10bn programme, we believe Northam has ample liquidity to weather a protracted COVID-19 lockdown in South Africa,” said O’Kane.
