NORTHAM Platinum said today it would proceed with its takeover offer for Royal Bafokeng Platinum (RBPlat) after a complaint laid with the Takeover Regulation Panel (TRP) by Impala Platinum (Implats) had been withdrawn.
On November 9, Northam announced it would offer R172.70 per RBPlat it didn’t own in a cash and shares offer. At the time, the company had just under 35% of RBPlat with options to extend this to about 38%. The offer rivalled Implats’ earlier R150/share cash and shares offer for RBPlat from which it has so far garnered just under 41% in RBPlat shares.
On December 12, Northam increased the cash portion of its offer by R7bn to R17bn – a development to which Implats objected in a formal complaint with the TRP. The TRP subsequently withheld approval of Northam’s offer while granting it an extension. The TRP reports to Government’s department of trade and industry.
Today’s development sees Implats “summarily” withdraw its complaint with the TRP, said Northam. “Implats has taken this course of action without having engaged with the TRP any further,” it said. “In light of Implats’ withdrawal … the TRP has advised Northam that it considers the announcement to be legally valid and that Northam may proceed with the offer.”
This is the latest twist in a takeover contest underway between Implats and Northam for since October 2001. The TRP has so far not provided Implats with a certificate of compliance for its takeover offer of RBPlat owing to a Northam complaint related to share awards to RBPlat executives.
Implats said on March 2 that it was considering closing its offer for RBPlat at the end of the month, arguing that the lingering nature of its takeover attempt was not good for its business long-term. It also suggested it would sell into Northam’s offer if one was made. Today’s withdrawal suggest it might be taking that course of action.
Net debt lower
In a trading statement also published today for the six months ended December 31, Northam said that since acquiring its beachhead 34.52% of RBPlat “our balance sheet, liquidity position and credit outlook have strengthened significantly”.
It repaid the cost of buying its stake in RBPlat by October and increased banking facilities to R9.15bn including an agreement on a new R5bn revolving credit facility and finalisation of a loan agreement. It closed the six months with net debt of R12.3bn from R14.3bn at the corresponding point in the previous financial year.
Northam was also due to receive a total of R1.3bn in RBPlat dividends once the firm’s year-end dividend of R5.35/share announced on Wednesday (total dividend for the year ended December 31 of R7.80/share) had been received in April. This represented a 13.7% return on cash invested to date in RBPlat.
RBPlat reported net cash on hand post the final dividend payment of R2.8bn which was equal to R9.64 of cash per RBPlat share currently in issue.
In its statement, Northam said basic share earnings would be between 60.4% and 70.4% higher to R15,48 and R16.44/share owing to a recovery in own production – up 11.9% year-on-year to 393,309 ounces – and an increase in the rand basket of platinum group metals which rose to R42,046/oz 4E from R39,811/oz 4E previously.
Inflation was a factor again, however. Group cash cost per equivalent refined platinum ounce increased 14% to R37,400 from R32.814 previously.