Monday, January 24

Implats ups the ante, ready to make a mandatory offer for RBPlat


FIFI PETERS: At the moment, there is strong competition going on in the South African platinum sector, in fact IMHO, and the contenders are two mining companies, Impala Platinum and Northam Platinum. The prize, it seems, is the assets of Royal Bafokeng Platinum. All three companies released an update today on the JSE, the last of which was Impala, which came out at 5:48 p.m., saying it was now going to own a 35% stake in Royal Bafokeng Platinum, paving the way for it to produce a mandatory offer for the company.

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We have Johan Theron, the Impala Platinum spokesperson joining the program. Johan, you guys have been very busy. However, please tell us about the latest hit you have thrown in this race and what it means.

JOHAN THERON: Hi Fifi. Obviously, we have to report daily every time we increase our shareholding; remember that our offer is only formally opened in January after we have published our circular, but we are allowed [before that] voluntarily acquire shares of entities that want to sell us.

Today we announced that we had acquired another 3%, bringing the total sum to 35% ownership in RBPlat.

FIFI PETERS: Where do you get all the new shares, Johan?

JOHAN THERON: Basically institutional shareholders. Our offering has been on the market for about two weeks so people know exactly what it is about. It is open to all; It’s the same for everyone, and as long as people contact us on the basis of a willing buyer, a willing seller, we can conclude exactly the same transaction for everyone who knocks on our door.

FIFI PETERS: What was interesting was that earlier today Royal Bafokeng Platinum issued a statement in which it somehow indicated that a mandatory offer would be submitted, possibly from Northam, which issued a counter-statement saying that was misleading. And then he came out with the statement as Impala, saying he’s paving the way and he’s ready to make a formal offer here. Has this gotten personal?

JOHAN THERON: Not on our side. I believe that there is absolute and compelling value on our side in many respects. This deal has been in the works for 20 years with Impala. The latest iteration has taken us the better part of two years, so hopefully the planets are starting to align, but in a complex way, no doubt.

FIFI PETERS: Very complex, because a day or two before that, I am struggling to keep up, Northam Platinum also said that it had bought new shares. I think his current stake was around 34.9% or so, with the option to increase it to around 38%. It is quite complex. What does that mean?

JOHAN THERON: Well, Fifi, as far as I understand, our offer is the only offer that is available at this time, and it is the only offer that willing sellers can transact on. As I understand it, Northam has accumulated a 34.95% stake and there is no formal offer that no one can pursue. I think today’s RBPlat announcement obviously if they go over 35%, as we did today, to the extent that there is an offer it becomes a mandatory offer for all shareholders.

That doesn’t matter to us. It was always our intention to make the exact same offer to everyone, so for us it was just a technicality today that we passed the 35% mark.

FIFI PETERS: People have been watching this closely and commenting on a possible 51% run, although I guess no one can be in that position, not you and not Northam Platinum. Is that correct?

JOHAN THERON: No. I think it’s technically possible, but obviously it would require the majority of the remaining shareholders to sell to one or two parties. If Northam made an offer, then they could sell to Northam, but at this stage our [offer is] the only one available there. However, it is conceivable that neither party makes it to 51% and we both end up with a large stake with some minorities still in the structure.

FIFI PETERS: In the second scenario you paint, in which you both end up with this minority stake, this race feels very hostile from those of us who are reading the updates and watching them closely. Is that the case, and if that’s the case, could you work with Northam?

JOHAN THERON: Yes absolutely. I think there is no problem on our part. We have very successful relationships with peer companies, competitors so to speak, where we do business with Sibanye-Stillwater at our Mimosa mine in Zimbabwe, and with ARM Platinum at the Two Rivers mine. So it is certainly possible in our experience, and we hope to unlock value with Northam Platinum.

FIFI PETERS: Looking at some of the transactions that they also announced a bit earlier this week, the fact that the CEO of Royal Bafokeng Platinum had sold some of his shares to the company, as well as the CFO, I think it would seem that Royal La casa Bafokeng has taken a position on who they want their suitor to be. Would you say this is the case and what kinds of interactions have you had, and are you having, with Royal Bafokeng Platinum?

JOHAN THERON: Look, we’ve been talking to them for almost two years. Obviously, we were much closer together during the last eight to 10 months when we did due diligence on each other. But I would say they have remained open to counter offers. They have handled us very professionally and I believe that they only seek the best interests of their shareholders. To the extent that Northam comes up with a better deal that would certainly be welcomed by them.

FIFI PETERS: And what about the PIC, the Public Investment Corporation, because many of the analysts we are talking to are saying that they could possibly be the ones who make kings in this deal. What have been your conversations with the PIC and what is your opinion on the deal?

JOHAN THERON: Look, they’re obviously our biggest shareholders, so we’ve been close to them and keep them posted. I think they have two considerations.

One is that they must follow due process and must ensure that they offer value to their own customers. Second, they have a broader South African economy, so to speak, so they are very open to understanding how deals like this influence the landscape from job security, regional economy, taxes, security, all that good stuff. . I am sure they will take this into account in their decision making.

FIFI PETERS: Going back to price, the mandatory offer for the rest of the market, now that it has reached that level, would be an offer at R150 / share.

JOHAN THERON: It is a bit more complex than that. It is structured as R90 cash and 0.3% of an Impala share for each RBPlat share. For example, at today’s closing price, I think we close at around R214 / share, taking that into account the offer is around R154 / share. So the bid price changes up and down depending on the Impala price, because part of the consideration is our equity.

FIFI PETERS: If tomorrow Northam perhaps says that it is also in a position to make this mandatory offer, as Royal Bafokeng seems to indicate in its previous statement, what happens then?

JOHAN THERON: Well, we would have to see to what extent that offer manifests the consideration of the offer, and then we will have to take a look at it. So we clearly have the option in this process to increase our consideration if we deem it necessary, but we were very clear from the beginning that it was never our intention to enter a bidding war and we certainly do not want to fight to the end. death for control here. We honestly seek the best possible outcome for all parties. Most of the regional synergies are on our side and we would be very keen to unlock that for the benefit of everyone involved here.

So we certainly should have an opinion on that, but there is no intention here to enter a bidding war with Northam.

FIFI PETERS: It’s okay. Isn’t it too late, Johan?

JOHAN THERON: Well, these things move in particular ways and change almost from day to day, and that is why people like you [Moneyweb] I’ve been so enthralled with him. It’s almost as if every day it starts from there. It was never our intention for it to get as loud or complicated as it certainly sounds right now. But hopefully from this point on we can move in a common direction and reach a point where we can really unlock some of these values.

FIFI PETERS: I tell you, we are looking at this screen now with popcorn in hand [laughing] looking at how this ends.

Johan, thank you very much for helping us today. Johan Theron is the spokesperson for Impala Platinum.


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