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SHANDUKA Group, a black-owned and controlled investment holding company, yesterday announced that it had acquired a 50,03percent shareholding in Incwala Resources for a total consideration of R2,8billion.
Incwala, established in 2004, holds an 18percent interest in Lonmin's two subsidiaries, Western Platinum and Eastern Platinum, and a 26percent stake in the Akanani platinum project.
The transaction will be financed by an unencumbered equity contribution of R300million from Shanduka and vendor loan funding from Lonmin to the extent of R2,5billion.
Lonmin, the world's third largest platinum producer, said yesterday it would issue 9,65million new shares to fund Shanduka.
"Completion of the Shanduka offer will simplify the ownership structure of Incwala and create the basis for a long-term relationship between Lonmin and Shanduka," Lonmin said.
The R2,5billion funding to Shanduka will be provided through a five-year loan, which will be secured on Shanduka's holding in Incwala.
"In line with the board's policy to maintain an appropriate capital structure, which preserves financial flexibility and supports future growth, the funding will be financed through a combination of the net proceeds to be raised from the placing announced today and from Lonmin's own financial resources," Lonmin said.
It said the provision of vendor finance in this manner provides a robust financial structure to the Lonmin Shanduka partnership, avoiding the risks shown to be inherent in BEE structures built on bank debt.
After the completion of the transaction, Shanduka will, directly or indirectly, own 50,03percent of Incwala, the Industrial Development Corporation and Lonmin will each continue to own 23,56percent, with historically disadvantaged shareholders owning about 2,85percent.
"This transaction affords Shanduka a rare opportunity to invest in the world's third largest primary producer of platinum and bolsters our existing platinum group metal investments," Shanduka Group chairperson Cyril Ramaphosa said.
"Shanduka's equity contribution represents a significant portion of the group's liquid capital and exposes the group's balance sheet to the PGM market," he added. - I-Net Bridge