Ferro Metals unveils BEE deal
International Ferro Metals (IFM) yesterday announced it would increase its black empowerment shareholding in its South African subsidiary to 26percent in a deal reputed to be worth more than R1billion.
The empowerment scheme will see four communities surrounding the company's main international operations in Buffelsfontein, east of Rustenberg, acquiring the largest chunk of 12,5percent.
An estimated 160000 people in the area stand to benefit while the company's 240 employees, who don't participate in share option schemes, will acquire 6,75percent.
The remaining 6,75percent will be acquired by an "entrepreneurial group" yet to be constituted but which will include current BEE partner and 1,25percent stakeholder Global Eagle, headed by mining bigwig and empowerment player Seth Phalatse.
Speaking yesterday IFM chief executive David Kovarsky said it was "likely that they (Global Eagle) will be a part of this although this aspect has not been finalised".
He said the company lodged its proposal to the department of minerals and energy last week, adding it was in line with its previous application to convert its existing old order mining rights to new order mining rights.
IFM is an Australian-based company with a market capitalisation, as of yesterday's share price, of R2,6billion and is listed on the London Stock Exchange.
Ferro chrome is one of the key ingredients when making stainless steel.
Kovarsky said IFM was one of the first mining companies to increase their shareholding to the required 26percent.
"The principal requirement of the Mining Charter was for there to be black ownership of 15percent by this year and 26percent by 2014 so we are extremely happy to do it all at once.
"We thought it was right as the constituencies to whom we are selling the shares aren't going to change much ... and we concentrated on the broad-based elements of the deal," he said.
He said another advantage of the deal was that it would be financed by the company itself "thus removing pressure on shareholders so they don't have to money borrow money" to finance the deal.
"The gearing or debt will reside in the company ... and we have an undertaking to start paying dividends - as long as we are in profit - so that the community and staff can benefit," said Kovarsky.
He anticipated that the debt would be serviced within five to 10 years.