South Africa's Northam seals $600 mln black empowerment deal
By Zandi Shabalala JOHANNESBURG (Reuters) - South Africa's Northam Platinum has sealed a $600 million deal that will increase its black ownership to over a third and inject 4.6 billion rand ($420) in cash to fund growth and potential acquisitions. South African companies are required to reach at least 26 percent black ownership this year under the government's policy of black economic empowerment, or "BEE", designed to address the inequalities of the apartheid system that ended in 1994. Northam said on Wednesday it would exceed that requirement to reach 35 percent ownership in the hands of black investors. Northam will sell over 112 million new shares, representing 22 percent of its issued share capital, to a consortium of black investors in exchange for a cash injection into its balance sheet. Chief Executive Paul Dunne said the BEE deal provides Northam with a strong cash position to acquire new platinum assets and possibly expand its Booysendal mine. "With this deal we have beefed up the balance sheet. There are some assets for sale, and we could expand Booysendal," he told journalists after a presentation. Anglo American Platinum has said it plans to sell assets including its Rustenburg operations, which were at the epicentre of a five-month, industry-wide strike earlier this year, as it pivots from labour-intensive to mechanised mining. The new Northam investors will also buy existing shares worth 9.4 percent, the company said, lifting the total share of black ownership to 35.4 percent from 4 percent now. The investors will pay 41 rand a share, a 15 percent premium to Northam's closing price on Wednesday, in both purchases. Unlike many BEE deals, in which black investors acquire their stakes via loans, Northam's investors will fund their side of the deal by issuing preference shares for cash to two of Northam's own shareholders, the Public Investment Corporation and Coronation Fund Managers. The deal includes a 10-year "lock-up period", meaning the black investors will retain their stake for at least a decade. This will help ensure the company remains compliant when it comes to requirements such as black ownership. The main black partner is the Zambezi Platinum Consortium led by Lazarus Zim, who headed up Northam's previous empowerment deal and is the company's chairman. Zim said he had recused himself from board discussions about the deal. Northam shares fell 2.77 percent to 34.81 rand, compared with a 0.25 percent fall in Johannesburg's All-share index. Northam's previous empowerment deal went sour when BEE shareholders were forced to sell their holdings after they breached covenants under their financing arrangements as a result of the collapse in the company's share price. (1 US dollar = 11.0197 South African rand)
