NORTHAM Platinum yesterday unveiled a 15-year extended empowerment transaction valued at R33.1 billion as it wound up its Zambezi Platinum black economic empowerment (BEE) deal four years earlier than the originally envisaged 10 years.
Northam told shareholders it had approved the introduction of the 26.5 percent extended transaction with an emphasis on participation by the group’s employees and communities.
The transaction would see Northam empowering its employees and communities by providing them with a 23 percent ownership in the company, with other historically disadvantaged people, including women and youth groups, participating in the balance through a new empowerment vehicle to be listed on the JSE’s BEE segment.
Northam and Zambezi entered into an implementation and framework agreement in which the terms of the proposed acceleration of the maturity and wind-up of the Zambezi empowerment transaction had been agreed.
Chief executive Paul Dunne said close to 10 000 employees and community members would participate in the extended transaction.
“We have taken a considered view both as management and the board together with external opinion that it is from a sustainability and a risk point of view advisable that we maintain our empowerment credentials,” Dunne said. “We are very clear on that one,” he said.
Northam said the extended BEE transaction was valued at R33.1bn based on its current share price, adding that the deal would be funded exclusively by the group.
Northam, which owns 87.5 percent in Zambezi preference shares, said it also planned to offer R2bn to acquire the remaining 12.5 percent of Zambezi preference shares at a premium of 15.99 percent, as well as implement a share buy-back of more than 25 percent of its shares in issue.
Northam has 509 million shares in issue, giving it a market capitalisation of R130bn. Following the share buyback transaction, the shares in issue were expected to reduce to 378m.
Dunne said the buy-back was extremely beneficial for shareholders.
“The transaction will see Northam apply a further R7.3bn towards shareholder value creation and simultaneously convert its R12.1bn Zambezi
preference shareholding acquisition strategy into a collective share buyback of more than 25 percent of the Northam shares currently in issue,” said Dunne.
The Zambezi deal, which was created in 2015, gave empowerment participants 31.4 percent and was valued in excess of R39bn at March 19. It returned R12bn in value to shareholders.
Northam, which operates the Eland, Booysendal Zondereinde mines, owns 87.5 percent in Zambezi preference shares after embarking on a share buy-back strategy to reduce its preference share dividend expense and liability, and to mitigate risks for dilution of shareholders at the end of the 10-year lock-in period in 2025.
Fairtree Asset Management portfolio manager Cornelius Zeeman said the extended empowerment deal was clever, as it included a significant upfront share buy-back, which protected and enhanced shareholder value ahead of the extended transaction.
“There is a guaranteed minimum benefit transferring every year to employees and communities, which is a responsible and sustainable approach. We think the deal sets an excellent example for the market,” Zeeman said.
Fairtree owns a 3.6 percent stake in Northam.
dineo.faku@inl.co.za
BUSINESS REPORT ONLINE