SIBANYE-Stillwater is to place shares worth R1.8bn in an effort to minimise the impact on its balance sheet of the ongoing strike at its gold mines and to head-off potential disruptions that may flow from wage negotiations in the South African platinum sector.
Up to 108.9 million shares would be placed by means of an accelerated book-build with institutions, equal to 5% of the company’s share capital and the maximum it is allowed to sell for cash. The proceeds will be put to debt reduction taking net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) to a ratio 2.3x from 2.5x currently.
The group, which last year used $400m (R5.6bn) of some $500m raised by selling metals in a so-called streaming deal to lower debt, said the economics of the industry had improved owing to rand weakness and better platinum group metal (PGM) pricing.
But the strike waged by the Association of Mineworkers & Construction Union (AMCU) at its gold mines since November and “… the commencement of upcoming South African PGM wage negotiations at the end of Q2 (second quarter), pose potential risks that require due consideration,” it said.
In the event there were no disruptions from wage negotiations, the share placement would be a segue to the resumption of dividends, the company said. “The new proceeds from the placing will enhance balance sheet flexibility and ensure that group leverage is appropriately reduced,” the company said.
“Management has confirmed that should these uncertain events be successfully navigated and appropriate gearing levels maintained, the resumption of dividend payments, in line with the existing dividend policy, are anticipated,” it added.
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