| Friday 10 December 2021 Good morning Voornaam,
Northam Platinum just can't stay out the headlines. The group has concluded a ten-year offtake agreement for PGM concentrate with Ivanplats, a subsidiary of Ivanhoe Mines. Broadly, Northam will buy 20,000 tonnes of PGM concentrate per annum from the Platreef Project, located 280kms northeast of Johannesburg.
The much bigger news is that the fight for Royal Bafokeng Platinum (RBP) seems to be escalating into a full bidding war. Northam has made an approach to RBP's board requesting a due diligence on the same basis that Implats was allowed to do. The board rejected Northam once before, which resulted in Northam going to major shareholder Royal Bafokeng Holdings and grabbing a stake of around a third of RBP at R180 per share.
On top of this, the parties are making representations to the Takeover Regulation Pa nel (TRP) regarding potential mandatory offers and the pricing thereof. Northam doesn't believe that a mandatory offer has been triggered. It's not clear yet whether Northam will launch a full competing offer or at what price, but RBP closed over 2% higher anyway. At the same time, Implats has now moved through the 35% threshold which means that its offer has now become a mandatory offer under takeover law.
The Aveng share consolidation caused havoc in the market as most brokerage platforms seem to be unable to divide by 500. Instant "millionaires" were created everywhere, as many platforms showed the new share price and the old volume of shares held. There was great disappointment across the land when the platforms finally sorted out the issue. The next step in the process is the payment of "fractional entitlements" - cash payments based on rounding off of shares in the consolidation.
Irongate Group, the Australian pro perty fund listed on the JSE, announced the acquisition of an industrial business park at an initial yield of 5.8% that will be funded by a new tranche of an existing syndicated debt facility. A further acquisition is a 50% interest in an office building at an initial yield of 4.7%, which necessitated the raising of equity capital.
Theoretically, the main reason to list on an exchange is to tap into capital pools for growth. In a matter of hours, Irongate raised AUD50 million (around R564 million) in a fully underwritten accelerated bookbuild, which is a fancy term that means (1) institutional investors would've been offered shares on a first-come, first-serve basis and (2) if investors weren't interested, the underwriters (in this case Macquarie Capital and J.P. Morgan Australia) would've taken up the stock. The issue price was AUD1.55 per share, a 6.3% discount to the last closing price. Irongate also gave updated guidance that the distribution per share i s expected to be grow by 2.5% to 3.0% in FY22.
Transcend Residential Property Fund also got in on the capital raising action. The REIT needed to fund the acquisition of two rental enterprises for R253.5 million. This required an equity capital raise of around R156 million. The TRP has also waived a requirement for Emira to make a mandatory offer.
Fairvest published "updated pro forma financial effects" related to the proposed deal with Arrowhead, which simply means "this is what our results would be if the deal had already been done" - an announcement necessitated by Arrowhead publishing its results for the year ended September. If the scheme had already been finalised and the merger concluded, Fairvest's diluted HEPS would've been 256% higher and the NAV per share would've been 29.5% higher.
Afrimat has announced an acquisition from Glenover Phosphate of the right to mine the vermiculite deposit and certain deposits of phosphate rock at the Glenover Mine. The site is 90km northwest of Thabazimbi in Limpopo. With a resource life of more than 20 years, this further diversifies Afrimat's business. Notably, Afrimat also has an option to acquire all the shares in Glenover. The total deal value is R550 million of which R250 million is payable for the underlying assets and R300 million would be payable if the option is exercised. A significant portion of the value can be settled in Afrimat shares. It could take until May 2023 to obtain all the required regulatory approvals.
In addition to the usual DealMakers content on a Friday, the feature article is on Tongaat's interim results. Shareholders can now see the extent of the troubles that have necessitated a highly dilutive capital raising plan.
Have a lovely weekend!
The Finance Ghost
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