Sibanye’s Stillwater acquisition progresses as it mulls hiking equity component to $1.3bn

3rd February 2017 By: Natasha Odendaal - Creamer Media Senior Deputy Editor

JOHANNESBURG (miningweekly.com) – JSE-listed Sibanye is considering increasing the size of the equity component of the Stillwater Mining financing package to $1.3-billion.

The group, which reported “good progress” in the $2.2-billion acquisition of Colorado-headquartered mine-to-metals company, initially intended raising between $750-million and $1-billion in the equity capital markets.

This followed Sibanye’s consideration of the current strong rand environment, spot precious metals prices and certain shareholders’ desire for the company to achieve a “more desirable financial leverage ratio”.

“While the amount is still to be finalised and is subject to prevailing market conditions, exchange rates, commodity prices and further engagement with our shareholders, Sibanye believes that increasing the equity component would be prudent in the current strong rand environment, allowing the company to maintain a strong balance sheet,” the company said in an update to shareholders on Friday.

Sibanye obtained $2.65-billion of bridge facilities through Citi and HSBC banks to fund the transaction and repay Stillwater’s $500-million convertible debentures.

The syndication of the facilities early in January was oversubscribed by more than $1-billion, raising over $3-billion of commitments into the syndicated $1.9-billion combined B and C facilities, across a final syndicate of 16 banks.

“The syndication attracted strong interest from banks with existing relationships with Sibanye, as well as a number of new international banks, which we believe reflects confidence in Sibanye’s operational and financial strategy,” it said.

The facilities were structured into three tranches including facility A, comprising a $750-million bridge-to-equity to be repaid following a planned rights offering; facility B, comprising a $300-million bridge-to-cash; and facility C, comprising a $1.6-billion bridge-to-debt capital markets.

“Pending approval by shareholders, refinancing of the bridge loan is expected to begin soon after the general meeting to approve the transaction, which is anticipated to be held in April,” Sibanye noted.