IMPALA Platinum, South Africa’s third-largest source of platinum group metals (PGMs), will buy back up to half of a R3.25bn convertible bond maturing in 2022 for cash as it strengthens its balance sheet by removing debt, said BusinessLive.
According to the initial offer, Implats will pay R5.74bn to retire R1.625bn worth of the bonds.
There is a potential that, based on the share price movement in the next few days, it could go as high as R6.3bn based on any price increase, but the expectation is for the company to pay out a number between those two levels, the publication said.
“Implats has confidence in the outlook for PGM markets and the invitation is considered a proactive approach to extinguish a material existing debt liability and simultaneously reduce the potential future dilution associated with the conversion of the bonds on existing Implats shareholders,” it said.
“The proactive management of the balance sheet is considered key to repositioning the company as a profitable and sustainable business with the ability to deliver meaningful returns for all stakeholders through the commodity cycle,” it said.
Implats can redeem the bond in June 2021, but it has opted to make the offer to bondholders early, taking advantage of its strong cash generation, said BusinessLive.
The company invited bond holders to sell half their stake in the issuance in an offer that expires at the close of business on December 9 in South Africa.
The decision behind the offer is to prevent the dilution of shareholders’ interest when the bond matures in 2022. Implats could issue 65 million shares when it matures. Based on the prevailing price of R175 per share, these shares are worth R11.38bn.
