By Dineo Faku
JOHANNESBURG - IMPALA Platinum (Implats), one of the world’s biggest platinum group metals (PGM) producers, has invited holders of its R3.25 billion convertible bonds due in 2022 to sell up to R1.62bn, half of their bonds, to the company.
Implats said yesterday that it was focused on pursuing value creation by maintaining a strong and flexible balance sheet within a prudent capital allocation framework.
“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,” said the group.
Implats, whose operations are in South Africa, Zimbabwe and Canada, offered bond holders at least R10 000 to participate in the sale process.
The group told the market that the strengthening in rand, PGM pricing and sustained operational delivery had provided a meaningful tailwind to profitability and free cash flow generation.
“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,” explained the group.
The group reported a 240 percent surge in annual profits during the year ended June as it rode the wave of strong metal prices.
Strong PGM prices driven by rhodium and palladium coupled with the weaker rand helped boost gross profit to rise to R23.3bn from R6.8bn a year earlier on the back of a 44 percent increase in group revenue at R69.9bn driven, the group reported in September.
Investment analyst at Anchor Capital Seleho Tsatsi said that Implats was generating a lot of free cash flow at the moment.
“Today’s announcement is a reflection of that. The two key questions for investors are how long PGM prices stay strong and what Implats and other PGM companies will do with the cash they generate if prices do hold up,” Tsatsi said.
Implats late yesterday also said it had become a limited partner and advisory board member in AP Ventures Fund II, the London-headquartered firm whose investment strategy is focused on companies developing technologies, which are capable of sustainably solving global challenges such as renewable energy integration and resource scarcity.
Commenting on the announcement, chief executive Nico Muller said: “Our multi-year investment in Fund II increases Implats’ focused market development spend on key evolving end-uses for PGMs including hydrogen, fuel cell mobility and energy storage. AP Ventures’ core linkages and strong developmental commitment to South Africa will help harness the benefits of PGM demand growth for all our stakeholders.”
Implats joined Anglo American Platinum, the Mirai Creation Fund, Mitsubishi Corporation, Plastic Omnium, the Public Investment Corporation and Sumitomo Corporation as an investor in AP Ventures.
AP Ventures is the only fund of its kind offering investors access to these innovative, fast-growing companies built on the unique PGM properties.
Implats shares closed 10.7 percent higher at R187.83 on the JSE yesterday.
BUSINESS REPORT