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ROYAL BAFOKENG PLATINUM LIMITED - Royal Bafokeng Platinum Limited ZAR1.2 billion Senior Unsecured Convertible Bond Offering

Release Date: 08/03/2017 08:11
Code(s): RBP     PDF:  
Wrap Text
Royal Bafokeng Platinum Limited ZAR1.2 billion Senior Unsecured Convertible Bond Offering

Royal Bafokeng Platinum Limited
(Incorporated in the Republic of South Africa)
(Registration number 2008/015696/06)
(ISIN: ZAE000149936)
(JSE Share code: RBP)
Bloomberg: RBP SJ EQUITY
Reuters: RBPJ.J
(“RBPlat” or “the Issuer”)

NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR
ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION WOULD BE PROHIBITED BY
APPLICABLE LAW

ROYAL BAFOKENG PLATINUM LIMITED ZAR1.2 BILLION SENIOR UNSECURED CONVERTIBLE BOND OFFERING

RBPlat hereby announces the launch of an offering (the “Offering”) of senior, unsecured, convertible
bonds with an aggregate principal amount of approximately ZAR1.2 billion (the “Bonds”).

1. Terms of the Offering

The Bonds, which are expected to mature on 16 March 2022, will be issued at par and are expected to
carry a fixed rate coupon of between 6.5% and 7.0% per annum payable semi-annually in arrears. The
Bonds will, subject to certain conditions including the passing of the Shareholder Resolutions as defined
below, be convertible into ordinary shares of the Issuer (the “Ordinary Shares”) and will be ZAR
denominated.

The initial conversion price is expected to be set at a premium of between 30% and 35% to the Volume
Weighted Average Price of the Ordinary Shares of the Issuer listed on the Main Board of the JSE Limited
(“JSE”) from market open to the close of the offer today. The conversion price will be subject to
customary adjustments (as described in the Terms and Conditions of the Bonds). The Ordinary Shares
initially underlying the Bonds represent approximately 13.5% of RBPlat’s issued and outstanding
ordinary share capital immediately prior to the Offering.

The Issuer may redeem all (but not some) of the Bonds at their principal amount together with accrued
interest excluding the date of redemption: (i) on or at any time after the twenty-first day following the
fourth (4th) anniversary of the Settlement Date, if the VWAP of the Ordinary Shares exceeds 130% of
the conversion price at the time on no less than 20 out of any 30 consecutive Dealing Days; or (ii) at
any time if more than 85% of the Bonds originally issued have been converted and/or redeemed and/or
purchased and cancelled.

The Issuer will undertake to use all reasonable endeavours to convene a meeting of its ordinary
shareholders by 15 May 2017 for the purpose of considering, and if thought fit, passing such resolutions
(the “Shareholder Resolutions”) as required to enable the issue of, or transfer and delivery of, such
number of Ordinary Shares as may be required to be issued or, as the case may be, transferred and
delivered from time to time upon the exercise of conversion rights. Until the Shareholder Resolutions
are approved, the Issuer shall satisfy the exercise of conversion rights by making payments in cash of
the value of the underlying Ordinary Shares. At any time up to 15 June 2017 whilst the Shareholder
Resolutions have not been passed, the Issuer will have the option to redeem all (but not some) of the
Bonds at the greater of (i) 102% of the principal amount of the Bonds (plus accrued interest) or (ii) 102%
of the fair value of the Bonds (plus accrued interest).

The Bonds may be redeemed at the election of bondholders, prior to the maturity date, in the event of a
change of control of the Issuer or a de-listing of the Ordinary Shares, in each case, at their principal
amount (plus accrued interest).

The Offering is being made by way of an accelerated bookbuild through a private placement to South
African and international institutional investors outside the United States of America in accordance with
Regulation S under the Securities Act (as defined below) and outside Canada, Australia and Japan. The
Offering is open with immediate effect and will close as soon as is practicable today, Wednesday, 8
March 2017.

2. Rationale and use of proceeds

In August 2015, the Issuer announced that in the context of sustained depression in the Platinum Group
Metals (“PGM”) market, it had decided to materially reduce construction activities and related capital
expenditure at the Styldrift I Expansion Project (“Styldrift I”), in order to protect the balance sheet and
ensure the organisation was well positioned to maximise on any uplift in the cycle.

At the beginning of 2016, against the backdrop of improving ZAR revenue basket prices, RBPlat
committed a further ZAR1 billion in capital expenditure to Styldrift I for the 2016 year which facilitated a
production rate of up to 50 000 tonnes per month of on-reef development that was achieved in August
2016. This expenditure was funded from on-reef development revenue, excess cash flows from the
Bafokeng Rasimone Platinum Mine (“BRPM”) and surplus cash resources.

RBPlat’s average ZAR basket price achieved for 2016 was ZAR18,906 per platinum ounce, compared
to ZAR17,256 per platinum ounce for 2015. The RBPlat Board (the “Board”) is therefore of the opinion
that it is now appropriate to secure the transition into the next phase of ramping up Styldrift I from 50 000
tonnes per month to 150 000 tonnes per month by the end of 2018. This level of production secures the
optimal level of Merensky production for RBPlat in a PGM environment faced with future uncertainty,
without the Issuer incurring significant expenditure that would be required for a further processing plant
and infrastructure development to process production above this level. The RBPlat Merensky production
will also position RBPlat further down the cost curve securing the sustainability of the operation in the
future.

RBPlat’s share of the capital expenditure for this phase of the development is estimated to be ZAR3.2
billion (of a total of approximately ZAR4.75 billion) and provides for key underground life of mine and
surface ore handling infrastructure to eventually support 230 000 tonnes per annum and includes the
overland belt to the BRPM concentrator complex, all underground silos and associated conveyor belt
systems, required water handling and pumping facilities, stores, two ventilation shafts and equipping of
the services shaft.

The ZAR1.2 billion Offering will complete RBPlat’s robust funding solution which also includes ZAR2.0
billion of recently concluded debt facilities and will secure the next phase of the ramp-up of Styldrift I to
150 000 tonnes per month.
Progressing Styldrift I to a 150 000 tonnes per month project, positions it well for the ultimate ramp-up
to a 230 000 tonnes per month Merensky operation when further investment is warranted by the market
conditions.

3. Shareholder support and underwriting

RBPlat’s major shareholder, Royal Bafokeng Holdings Proprietary Limited (“RBH”) has confirmed its
support for the Company’s strategy and the Offering.

RBH, acting through a wholly-owned subsidiary (the “Underwriter”), has entered into an underwriting
agreement with RBPlat pursuant to which it has agreed to underwrite Bonds up to a value of R620.88
million (the “Underwritten Amount”), which is proportionate to RBH’s existing 51.7% shareholding in
RBPlat.

The Underwriter’s commitment is provided throughout the expected pricing range. To the extent that the
Joint Global Coordinators and Bookrunners (as defined below) are unable to place all of the Bonds with
subscribers in the Offering, the Underwriter or its appointed nominee will subscribe for up to R620.88
million of the Bonds.

Pursuant to the terms of the underwriting agreement, an underwriting fee equal to 0.5% of the
Underwritten Amount shall be payable by RBPlat to the Underwriter.

4. Settlement and listing

The final terms of the Bonds are expected to be announced today and settlement is expected to take
place on or around 15 March 2017 (the “Settlement Date”).

The Bonds will not be listed on the Settlement Date. The Issuer will apply for the Bonds to be listed and
admitted to trading on the Main Board of the JSE within three months following the Settlement Date.

5. Lock-ups

The Issuer has agreed not to issue or dispose of any Ordinary Shares, or securities convertible or
exchangeable into Ordinary Shares, held by or on their behalf, for a period of 90 days following the
Offering, subject to customary exceptions such as share issues in respect of the RBPlat employee share
schemes.

6. Bookrunners

Morgan Stanley & Co. International plc and Rand Merchant Bank, a division of FirstRand Bank Limited,
are acting as joint global coordinators and bookrunners for the Offering (the "Joint Global Coordinators
and Bookrunners").


Johannesburg
8 March 2017


Joint Global Coordinators and Bookrunners
Morgan Stanley & Co. International plc
Rand Merchant Bank, a division of FirstRand Bank Limited

Transaction Sponsor
Rand Merchant Bank, a division of FirstRand Bank Limited

Legal adviser to RBPlat
Bowman Gilfillan Inc.                 (South African legal counsel)
Davis Polk & Wardwell London LLP      (International legal counsel)

Legal adviser to Bookrunners
Webber Wentzel                        (South African legal counsel)
Linklaters LLP                        (International legal counsel)

Disclaimer

NO ACTION HAS BEEN TAKEN BY THE ISSUER, THE JOINT GLOBAL COORDINATORS OR ANY
OF THEIR RESPECTIVE AFFILIATES THAT WOULD PERMIT AN OFFERING OF THE BONDS OR
POSSESSION OR DISTRIBUTION OF THIS PRESS RELEASE OR ANY OFFERING OR PUBLICITY
MATERIAL RELATING TO THE BONDS IN ANY JURISDICTION WHERE ACTION FOR THAT
PURPOSE IS REQUIRED. PERSONS INTO WHOSE POSSESSION THIS PRESS RELEASE COMES
ARE REQUIRED BY THE ISSUER, AND THE JOINT GLOBAL COORDINATORS TO INFORM
THEMSELVES ABOUT, AND TO OBSERVE, ANY SUCH RESTRICTIONS.

THIS PRESS RELEASE IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE
UNITED STATES. THIS PRESS RELEASE IS NOT AN OFFER TO SELL SECURITIES OR THE
SOLICITATION OF ANY OFFER TO BUY SECURITIES, NOR SHALL THERE BE ANY OFFER OF
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SALE WOULD BE UNLAWFUL.

THE SECURITIES MENTIONED IN THIS PRESS RELEASE HAVE NOT BEEN AND WILL NOT BE
REGISTERED IN THE UNITED STATES UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES,
ABSENT REGISTRATION OR EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
THERE WILL BE NO PUBLIC OFFER OF THE SECURITIES IN THE UNITED STATES OR IN ANY
OTHER JURISDICTION.

COPIES OF THIS PRESS RELEASE ARE NOT BEING, AND MUST NOT BE, MAILED, OR
OTHERWISE FORWARDED, DISTRIBUTED OR SENT IN, INTO OR FROM THE UNITED STATES
OR ANY OTHER JURISDICTION IN WHICH SUCH MAILING WOULD BE ILLEGAL, OR TO
PUBLICATIONS WITH A GENERAL CIRCULATION IN THOSE JURISDICTIONS, AND PERSONS
RECEIVING THIS PRESS RELEASE (INCLUDING CUSTODIANS, NOMINEES AND TRUSTEES)
MUST NOT MAIL OR OTHERWISE FORWARD, DISTRIBUTE OR SEND IT IN, INTO OR FROM THE
UNITED STATES OR ANY OTHER JURISDICTION IN WHICH SUCH MAILING WOULD BE ILLEGAL
OR TO PUBLICATIONS WITH A GENERAL CIRCULATION IN THOSE JURISDICTIONS.

THIS PRESS RELEASE AND THE OFFERING WHEN MADE ARE ONLY ADDRESSED TO, AND
DIRECTED IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (THE “EEA”) AT PERSONS
WHO ARE “QUALIFIED INVESTORS” WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE
PROSPECTUS DIRECTIVE (“QUALIFIED INVESTORS”). FOR THESE PURPOSES, THE
EXPRESSION "PROSPECTUS DIRECTIVE" MEANS DIRECTIVE 2003/71/EC, AS AMENDED.
IN ADDITION, IN THE UNITED KINGDOM THIS PRESS RELEASE IS BEING DISTRIBUTED ONLY
TO, AND IS DIRECTED ONLY AT, QUALIFIED INVESTORS (I) WHO HAVE PROFESSIONAL
EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF
THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS
AMENDED (THE “ORDER”) AND QUALIFIED INVESTORS FALLING WITHIN ARTICLE 49(2)(A) TO
(D) OF THE ORDER, AND (II) TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED
(ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS
PRESS RELEASE MUST NOT BE ACTED ON OR RELIED ON (I) IN THE UNITED KINGDOM, BY
PERSONS WHO ARE NOT RELEVANT PERSONS, AND (II) IN ANY MEMBER STATE OF THE EEA
OTHER THAN THE UNITED KINGDOM, BY PERSONS WHO ARE NOT QUALIFIED INVESTORS.
ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS PRESS RELEASE RELATES IS
AVAILABLE ONLY TO (A) RELEVANT PERSONS IN THE UNITED KINGDOM AND WILL BE
ENGAGED IN ONLY WITH RELEVANT PERSONS IN THE UNITED KINGDOM AND (B) QUALIFIED
INVESTORS IN MEMBER STATES OF THE EEA (OTHER THAN THE UNITED KINGDOM).

NO “OFFER TO THE PUBLIC” (AS SUCH TERM IS DEFINED IN THE SOUTH AFRICAN COMPANIES
ACT, 2008 (THE “SA COMPANIES ACT")) IN SOUTH AFRICA IS BEING MADE IN CONNECTION
WITH THE ISSUE OF THE BONDS OR ANY SECURITIES AND ACCORDINGLY THIS PRESS
RELEASE DOES NOT, NOR DOES IT INTEND TO, CONSTITUTE A ‘‘REGISTERED PROSPECTUS’’,
AS CONTEMPLATED IN CHAPTER 4 OF THE SA COMPANIES ACT. ACCORDINGLY, NO
PROSPECTUS HAS BEEN FILED WITH THE SOUTH AFRICAN COMPANIES AND INTELLECTUAL
PROPERTY COMMISSION IN RESPECT OF THE ISSUE OR OFFERING OF THE BONDS. ANY
ISSUE OR OFFERING OF THE BONDS IN SOUTH AFRICA CONSTITUTES AN OFFER FOR THE
SUBSCRIPTION AND SALE OF THE BONDS IN SOUTH AFRICA ONLY TO SELECTED INVESTORS
WHO FALL WITHIN THE EXEMPTIONS SET OUT IN SECTIONS 96(1)(a) OR (b) OF THE SA
COMPANIES ACT AND, ACCORDINGLY, SUCH OFFER WOULD NOT BE CONSIDERED TO BE AN
“OFFER TO THE PUBLIC” FOR THE PURPOSES OF THE SA COMPANIES ACT.

ANY DECISION TO PURCHASE ANY OF THE BONDS SHOULD ONLY BE MADE ON THE BASIS OF
AN INDEPENDENT REVIEW BY A PROSPECTIVE INVESTOR OF THE ISSUER’S PUBLICLY
AVAILABLE INFORMATION. NEITHER THE JOINT GLOBAL COORDINATORS NOR ANY OF THEIR
RESPECTIVE AFFILIATES ACCEPT ANY LIABILITY ARISING FROM THE USE OF, OR MAKE ANY
REPRESENTATION AS TO THE ACCURACY OR COMPLETENESS OF, THIS PRESS RELEASE OR
THE ISSUER’S PUBLICLY AVAILABLE INFORMATION. THE INFORMATION CONTAINED IN THIS
PRESS RELEASE IS SUBJECT TO CHANGE IN ITS ENTIRETY WITHOUT NOTICE UP TO THE
SETTLEMENT DATE.

EACH PROSPECTIVE INVESTOR SHOULD PROCEED ON THE ASSUMPTION THAT IT MUST
BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE BONDS OR THE ORDINARY SHARES
TO BE ISSUED OR TRANSFERRED AND DELIVERED UPON CONVERSION OF THE BONDS AND
NOTIONALLY UNDERLYING THE BONDS (TOGETHER WITH THE BONDS, THE “SECURITIES”).
NONE OF THE ISSUER OR THE JOINT GLOBAL COORDINATORS MAKE ANY REPRESENTATION
AS TO (I) THE SUITABILITY OF THE SECURITIES FOR ANY PARTICULAR INVESTOR, (II) THE
APPROPRIATE ACCOUNTING TREATMENT AND POTENTIAL TAX CONSEQUENCES OF
INVESTING IN THE SECURITIES OR (III) THE FUTURE PERFORMANCE OF THE SECURITIES
EITHER IN ABSOLUTE TERMS OR RELATIVE TO COMPETING INVESTMENTS.

THE JOINT GLOBAL COORDINATORS ARE ACTING ON BEHALF OF THE ISSUER AND NO ONE
ELSE IN CONNECTION WITH THE BONDS AND WILL NOT BE RESPONSIBLE TO ANY OTHER
PERSON FOR PROVIDING THE PROTECTIONS AFFORDED TO CLIENTS OF THE JOINT GLOBAL
COORDINATORS OR FOR PROVIDING ADVICE IN RELATION TO THE SECURITIES.

EACH OF THE ISSUER, THE JOINT GLOBAL COORDINATORS AND THEIR RESPECTIVE
AFFILIATES EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO UPDATE, REVIEW
OR REVISE ANY STATEMENT CONTAINED IN THIS PRESS RELEASE WHETHER AS A RESULT OF
NEW INFORMATION, FUTURE DEVELOPMENTS OR OTHERWISE.

FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS ANNOUNCEMENT CONSTITUTE FORWARD LOOKING
STATEMENTS. THESE FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF
FORWARD-LOOKING TERMINOLOGY, INCLUDING THE TERMS “PLANS”, “PROJECTS”,
“ANTICIPATES”, “EXPECTS”, “INTENDS”, “MAY”, “WILL” OR “SHOULD” OR, IN EACH CASE, THEIR
NEGATIVE OR OTHER VARIATIONS OR COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF
PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. SUCH STATEMENTS INVOLVE
KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE
ACTUAL RESULTS, PERFORMANCE, OBJECTIVES OR ACHIEVEMENTS OF THE ISSUER, AS
WELL AS THE INDUSTRY IN WHICH IT OPERATES, TO BE MATERIALLY DIFFERENT FROM
FUTURE RESULTS, PERFORMANCE, OBJECTIVES OR ACHIEVEMENTS EXPRESSED OR
IMPLIED BY THESE FORWARD LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS
SPEAK ONLY AS OF THE DATE THEY ARE MADE. THE ISSUER UNDERTAKES NO OBLIGATION
TO UPDATE PUBLICLY OR TO RELEASE ANY REVISIONS TO THESE FORWARD LOOKING
STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF THIS
ANNOUNCEMENT.

Date: 08/03/2017 08:11:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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