In a bold move to finance its expansion plans, Sibanye-Stillwater’s subsidiary, Stillwater Mining Company, has initiated a $500-million offering of senior, unsecured, guaranteed convertible bonds. Due in November 2028, these bonds are set to be converted into new and/or existing Sibanye ordinary shares.
This strategic financial maneuver aims to propel the group’s growth agenda. It includes funding the recent acquisition of precious metals refining company Reldan, as announced on November 9. Additionally, the initiative seeks to fortify the balance sheet, ensuring robust funding for ongoing operations and projects amidst fluctuating commodity prices.
CEO Neal Froneman emphasized the convertible bond offering as a prudent financing choice. He highlighted its cost-effectiveness in the current market and its role in advancing strategic growth objectives at an optimal time in the commodity cycle. This approach also aims to maintain balance sheet resilience and liquidity.
According to a report by Mining Weekly, Stillwater Mining Company plans to issue these convertible bonds around November 28. Sibanye and its subsidiaries, such as Sibanye Gold, Sibanye Rustenburg Platinum Mines, Kroondal Operations, Western Platinum, and Eastern Platinum, will jointly and severally guarantee payments related to the bonds.
The company’s board has approved a resolution to guarantee the debts of other group members under this offering. This guarantee represents direct and/or indirect financial assistance to related and inter-related companies within the Sibanye group.
The convertible bonds are expected to offer a yearly coupon rate between 4% and 4.5%, payable semi-annually in arrears on May 28 and November 28. The initial conversion price is likely to be set at a 30% to 35% premium above the volume-weighted average price of Sibanye’s shares on the JSE main board, based on trading from opening to closing on November 21.
The conversion of these bonds into ordinary shares will be contingent upon receiving certain approvals.
Following the announcement on November 21, Sibanye’s share price on the JSE experienced a significant drop of over 25%. This development reflects the market’s reaction to the new financial strategy and underscores the challenges and opportunities inherent in such large-scale corporate financing ventures.
