Key points
- The bonds carry a 1.5% annual coupon paid semi-annually, with the first payment due March 29, 2027, and redemption around Sept. 29, 2031.
- The initial conversion price of R418.60 represents a 40% premium to the placement price in a concurrent offering of existing shares.
- The bonds convert into 19.4 million ordinary shares, about 3% of Harmony’s current issued share capital, with Citigroup and JPMorgan as joint global coordinators.
Harmony Gold Mining Company has priced a $500 million offering of guaranteed senior unsecured convertible bonds due 2031, a move CEO Beyers Nel says strengthens the miner’s balance sheet from a position of strength rather than need.
The JSE-listed gold and copper producer announced the launch on Monday, Sept. 21, and reported the pricing the following day in a stock exchange news service statement. According to the company, net proceeds will go toward general corporate purposes.
“The offering reflects a proactive and disciplined approach to balance sheet management from a position of strength,” Nel said.
It enhances funding efficiency, diversifies capital sources and optimizes the group’s funding profile, he added, while the capital program remains fully funded.
Nel is scheduled to present at Mining Forum Americas on Sept. 28, where he will discuss the company’s strategy and progress across its gold and copper portfolio.
Terms of the bonds
Each bond will be issued at 100% of its $200,000 principal amount. Unless redeemed, converted or repurchased and canceled earlier, the bonds will be repaid at par on or around Sept. 29, 2031.
The coupon is 1.5% a year, paid semi-annually in arrears in equal installments on March 29 and Sept. 29, starting March 29, 2027.
That is a low cost of capital for a mining company, reflecting both strong demand for gold exposure and the equity upside embedded in the conversion feature.
The initial conversion price is R418.60, a 40% premium to the reference share price set in a concurrent offering of existing shares.
Moreover, the conversion price will be subject to customary market adjustments, including dividend protection provisions. In total, the bonds convert into 19.4 million ordinary shares, roughly 3% of Harmony’s current issued share capital.
Guarantors and bookrunners
A long list of Harmony subsidiaries will guarantee payments on the bonds. These include Harmony Gold (Australia), African Rainbow Minerals Gold, Avgold, Chemwes, Golden Core Trade and Invest, Freegold, Randfontein Estates, Harmony Copper and Harmony Moab Khotsong Operations.
In addition, the copper businesses acquired through the MAC Copper deal, including Cobar Management, Metals Acquisition (Australia), and Eva Copper Mine, are also guarantors.
Citigroup and JPMorgan acted as joint global coordinators and joint bookrunners. Meanwhile, Absa, FirstRand and Nedbank served as co-lead managers, giving the deal both international and South African distribution.
Consequently, the transaction gives Harmony cheap, long-dated capital at a time when gold prices remain elevated and the company is integrating a growing copper portfolio.
Investors, in turn, get a modest coupon plus the option to convert into equity if the share price rises well above current levels.
