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Public Investment Corporation concerned by Sibanye offer

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The Public Investment Corporation (PIC) is troubled by the drop-in Sibanye’s stock since the deal was announced in December 2017 as the company battled to cut debt.

Sunday 19, May 2019

(Bloomberg) --South Africa’s PIC, whose 30 per cent stake in Lonmin is enough to block the miner’s planned takeover by Sibanye Gold, is concerned that the value of the all-share deal has been eroded.

Africa’s biggest money manager is also struggling to value Sibanye’s gold operations after they were impacted by a five-month strike and the restructuring of its key mine.

The PIC held talks with Sibanye and will make a final decision on whether to back the takeover, the deal requires the backing of 75 per cent of Lonmin’s shareholders when they vote later this month.

Deon Botha, PIC’s Spokesman, said that the PIC does not comment on investments before a decision has been made.

In September 2018, the money manager supported the all-share deal, people familiar with the matter said at the time.

Lonmin agreed to an offer from rival platinum producer Sibanye after struggling through years of losses and being forced to seek debt-covenant waivers from lenders. Sibanye last month increased the share ratio it’s offering to Lonmin investors after metal prices rose, but the value of the deal remains lower than when it was first announced.

James Wellsted, Sibanye’s Spokesman, said that shareholders are going to vote on the current offer that is been posted in circulars and Sibanye will not be raising it, adding that the company has discussed its plans to cut debt and the profitability of its gold operations with the PIC.

While a rally in metal prices and a weaker rand saw Lonmin return to profit in the six months through March, Chief Executive Officer Ben Magara is still recommending the deal, saying his company would otherwise lack capital to invest.

Last week, South Africa’s antitrust court rejected a labour union’s bid to block Sibanye’s acquisition of Lonmin, saying its main concern related to the welfare of the platinum producer’s workforce.

TAGS : Public Investment Corporation, Sibanye Gold, Lonmin

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