MIMOSA’S indigenous partners are set to pick up the US$57 million bill incurred by the Reserve Bank of Zimbabwe (RBZ), according to documents obtained on Friday.
REPORT BY NDAMU SANDU
RBZ owed Mimosa US$57 million and a host of other miners as well as organisations after raiding Foreign Currency Accounts to meet the country’s critical needs prior to the use of multi-currencies in 2009.
On Friday, Mimosa — a joint venture between Implats and Acquarius — and indigenous partners signed agreements that would allow indigenous partners to acquire 51% of the platinum producer in a transaction valued at US$550 million.
The move to sell the shareholding to locals ensured that the platinum producer complied with the Indigenisation Act.
The Mimosa transaction would result in the National Indigenisation and Economic Empowerment Fund taking up a 31% stake in the platinum producer, Zvishavane Community Share Ownership Trust (10%) and Mimosa Employees Share Ownership Trust (10%) in a purchase price of US$493 million.
After factoring in the RBZ debt, the transaction would cost US$550 million.
According to documents obtained on Friday, the agreed valuation of Mimosa by the NIEEF, Implats and Acquarius was US$1,148 billion. The value of the transaction, before taking into account the resource value, was US$585 million. The indigenisation discount was US$93 million, leaving the transaction at US$493 million.
The buying of the 51% would be financed through forfeiting of dividends by the indigenous shareholders. Under a notional vendor financing, Mimosa would allow the indigenous partners to buy shares without paying for them upfront with payment made through deducting future dividends over a specific period of time.
Information obtained from documents at hand showed that Mimosa has been getting a net profit after tax per annum of US$120 million since 2010.
Sources said the indigenous partners have committed to use 90% of the dividends to pay for the shares.
According to the breakdown of the transaction, the deal will see indigenous entities receiving 10% of the 51% share of their dividend declared by the platinum producer during the tenor of the notional vendor financing.
“Assuming a 50% dividend payout ratio per year on maintainable profits of US$100 million, this will result in indigenous entities receiving annual cashflows of approximately US$2,5 million with significant potential for growth,” the documents said.
It said the transaction achieves the raising of acquisition finance of US$550 million through the notional vendor financing structure under difficult global economic conditions in capital markets.
A representative of the Mimosa foreign shareholders Gerhard Potgieter, said the transaction was the biggest value indigenisation agreement signed to date in the history of the country.
Critics of the indigenisation plan say it is an election gimmick that hinders the flow of foreign direct investment into the country.
Saviour Kasukuwere, the man behind the crusade said he was merely implementing the law that would allow indigenous Zimbabweans to have a slice of the national cake.
‘Zim needs own platinum refinery’
Mines and Mining Development permanent secretary Prince Mupazviriho said the parties should go beyond the agreement on share transfers and urged the shareholders to ensure that there is refinery in the country.
“We want to get to a stage where we have got platinum refinery in the country. In 2013 we must frantically work to ensure that we have achieved that,” Mupazviriho said.