ZIMPLATS’ indigenous partners will settle government’s US$153 million outstanding debt to the platinum producer under a transaction unveiled on Friday.
BY OUR STAFF
The company last week signed the empowerment transaction with the government valued at US$971 million in which locals would have 51% in the white metal producer.
The transaction had been valued at US$818 million but shot up to US$971 million after factoring in government’s debt.
A 2006 agreement between Zimplats and the government stated that instead of paying US$153 million cash for land rights, government would give Zimplats credits against indigenisation.
Zimplats would then facilitate the transaction by providing vendor financing to the indigenous entities at an interest rate of 10% per annum under the new transaction.
Vendor financing would be repayable from 85% of the dividends declared by Zimplats on the indigenisation shares.
The new shareholding of Zimplats will see Impala Platinum owning 49%, the National Indigenisation and Economic Empowerment Fund (NIEEF) holding 31%, Zimplats Employee Share Ownership Trust 10% and Community Share Ownership Trust 10%.
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NIEEF will have to pay US$590 million while the Community Share Ownership Trust and Employee Share Ownership Trust’s share of the purchase price is US$190 million each.
The transaction will see indigenous entities receiving 15% of 51% of dividends declared by Zimplats.
“Assuming a 100% dividend payout on free cash-flows over the next 10 years, this will result in indigenous entities receiving an estimated US$164 million in cash-flows,” said an overview done by the transaction’s financial advisors, Brainworks Capital. “Zimplats has sustainably generated average net profit per annum in excess of US$100 million per year since 2010 and this performance is expected to be sustained going forward.”
An overview of the transaction calculated by Brainworks Capital shows that the value of Zimplats on an asset valuation basis is about US$1,7 billion.
Speaking at the signing ceremony, Implats chief executive officer, Terence Goodlace said he was pleased that after some two years of hard work and diligence, an acceptable solution had been reached. “Through broad-based empowerment, we believe that the country would be able to broaden participation by locals in the resource sector, spread wealth, and expand growth opportunities to propel the country’s economy to higher levels,” said Goodlace.
The government has been using empowerment transactions to settle debts owed to mining firms.
In the Mimosa transaction unveiled last month, indigenous partners were set to pick up the US$57 million bill incurred by the Reserve Bank of Zimbabwe.
