Finance & Banking

First-of-a-kind funding structure for ground-breaking Northam deal

CDH advised One Capital Advisory, as corporate advisor and bookrunner, and a consortium of black investors, in a R6.5 billion landmark black economic empowerment transaction. Our firm also advised in the capital markets leg of the transaction involving a capital raising for Northam Platinum Limited, the third largest Platinum producer in South Africa by market capitalisation and world's fourth largest platinum producers.

CDH advised One Capital Advisory, as corporate advisor and bookrunner, and a consortium of black investors, in a R6.5 billion landmark black economic empowerment transaction. Our firm also advised in the capital markets leg of the transaction involving a capital raising for Northam Platinum Limited, the third largest Platinum producer in South Africa by market capitalisation and world's fourth largest platinum producers.

Banzi Malinga, Director in our Corporate and Commercial practice, was lead legal advisor to the BEE consortia. Lilia Franca, also a Director in the Corporate and Commercial practice, was lead legal advisor to the Bookrunner. The two teams worked on the transaction on a "Chinese Wall" basis.

Owing to the complex nature of the transaction and the fact that the transaction encompassed a newly listed instrument, our Corporate/M&A team worked closely with the firm's Finance and Banking practice and Tax and Exchange Control team in order to structure the preference shares and the transaction as a whole in a manner which would satisfy the needs of the competing stakeholders. We also partnered closely foreign lawyers in order to ensure that the capital raising by the company, which was extend to qualifying foreign shareholders, did not infringe EU and US securities laws.

The transaction was nominated for Deal of the Year by DealMakers for the innovative and never before seen way in which the funding of the transaction was structured. The deal involved a secondary public offering of preference shares in a newly-listed SPV to existing Northam shareholders through a rights offer process.

The transaction locks in higher black ownership than legally required and thereby safeguards the company from non-compliance in the event of a dilution of black shareholders through future acquisitions and equity capital raisings for at least a decade. The deal also provides Northam with a net cash injection of R4 billion to fund its growth plans. 

In a separate transaction, we advised Northam Platinum Limited, listed on the JSE and the third largest Platinum producer in South Africa by market capitalisation and one of the world's largest platinum producers in its R450 million acquisition of the Everest Platinum Mine from Aquarius Platinum (South Africa) (Pty) Ltd.

This second transaction provides an excellent platform for Northam to develop its existing ore body on a neighbouring property thereby adding significant shareholder value by unlocking a resource of circa 60-million PGM ounces in a capital-efficient manner. This transaction was particularly well received by the market and resulted in significant shareholder value and an uplift in the share price.