Union pokes one in the eye of proposed mining takeover
Amcu threatens to interdict Sibanye-Stillwater's buyout of Lonmin because workers weren’t consulted
The Association of Mineworkers and Construction Union (Amcu) threatened to interdict Sibanye-Stillwater’s all-share bid for Lonmin to become a leading platinum group metal producer just as the deal goes before the competition authorities for clearance.
Sibanye launched the bid in mid-December, issuing an announcement on the Johannesburg Stock Exchange News Service as well as hosting a joint media conference with Lonmin, which has breached its temporarily suspended debt covenants, which would be reinstated if the deal was not concluded by February 2019.
The transaction, it was made clear at the time, needed Lonmin to repay debt and restructure its assets, shedding 12,500 of the 33,000 jobs at its mines and closing unprofitable shafts, something Lonmin CEO Ben Magara said had to be done regardless of the Sibanye transaction or not.While the transaction took another step forward on Friday, with Sibanye filing its submission to the competition authorities, there was a possible legal challenge to prevent the deal in what Amcu labelled a “secret sale”.
Amcu president Joseph Mathunjwa said neither its members at Lonmin nor the community had been consulted about the transaction and said Amcu would “urgently interdict” the process if it was not suspended.
“If Lonmin remains determined to sell Lonmin Platinum, alternative consortia of potential investors exist, which have the interests of the working class as well as the broader interest of all of the South African communities and must be negotiated with, both in the interests of Lonmin and its greater community of South African stakeholders,” he said.
“The full community of Lonmin’s shareholders have not been consulted about this sale and have been kept in the dark about a transaction that will have a major impact on the future role and value of the company,” he alleged.
Both companies recommitted themselves to the transaction, just weeks after Sibanye CEO Neal Froneman publicly warned Lonmin to focus on restoring cash flows from its operations and repay its debt or face Sibanye’s shareholders voting against the transaction.“Sibanye-Stillwater and Lonmin remain fully committed to the proposed transaction which they continue to expect to close in the second half of this year,” both companies said in a joint statement.
“The proposed transaction remains in the best interest of stakeholders and will create a leading mine-to-market producer of PGMs (platinum group metals) in South Africa,” Magara and Froneman said jointly.
The pressing need for Sibanye to take over Lonmin was underscored by the platinum’s annual results released in January, showing a post-tax loss for the year to end-September of $1.15-billion, compared with a $400-million loss the year before.
Lonmin recorded a $1-billion impairment of its mining assets during the year. After the 2017 impairment, the tangible net worth of Lonmin was $674-million, which was $426-million below the $1.1-billion net worth covenant threshold set by lenders.
Lonmin would have to pay $150-million if it breached the covenant. It had $235-million of cash and cash equivalents at the end of a year in which it had negative cash flow of $67-million, compared with an outflow of $31-million the year before. Lonmin needs the deal to happen to save more than 20,000 jobs after the reduction of 12,500 positions.