Stillwater mine. Picture: SUPPLIED
Stillwater mine. Picture: SUPPLIED

In a massively oversubscribed rights offer, Sibanye Gold secured the first tranche of money it needs to repay a bridging loan to buy Stillwater Mining for $2.2bn cash.

bridging loan arranged by Sibanye to buy North American palladium and platinum miner Stillwater Mining

Sibanye arranged a $2.65bn bridging loan from a consortium of banks to buy the North American palladium and platinum miner, as well as to buy back a bond in the Colorado-based company.

In the first of three capital-raising exercises, Sibanye will secure $1bn in the rights offer, a further $1bn in a bond issue and the balance in a process to be decided later in 2017.

Sibanye was undecided about the size of the rights offer, initially pegging it at between $750m and $1bn when it unveiled the Stillwater deal last December before raising the offering to $1.3bn. It finally settled on $1bn.

The fully underwritten offering of nine shares for every seven was five times oversubscribed. The offer represented a 60% discount to Sibanye’s closing price the day before it was announced and a 62% discount to the 30-day volume-weighted average price. Sibanye described the rights offer to raise more than R13bn — more than half its R22.4bn market capitalisation — as the "largest ever rights issue in SA to finance an acquisition" and the third largest after the rights issues by AngloGold Ashanti and Anglo American Platinum to cut their debt.

Sibanye’s share price has risen 11% since the beginning of June, pulling back about 2.29% to close at R16.63 on Monday in line with a similar fall in AngloGold Ashanti.

S&P Global Ratings has assigned Sibanye Gold a preliminary B+ credit rating for its pending $1bn bond issue and gave it a positive outlook as the company advanced its strategy to become a leading global producer of platinum group metals. 

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