Western Areas gets a shot at Mali's Morila
ACQUISITION FINANCING
By AMANDA VERMEULEN
A SHORT-TERM loan from Western Areas via Barnato Exploration ( Barnex ) to
Should Randgold Resources default, Barnex can convert the loan into shares in Morila. Randgold, Western Areas and Barnex are part of the complex web of companies in the Kebble family mining empire.
Western Areas, which owns 87% of Barnex, may end up with "25%-plus" of Morila, says Western Areas MD John Brownrigg. According to the London Stock Exchange, where Randgold Resources is listed, this could constitute a Class One transaction, which requires permission from shareholders, as the loan value comprises almost half the market capitalisation of Randgold Resources in London.
But Randgold Resources shareholders were only informed about the loan in the company's quarterly bulletin published in January. Shareholders of Western Areas and Barnex first heard of the loan agreement when the December quarterlies were released earlier this month.
The boards of all three companies approved the loan.
If the loan is converted, Barnex and Western Areas shareholders would be required to vote, as the funding facility would then become an acquisition transaction of some size requiring the permission of shareholders.
Randgold Resources finance director David Ashworth said this week the company was confident it would be able to repay the loan, despite delays it had experienced in securing agreement from the Mali government regarding its proposed acquisition of a 20% interest in the mine.
He said, however, the conversion into equity would give Western Areas only about 20% of Morila - making it a Class Two transaction, which Ashworth said fell below the LSE threshold requiring shareholder approval.
Randgold Resources shareholders, among whom are the Kebble family, face the prospect of losing up to half their expected earnings from Morila in a few months, if Barnex acquires its shareholding and the Mali government finalises its recently announced plan to acquire 20% of Morila, half of which it will receive free.
Ashworth said the company had project finance of 85-million signed, and should be able to use that to repay the Western Areas/Barnex facility before the expiry of the loan.
Brownrigg said the loan was provided to get Morila off the ground as soon as possible "as we were going to put all the companies together anyway", referring to the now derailed plan to restructure the JCI group of companies under the Western Areas umbrella.
Analysts and interested parties claim that the lack of timeous disclosure about the loan may have prejudiced Randgold Resources shareholders and any potential buyer of the Morila project, as a significant portion of the asset base may be carved away in six weeks' time.
The loan details were not included in the various JCI restructuring circulars distributed to the shareholders of Western Areas and Barnex in December. Western Areas says signed-off financial information for the period during which the loan was made was not available at the time the circulars were drawn up.
Western Areas and its former deputy chairman Brett Kebble were at the centre of the recent debacle which implicated Kebble in various share dealing scandals under investigation by the Johannesburg Stock Exchange, Securities Regulation Panel and the Financial Services Board. Kebble, who was cleared by the Western Areas board of illegal conduct, has since resigned from the boards of several of the JCI companies.
His father, Roger Kebble, escaped the scandal virtually unscathed, receiving only a mild rebuke for his involvement as chairman of Durban Roodepoort Deep in the scandal, despite the company finding that he had contravened good corporate governance. |
