Northam Platinum launches $600m black empowerment deal

JOHANNESBURG (Reuters) – South African's Northam Platinum has agreed to a $600 million deal with black shareholders that will see it increase its black ownership to over a third, the mid-tier platinum producer said on Wednesday.

Northam's share price fell 2.25 percent in early trade to 35.00 rand.

South African companies are required to meet targets on black ownership and hiring under the government's policy of black economic empowerment, or "BEE", designed to address the inequalities of the apartheid system that ended in 1994.

Northam said it will issue over 112 million new shares, representing 22 percent of its issued share capital, to an entity owned by black investors. The investors will also buy existing shares worth 9.4 percent, the company said.

The investors will pay 41 rand a share, a 15 percent premium to Northam's closing price on Wednesday.

Unlike many BEE deals, where black investors acquire their stakes via loans, Northam's investors will fund their deal by issuing preference shares for cash to two of Northam's own shareholders, the Public Investment Corporation and Coronation Fund Managers.

The deal, worth 6.6 billion rand ($600 million), will see Northam get a cash injection of 4.6 billion rand.

It will also bring its total black ownership to 35.4 percent, exceeding the government's minimum requirement of 26 percent for mining companies.

The agreement includes a ten year "lock-up period" meaning the black investors will retain their stake for at least a decade.

The black investors include community trusts and a group led by KB Mosehla, the chief executive of black investment company Mosomo Investment Holdings.

(1 US dollar = 11.0322 South African rand)