Sibanye’s shares fall after nil-paid letters begin to trade

Sibanye Gold’s share price fell as much as 35% to a low of R18.39 on Wednesday after the nil-paid letters associated with its rights issue started trading.

Sibanye shareholders received nine nil-paid letters for every seven Sibanye shares held.

At about R19.60 per Sibanye share and R8.32 per-nil paid letters, Sibanye shareholders were effectively 7% richer on Wednesday. At Tuesday’s closing price of R28.26, seven Sibanye shares were worth R197.82. On Wednesday seven Sibanye shares plus nine nil-paid letters were worth R212.08.

The nil-paid letters traded in a range between R10 and low of R7.80. At 11:20am, the nil-paid letters were trading at R8.32, by which time 2.51-million had traded for a total value of R20.45m.

Each Sibanye nil-paid letter gives the holder the right to buy a new Sibanye share at R11.28 each.

The mining group unbundled from Gold Fields is issuing more than 1-billion new shares to raise nearly R13.5bn to partly fund its $2.2bn acquisition of US platinum miner Stillwater, meaning the R18bn market capitalisation South African mining group is acquiring a US group worth about R30bn.

It is important for Sibanye shareholders to either sell their nil-paid letters or inform their stockbrokers that they intend to subscribe for their rights offer shares.

Any rights offer shares not subscribed for would go to underwriters Citigroup, HSBC, JP Morgan and Rand Merchant Bank.