Royal Bafokeng Platinum (RBPlat) has won a legal battle over its $70m (R840m) acquisition of the Maseve Mine near Rustenburg in 2018, with the high court ruling against a Wesizwe Platinum subsidiary that maintained it hadn’t given its consent for asset sales.
The court victory potentially removes a legal headache for RBPlat, which is the subject of a takeover bid by Impala Platinum. While the Maseve Mine is under care and maintenance, the miner has been upgrading its concentrators there, spending R428m on the project as of 2021, with the acquisition also allowing it to ramp up production at its neighbouring Styldrift mine.
The subsidiary, Africa Wide Mineral Prospecting and Exploration, had sought to overturn the transaction maintaining Toronto-listed Platinum Group Metals (PTM) sold part of the assets without its consent, violating its rights as a minority shareholder.
The South Gauteng High Court, however, ruled on Tuesday it had failed to make the case for this claim, further ordering the applicants to pay costs. They have until July 6 to appeal, PTM said in a statement.
Wesizwe, which had also expressed interest in acquiring the Maseve assets, did not immediately respond to emailed requests for comment on Friday.
PTM had held 82.9% of the issued shares in the struggling Maseve operation and Africa Wide held 17.1%, but the transaction had been split into two parts, prompting disagreement over whether it was a single sale, or if the earlier sale of some of the assets was a separate agreement.
The agreement had been structured in this way as Maseve had been desperate for cash, with lenders at the time threatening to pull their facilities. PTM hoped to get as much cash as possible upfront as it waited for a share transaction to be approved.
The argument over whether it was a separate agreement was crucial to the case, as Maseve had altered its memorandum of incorporation in 2017. The addition clause meant that, in the event of a third party seeking to buy all of its shares, this could be approved by 80% of shareholders, rather than requiring unanimous agreement.
Stage one of the transaction was the sale of certain of Maseve’s assets, including properties and its converter plant, for about $58m in cash, which was completed in early April 2018.
Stage two, being the sale of 100% of Maseve’s issued shares to RBPlat in exchange for $12m worth of RBPlat common shares, was completed about three weeks later. At the time, $70m was worth about R840m.
The court concluded that the earlier sale of assets agreement was an integral and indivisible part of the scheme as a whole, and there was nothing nefarious about the earlier transfer of the assets.
While Wesizwe also had expressed interest in the assets of Maseve, Maseve’s board had concluded in November 2017, while weighing both offers, that Wesizwe’s came with a high degree of uncertainty and conditionality, the court papers read.
The judgment said that, given this bidding war, an impression of “sour grapes” is created, and that there had been a “cynical disregard of the predicament of PTM as its fellow shareholder who had paid all the bills of Maseve on borrowed money.”
Maseve was incorporated in 2008 by Africa Wide and PTM, and their respective shareholding has been adjusted over time as a consequence of Africa Wide’s failure to make certain capital contributions to the joint venture, according to the court papers.
From November 2016, Maseve experienced serious financial difficulties, and PTM and PTM Canada had lent in excess of R4bn to Maseve in the form of shareholder loans.
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