Impala Platinum Plunges on $400 Million Bond Refinance

  • New 2022 notes will replace those due in February 2018
  • Conversion expected at 30%-35% above reference share price

Impala Platinum Holdings Ltd., the world’s second-largest producer of the precious metal, plunged in Johannesburg trading after saying it will refinance about $400 million of convertible bonds, which could dilute existing shareholders.

The existing bonds had an equity conversion price more than four times higher than yesterday’s closing price of 41.46 rand a share. The new bonds will convert to equity at a much lower level of 30 to 35 percent above the average price of the stock during the current offer, Johannesburg-based Impala said in a statement Thursday.

Impala tumbled as much as 18 percent, the most since 2008, before rebounding to trade 9.7 percent lower at 37.53 rand a share at 10:07 a.m. in Johannesburg. The miner expects “some period of volatility” in the shares while the new debt structure is digested by investors, spokesman Johan Theron said by phone.

The bond offer, which will raise money in both dollars and rand, will extend the debt’s maturity from 2018 to 2022, Impala said. The dollar debt will pay an interest rate of about 3.3 percent while the rand debt will pay about 6.4 percent.

The aim is to push out the bond’s maturity date, “thereby significantly enhancing Implats’ short-to-medium-term liquidity, in line with its strategy to maintain a strong financial position,” the company said.

Like other platinum-group metal miners, Impala is struggling with a metal price that has tumbled by 35 percent in the past four years and failed to rebound like other commodities in 2016. The company this year appointed a new chief executive officer, Nico Muller, who is tasked with turning around its biggest operations in Rustenburg, South Africa, after years of underperformance.

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