Anglo American Platinum announces the successful settlement of the notional vendor finance (NVF) by its community share scheme (Alchemy), resulting in the Lefa Le Rona Trust (LLRT), which is the umbrella trust on behalf of the regional development trusts (DTs), now holding unencumbered shares in Anglo American Platinum with a value of c.R2 billion at vesting. The settlement of the NVF and transfer of value to communities comes one year prior to the maturity of the Alchemy Scheme period (December 2011 to December 2021), due to Anglo American Platinum’s recent strong share price performance.
Natascha Viljoen, CEO of Anglo American Platinum says:
“I am delighted to announce that our community share scheme Alchemy, set up in 2011, has delivered on its objective of creating sustainable shared value to our host communities and specific communities from where our employees originate in the Eastern Cape, North West and Southern African Development Community (SADC) countries. The settlement will result in R2 billion of value transferring to these communities via regional development trusts. These trusts will focus on advancing broad-based community development including infrastructure, education and health developments, as well as improving livelihoods. Anglo American Platinum is playing a responsible role by catalysing development in our communities. Through our established governance structures, we will work with the DTs to ensure the careful deployment of this capital so that it can further advance our efforts to deliver shared value and build thriving communities.”
Background
In December 2011, Anglo American Platinum established a community empowerment and development scheme named Alchemy. The transaction was structured to provide equity ownership of Anglo American Platinum to the host communities around the mines and specific labour-sourcing communities, through development trusts. The LLRT is the umbrella trust through which the regional DTs hold their interest in the Company.
Transaction structure
At the time of the inception of Alchemy, the Company issued c.6.3 million shares at par value of 10 cents per share, which are held by LLRT, representing 2.33% of the total issued share capital.
Of the total dividends paid to the LLRT relating to their shareholding of 2.33%, 60% was used to service the NVF and the balance of 40% is retained by the LLRT. The dividends received by the LLRT to date amounted to c.R300 million which has been deployed to further the development objectives of the DTs.
The subscription for the shares was funded through the NVF mechanism, facilitated by the Company. The transaction structure provided for early settlement of the NVF when Anglo American Platinum’s volume weighted average price (VWAP) reached a trigger price.
The trigger event occurred on 27 July 2020 and will result in the Company repurchasing 4,889,680 shares from LLRT (not from the market) on 22 September 2020 at par value of 10 cents per share, to settle the NVF. The vesting results in an immaterial cash flow impact for the Company.
The LLRT will have 1,400,685 unencumbered Anglo American Platinum shares held by LLRT (with a vesting value of c.R2 billion at the date of the trigger event).
The shares held by LLRT are subject to restrictions until the end of the Alchemy Scheme period in December 2021 – i.e. shares cannot be transferred, sold or encumbered.
Post the Alchemy Scheme period in December 2021, 40% of the shares can be distributed to the DTs based on their proportional interest held and are entitled to monetise this investment. The remaining 60% of shares held by LLRT are subject to a twenty year lock-in period, to the end of December 2041.
Governance
The DTs are managed by Trustees, including transparently selected community trustees, independent trustees and company selected trustees. The DTs have been designed in consultation with locally-based working groups, and structures and governance are carefully customised to serve local community dynamics and development requirements.