In­jected with a new lease on life

Should the deal with Sibanye-still­wa­ter com­plete then we save the ma­jor­ity of jobs and keep the as­set suite in­tact

Financial Mail - - CORPORATE REPORT LONMIN -

In lit­tle more than two years as CFO of Lon­min, Bar­rie van der Merwe helped in­ject a healthy dose of re­al­ism about the prospects of the com­pany into dis­cus­sions, and as a re­sult he has been part of the big­gest deal of ca­reer.

There was an ac­knowl­edge­ment fol­low­ing the 2015 rights Is­sue that Lon­min could not mine it­self out of trou­ble, and that break­ing up and sell­ing the as­set base piece­meal be­cause of the re­luc­tance of fi­nan­cial in­sti­tu­tions and in­vestors to pour in any more money was less favourable than sell­ing the en­tire busi­ness to a sin­gle new owner.

Van der Merwe, who joined Lon­min in 2016, says the high­light of his ca­reer at the plat­inum miner was be­ing part of the team that ne­go­ti­ated a deal with the tough and canny ne­go­tia­tors at Sibanyestill­wa­ter to save most jobs and keep the Lon­min as­set suite in­tact – a trans­ac­tion in the best in­ter­ests of all the com­pany’s stake­hold­ers. It was his maiden merger and ac­qui­si­tion deal.

“There were also lots of at­tempts to re­fi­nance debt, but credit, to a large de­gree, runs on per­cep­tion. Per­cep­tions and sen­ti­ment, he says, dom­i­nated dis­cus­sion.

De­scrib­ing Lon­min as hav­ing the “most ex­hausted balance sheet of any plat­inum com­pany”, Van der Merwe says there was sim­ply no other op­tion af­ter the com­pany had con­sumed $2bn in the first decade of the new mil­len­nium on in­tro­duc­ing mech­a­ni­sa­tion at un­der­ground mines and then rolling back the strat­egy as it snapped up other as­sets on the East­ern Limb.

De­spite a num­ber of rights is­sues, Lon­min had its back firmly to the wall as the tragic events at Marikana un­folded in 2012 and dam­aged the com­pany’s rep­u­ta­tion, while a five-month strike in 2014 un­did any progress it had made op­er­a­tionally and once again placed re­newed pres­sure on the balance sheet.

Van der Merwe has worked on in­no­va­tive ways to re­alise cap­i­tal and cut costs, work­ing closely with CEO Ben Ma­gara.

Clos­ing the cor­po­rate of­fice in Jo­han­nes­burg and mov­ing it to Marikana was more about mak­ing a point.

The re­la­tion­ship with Ben was crit­i­cal, forg­ing a strong team at the head of a flat struc­ture with all op­er­a­tional heads re­port­ing di­rectly to both of them ev­ery Fri­day.

Bar­rie van der Merwe: Fo­cus on restor­ing the com­pany’s im­age and balance sheet

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