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
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