Sibanye takes massive hit in UK court dispute
Sibanye-Stillwater may be liable for as much as $1.2bn (about R21bn) in compensation to a UK private equity firm after a court ruling that threatens to worsen the strain on a company already reeling from tumbling platinum group metal (PGM) prices, reports Business Day.
It says the judgment ends the first leg of the dispute between Sibanye and UK-based Appian Capital Advisory, with the second leg set for next year.
The dispute arose in 2022 when Sibanye – currently valued at just over R54bn on the JSE - walked away from a deal to buy the private equity firm’s shares in Atlantic Nickel and Mineração Vale Verde, the respective owners of the Santa Rita nickel and Serrote copper mines in Brazil.
At the time Sibanye, SA’s largest employer in the private sector, cited a ‘geotechnical incident’ at Santa Rita, which it deemed significant enough to undermine the commercial merits of the deal and justify terminating the agreement.
Appian rejected Sibanye’s assessment that a ‘material adverse change’ clause had been triggered, arguing a failure of part of the wall of the open-cast mine was minor, and took the matter to court.
The UK court found Sibanye liable for damages, which will be quantified at a trial scheduled for next year.
The ruling could not come at a worse time for Sibanye CEO Neal Froneman, says Business Day.
The company is grappling with a plunge in the prices of PGMs - the main reason for it reporting a R7bn loss in the first half of 2024 and a R37bn loss for all of 2023.
Sibanye shares slumped yesterday in reaction to the latest news, shedding more than 8% to R17.61 – a huge change of fortunes for the stock that fetched nearly R200 just two years ago.
The loss in value over the years mirrors an industrywide decline that has seen larger rival Anglo American Platinum removed from the JSE’s blue-chip top 40 index.
The potential $1.2bn compensation dwarfs the R6.6bn in adjusted earnings before interest, tax, depreciation and amortisation, or core profit, that Sibanye recorded in the six months ended June.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
