There’s hope for Merafe (JSE: MRF)

Eskom is looking to support the ferrochrome industry

For a long time now, there’s been incredible uncertainty around the ferrochrome industry and Merafe’s sustainability as a business. Smelters are energy pigs of note, with the company finding it impossible to operate without a sweetheart deal from Eskom on electricity tariffs.

After months of negotiations, Eskom and the government had indicated support for a special tariff of 62c per kWh. We aren’t exactly swimming in jobs in South Africa, so this is probably the correct practical decision, even though other industries may feel irritated that they don’t get a special price.

The tariff had remained subject to outstanding terms and conditions. After what I’m sure has been a stressful process for all involved, Eskom has confirmed the terms and conditions that would be applicable to this tariff. It sounds like Merafe is happy with them, so this is a huge positive step.

It isn’t quite across the line yet, as the wider ferrochrome industry needs to agree to the final terms. Ditto for NERSA, with regulatory approvals always creating a layer of risk for South African deals.

With a s189 process lurking in the background at Merafe (i.e. retrenchment of staff), the company has requested urgency in the regulatory process. Let’s hope that the targeted timeline of 30 days can be met.

What are your thoughts on this tariff?

Optasia has locked in significant funding (JSE: OPA)

Access to debt is important for any growth company

Optasia has announced a refinancing of its debt facilities. It’s a bit more exciting than that actually, as the new facility is also significantly larger.

The previous facility had limits of $120 million as a term loan and $105 million as a working capital facility. The new facility is higher on both counts, with a $180 million term loan and a $150 million working capital facility. That’s a total increase of $105 million.

The new facility has a tenor of three years, so this gives them reasonable balance sheet visibility.

RMB and Standard Bank acted as lead arrangers and underwriters. Nedbank and ABSA also participated in the facility. Talk about spreading the risk!

RMB is a related party to Optasia based on its shareholding relationship with FirstRand. RMB has contributed $35 million of the additional $105 million in debt.

Nibbles:

• Director dealings:
  • Here’s an interesting one that shows you the extent to which Des de Beer is focused on offshore exposure. He received shares in Resilient (JSE: RES) and sold them to the value of R15.6 million. In contrast, we regularly see him buying shares in related offshore structure Lighthouse Properties (JSE: LTE).
  • A director of Standard Bank (JSE: SBK) sold shares worth almost R7.3 million.
  • A director of Supermarket Income REIT (JSE: SRI) bought shares worth around R555k.

• RMB Holdings (JSE: RMH) announced that AttBid acquired additional shares in the company, taking its stake to 10.02%. That’s an increase of 0.2% since the 9.82% stake disclosed in the transaction circular. It therefore looks like the concert parties are up to roughly 42.8% as a combined stake.

• Here’s an interesting one: Stafford Masie has stepped down as the Chair of Africa Bitcoin Corporation (JSE: BAC). He will remain a director. Masie has been spearheading the company’s bitcoin strategy and he will now “dedicate full energy” to it. Norma Sephuma, currently the Lead Independent Director, has been appointed as the new Chair.

• ASP Isotopes (JSE: ISO) has scheduled a business update call for 13 April. Keep an eye out for the transcript.

• For those who enjoy keeping track of what happens in the fixed income space, Sasol (JSE: SOL) will be repurchasing almost $334 million worth of 2029 notes under the previously announced tender offer. Acceptances to the value of $416 million were received, so they are having to cap the offer. Essentially, this means that demand by debtholders to be paid out exceeded Sasol’s ability to do so.