Financial Services Correspodent
AFRIKANDER Lease's (Aflease's) share price dropped 11% yesterday as concern mounted that the gold miner is struggling to drum up the remaining R140m needed to pay Harmony for its R275m purchase of Kalgold.
Aflease has had a torrid past two months after it said in December it would mothball its core open-pit gold mining operations, a move that saw the share plummet more than 50% in two days.
Although the stock has recovered partly from December lows of 215c, the new concern pushed the stock down to 299c yesterday from its Friday close of 336c.
The market expected an announcement last week on how Aflease would raise the cash to pay Harmony before the February 28 2004 deadline. But no announcement has been made and asset manager Trinity Holdings, which holds 20% of Aflease, said the market seemed to be responding to this delay.
CEO Neal Froneman said Aflease would make a statement on this issue only "either late this week or early next week" as it was undecided about which method it would use to raise the R140m.
"There are about five options we are considering to raise this capital, and a rights issue is only one of those. We have had difficulty deciding on the optimum solution ," he said.
But Trinity Holdings' Quinton George said that as the deadline looms, Aflease has limited funding alternatives.
"Given the time pressure the options are fairly limited. I doubt the banks would be willing to lend more money to Aflease for this purchase, and it may not have time to find fresh investors," he said.
"The other option is a rights issue, but I would not think many investors would have the appetite to have their shares diluted for this deal," he said.
George said shareholders are likely to shy away from a rights issue for the remaining R140m as this would dilute their Aflease shares by a third a hefty price to pay for Kalgold.
But George said Aflease's future was not dependent on Kalgold as there were other options, such as opening up the open-pit basin again or waiting for its other major projects to come on stream.
Froneman was "absolutely convinced" Aflease would be able to get the funds necessary before the end of February deadline.
Jan 27 2004 07:50:52:000AM Rob Rose Business Day 1st Edition
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