Western Areas has announced the resignation of Brett Kebble as CEO of the company with effect from August 24, while also unveiling the details of its rights offer. Kebble has also resigned as CEO of fellow mining group JCI, but will remain on the JCI board as a non-executive director.
In a statement late on Tuesday, Western Areas said it plans to raise R639-million by way of a renounceable rights offer of 35,5-million Western Areas shares at a price of 1Â 800 cents per share.
A wholly owned subsidiary of fellow mining group JCI, called SPV, will underwrite the rights offer up to a maximum of R250-million, the company added. The underwriting agreement is subject to the conclusion of a loan agreement between JCI, SPV and Investec, in which Investec will arrange a loan facility totaling R460-million for SPV.
Announcing the resignations on Tuesday, Kebble stated: “There has been a great deal of speculation in recent weeks about my position as chief executive of JCI, Randgold & Exploration and Western Areas. I have been unable to comment until now because of the sensitivity of what I was trying to achieve but that process has now been finalised.
“The position is as follows: It became obvious to me that the lengthy delay in the commissioning of the South Deep Twin Shaft complex had severe consequences for Western Areas and the JCI Group. Apart from the strain the delays put on our relationship with our partner Placer Dome, the delay confronted JCI with major capital and cash flow challenges.
“To help resolve these issues, JCI has twice in the past year made loans to Western Areas which together totalled more than R600-million. As I write, the outstanding balance of these loans is R230-million. These financial demands on JCI came at a time when other companies in the group were involved in a number of bold empowerment initiatives, the fruits of which have yet to be realised.
It became clear to me that, in addition to the proposed R640-million rights issue for WAL [Western Areas Limited], JCI would have to be recapitalised. I have thus been involved in recapitalisation discussions with a number of financial institutions over the past several months.
“I have also agreed to the appointment of new chief executives for each of the three group companies, JCI, RG&E and WAL. I will remain a non-executive director of JCI and will encourage the nurturing of its empowerment portfolio and support the new leadership of the companies in the JCI Group in any way I can, in the interest of all stakeholders.
“I believe the appointment of additional directors and the strengthening of management within the group companies will ensure that latent shareholder value is unlocked in the months and years ahead. This process will be underpinned by the financial support of Investec bank and the commitment of all major shareholders who are supporting my decisions.
“I am looking forward to working with Peter Gray, the new chief executive of JCI and Randgold. Peter is a consummate professional manager and I have no doubt that he will be good for the company as will Chris Lamprecht, the new chief financial officer.
“Looking back over the past decade or so, I believe I can claim to have made some contribution to the sustainability of the South African gold mining industry. My belief — one that I share with my closest associates — in the need to create a compact between capital and labour laid the foundation for the continued existence of at least three major mining houses that would otherwise have met their demise a decade ago.
“However, after a period of deep introspection, and notwithstanding the rough and ready ethos that is characteristic of our industry, I believe that some of the bruising corporate and personal battles that have taken place on my watch, while unavoidable, might have been handled in a less confrontational way. I have therefore attempted in recent months to mend some fences. Separate announcements will follow in due course in this regard.
“It is also clear that the time frames required for some of the BEE initiatives I have championed in recent years have taken longer to realise than had been hoped. I have no regrets other than that the vision of stimulating economic growth and transformation through new order partnerships and alliances is taking longer to achieve than I originally anticipated.
“The new situation will also give me more time for my other endeavours including my interest in early learning development for disadvantaged children through my projects in the Cape and my interest in the arts. I may also take my first holiday in 14 years.”
Mafika Mkwanazi, chairperson of Western Areas, paid tribute to Kebble for the “mature and unselfish manner in which he has dealt with a very difficult period.
“He has at all times been completely open with his fellow directors and willing to accept their constructive criticism and advice,” said Mkwanazi.
“The manner in which he has worked ceaselessly over the past many months to secure funding for JCI and the group companies has earned my admiration and respect. He has done so in the face of a concerted campaign to undermine his position through a series of media leaks. While the gist of the leaks was correct in that a major restructuring of the executive was under way, nobody was aware that Brett was the driving force behind the initiative. He has served the shareholders well.”
Peter Gray, who has become chief executive of JCI after stints as head of Société Générale SA and of Tlotlisa Securities, said “JCI and Randgold are both companies with exciting assets and strong underlying value,” he said.
“Having been part of the recent fund-raising initiative for the group I am familiar
with both the challenges and the opportunities in the JCI Group.
“My initial priority will be to concentrate on the accounts so that we can get our results published quickly and end the suspension of the shares on the JSE.” – I-Net Bridge