The company went into business rescue in September 2017 and indicative bids were submitted in December
The purchase price for the asset is an aggregate amount of 500 million rand for the business, plus net working capital and amounts owing to Hernic, according to documents published by its business rescue practitioners.
The documents state that for illustrative purposes, based on management accounts up to December 31, the purchase price would amount to 1.74 billion rand.
Samancor is already South Africa’s largest ferro-chrome producer, following its acquisitions of ASA Metals
and the ferro-chrome producing arm of International Ferro Metals.
The strengthening rand has been supporting South African ores and alloys prices
for months, particularly ferro-chrome.
Metal Bulletin's charge chrome index cif Shanghai
was stable week on week at $1.03 per lb on Friday March 16, but up from $0.90 per lb at the start of the year.
Hernic warned when it went into business rescue that it was likely to breach certain conditions of the credit facility, triggering a requirement to repay the full facility by April 1, 2018.
Known claims against Hernic as of February 28, 2018 amounted to 3.63 billion rand, while its total assets amount to $3.55 billion, according to the documents.
Hernic consists of three chrome ore mines, four ferro-chrome smelters, an ore benefication plant, a platinum group metals concentrator plant, a slag recovery plant and surface tailings.
The asset produced 376,000 tonnes of ferro-chrome in the full year 2016.
The acquisition of Hernic by Samancor is subject to competition authority approval in South Africa.