R1bn Initial Payment and R270m Deferred Consideration Form Cornerstone of MRL Business Rescue

Led by Differential Capital, the deal preserves approximately 2,600 jobs, safeguards critical engineering capabilities and establishes a financially independent mining services platform that includes the Cementation operations in Africa and the Americas. The transaction forms the cornerstone of the company's business rescue plan following its entry into voluntary business rescue in November 2024.

The purchase consideration comprises an initial payment of R1bn on closing and a deferred portion of R270m payable 12 months thereafter.

"The completion of the Differential Transaction represents a defining milestone in MRL’s business rescue process and demonstrates what can be achieved when stakeholders work together around a common objective.

"From the outset, our focus has been on preserving viable businesses, protecting jobs and maximising value for creditors, while ensuring these specialist mining businesses could continue to contribute to South Africa's economy.

"This outcome would not have been possible without the constructive engagement of employees, creditors, funders, management, regulators and our transaction partners, all of whom recognised the importance of securing a sustainable future for these businesses,” said Josh Cunliffe from Metis Strategic Advisors, and one of the jointly appointed business rescue practitioners of MRL.

Strategic growth platform

The transaction comes at a time when investment activity in the global mining sector is strengthening, creating new opportunities for specialist mining contractors. For Differential Capital, a South African investment firm specialising in complex Special Situations transactions, the quality of the businesses and their prospects presented a compelling opportunity.

“What attracted us was not simply the investment opportunity, but the opportunity to preserve a world-class mining services platform with deep technical expertise and a highly skilled workforce. Businesses like Cementation and TNT play a critical role in supporting the mining sector, which remains one of the foundations of South Africa's economy.

"By retaining these capabilities, this transaction delivers meaningful value not only for our investors, but for employees, clients, suppliers and the broader mining ecosystem. It is an example of how long-term capital can be deployed to generate both commercial returns and positive economic and social outcomes,” said Mark Salmon, head of Special Situations Fund at Differential Capital.

Building new momentum

Throughout the process, Cementation, which was not itself in business rescue at any stage, retained its core operational capability, technical expertise and workforce, enabling the business to continue servicing clients and pursuing growth opportunities without interruption.

Today, the company is actively delivering projects across several jurisdictions, including a five-year underground mining development and construction contract at Tharisa Minerals in South Africa, work at Mopani Copper Mines in Zambia, numerous projects in the Americas and it has a robust project pipeline across international markets.

With the transaction now complete, Japie du Plessis assumes the role of chief executive officer of the new group, with Sibulele Songca appointed as chief financial officer.

Du Plessis said the completion of the transaction provides the certainty to focus on the next phase of growth: "This is much more than a change in ownership; it is the start of a new chapter for us.

"Throughout this process our employees continued to deliver, our clients continued to place their trust in us, and together we have preserved a business with exceptional technical capability. We are now focused on building on those foundations, growing the business and creating long-term value for our people, our clients and the mining industry.”

Business rescue continues

The BRPs, Metis Strategic Advisors and Differential Capital wish to acknowledge the significant contributions of the professional advisors who supported the successful conclusion of this transaction.

Webber Wentzel and Werksmans Attorneys acted as lead legal counsel to the BRPs and Differential Capital respectively – their expertise has been invaluable in navigating an extremely complex, multi-jurisdictional transaction.

Redinc Capital acted as arranger, debt sponsor and administrator to the Differential Consortium, raising approximately R1.2bn across four tranches of JSE-listed Preference Shares to provide listed-market funding for the transaction. Credeq Africa (Pty) Ltd, acting as underwriting management agent for Lombard Insurance Company Ltd, is also acknowledged for providing continued guarantee facilities to Cementation Africa through the transition.

The BRPs note that, notwithstanding the closing of the Differential Capital Transaction, the business-rescue process in respect of MRL remains ongoing.

On the closing of the transaction, the BRPs were able to settle all secured lender debt and all secured post-commencement finance (PCF) obligations. The BRPs do not, at this stage, expect to be able to make an unsecured creditor distribution until receipt of the deferred portion of the purchase consideration, but they will continue to monitor the position and will keep creditors informed as the business-rescue process continues.

"The mining industry is entering an exciting period of investment and growth, and we are well positioned to be part of that story. We have the people, the skills, the track record and now the platform to grow," du Plessis added.