Harmony Gold Mining Company has successfully priced a US$500-million (R8.1-billion) guaranteed senior unsecured convertible bond due in 2031, marking the miner’s latest move to diversify its funding base while maintaining support for its capital programme.
According to Investopedia, a senior convertible bod is a hybrid debt security that can be exchanged for common stock and ranks above other unsecured or junior debts if the issuer goes bankrupt. This means that should the company be liquidated, the senior unsecured convertible bondholders will be repaid before junior debt and equity holders.
The bonds were priced at 100% of their principal amount and will carry a coupon of 1.5% per annum, payable semi-annually. The offering is expected to settle on or around September 29 2026.
Funding strategy
Harmony said the net proceeds from the offering will be used for general corporate purposes.
Chief executive Beyers Nel said the transaction forms part of the company’s broader balance sheet strategy.
“The offering reflects a proactive and disciplined approach to balance sheet management from a position of strength. It enhances funding efficiency, diversifies our capital sources and optimises our funding profile. Our capital programme remains fully funded, and we remain confident in Harmony’s ability to continue creating long-term value for shareholders,” Nel said.
The offering provides Harmony with access to relatively low-cost funding, with the 1.5% coupon significantly below the rates typically associated with conventional unsecured corporate debt.
Conversion terms
The bonds mature in September 2031 and can be converted into Harmony ordinary shares at an initial conversion price of R418.60 per share.
The conversion price represents a 40% premium to the R299 per share reference price determined through a concurrent share placement undertaken alongside the bond issue. The 40% conversion premium suggests management remains confident in the company’s growth prospects and was able to secure terms that limit potential shareholder dilution unless the share price appreciates substantially over the next five years.
Subject to adjustments, the bonds are convertible into approximately 19.4 million Harmony shares, equivalent to about 3% of the company’s current issued share capital.
Harmony said it retains flexibility to manage dilution. Upon conversion, the company may either deliver shares or use a net share settlement mechanism that allows part of the obligation to be settled in cash.
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Frankfurt listing planned
The miner also stated its intention to apply for the bonds to be admitted to trading on the Open Market (Freiverkehr) segment of the Frankfurt Stock Exchange within 30 days of the issue date.
The bonds are backed by guarantees from a range of Harmony subsidiaries, including operations in South Africa and Australia as well as entities linked to the company’s copper assets.
Citigroup and J.P. Morgan acted as joint global coordinators and joint bookrunners on the transaction, while Absa, FirstRand and Nedbank served as co-lead managers.
Hedge-related share placement
Alongside the bond issue, the bookrunners placed approximately 4.1 million existing Harmony shares on behalf of certain bond investors seeking to hedge their exposure through short-selling transactions.
The shares were placed at R299 each.
Harmony said it would not receive any proceeds from the share placement, which was conducted solely to facilitate hedging by investors participating in the convertible bond offering.
The 40% conversion premium suggests management remains confident in the company’s growth prospects and was able to secure terms that limit potential shareholder dilution unless the share price appreciates substantially over the next five years.
- Harmony Gold Mining Company has successfully priced a US$500-million (R8.1-billion) guaranteed senior unsecured convertible bond due in 2031, marking the miner’s latest move to diversify its funding base while maintaining support for its capital programme.
- According to Investopedia, a senior convertible bod is a hybrid debt security that can be exchanged for common stock and ranks above other unsecured or junior debts if the issuer goes bankrupt.
- This means that should the company be liquidated, the senior unsecured convertible bondholders will be repaid before junior debt and equity holders.
- The bonds were priced at 100% of their principal amount and will carry a coupon of 1.5% per annum, payable semi-annually.
- The offering is expected to settle on or around September 29 2026.
