Gold producer AngloGold Ashanti has announced plans to separate its South African assets from its international mining assets through London-listed NewCo, whilst contemplating a rights issue to raise $2.3 billion to fund the restructure and pay off debt.
Gold producer AngloGold Ashanti has announced plans to separate its South African assets from its international mining assets through London-listed NewCo, whilst contemplating a rights issue to raise $2.3 billion to fund the restructure and pay off debt.
The miner said it would partially demerge 35 per cent of NewCo to its shareholders, retaining a 65 per cent controlling interest.
The intention is that NewCo would hold AngloGold’s portfolio of gold production and exploration assets outside of South Africa, while AngloGold would continue to remain a South African-housed business.
“AngloGold believes that separation into separately-listed vehicles would allow independent management teams to execute distinct strategies in order for each entity to compete as effectively as possible in the context of the current industry and macro-economic environment,” AngloGold said in a statement.
It said the restructure would lower corporate costs of both entities while allowing both businesses to be better valued to reflect their individual investment cases and asset profiles, with independent balance sheets.
“It has become increasingly clear that the two distinct parts of our portfolio require different strategies, focused management and should be appropriately capitalised to realise their full potential and unlock further value for shareholders,” AngloGold chairman Sipho Pityana said.
“In South Africa, we will create a standard bearer for the mining industry with a structure allowing it to chart an exciting growth trajectory while allowing investors to properly value its high quality, cash generative portfolio.
“The NewCo portfolio is expected to have a premium listing in London and will receive the management focus, resources, financial flexibility and structure required to realise the full potential from its portfolio of growth asserts,” he said.
Regardless of whether the proposed restructuring occurs, as it is subject to shareholder approval, AngloGold said that it would contemplate a capital raising, through a rights issue, to raise about $2.3 billion to pay off its existing debt.
It said that it wanted to be debt-free by the time the restructuring plans were implemented.
The amount of shares to be issued or the issue price was not disclosed.
AngloGold said it would have the right to nominate two non-executive directors to NewCo’s board, and has proposed that its current board member Michael Kirkwood would move to chair NewCo.
AngloGold chief executive officer Srinivasan Venkatakrishnan said he would retain his role while initially serving as a non-executive director on the NewCo board.
“Our decisive response to a challenging gold price environment has seen us return to growth, aggressively reduce costs and improve free cash flow, all while posting a record safety performance,” Mr Venkatakrishnan said.
We believe that the structural change we have proposed will allow our shareholders to focus on, and support, the key assets of particular interest to them.
“Each business will have greater focus and separate identities which enable them to chart distinct, value-creating strategies going forward.”
The restructuring, if approved, will be executed in 2015.
AngloGold’s share price slumped 18.9 per cent to $3 per share at 11:20am.
