Cynthia Carroll, CEO, Anglo American
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Anglo in $2.9bn AngloGold stock sell-off
David McKay
Posted: Mon, 01 Oct 2007

[miningmx.com] -- ANGLO American is to sell about half of its 41% stake in AngloGold Ashanti, equal to 61 million shares or $2.9bn (R19.8bn) assuming the gold company’s current share price of R326.20/share.

In addition, Anglo American said its remaining representatives would resign from AngloGold Ashanti’s board once its stake fell below 20%. The stake, which in fact drops to 19%, would be investment accounted by Anglo American once the sale was complete.

Crucially, Anglo American has agreed to a lock up of its remaining stake in AngloGold Ashanti until May 31, 2008 in a step intended to limit the risk of an overhang on AngloGold Ashanti's stock.

“Anglo American has advised AngloGold Ashanti that it currently supports its general strategy to enhance long term shareholder value,” Anglo American said in an announcement to the JSE.

The shares in AngloGold Ashanti would be sold in the form of ordinary shares and American Depository Receipts “pursuant to the registration of such securities under AngloGold Ashanti’s automatic shelf registration statement”.

The sale of the stake in AngloGold Ashanti represents an important step in the strategy of Cynthia Carroll, Anglo American CEO, who since March has presided over a management restructuring, the separate listings of former subsidiaries Mondi and Hulett Aluminium, and a R10bn empowerment deal involving another subsidiary, Anglo Platinum.

For Mark Cutifani, AngloGold Ashanti's newly appointed CEO, the sale of the stake is the first major corporate event he must manage. Cutifani, whose first official day as CEO is today, must also tackle an underground accident which occured at AngloGold Ashanti's Mponeng mine on September 28 (Friday) where four people died and five more were injured.

Goldman Sachs International is acting as the global coordinator for the offering and is joined by UBS Investment Bank as joint bookrunners for the share issue.

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Pete Major, a fund manager for Cadiz, said the sale of the AngloGold Ashanti shares was at a good time owing to the high gold price. But he was not convinced he would be a buyer. "I think I'd have a close look at the gold price.

"I've been on record for some time saying that the gold price is unsustainable at $750/oz and the dollar can't remain as weak as it has been."

Gareth Tredway at Vestact concurred. "Not a chance," he said when asked whether he'd be buyer of AngloGold stock at the moment. "They're going come under a bit of pressure."

"On the other side, it's very positive for Anglo American. This probably puts them in a net cash position and their gearing is very low compared to their competitors," Tredway said, adding that the firm could consider paying a dividend or making an acquisition as a result.