[miningmx.com] – ANGLOGOLD Ashanti has abandoned plans to restructure into two separate companies following widespread shareholder resistance to a $2.1bn rights issues the firm said was a necessary precursor to the deal.
Shares in the company fell more than 12% on September 10 when it unveiled plans to float a UK-listed gold company consisting of its non-South African international assets and develop a diversified mining company from the rump of its local mines.
Notably Paulson & Co, which holds 6.6% of AngloGold, voiced its opposition to the size of the capital raising. AngloGold said that the South African Reserve Bank (SARB) had asked for the local company to be debt-free.
“The concept is good, but the execution, the way they’re doing it with this massive dilutive equity offering, it’s value-destructive,” John Paulson told Bloomberg News the following day. “I have absolutely no intention of voting this deal,’ he added.
Srinivasan Venkatakrishnan, CEO of AngloGold, said in an interview today that his firm has spoken with shareholders owning more than two-thirds of the company who voiced their opposition to the deal.
“The message from shareholders is that this [rights issue] is too much and they are not prepared to pay it,” said Venkatakrishnan by phone.
“It is a setback. We were thinking 10 years ahead, but it’s also not a do or die situation. We don’t necessarily need to separate the assets but we will fast-track some of the other things we have been doing,” he said.
This included either selling Obuasi, the Ghanaian gold mine which is currently on care and maintenance as its sections are restructured, or entering into a joint venture agreement with a partner, Venkatakrishnan said.
Joint ventures or sales of its Colombian gold projects was another option for the group which Venkatakrishnan said would focus on improving its cost profile, safety as well as new extraction technology for its South African mines.
Asked if AngloGold would ever return to its de-merger strategy, Venkatakrishan said: “If there’s one thing I’ve learned about life, it’s never say never. We would like to keep our options on the table”. He added that AngloGold would be a challenge to operate, partly because net debt, at $3.6bn, was “higher than we’d like it to be”.
Commenting on the balance sheet, Venkatakrishnan said: “There is no immediate short-term maturities so we can keep chipping away at the debt.
“It’s at a higher level than would like, especially taking the high interest charge through the books, but we will extract value from business to reduce debt levels”.
Analysts said last week that even without a de-merger, a $1bn recapitalisation of AngloGold’s balance sheet was a necessity – and one generally expected by shareholders – since AngloGold’s 2020 8.5% corporate bonds contribute towards total interest on all company debt of $250m a year.
