Anglo American has raised R44.1bn (about $2.5bn) from the sale of its remaining 19.9% stake in r platinum group metals (PGMs) group Valterra Platinum.
The cash injection, coupled with a R15.7bn special dividend declared by Valterra ahead of its demerger in February, will allow the mining giant to pay down its $10.8bn debt burden.
Anglo had held onto its 19.9% stake in the company in hopes of managing the unbundling’s effect on Valterra’s share price.
“It was always expected that the remaining 19.9% stake would be sold through a bookbuild process — it’s the quickest way of placing those shares in the market,” said Anchor capital resource analyst Robbie Proctor.
“More importantly, though, Anglo required the $2.5bn proceeds to degear its balance sheet — particularly following Peabody pulling out of the acquisition of Anglo’s steelmaking coal business and the recent Brazilian regulatory scrutiny of the group’s nickel sale to MMG,” Proctor told Business Day.
In a bid to fend off buyout offers from Australian mining behemoth BHP, Anglo CEO Duncan Wanblad announced a portfolio restructuring last year, which would focus the group solely on copper, iron ore and fertiliser.
In the 15 months since the announcement, Anglo’s radical restructuring has run into some expensive hiccups.
The group’s plans were dealt a major blow last month after Peabody Energy backed out of a $3.8bn deal to acquire its steelmaking coal assets, after a fire in March grounded operations at Moranbah, one of the key mines in the deal.
Additionally, Financial Times reported earlier in the week that Anglo’s plan to sell its nickel operations to Hong Kong-listed MMG for up to $500m had come under pressure when Brazil’s competition regulators opened an investigation into the mooted deal.
Added to this are up to $1bn in one-off expenses (the result of hefty taxes and transaction costs) associated with the sale of its steelmaking coal assets and the demerger of Valterra.
Fortunately for Anglo, a rebound in PGM prices, driven by SA’s dwindling mined supply and robust global demand for hybrid electric vehicles, has buoyed confidence in the newly independent Valterra.
The recent sale comes as shares in the PGM miner have surged nearly 40% in the three months since unbundling and taking up a secondary listing on the London Stock Exchange.
In a statement on Thursday, Anglo said it had sold 52.2-million Valterra shares at a price of R845 per share, reflecting an 8.5% discount to Valterra’s closing price on Wednesday.
“Valterra has made a strong start as a stand-alone company,” said Wanblad.
“We continue to have every confidence in its future as the world’s leading integrated value chain producer of PGMs. Valterra is perfectly positioned to benefit from the increasingly attractive structural market dynamics for PGMs,” he said.
“This placing marks further progress in our responsible separation process and a further step in our portfolio simplification to focus on our world-class positions in copper, premium iron ore and crop nutrients.”
The Valterra sale was concluded by means of a bookbuild through Merrill Lynch and Standard Bank.
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