15 08 13 Reuters – ENRC founders could sell some international assets
The founders of Kazakh
miner ENRC,
bidding to buy out minority investors and take the group private, said on
Wednesday they could sell some international assets, reversing a costly
expansion drive that took the group to Africa and Brazil.
Since its 2007
London listing, ENRC has spent more than $6 billion expanding beyond its Kazakh
core ferrochrome and iron ore operations into places such as Democratic Republic
of Congo. More than $5 billion of that was spent on assets still in development
that have generated little or no cash so far.
In an offer document published
on Wednesday by the bidders – Eurasian Resources, a group made up of ENRC's trio
of founders and the Kazakh government – they outlined plans to focus management
attention on the Kazakh core of the business.
"Eurasian Resources will
undertake a thorough strategic review of ENRC's international assets, and this
may lead to a reduction in capital allocated to such assets and the
identification of potential business disposal opportunities," the bidders said
in the document.
Given the involvement of the Kazakh government, ENRC's heavy
debt and the burden of financing the buyout, the bidders had been expected to
concentrate on assets at home, but they had not been expected to indicate
possible sales as early as the bid document.
ENRC, under pressure over its
poorly performing share price and growing debt, had already cut back its $11
billion list of potential projects last year.
Assets now expected to be put
on the block include their planned Brazilian iron ore operation, a Mozambique
coal project and a South African platinum holding – none of which are likely to
prove easy sales at a time when buyers are contemplating an uncertain demand
outlook.
Brazil could be the least complex sale, with industry advisers
already touting an option that could see privately owned iron ore developer
Zamin, which sold the BML asset to ENRC in a $1 billion deal, buying it back
less than three years later. Zamin has declined to comment on the
possibility.
ENRC's jewel outside Kazakhstan is its copper operation in
Democratic Republic of Congo – these mines, some acquired in a controversial
2010 deal after they were confiscated from a rival miner, have been the focus of
overseas spending and are not expected to be up for sale.
Should the bidders
succeed they will draw a line under ENRC's turbulent years on the London market.
They are widely expected to be successful after rival Kazakhmys,
ENRC's top shareholder, backed the offer last week.
Including Kazakhmys'
holding, the bidders now own or have support from shareholders representing more
than three-quarters of the total capital. ENRC's minority shareholders have
until Aug. 28 to accept the offer of $2.65 in cash plus 0.23 Kazakhmys shares
for each ENRC share.
At Wednesday's closing prices, that values ENRC at
around 228 pence, compared to ENRC's closing value of 219.3
pence.