Anglo sale sends Exxaro shares into a tailspin

EXXARO Resources slumped close to 10percent on the JSE yesterday after the global diversified mining house Anglo American announced the R3billion sale of its 9.7percent stake in the company to reduce its debt.

Exxaro declined 9.99 percent to trade at R86.95 a share on the back of the unwinding of its empowerment structure which it unveiled last month.

Earlier this week Anglo American said it had agreed to sell about 35million ordinary shares in Exxaro representing a 9.7 percent interest in Exxaro.

The mining giant also said Exxaro’s empowerment partner Main Street 333 (MS333) Proprietary would sell 17million ordinary shares in Exxaro at R87 a share.

Anglo said the combined sale price represented a 10percent discount to the closing price on Wednesday.

It also said the placing shares represented about 14.7percent of Exxaro’s issued share capital.

“Following completion of the placing, Anglo American will no longer hold a direct equity interest in Exxaro.

“Anglo American intends to use the proceeds from the placing to reduce net change,” the company said.

Exxaro, which has grown into one of the largest black-controlled companies in the South African mining sector, last month unveiled its empowerment scheme that would result in a new BEE entity the direct and indirect shareholders of MS333 would be invited to participate in the new BEE transaction by reinvesting their shares received from the unwinding process.

The company said the stateowned Industrial Development Corporation (IDC), which currently owns 15 percent of MS333, had agreed to invest in the new empowerment scheme.

It said the new empowerment scheme would have two shareholders under a newly formed special purpose vehicle to house the MS333 Reinvestment and the IDC.

Previously the company said that following weakness in the first half of this year, commodity prices started to rebound in the second half due to production cuts, weather disruptions and supply reforms in various producer countries.

The company’s coal business continued to be resilient with a slight increase in production forecast despite the closure of Arnot.

Its cost-saving initiatives and capital optimisation with total coal capital expenditure forecast at R2.72 billion this year compared with R2.3bn last year.