An­glo Amer­i­can’s plat­inum as­sets de­bate

Finweek English Edition - - INSIDE - BY DAVID MCKAY ed­i­to­rial@finweek.co.za

There’s been some de­bate about An­glo Amer­i­can’s t i ming re­gard­ing the sale of its non­core plat­inum as­sets held in l i sted sub­sidiar y An­glo Amer­i­can Plat­inum (Am­plats) af­ter first f lag­ging end-2015 as an ap­pro­pri­ate dead­line.

Speak­ing at Am­plats’ full-year re­sults pre­sen­ta­tion in Cape Town ear­lier this month, CEO Chris Grif­fith ap­peared to have ad­justed the com­pany’s ini­tially con­ser­va­tive timeline say­ing that it would “have a feel” for the trade sales be­fore mid-year.

The as­sets up for sale are the re­cently re­str uc­tured shafts i n Rusten­burg (re­duced from five mines to three) and the Union sec­tion, as well as its stakes in joint ven­tures with At­latsa Re­sources (49%) and the Pan­dora joint ven­ture with Lon­min (49%). If an agree­ment can­not be reached on a sale price, the group has mooted a list­ing of the Rusten­burg as­sets through an un­bundling.

“A de­ci­sion on the exit mech­a­nism will be made in the first half of this year,” said Grif­fith. “In the sec­ond quar­ter, we will get a feel for the route we can take,” he said, ac­knowl­edg­ing that un­bundling the as­sets may take longer.

In any event, the data room was opened in De­cem­ber and in­ter­ested par­ties “are go­ing through their due dili­gences”, Grif­fith said. Sibanye Gold is a bid­der, while oth­ers who’d at f irst ex­pressed in­ter­est in the as­sets, are not. “We’re not go­ing to bid for any­thing,” Steve Phiri, CEO of Royal Bafo­keng Plat­inum, told Finweek on the side­lines of the Min­ing Ind­aba.

The tim­ing may have much to do with how Am­plats and its par­ent com­pany view the no­tion of fair value as well as its com­fort with its bal­ance sheet. Out­go­ing CFO Bongani Nqwababa said that there was plenty of head­room on the bal­ance sheet even though net debt at R14.6bn was R3.2bn higher.

Said Seten Naidoo, an an­a­lyst for Stan­dard Bank Group Se­cu­ri­ties: “We be­lieve Am­plats’ in­sis­tence on achiev­ing fair value for its as­sets may re­sult in the po­ten­tial sale of as­sets be­ing de­layed ma­te­ri­ally.”

Com­ments from Mark Cu­ti­fani, CEO of An­glo Amer­i­can, in­di­cate per­haps that isn’t the case. Speak­ing to Finweek, he said the group wasn’t in­tent on ex­tract­ing “the last dollar” from in­ter­ested bid­ders for as­sets.

“When we started the con­ver­sa­tion [about as­set sales] we had a tar­get of $3bn to $4bn. We’ve since se­cured the 50% sale of the $3bn Tar­mac [an ag­gre­gates busi­ness pro­vid­ing An­glo with a $1.5bn inf low], which we think is rea­son­able value.”

An­glo Amer­i­can’s net debt sit­u­a­tion is also a con­cern. The group’s year-end fig­ures, pub­lished last week, showed net debt was higher year on year and ris­ing. Even as­sum­ing the sale of Tar­mac for $1.5bn, net debt is ex­pected to peak at $13.5bn to $14bn.

“The bal­ance sheet will be the sin­gle big­gest fo­cus area for in­vestors from th­ese re­sults,” said Kieran Daly, an an­a­lyst for Mac­quarie Re­search. “If prices stay at cur­rent spot lev­els the net debt num­ber could be much higher.”

“We be­lieve Am­plats’ in­sis­tence on achiev­ing fair value for its as­sets may re­sult in the po­ten­tial sale of as­sets be­ing de­layed ma­te­ri­ally.”

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