Anglo American ropes in debt-cutting specialist

ANGLO American has picked a debt-cutting specialist as the the embattled producer seeks to further reduce its borrowings.

It named Fortescue Metals Group’s Stephen Pearce its new finance director after he led the drive to slash debt at the world’s fourth-largest iron ore producer.

Pearce would join Anglo in January and take up his new post on April 24, the producer said on Friday in a statement. The 52-year-old has been chief financial officer of Fortescue since 2010 and was promoted to the board of the Australian company in June.

Anglo, seeking to reshape its business for an era of lower commodities prices and to cut net debt to less than $10 billion (R137bn), said in April its current finance director, Rene Medori, would retire next year after holding the position for 12 years.

Pearce is credited with driving Fortescue’s debt reduction programme, cutting the producer’s borrowings by $3.6bn since July last year.

London-based Anglo’s need to cut its debt pile had parallels to Fortescue’s position about three years ago, said Peter O’Connor, a Sydney-based analyst with Shaw and Partners.

Pearce was “a guy who can methodically and systemically work through an incredibly pressured process to reduce debt. He’s just done it,” he said.

Fortescue’s shares fell 3.9 percent on Friday in Sydney trading, trimming its advance this year to 165 percent.

Anglo slipped 0.5 percent in London. The stock has more than tripled this year and is the best performer in the benchmark FTSE 100 index.

Medori would continue to lead London-based Anglo’s asset divestment and restructuring processes until his retirement at the end of next year, the company said.

Pearce’s “strong relationships with the debt and equity capital markets have proven immensely valuable in his role at Fortescue, as has his work across complex cost and other efficiency performance programmes”, Anglo’s chief executive Mark Cutifani said.

Rising commodity prices have eased the pressure on Anglo’s debt-cutting programme. Once the company completes the $1.5n sale of its niobium and phosphates business, debt will drop to $10.3bn, putting it within touching distance of its goal to cut borrowings below $10bn by year-end.

The century-old company announced a plan in February to shrink its business by more than half to weather a crisis in raw-material prices.

It is planning to exit coal and iron ore to focus on more profitable diamond, platinum and copper mines.

The company has a target of $3bn to $4bn in asset sales this year.

Perth-based Fortescue, founded by billionaire Andrew Forrest, earlier confirmed the executive would step down at the end of this year and said it would study internal and external candidates to replace Pearce.

Former Rio Tinto Group executive Greg Lilleyman would be appointed as operations director in January, Fortescue said. – Bloomberg