ENRC stock dives after report
EURASIAN Natural Resources Corporation yesterday fell the most in a week in London trading following a report that chairman Mehmet Dalman may leave.
EURASIAN Natural Resources Corporation (ENRC), a producer of ferroalloys and iron ore in Kazakhstan, yesterday fell the most in a week in London trading following a report that chairman Mehmet Dalman may leave.
ENRC dropped as much as 7.7%, the biggest intraday fall since April 3. The stock has slumped 55% in a year, valuing the company at £3.3bn.
ENRC is trading about 80% below its value three years ago.
The stock was down 4% at 259.2p in early London trade yesterday.
Mr Dalman, appointed to the role last year, might quit over a disagreement with company executives on “issues of principle”, the Financial Times said, citing a person it did not identify. Mr Dalman was leading an internal probe into allegations of fraud in connection with ENRC’s assets in Kazakhstan.
“I am committed to my current role as chairman of ENRC and continue to have a constructive working relationship with all executive team members,” Mr Dalman said in an e-mailed statement.
The report comes three weeks after ENRC posted an unexpected full-year loss, writing down the value of assets by $1.5bn. Net debt rose to $5.1bn at the end of last year.
The London-based company began a governance review in 2011 after shareholders voted against rehiring some independent directors.
“ENRC have had longstanding corporate-governance issues that Mehmet Dalman was brought in to clean up, and given close to executive powers to do so,” Liberum Capital said in a note, placing the stock under review.
“If he did step down, it would be bad news for the company, with only marginal confidence in the market after the shares have plummeted in recent years. We expect the shares to underperform until clarification of the chairman’s permanence is made.”
ENRC, which operates in Kazakhstan and Africa, is in talks with its five main owners on selling new shares to expand its free float and raise cash. The company plans to raise the float, or the portion of shares available to the public, to 25% to meet new UK stock index rules. That compared with 18.4% now, CEO Felix Vulis said last month.
“We are just at the beginning of the process so it’s very early to comment” on whether the main owners are in favour of a share sale, Mr Vulis said.
The company’s three founding shareholders are Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev. Bloomberg