AngloGold Ashanti Ltd. (ANG), the world’s third-largest gold producer, plans a $2.1 billion rights issue as it spins off operations outside South Africa into a new London-listed company.
The stock slumped the most in six years. Johannesburg-based AngloGold hired UBS AG (UBSN) and Goldman Sachs International to advise on the share sale, designed to repay debt, according to a statement today. The creation of the new company has been approved by South Africa’s central bank, AngloGold said.
“The South African regulatory authorities have been supportive in clearly understanding the strategic rationale of this proposed transaction, and also the benefit to be unlocked given our specific set of circumstances,” AngloGold Chief Executive Officer Srinivasan Venkatakrishnan said in the statement. “These two very distinct sets of assets will benefit from the more focused structure.”
The split comes after shareholders including billionaire John Paulson said the reorganization would boost the value of its stock. The hedge-fund investor has estimated that spinning off the South African mines from the rest of the company could boost the combined value of the stock by as much as 68 percent. AngloGold’s South African mines, among the world’s deepest, are constrained by power shortages.
AngloGold fell as much as 13 percent, the biggest intraday drop since October 2008, and was 9.9 percent lower at 152 rand as of 9:30 a.m. in Johannesburg.
International Operations
AngloGold, with 21 operations in 11 countries, said in July that it’s seeing its profits being eroded by costs from closing its Yatela mine in Mali and reorganizing operations in Ghana. The company is also trying to improve the quality of its portfolio after gold prices fell last year.
The gold producer has previously said it’s considered splitting its assets. In February 2011, former CEO Mark Cutifani said in an interview that a split was being debated to boost the value of the company’s shares.
South Africa’s government has been critical of companies such as Anglo American Plc that have moved their headquarters and main listings abroad, saying that investment in the country has been cut and jobs lost.
