Johannesburg - AngloGold Ashanti, the world’s third-largest gold producer, plans a $2.1 billion (R23 billion) rights issue as it spins off operations outside South Africa into a new London-listed company.
AngloGold hired UBS and Goldman Sachs to advise on the share sale, which will raise capital to repay debt, the Johannesburg-based company said in a statement today.
The stock fell the most in a year.
“AngloGold Ashanti believes that separation into separately-listed vehicles would allow independent management teams to execute distinct strategies in order for each entity to compete as effectively as possible in the context of the current industry and macro-economic environment,” it said.
The split comes after shareholders including billionaire hedge-fund investor John Paulson said the reorganisation would boost the value of its stock.
The creation of a new company, with Charles Carter as chief executive officer-designate, has been approved by South Africa’s central bank, AngloGold said.
AngloGold fell as much as 9.3 percent and was 8.1 percent lower at 155 rand as of 9:07 am in Johannesburg.
Paulson has estimated that spinning off the South African mines, which accounted for about a third of the company’s $6.4 billion revenue in 2012, 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.
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 reorganising 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 chief executive 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 that have moved their headquarters and main listings abroad, saying that investment in the country has been cut and jobs lost. - Bloomberg News