JOHANNESBURG - Exxaro shares strengthened 4% on the JSE yesterday after the diversified mining company said it would sell 16 million shares in its New York-listed chemical business Tronox through a public offering.
Exxaro said it was selling the shares to focus on its core activities to provide funding for its future capital commitments, to repay debt and to return capital to its shareholders.
It said JPMorgan, Barclays and Morgan Stanley would act as joint book-running managers and underwriters for the offering.
“If today’s offering is completed, Exxaro’s ownership in Tronox would be reduced to approximately 29.4percent, assuming no exercise of the underwriters’ option to purchase additional shares,” the company said in a statement.
Exxaro, one of the largest black-empowerment diversified firms in South Africa, owns 51million shares which represents a 43percent stake in the US-based titanium-dioxide producer.
The company said it planned to grant the underwriters a 30-day option to purchase up to 2.4million shares at the public offering price, less underwriting discounts and commissions. It also said that the offering was subject to market and other conditions.
“There can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering,” Exxaro said.
Cape Town-based Cadiz Corporate Solutions director Peter Major described the proposed offering as good news for the company.
Major said while he had not yet seen the details, the transaction would correct value destroyed by directors since Exxaro listed in late 2006.
“The whole Tronox saga was not good at all for the South African mineral sands assets put into it. Exxaro had no control over Tronox, nor the assets they placed into it,” said Major.
“They don’t control Kumba either - but at least it is well managed by long-experienced South Africans and pays good dividends. One has to ask oneself - what if Exxaro had just kept and managed the assets it originally had and paid out dividends from excess cash flow, instead of all the value destructive wheeling and dealing we saw these past 10 years? So sad! Where are all those directors now?”
The company in March flagged that it was exploring alternatives for monetisation of its shareholding in Tronox through an efficient staged sales approach in the second half of this year.
The company reportedly did not rule out returning a portion of the proceeds from the sale of its R11.82billion stake in Tronox to shareholders.
Exxaro finance director Riaan Kopperschaar said at the time that the company would consider distributing part of the proceeds from the sale to shareholder.
“Yes, we might. Everything will be in the pot. We will have to look at the (capital expenditure) programme, what money will be going to the (black economic empowerment) transaction. At the end of the day, it is about capital allocation.”
Exxaro shares rose 4.99percent on the JSE yesterday to close at R131.85.
- BUSINESS REPORT