London, England — 22 March 2013 – Eurasian Natural Resources Corporation (ENRC) “’ the London-listed metals and power company that has posted a surprise full-year loss “’ is in talks with its five main owners on the issue of selling new shares to expand its free float and raise cash.
The producer, which has operations in Kazakhstan and Africa, plans to raise the float to 25%, a new minimum for companies in the benchmark U.K. stock index, from 18.45% now, CEO Felix Vulis said in an interview with Bloomberg News.
“We have started to approach our five major shareholders,” he explained. “We are just at the beginning of the process so it’s very early to comment on whether they are in favour,” he added.
ENRC fell 1.9% 306.9 pence in London trading, the lowest level since January 8, after the comments by CFO Zaure Zaurbekova, who said the company might add US$1.5 billion in impairment charges.
FTSE International Limited is to raise the minimum free float for companies in the benchmark FTSE 100 index to 255 in 2014, after investor concerns that major shareholders of resource companies were dominating minorities. ENRC’s three founders each own 14.6% of the company, with Kazakhmys Plc holding another 26% and the Kazakh government 12%.
“Issuing new shares is a good option to raise funds, but it’s mainly for our commitment to stay as a FTSE 100 company,” said Zaurbekova.
The funds will help compensate for impairment charges and a surge in debt levels after a slump in the value of acquisitions. Debt expanded fivefold to US$5.14 billion in 2012, ENRC said.
The company reported a surprise net loss of US$804 million for 2012, after profit of US$1.97 billion a year earlier, because of the higher-than-anticipated write down of US $1.5 billion. ENRC also decided against paying a dividend, while sales slid 18% to US$6.32 billion, it revealed in a statement.
ENRC wrote down US $240 million from its Boss copper and cobalt mine in the Democratic Republic of Congo, and US$96 million from Chambishi, the Zambian copper and cobalt smelter bought in 2010.
The company “’ which produces iron ore, ferroalloys, aluminium and power in Kazakhstan and copper and cobalt in Africa “’ is seeking to boost copper output in Africa to 200,000t in next five years, Vulis said. At the same time it’s cutting planned capital spending to US$1.75 billion this year from US$2.3 billion in 2012.
Source: Bloomberg News. For more information, click here.