EURASIAN Natural Resources Corporation plans to buy the 75 per cent stake it doesn’t already own in the thermal coal producer Shubarkol from ENRC’s founding shareholders for $600m (£384m).
The news comes less than two weeks after ENRC completed its three month corporate governance review of the board’s directors and management following calls from investors for reform.
The FTSE 100 miner said it will exercise a call option to buy the shareholding in Shubarkol controlled by ENRC’s three Kazakh oligarch shareholders, Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev, who together hold about a 44 per cent in the ENRC.
It first acquired a 25 per cent stake in Shubarkol for $200m in cash in February 2009, also agreeing a call option on the outstanding stock.
Felix Vulis, restored as ENRC’s chief executive following the governance review, said the decision would help secure “the supply of relatively high quality and low cost thermal coal” and will raise ENRC’s coal production capacity in Kazakhstan to more than 25m tonnes a year.
Shares, however, slipped to 2.3 per cent to 625p yesterday.
Analysts at Collins Stewart said the proposed related party transaction “will raise eyelids”, adding that it “fails to provide some distraction from the well publicised corporate governance issues at the company”.
The acquisition will require approval from independent shareholders at a meeting being held on 7 November. Credit Suisse advised ENRC and Lazard advised the independent non-executive directors.