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ENRC to buy Kazakh coal producer from founders
The founders of Eurasian Natural Resources Corporation (ENRC), the FTSE-listed miner, are in for a windfall after the company said it plans to buy the rest of a Kazakh coal producer from them.
ENRC said it will pay $600m (£385m) in cash and take on $50m in debt for the remaining 75pc stake in Shubarkol Komir, after acquiring the first 25pc and a call option on the rest in February 2009.
Shubarkol is currently controlled by ENRC's founding shareholders Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev, the trio of Kazahz oligarchs who together have a roughly 44pc stake in ENRC.
The announcement comes less than a fortnight after ENRC completed a corporate governance review amid investor pressure for change. One ousted board member has described the miner as "more Soviet than City".
Analysts at Collins Stewart said the deal would "raise eyelids", commenting: "The related party nature of the Shubarkol transaction fails to provide some distraction from the well-publicised corporate governance issues."
The team at Troika said the market would "certainly be annoyed", but argued the move should be seen as the continuation of the acquisition process begun in 2009.
Felix Vulis, chief executive of ENRC, said the price was fair and the deal would secure a reliable and low-cost supply of coal. Shubarkol last year produced 6m tonnes of coal, around 5pc of Kazakhstan's total coal production.
"We secured the deal when the price of coal was $45 to $55 a tonne, today it is twice as much," he said.
ENRC was one of the biggest fallers among the London-listed miners, dropping 14½ to 625p.