Sector News

Exxaro begins Tronox sell-off

October 4, 2017
Energy & Chemical Value Chain

Diversified mining company Exxaro Resources on Tuesday commenced the sell-off of a portion of the shares it holds in US mineral sands mining company Tronox.

The JSE-listed Exxaro, headed by CEO Mxolisi Mgojo, is monetising its Tronox stake to focus on its core activities as well as provide funding for future capital commitments, repay debt and return capital to shareholders.

Exxaro’s asset portfolio includes coal operations and investments in iron-ore and wind energy.

In March, the company announced its intention to begin exiting its stake in Tronox, a New York Stock Exchange-listed mining and inorganic minerals and chemicals production and marketing company, which last year opened the R3.3-billion Fairbreeze mineral sands mine, in KwaZulu-Natal.

As the US company’s 26% South African black economic empowerment (BEE) partner, Exxaro at one stage had a 45% shareholding in Tronox, which also operates South Africa’s Namakwa mineral sands mine and benefits from a vertically integrated suite of mines, smelters and pigment plants.

Exxaro, which has unwound its former BEE transaction, has still to announce the financial effects of its replacement BEE transaction.

Its current ownership of 51-million Tronox Class B ordinary shares represents 42.7% of Tronox’s total outstanding voting shares.

The offering under way represents 31.3% of Exxaro’s Class B ordinary shares and 13.4% of Tronox’s total outstanding voting shares, assuming no exercise of the underwriters’ option to purchase additional shares.

As at March 7, Exxaro’s shares in Tronox were estimated to be worth $911-million and the offering now under way represents 31.3% of Exxaro’s Class B ordinary shares and 13.4% of Tronox’s total outstanding voting shares.

JP Morgan, Barclays and Morgan Stanley, which are acting as joint bookrunning managers and underwriters of the 16-million Class A ordinary Tronox shares under way, are expected to be granted a 30-day option to purchase up to 2.4-million additional shares at the public offering price, with Class B ordinary shares automatically converting into Class A ordinary shares on a one-for-one basis on the sale of the shares to the underwriters.

The remainder of its Tronox shares are expected to be sold in a staged process over time, subject to market conditions, the company said in a release to Creamer Media’s Mining Weekly Online.

If today’s offering is completed, Exxaro’s ownership in Tronox will be reduced to 29.4%, assuming no exercise of the underwriters’ option to purchase additional shares.

Source: Creamer Media’s Engineering News

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