Anglo American Appoints Fortescue's Stephen Pearce as CFO

By Alex MacDonald 

Anglo American PLC on Friday named a new chief financial officer with a reputation for cutting debt amid what the company calls a "radical" restructuring of its operations and workforce.

Anglo American's hefty debt burden raised investor concerns earlier this year, when commodity prices slumped to multiyear lows, prompting the cost of insuring Anglo American's debt against default to surge above its U.K.-listed peers.

The U.K.'s fifth-largest listed mining company by market value appointed Stephen Pearce, currently CFO of Australian iron ore producer Fortescue Metals Group Ltd., to replace current CFO René Médori, who announced earlier this year his intention to retire in 2017.

Mr. Pearce, 52, faces the challenge of trying to transform one of the world's most diversified miners--which digs for minerals, including South African iron ore, Colombian coal and Chilean copper--into a leaner operation focused on copper, diamonds and platinum.

The storied 99-year-old company, founded in South Africa by Ernest Oppenheimer, wants to sell $3 billion to $4 billion worth of assets this year to help reduce its net debt to less than $10 billion by year-end from $12.9 billion last year. This includes hiving off more than half its mining businesses in the near-term, which accounted for about one third of its 2015 underlying earnings, excluding one-off items such as accounting write-downs.

By midmorning in London, Anglo's shares were up 0.4% at 924.1 pence a share.

Mr. Pearce joined Fortescue as CFO in 2010 and played a major role in steering the world's fourth-largest exporter of the steelmaking commodity through a period of major growth and then pain when iron ore prices slumped.

Fortescue borrowed heavily to build a vast network of mining pits, rail lines and port infrastructure in Australia's Pilbara region in a decadelong quest to break the dominance of Vale SA, Rio Tinto PLC and BHP Billiton Ltd. in iron-ore mining.

However, a slump in iron ore prices resulted in a brush with lenders in 2012 just as the company was ramping up production. Mr. Pearce helped shift the company's focus toward slashing costs and cutting debt, reducing the amount it owed to $8.4 billion by December-end from a peak of around $13 billion in 2013. He also refinanced all debt with the first payment due in 2019 at the earliest.

Mr. Pearce will join Anglo on Jan. 30 but won't become Anglo's CFO and executive board director until after the company's annual general meeting on April 24, when Mr. Médori is set to retire.

Mr. Pearce will earn a salary of GBP775,000 ($1.0 million) plus a bonus contingent upon his performance. This is less than Mr. Médori's salary of GBP804,000 last year. He will also receive GBP3.4 million in compensation for forfeited compensation from his previous employer, 90% of which will be paid in Anglo American shares.

Write to Alex MacDonald at [e-mail]

(END) Dow Jones Newswires

September 23, 2016 07:06 ET (11:06 GMT)

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