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Real-Time news about Eurasian (London Stock Exchange): 0 recent articles
|careful: the share price based upon the offer should be around 230p.
that is based upon todays kaz share price.
ENRC seems to be trading at a large discount.
if the deal goes ahead an obvious 8%+ gain is there for the taking.|
|tanzz786: Nolens - Kerimov will lose many millions if this deal goes through - a loss of 30pence per share- my view is that he may make a counter bid in cash only that will improve Kazakhmys' position so that Kazakhmys votes against the offer and supports his bid -
If he for instance makes an offer of £3.65, KAZ will be able to buy the 12% stake that the government holds in KAZ and still have more cash left over to execute its business development plan
KAZ's share price is likely to rocket even on the current deal as it will be cash rich at a time when most mining companies are heavily in debt with their share prices heading south..
Lets see what transpires this week...remember KAZ still has to get this deal ratified by its shareholders and unlike ENRC, KAZ has a significant proportion of its stock in free-float on the FTSE|
|dflowers68: Fwiw I think the deal will probably go ahead. I've no doubt kaz will probably want to draw a line here and move on and pay down some of their debt. Then in the coming weeks/months once the dust has settled and the price of copper increases, so in turn will the share price in kaz. IMO if the offer is put forward and rejected the short term share price in both kaz & enrc will continue to decline. Then there's the outcome of the corruption allegations to contend with.|
|nolens volens: dflowers - "Also I've read a report that kerimov may have increased his stake to over 3% in order to aid the enrc founder members with their bid "
I haven't read any article saying that can you post the link please.
As I understand it, reports are suggesting that any formal offer from the consortium for enrc would be along the same lines as the tentative offer i.e. the number of kaz shares you would receive would be based on the number of enrc shares you hold. In that sense, I don't see that it matters what the kaz share price is at any time except the day you intend to sell which might be the day you would receive any kaz shares if this buyout went ahead. LOL might be loads of folk selling kaz that day.|
New £3bn offer to take ENRC private
The founders of the mining giant ENRC are poised to table an unchanged £3bn offer in order to take the troubled company off the London market.
It is understood that the founders, led by Alexander Machkevich, will tomorrow table a firm version of an indicative offer which in May was rejected by independent directors. The offer will actually value ENRC at less than the earlier indication.
Despite that, the move is likely to be accepted by a committee of independent directors because of the lack of other options and the wider sell-off in mining stocks.
The move, if accepted by minority investors, will trigger the departure of ENRC from the London Stock Exchange after a turbulent six years in which directors have been ousted and the Serious Fraud Office (SFO) has been carrying out an investigation.
Sir Richard Sykes, the non-executive director, said at the height of its problems in June 2011 that the company should never have been listed in the first place. He also accused the company's chairman and chief executive at the time of being "in the pocket" of its founding shareholders.
The fully financed offer is expected to be announced by the consortium which accounts for 56pc of ENRC's investors including the Kazakh government's 12pc stake, ahead of a Takeover Panel deadline of 5pm tomorrow .
The offer is expected to be the same as that originally tabled on May 16, offering 175p-a-share in cash and 0.231 shares in Kazakhmys for each ENRC share.
At the time, it valued each ENRC share at 260p. However, due to exchange-rate differences since then - the consortium's financing was arranged in dollars by bankers led by Société Générale - and the fall in Kazakhmys's share price, the offer is actually worth less.
At the time the approach was made, Kazakhmys's share price stood at 370p. However, at Friday night's market close, the share price of the Kazakh miner stood at 272.13p.
As a result, the offer values ENRC shares at 238p each, before taking into account the currency fluctuations. On Friday, Macquarie analyst Alon Osha set a target price of 236p for the offer, some 10pc below the original, but above Friday night's closing price of 216.9p.
One source said that the terms of the initial offer "were never going to change," suggesting that the founders feel there is nothing to be gained in reputational terms from upping the offer.
It is understood that, despite the decreased value, the independent committee set up to consider the approaches will reluctantly recommend it to shareholders.
Sources this weekend indicated that the seven-strong committee, chaired by former World Bank director, Mohsen Khalil, is likely to set out the difficult nature of the task in an attempt to absolve themselves from blame from minority investors.
In late May, Mr Khalil instructed bankers Lazard and Credit Suisse to work separately to establish the value of the miner, asking them to develop valuations based on a number of variables, including competitors, its economic value were it to be sold and a sum-of-the-parts model.
In deciding whether to accept the approach, the committee will know that were they to reject the offer, and the consortium walk away, the company's share price would slide significantly, making it cheaper to table a lower offer in the future.
As a result of the complex deal, the Kazakh government's stake in Kazakhmys - which has a 26pc stake in ENRC - will reduce to zero, and its free float will increase to 58pc. It is listed in London.
ENRC was listed on the London Stock Exchange in December 2007 after raising £1.36bn, the second-biggest stock market float of the year.
The company, which mines coal, iron ore and ferrochrome among other minerals, floated at a share price of 540p, valuing it at £6.8bn.
ENRC was founded by three Kazakh businessmen - Mr Machkevich plus Patokh Chodiev and Alihan Ibragimov - in 1994.
In March 2008, four months after floating, it became a member of the FTSE 100 index, hitting highs of £12.50 in 2010. But by December that year , the company's problems began, when Sir Richard and other independent directors, including Ken Olisa, began to question the way the board operated.
By March 2011, solicitors Herbert Smith were hired by the independent directors to ask about the ramifications of resigning en masse.
In June that year, Mr Olisa coined the term "more Soviet than City" to describe the company after he and Sir Richard were voted off the board by its Kazakh shareholders.
Mehmet Dalman, a former Commerzbank banker, was drafted in as chairman shortly afterwards, pledging to clean up the business.
But Mr Dalman resigned in April this year saying he had "achieved all that I can".
The SFO continues to work on its criminal investigation into the miner, looking at allegations of fraud, bribery and corruption related to its business in Kazakhstan and Africa.
Adding to the pressure for the company to go private, the UK Listing Authority has asked that the group increase its free float to 25pc from 18pc by January 2014 or leave the market.|
|nolens volens: UBS analysts eye ENRC bid
The bank's experts said an offer could be "significantly above market value". As dealers picked over the troubling implications of Mehmet Dalman's resignation as chairman of potenial bid target Eurasian Natural Resources Corporation , analysts had better news for traders, speculating a blockbuster offer for the miner could be in the works. The experts at UBS (Berlin: UBRA.BE - news) noted that the consortium of three founding ENRC investors and the Kazakh government considering an offer for the group are likely to bid for both Kazakhmys (LSE: KAZ.L - news) 's 26pc stake in the company as well as ENRC's free float, because the suitors would need 75pc shareholder approval to take the miner private. That, the analysts argued, meant an offer may be "significantly above market value", as Kazakhmys is likely to "leverage" its influential position to "extract optimal value for itself and ENRC minority shareholders". Kazakhmys, they said, was unlikely to agree to an offer of less than 375p a share - the value at which it recently wrote down its ENRC stake - while a bid of 540p - ENRC's 2007 flotation price - was also possible. That would be a significantly premium to yesterday's close of 280.7p, down 1.6p. If the consortium did make a knock-out bid for ENRC it would be "materially positive" for Kazakhmys's own share price, the UBS analysts concluded. The optimistic assessment helped Kazakhmys advance 23.94 to 359p on the FTSE 250, taking into account the shares were trading without right to the latest dividend http://uk.finance.yahoo.com/news/ubs-analysts-eye-enrc-bid-184234211.html|
|nolens volens: "Glencore International Plc has expressed interest in ENRC assets in the past, said Jeff Largey, an analyst at Macquarie Group Ltd. in London, and "there are certain components of it they would find very attractive," especially in Kazakhstan, he said. The commodities trader and mining company might also be interested in ENRC's operations in the Democratic Republic of Congo, Largey said. Glencore's Chief Executive Officer Ivan Glasenberg commented on the decline in ENRC's stock at a Moscow conference yesterday. i.e Thursday "Its share price has fallen considerably on the back of commodity prices," Glasenberg said. "Will there be some form of consolidation in Kazakhstan with Kazakhmys with the copper, with ENRC with their assets? I don't know, but people will be looking at them." http://www.bloomberg.com/news/2013-04-19/machkevitch-may-form-group-to-make-takeover-offer-for-enrc.html|
|smurfy2001: Should you buy shares in Eurasian Natural Resources Corporation plc (LON: ENRC)?
A confluence of factors has pressured Eurasian Natural Resources Corporation (ENRC) (LSE: ENRC) in recent times: rising operational costs, depressed ferrochrome prices and escalating debt levels have all put the giant ferrochrome producer under the cosh.
Although a dodgy balance sheet could present more problems further down the line, I sense rocketing production in coming years could propel the share price skywards.
ENRC -- whose primary assets are located in the mining hotbed of Kazakhstan -- boasts extensive operations across a multitude of areas, encompassing ferroalloys, iron ore, alumina and aluminium, energy and logistics.
ENRC announced earlier this month that its total annual production of saleable ferroalloys, electricity and coal had hit their highest levels since the group's 2007 flotation.
In a bid to increase its exposure to the copper market, the company completed the acquisition of the remaining 49.5% stake in Camrose -- which owns various red-metal projects in the Democratic Republic of Congo -- for $500 million at the end of December. Eurasian has earmarked capital expenditure of $300 million to develop these African assets this year.
Credit Suisse expects production volumes across the group to step up significantly in coming years and drive earnings growth. Ferrochrome output is projected to rise almost 1% in 2013 to 1.505 million tonnes, before shooting to 1.605 million tonnes in 2014, a 6.6% annual increase. Copper production, meanwhile, is forecast to rise 57.1% to 55,000 tonnes this year and then 127% in 2014 to 125,000 tonnes.
Balance sheet blues
Expectations of a small equity raising continue to rumble due to ENRC's suffocating debt levels and fears of a possible debt-covenant breach by the end of the year.
The company recently announced that it expects net debt to come in at $5 billion for the end of 2012 -- as an aside, ENRC was in a net cash position in 2010 prior to embarking on its acquisition spree. I must admit the borrowing situation remains precarious, although the possibility of asset divestment could help allay fears.
As well, takeover speculation has heated up in recent weeks as the likes of Kazakhmys are said to be considering a swoop.
Earnings ready to ignite
Analysts expect ENRC's earnings per share to have collapsed almost 70% in 2012 to 30p, before bouncing 10% back to 34.4p the following year. A 44% jump is then anticipated in 2014 to 49.5p as production volumes balloon and commodity prices improve.
The level of risk attached to ENRC is reflected by a P/E ratio of 11 for 2013, down from 12.1 the previous year, and which is set to fall to a lowly 7.6 for 2014, according to the current City broker consensus. Provided management can successfully hurdle recent problems, I reckon ENRC could pay off handsomely for the more risk-tolerant punter.
|smurfy2001: STOCKS NEWS EUROPE-ENRC higher on solid production, bid rumours
Wed, 6th Feb 2013 12:59
Shares in Kazakh miner ENRC climb 6.6 percent, boosted by the company's strong quarterly output numbers and media rumours that it could be a takeover target.
"Production numbers were pretty solid in its two main divisions. The chief executive made a comment around the outlook too, which was positive," says an analyst who declined to be named.
ENRC, which earlier on Wednesday posted an 8.9 percent rise in quarterly production of saleable ferroalloys and a 10.9 percent jump in iron ore and whose boss said it anticipated delivering a strong performance next year, has been the subject of renewed bid speculation in recent days.
A trader cites "decent numbers" and the "same old bid rumours" as prompting the strong share price rise.
ENRC declined to comment on the bid speculation.
In 2011, trader Glencore was forced to deny it was considering an offer for ENRC.
"Any chatter around potential M&A (mergers and acquisitions) will move the shares as well," agrees the analyst, saying he believes ENRC has risen on a combination of the production report, the positive outlook and the rumours.|
|cfb2: As an apology for lowering the tone here yesterday (I was led on by bracke...), here is ING Equity Research's note on the sell side:
ENRC's rapidly escalating debt burden is now the key concern for investors and we expect the stock to continue its underperformance while this remains the case. We see the deferral of ENRC's most capex intensive projects as inevitable but in the absence of a meaningful recovery in spot prices for ferrochrome and iron ore we still expect net debt/EBITDA to exceed 2x within six months. We believe ENRC may eventually need to consider selling some of its more attractive assets (e.g. African copper) or raise capital via new equity.
We downgrade our target price for ENRC to 325p (previously 430p) and retain our SELL recommendation.
Debt load rapidly rising, earnings outlook weakening. ENRC's net debt has moved from zero to US$3.4bn in just a year. We expect net debt to reach US$4.6bn by end 2012 with net debt/EBITDA at 2.04x (just above management's internal threshold of 2.0x but below bank covenants of 3.0x). Given a weakening outlook for ENRC's main commodities ferrochrome and iron ore we have reduced our EBITDA forecasts for 2012 and 2013 by 18% and 10%, respectively. Our earnings estimates are below consensus.
Debt burden not compatible with aggressive growth strategy. With ENRC lacking the debt capacity to fund its expansion strategy (see our Supercycle hangover report of 29 May 2012) management is now deferring large projects and prioritizing less capex intensive projects such as the Frontier and Kolwezi copper projects in the DRC. However, given our scepticism over ENRC's ability to execute and fund its overseas projects, our capex assumptions are already quite conservative and we do not see material downside to our 2013 capex assumption of US$1.8bn (including US$800m of maintenance capex).
Asset sales or new equity required? Selling stakes in ENRC's overseas iron ore and coal projects could prove difficult in current market conditions although its copper assets remain more appealing to investors, in our view. However, in order to avoid selling its best assets towards the bottom of the cycle we think issuing new equity may also be an option which could also address FTSE requirements to increase free float to 25%. We think it far too early for ENRC to be considering a demerger for its international assets.
Valuation: We lower our target price to 325p (a 15% discount to NPV) and reiterate our SELL recommendation. On our updated estimates, ENRC trades on an EV/EBITDA of 5.6x for both 2012F and 2013F.
ING say that the net debt will reach $4.6bn by the end of 2012 following the spending spree on development projects in Africa and estimate that ENRC will need to raise $550m. All this at a time when inflated debt is bad and mining assets are selling for rock bottom prices. The possibility of new equity is therefore likely to be considered and that is what is driving the current share price.
Eurasian share price data is direct from the London Stock Exchange