Anglogold Ld Corporate Restructure & Capital Raising

 
TIDMAGD 
 
AngloGold Ashanti Limited 
 
                                 (Incorporated in the Republic of South Africa) 
 
                                                       Reg. No. 1944/017354/06) 
 
                                  ISIN No. ZAE000043485 - JSE share code: ANG 
 
                                         CUSIP: 035128206 - NYSE share code: AU 
 
Not for release, publication or distribution, directly or indirectly, in or 
into the United States, Canada, or Japan. 
 
10 September 2014 
 
NEWS RELEASE 
 
ANGLOGOLD ASHANTI PROPOSES A CORPORATE RESTRUCTURE AND A CAPITAL RAISING, AND 
CAUTIONARY ANNOUNCEMENT 
 
(JOHANNESBURG) - AngloGold Ashanti Limited ("AngloGold Ashanti") has made 
significant progress in the past two years in transforming its business to 
improve efficiency and competitiveness, against the backdrop of a 25% drop in 
the gold price. The company has returned to production growth, commissioned two 
new projects and significantly reduced costs. In the second quarter of 2014, 
compared with the corresponding period a year earlier, production rose 17% to 
1.098Moz, all-in sustaining costs fell 19% to $1,060/oz, corporate and 
marketing costs were down 65% to $20m and EBITDA was up 33% to $382m. These 
results were achieved whilst posting a record safety performance. Having 
evaluated several options to unlock further value in the business, the 
company's Board and management has decided to explore the possibility of 
restructuring AngloGold Ashanti into simpler and more focused entities, which 
they believe will present the best opportunity to realise the potential of the 
current portfolio. 
 
Accordingly, AngloGold Ashanti has applied for, and has received, approval from 
the South African Reserve Bank ("SARB") to restructure its international mining 
operations under a new UK holding company ("Newco") (the "Restructuring"). This 
Restructuring will be subject to approval of the shareholders of AngloGold 
Ashanti. Newco intends to seek a premium listing on the London Stock Exchange, 
an inward listing on the Johannesburg Stock Exchange ("JSE") and a listing of 
American Depositary Receipts ("ADR") on the New York Stock Exchange ("NYSE"). 
The intention is that Newco would hold AngloGold Ashanti's portfolio of gold 
production and exploration assets located outside South Africa. 
 
AngloGold Ashanti would continue to remain a South African domiciled business 
that would focus on maximizing the value of its current portfolio and, over 
time, the intention is that it would consider developing a multi-commodity 
growth strategy in South Africa and beyond. It will remain listed on the JSE 
and retain a listing of its ADRs on the NYSE. AngloGold Ashanti intends to 
partially demerge 35% of Newco to its shareholders and would initially retain a 
65% controlling interest. 
 
AngloGold Ashanti believes that separation into separately-listed vehicles 
would allow independent management teams to execute distinct strategies in 
order for each entity to compete as effectively as possible in the context of 
the current industry and macro-economic environment. Simplified portfolios 
would allow each management team to accelerate initiatives to improve 
productivity and operating costs and to realise the potential where appropriate 
of their growth opportunities whilst also allowing for flatter and more cost 
effective overhead structures. This, in turn, would enable the combined 
corporate costs of both entities to be materially reduced. Separate listings 
would also allow each business to be more appropriately valued to reflect their 
individual investment cases and asset profiles, each with an independent 
balance sheet and associated access to capital in distinct markets. Upon 
implementation of the Restructuring, it is expected that both companies will 
change their names. 
 
Chairman Sipho Pityana commented: "It has become increasingly clear that the 
two distinct parts of our portfolio require different strategies, focused 
management and should be appropriately capitalized to realise their full 
potential and unlock further value for shareholders. In South Africa, we will 
create a standard bearer for the mining industry with a structure allowing it 
to chart an exciting growth trajectory while allowing investors to properly 
value its high quality, cash generative portfolio. The Newco portfolio is 
expected to have a premium listing in London and will receive the management 
focus, resources, financial flexibility and structure required to realise the 
full potential from its portfolio of growth assets." 
 
"The South African regulatory authorities have been supportive in clearly 
understanding the strategic rationale of this proposed transaction, and also 
the benefit to be unlocked given our specific set of circumstances," Chief 
Executive Officer Srinivasan Venkatakrishnan said. "These two very distinct 
sets of assets will benefit from the more focused structure and capital 
allocation." 
 
Board and Management 
 
AngloGold Ashanti's board will continue to be chaired by Sipho Pityana and the 
existing board will remain with the exception of Michael Kirkwood and David 
Hodgson who would resign from the AngloGold Ashanti Board to join the Newco 
Board at the time of its establishment. It is intended to establish the Newco 
Board consistent with the principles of the UK's Corporate Governance Code 
including the appointment of a majority of Independent Non-Executive Directors 
and a Senior Independent Director. The Newco Board would be chaired by Michael 
Kirkwood. 
 
Whilst the AngloGold Ashanti shareholding in Newco remains above 20%, AngloGold 
Ashanti will have the right to nominate two non-executive Board members. Sipho 
Pityana and Srinivasan Venkatakrishnan will initially serve as AngloGold 
Ashanti's non-executive directors on the Newco Board, with Sipho Pityana 
initially in the role of Deputy Chairman. 
 
Srinivasan Venkatakrishnan will remain as CEO of AngloGold Ashanti and will 
continue to lead an executive team comprising incoming Chief Financial Officer 
Christine Ramon, Chief Operating Officer Mike O'Hare and Italia Boninelli. 
 
Commenting on the Restructuring, Srinivasan Venkatakrishnan, said: "Our 
decisive response to a challenging gold price environment has seen us return to 
growth, aggressively reduce costs and improve free cash flow, all while posting 
a record safety performance. We believe that the structural change we have 
proposed will allow our shareholders to focus on, and support, the key assets 
of particular interest to them. Each business will have greater focus and 
separate identities which enable them to chart distinct, value-creating 
strategies going forward." 
 
Newco will be led by CEO-designate Charles Carter, along with President and 
Chief Operating Officer Ron Largent, who will be joined on the executive team 
by Graham Ehm, Maria Sanz Perez and David Noko. A new CFO will be recruited for 
Newco in due course. 
 
Recapitalisation 
 
Separate from the Restructuring, the Board has concluded that current debt 
levels are too high and therefore an equity capital raising, in the form of a 
rights issue to AngloGold Ashanti shareholders, is being contemplated, whether 
or not the proposed Restructuring occurs. Under the Restructuring, AngloGold 
Ashanti, which will continue to house the South African assets, has agreed that 
it will be debt free upon implementation of the Restructuring (with the 
exception of existing guarantees by AngloGold Ashanti of debt that remains 
outstanding) in order to comply with the conditions of the SARB approval. It is 
for this reason that the company is potentially targeting gross proceeds from 
the contemplated rights issue in the order of approximately US$2.1 billion in 
order to be able to pursue the Restructuring. The proceeds would be used 
predominantly to repay existing debt by initially redeeming 35% of the 
aggregate principal amount outstanding of the company's 2020 8.5% bonds under 
the provisions of the related indenture that allows the company to redeem bonds 
from the net cash proceeds of an equity offering. The company will retain 
flexibility to either repay amounts drawn under certain revolving credit 
facilities and/or deploy the residual funds to further strengthen the company's 
balance sheet. 
 
The completion of the proposed rights issue cannot be assured as a fundraising 
of this scale will require shareholder approval and an increase in authorised 
share capital. Updates on this process will be provided in due course. 
 
The company may also consider utilising its general authority to issue for 
cash, up to 5% of the shares in issue as approved at the Annual General Meeting 
held in May 2014. 
 
Implementation 
 
AngloGold Ashanti is continuing to review the implementation of the proposed 
Restructuring with a view to execution during 2015. The Restructuring will be 
subject to a number of approvals including shareholder approval at a General 
Meeting, as well as receipt of required regulatory consents and approvals in 
jurisdictions in which Newco conducts business, and other third-party consents. 
The proposed equity capital raising would also need to be completed in advance 
of the contemplated Restructuring and would also be subject to shareholder 
approval and an increase in authorised share capital. The Restructuring may 
result in additional and unforeseen expenses, and the required consents and 
approvals, if received, together with the arrangements required to separate the 
business, may impact the nature of the Restructuring, including the asset 
composition, structure and timing as well as the economic impact of the 
transaction and its commercial benefits, and may impose conditions and 
limitations on the business and operations of Newco. There can also be no 
assurance that either the Restructuring or the capital raising will proceed. 
 
Approval has been received from SARB for the Restructuring, which is subject to 
certain conditions including the requirement for South Africa to remain 
AngloGold Ashanti's effective place of management with the majority of the 
Board including the Chair of the Board, the Chief Executive Officer and the 
Chief Financial Officer and the majority of executive committee members 
remaining resident in South Africa; where debt has been guaranteed by AngloGold 
Ashanti, these guarantees will remain in place, with appropriate "arm's length" 
arrangements to be made with Newco and subject to these guarantees being 
extinguished once the related debt has been repaid in full and no new 
guarantees being put in place; AngloGold Ashanti must notify SARB in advance of 
any subsequent transactions to reduce its shareholding in Newco; AngloGold 
Ashanti will use best efforts to ensure that upon implementation of the 
Restructuring, on an unconsolidated basis, it will be gross debt free. 
 
AngloGold Ashanti's advisers are as follows: 
 
Financial advisers on the transaction and proposed capital raising 
 
UBS AG and Goldman Sachs International 
 
Financial adviser on liability management 
 
Barclays 
 
Legal Advisors to the Company 
 
Cravath, Swaine & Moore LLP 
 
Bowman Gilfillan Inc 
 
Slaughter and May 
 
Independent Financial Advisors to the AngloGold Ashanti Board 
 
Rothschild (South Africa) (Pty) Ltd 
 
Independent Legal Advisors to the AngloGold Ashanti Board 
 
ENS Africa 
 
Cautionary announcement 
 
The Restructuring and contemplated equity capital raising may have a material 
effect on AngloGold Ashanti securities. Holders of AngloGold Ashanti securities 
are accordingly advised to exercise caution when dealing in AngloGold Ashanti 
securities until a further announcement is made. 
 
ENDS 
 
Sponsor to AngloGold Ashanti 
 
UBS South Africa (Pty) Limited 
 
CONTACTS 
 
Media 
 
Brunswick Group   [phone] / +27   [e-mail] 
                  (0) 11 502 7300 
 
Investors 
 
Stewart Bailey    [phone] / [phone] [e-mail] 
 
Fundisa Mgidi     [phone] / [phone]  [e-mail] 
(South Africa) 
 
Disclaimer 
 
This announcement shall not constitute an offer to sell or the solicitation of 
an offer to buy securities, nor shall there be any sale of the securities 
described herein, in any jurisdiction, in which such offer, solicitation or 
sale would be unlawful prior to registration or qualification under the 
securities laws of such jurisdiction or without an exemption from the 
registration or qualification requirements under the securities laws of such 
jurisdiction. 
 
This announcement shall not constitute an offer to sell or the solicitation of 
an offer to buy securities in the United States. Securities may not be offered 
or sold in the United States absent registration under the U.S. Securities Act 
of 1933, as amended, except pursuant to an exemption from the registration 
requirements thereof. Any public offering of securities to be made in the 
United States will be made by means of a prospectus that may be obtained from 
AngloGold Ashanti and that will contain detailed information about AngloGold 
Ashanti and management, as well as financial statements. AngloGold Ashanti 
intends to register the securities in the United States. 
 
This announcement includes "forward-looking information" within the meaning of 
Section 27A of the Securities Act, and Section 21E of the Securities Exchange 
Act of 1934, as amended. All statements other than statements of historical 
fact are, or may be deemed to be, forward-looking statements, including, 
without limitation those concerning: the benefits and completion of the 
contemplated Restructuring, the completion of the proposed equity capital 
raising, the strategy of AngloGold Ashanti and Newco, the economic outlook for 
the gold mining industry; expectations regarding gold prices, production, cash 
costs, all-in sustaining costs, cost savings and other operating results; 
return on equity, productivity improvements, growth prospects and outlook of 
AngloGold Ashanti's operations, individually or in the aggregate, including the 
achievement of project milestones, the commencement and completion of 
commercial operations at certain of AngloGold Ashanti's exploration and 
production projects and the completion of acquisitions and dispositions; 
AngloGold Ashanti's liquidity and capital resources and expenditure; and the 
outcome and consequences of any potential or pending litigation or regulatory 
proceedings or environmental, health and safety issues. These forward-looking 
statements are not based on historical facts, but rather reflect AngloGold 
Ashanti's current expectations concerning future results and events and 
generally may be identified by the use of forward-looking words or phrases such 
as "believe", "aim", "expect", "anticipate", "intend", "foresee", "forecast", 
"likely", "should", "planned", "may", "estimated", "potential" or other similar 
words and phrases. Similarly, statements that describe AngloGold Ashanti's 
objectives, plans or goals are or may be forward-looking statements. 
 
These forward-looking statements involve known and unknown risks, uncertainties 
and other factors that may cause the AngloGold Ashanti's actual results, 
performance or achievements to differ materially from the anticipated results, 
performance or achievements expressed or implied by these forward-looking 
statements. Although AngloGold Ashanti believes that the expectations reflected 
in these forward-looking statements are reasonable, no assurance can be given 
that such expectations will prove to have been correct. 
 
The forward-looking statements included in this announcement are made only as 
of the last practicable date. AngloGold Ashanti undertakes no obligation to 
update publicly or release any revisions to these forward-looking statements to 
reflect events or circumstances after the date of this announcement or to 
reflect the occurrence of unanticipated events. All subsequent written and oral 
forward-looking statements attributable to AngloGold Ashanti or any person 
acting on its behalf are qualified by the cautionary statement in this section. 
 
For a discussion of risk factors, shareholders should refer to the annual 
report on Form 20-F for the year ended 31 December 2013, which was filed with 
the Securities and Exchange Commission on 14 April 2014. These factors are not 
necessarily all of the important factors that could cause AngloGold Ashanti's 
actual results to differ materially from those expressed in any forward-looking 
statements. Other unknown or unpredictable factors could also have material 
adverse effects on future results. 
 
The distribution of this announcement in certain countries may constitute a 
breach of applicable law. 
 
This announcement may not be published, forwarded or distributed, directly or 
indirectly, in the United States (including its territories and dependencies, 
any state of the United States and the District of Columbia), Canada, Japan or 
any other jurisdiction where such release is prohibited. 
 
AngloGold Ashanti Limited 
 
Incorporated in the Republic of South Africa Reg No: 1944/017354/06 
 
ISIN No. ZAE000043485 - JSE share code: ANG CUSIP: 035128206 - NYSE share code: 
AU 
 
Website: www.anglogoldashanti.com 
 
 
 
END