By David Mckay
Johannesburg (South Africa) 14 February 2002 - Ashanti Goldfields [NYSE:ASL] says it is seeking merger and acquisition activity and has identified Gold Fields and a number of other South African, Canadian and one Australian company as entities with which it has had discussions in the past 12 months. Sam Jonah, Ashanti chief executive, said however that the company would only consider corporate action from "a position of strength" and was not driven to merge to avoid a crisis.
The company also says it is seeking to scrap the Ghanaian government's golden share, a veto which theoretically enables the state to block the disposal of Ashanti's assets or mining leases as well as the liquidation of the company.
Ashanti flirted with bankruptcy following the gold price run in 1999 when the group's exotic cocktail of derivatives left it with creditors demanding some $500 million. The company has spent the last two years retrieving its balance sheet, a process which culminated in an announcement last month to restructure $219 million in exchangeable notes scheduled to mature in the first quarter of 2003. The new structure sees Ashanti convert 25 percent of the current notes to equity at a market price of $3.70 a share with the balance exchanged for notes maturing in 2008. Jonah declares the market pleased with the new structure.
He now believes Ashanti has regained a firm footing and says the company would do a deal as soon as possible if it added value. The benefit of working with Gold Fields was its acquaintance with Ghanaian gold mining industry and the spread of quality assets, but the group was not wedded to a deal with the South African group. The much discussed golden share, a veto owned by the Ghanaian government which also owns about of fifth of Ashanti's equity, would not hinder the company from completing a deal, says Jonah.
Jonah's point is that the Ghanaian government was instrumental in listing Ashanti in 1994 and would therefore, as a responsible shareholder, not seek to block a deal which was value-adding: "The consequences for Ghana as a place of investment would be dire," he said, commenting on the possibility of government stepping in to block a deal. Ghana's government was more disposed to privatisation than the former owing to its private sector experience. "Ashanti is opportunistic and is waiting with sharpened teeth," Jonah said of Ashanti's new strategy.
A lesser known fact about Ashanti is that it has a history based on aggressive acquisition. Between 1994 and 1996, the company completed four acquisitions building its total production based from the single operation, Obuasi, which it owned at the time of listing. Acquisition remains a strategy for the future but one wonders if Ashanti's future lies exclusively in its own hands. About a third of Ashanti is owned by Lonmin, which has declared its intention to sell its stake at the right value. This would make Ashanti vulnerable to a hostile or friendly takeover proposal, a possibility which Jonah concedes. The tacit agreement is that if Lonmin receives an offer for its Ashanti shares it will first discuss the matter with the Ghanaians.
Meantime, Jonah dismisses any chance of the company selling its 50 percent holding in the Geita gold mine to its joint venture partner, AngloGold. The South African gold company is thought to be seeking buying up shares in joint ventures it does not own (the other is Morila which is owned in cooperation with Randgold Resources). Jonah said the golden share could be exercised if the company made "a material disposal of assets" and "we have no intention to sell any assets," Jonah said earlier in a presentation at the Indaba mining conference, held in Cape Town. - Miningweb (Johannesburg)
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Prestea (Western Region) 14 February 2002 - The government has taken over the administration of Prestea Gold Resources (PGR), an underground gold mining company based in Prestea, with immediate effect.
The decision was taken owing to PGR's inability to service its growing debt, to a tune of 10 million dollars, Joseph Boahen Aidoo, Western Regional Minister disclosed at a meeting with striking workers of PGR at Prestea, on Wednesday.
He said high production cost per ounce of gold, payment of free electricity supply to Prestea township by PGR, among other things, have made the company to go bankrupt.
The Minister said the government had no funds to pay the debt and the only alternative left for it is to find an investor. Bogoso Gold Limited (BGL) had agreed to invest in PGR. It would pay the five months salary arrears of the workers in addition to their severance award, he explained.
Mr Aidoo said after the payment it would be deemed that the workers have been laid off, however, BGL would re-engage some of the underground mine workers to continue production while feasibility studies on the mine would be carried out.
After the studies, Mr Aidoo said, BGL would engage in both underground and surface mining. He told the workers that a committee would be set up to probe other allegations levelled against the previous administration. On January 21, workers of PGR embarked on a sit down strike to back their demand for the payment of their four months' salary arrears.
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Tema (Greater Accra) 14 February 2002 - Kaiser Aluminium Corporation that owes 90 per cent of Volta Aluminium Company said on Tuesday that the company and its operating subsidiary Kaiser Aluminium and Chemical Corporation and some of its wholly owned subsidiaries have filed voluntary petitions under Chapter 11 of the Federal Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.
The filing does not include the operations of VALCO in Ghana, the 65 per cent owned in Alpart Alumina Refinery and the 49 per cent owned in Kasier Jamacia Bauxite Company in Jamacia, the 20 per cent owned in QAL Alumina Refinery in Australia, the 49 per cent owned in Anglesey Aluminium Smelter in Wales or the
100 per cent owned in extrusion plant in Ontario.
In conjunction with the filing, the company expects to enter into definite documentation on Wednesday for 300 million dollars in Debtor-in-Possession (DIP) financing from Bank of America, subject to the court's approval.
The DIP financing, in combination with the company's current invested cash should provide sufficient liquidity to meet its ongoing operating needs. Kaiser's production and shipment of bauxite, alumina, primary aluminium products and fabricated aluminium products would continue without interruption.
This was contained in a statement issued by the VALCO to explain why "Kaiser Aluminium files voluntary petition under Chapter 11 of the United States Bankruptcy Code," ---Company finalising 300 million dollars loan agreement to fund ongoing operations, production, customer service not impacted by filing.
It said Kaiser has been facing significant near-term debt maturities at a time of unusually weak aluminium industry business conditions, depressed prices and a broad economic slowdown that was further exacerbated by events of September 11.
In addition, the company has become increasingly burdened by asbestos litigation and growing legacy obligations for retiree medical and pension costs. The confluence of these factors had created the prospect of continued operating loses and negative cash flow, resulting in lower credit ratings and inability to access the capital markets.
The Statement quoted Mr Jack A. Hockema, Chief Executive Officer (CEO) of Kaiser, as saying: "The decision to seek protection under Chapter 11 will provide the company with the opportunity to reorganise its financial structure and implement a strategic plan to return the sustained profitability," adding that the reorganisation process would also allow the company to expand on and quicken the pace of its operational improvements.
"Our core businesses are sound. Our fabricated operations have good market positions, best-in-class customer service rankings and continue to make progress in implementing lean sigma methods and at the same time our commodities businesses are aggressively pursing performance improvement initiatives".
The statement said for well over half a century, Kaiser Aluminium has produced a ide range of products from 'upstream' bauxite, alumina and aluminium to 'downstream' products for aerospace, ground transportation and industrial markets, adding that the company would continue to focus its energies on the quality products and superior service for which it was known.
"Kaiser employees have been the key to our past success, and their continued loyalty and commitment to the job at hand will ensure that we meet the challenges we face. There will be hard work and tough decisions ahead, but we have weathered difficult times before and will use the reorganisation process to implement the financial and operational initiatives that will position us for long-term success."
The statement explained: "In this regard and in conjunction with expected approval of first-day court motions, Kaiser has taken appropriate steps designed to ensure that its participation in each of these entities including the funding of certain costs and expenses, will not be impacted by the filing."
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Accra (Greater Accra) 14 February 2002
Currency Buying Selling
US Dollar 7,264.74 7,477.85
Pound Sterling 10,406.74 10,714.26
Swiss Franc 4,305.11 4,429.39
Canadian Dollar 4,565.56 4,695.94
Japanese Yen 54.59 56.17
S/African Rand 634.55 650.18
Euro 6,362.64 6,544.66
CFA Franc 9.70 9.98
Naira 62.98 64.82
Ecowas/WAUA 9,062.06 --------
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Accra (Greater Accra) 14 February 2002 - The GSE All-Share Index moved up on Wednesday closing 0.37 points higher at 961.75 points. The positive change of the main market index was on the back of the appreciation of two equities Unilever (nine cedis) and Ghana Commercial Bank (one cedi).
Change for the year was also up at 0.61 per cent from 0.57 per cent in trading that saw only 146,500 shares changing hands, compared with 20,900 shares on Monday.
Unilever gained nine cedis at 2,410 cedis while Ghana Commercial Bank was up by one cedi at 1,580 cedis. Market capitalisation closed higher at 3,915.28 billion cedis from 3,914.55 billion cedis. The following are the closing prices of the equities in cedis:
ABL 320
AGC 18,800
ALW 4,300
BAT 627
CFAO 60
EIC 3,117
FML 950
GBL 1,000
GCB 1,580 +1
GGL 910
HFC 950
MGL 241
MLC 146
MOGL 18,502
PAF 750
PBC 450
PZ 1,051
SCB 20,551
SPPC 342
SSB 2,200
UNIL 2,410 +9
CMLT 430
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