Anglo Platinum to raise $1.6 billion, pare debt

Anglo Platinum Ltd, the world's biggest producer of the metal, will raise $1.6 billion through a rights offer to reduce its debt of $2.9 billion.

In a stock exchange filing today, the Johannesburg-based miner said it would offer 24.9 million shares to shareholders at 502.18 rand per share.

In July 2009, London-based Anglo American, a global leader in mining with diverse mining assets, had increased lending to its platinum subsidiary Anglo Platinum, by 52.5 per cent to £1.6 billion in view of the global collapse in the e of platinum. (See: Anglo American pumps £1.6-billion into platinum subsidiary) 

The rights issue will effectively be a debt-for-equity swap as Anglo American, which holds 79.72 per cent stake in Anglo Platinum, has agreed to subscribe to the rights offer equivalent to its holding in Anglo Platinum of approximately $1.3 billion.

Anglo American has also agreed to underwrite the remaining 20 per cent of the rights offer, which will be raised from minority investors and also used by the miner to pay debt.

"The take-up of rights by Anglo American and repayment of inter-company debt by Anglo Platinum will be, in effect, an exchange of debt for equity. As Anglo Platinum is fully consolidated within the financial results of Anglo American, the expected ZAR2.5 billion ($1.6 billion) of subscription proceeds from Anglo Platinum's minority shareholders will reduce Anglo American's group net debt," Anglo American said in a statement.

Chief executive Cynthia Carroll of Anglo American is under pressure to regain investor confidence after the company's recent overpaid acquisitions and poor performance, which led Swiss miner Xstrata to make an unsuccessful bid on the company in October. (See: Xstrata abandons Anglo bid, for now)