ENRC co-founder plans $6-bn bid for Kazakh miner

A group of shareholders led by co-founder Alexander Machkevitch is planning to take Kazakh miner Eurasian Natural Resources Corporation (ENRC) private with a $6-billion bid, five years after it was listed on the London Stock Exchange.

Responding to a media report, ENRC's co-founder Machkevitch, who holds a 14.6-per cent stake in the Kazakhstan-based diversified miner, confirmed that he is working with two other co-founders and the Kazakhstan government to take the company private.

Machkevitch, along with other co-founders Alijan Ibragimov and Patokh Chodiev, the Kazakhstan government and state-owned FTSE 100 miner Kazakhmys, own more than 55 per cent of ENRC.

The UK Takeover Panel has stepped in and given the Machkevitch consortium until 17 May to either announce an intention to bid or pull out, which would then bar them from making another bid for six months.

Machkevitch, who has hired Societe Generale to advice on the deal, may offer a little below Friday's closing share price of 291 pence a share, which had risen by 26.6 per cent following the news of a potential takeover.

ENRC has recently emerged from a bruising boardroom battle, which saw deputy chairman Sir Richard Sykes and non-executive director Ken Olisa removed from the board, while Mehmet Dalman, a former banker was appointed chairman in place of Johannes Sittard.

The bitter boardroom battle, plus an aggressive six-year acquisition spree that has burdened ENRC with debt of $5 billion,  that heas led to its stock price fall by 57.5 per cent since its 540 pence-a-share IPO in 2007.

The miner is also facing a January 2014 deadline to exit the FTSE 100 or lift its free float under new stock exchange rules. Its free float is currently is less than 20 per cent, and media had speculated that the company would issue new shares to meet the requirements.

With annual revenues of $7.7 billion, ENRC is a large diversified natural resources group with its main production assets located in Kazakhstan.

Apart from Kazakhstan, ENRC also operates in China, Russia, Brazil and Africa, including the Democratic Republic of Congo, Zambia, Mozambique and South Africa.

The company's divisions include ferroalloys, iron ore, alumina and aluminum, energy, logistics and other non-ferrous. ENRC controls sizeable proven reserves of minerals including chromium, manganese, iron ore, bauxite coal, copper and cobalt.