Sherritt International Corp. (S), a Canadian mining and energy company with operations on four continents, is considering options including selling assets or restructuring the business to improve its value.
“That’s what we are spending our time on now,” Chief Executive Officer David Pathe said in an interview after the Toronto-based company’s annual shareholder meeting today. “It’s made more challenging in this kind of commodity-price environment to try and demonstrate what we think true value of assets is.”
Pathe is seeking to boost the company’s shares, which have fallen 11 percent in the past year, even after it started producing finished metal from the $5.5 billion Ambatovy nickel and cobalt operation in Madagascar. Sherritt dropped 1.3 percent to C$4.68 at the close in Toronto.
Sherritt may be hurt by the number of businesses it’s in around the globe, the CEO said. In addition to producing nickel, the company sells power in Cuba, mines coal in Canada, has oil and natural gas assets in Pakistan and Spain and collects royalties from other operations.
“Our complexity hurts us, our different businesses in different locations makes it a harder story to tell,” Pathe said. “We can do any number of things, whether it’s sales and refocusing the business or restructuring ourselves in some way, there’s an infinite number of options.”
Pathe’s approach makes sense, said Raymond Goldie, a Toronto-based analyst at Salman Partners Inc. who rates the shares a buy.
“The market typically, for a very diversified play, trades at two-thirds of its net-asset value,” Goldie said in an interview. “A pure play trades at 100 percent of its net-asset value.”
Sherritt also sees opportunities for acquisitions, as the world’s biggest miners pursue sales and cut back on project spending, Pathe said. Sellers of assets outnumber buyers, he said, as a record amount of mining assets are put up for sale by companies including BHP Billiton Ltd. (BHP) this year.
“Today you can buy assets for less than you can build them,” Path said at the meeting. “That creates tremendous opportunities.”
He declined to comment on specific assets Sherritt is interested in.
“If we could find what we thought was the right opportunity for us, an asset that we could run and run well, if we could find a way to finance it ourselves or with partners, we would absolutely look at that,” he said in the interview.
Company Chairman Ian Delaney didn’t stand for re-election at today’s meeting and said the board intended to elect Harold Stephen to replace him as chairman. Delaney, who retired as CEO last year, was at Sherritt and its predecessor companies for more than two decades. Twenty-three years “is enough,” Delaney said at the meeting today.
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