Iluka Considers Alternative Deals After Ending Kenmare Talksby
CEO also sees growth from current projects, tech investments
Kenmare indicates top shareholder wouldn't support deal
Iluka has a balance sheet that provides “opportunity to invest at a time when others are not, and it gives us the opportunity to secure options for our shareholders on very favorable terms,” Chief Executive Officer David Robb said in a phone interview.
On top of the possibility of acquisitions, Robb flagged the Perth-based company’s current projects as candidates for growth, along with “significant investments we are making in technology.”
The miner had planned to add Kenmare’s Moma mine in Mozambique, which has zircon reserves and produces ilmenite and rutile, to its business. It ended talks after Dublin-based Kenmare indicated its largest shareholder wouldn’t support the deal, Iluka said Monday in a statement.
Iluka last month cut its offer for Kenmare because of a drop in prices and a deteriorating market. The U.K.’s Prudential Plc, the biggest Kenmare holder with a stake of about 20 percent according to data compiled by Bloomberg, didn’t immediately respond to an e-mail seeking comment on Monday.
Iluka rose 1.9 percent to A$5.47 in Sydney. The company has projects at home and in Sri Lanka, and agreed last year to buy 18.3 percent of U.K.-based Metalysis Ltd., a user of the Australian company’s raw materials and producer of the first 3-D printed titanium car parts.
Kenmare said Monday it will seek to reduce its debts to about $100 million from about $350 million, in part by persuading lenders to swap debt for equity. Its shares doubled in value by 10:58 a.m. in London trading.
State General Reserve Fund, a sovereign wealth fund of the Sultanate of Oman, has agreed in principle to invest $100 million in Kenmare if the company can reach agreement with lenders and existing major shareholders.
“At the end of this, Kenmare has to be robustly financed,” Managing Director Michael Carvill said in an interview. “The only problem with Kenmare is the financing structure.”