Anglo's Biggest Holder Says Investor Cash Should Be Last Resort

  • South Africa's Public Investment Corp. owns 9% of Anglo
  • Anglo fell the most in FTSE 100 last year, plunging 75 percent

Anglo American Plc’s biggest shareholder said the company should only ask investors for more money after first exploring all expense-reducing alternatives available.

“The board and management of any company should first explore all cost-cutting options available to it in order to ensure the future of the company, before engaging with shareholders for a financial injection to salvage the company,” Public Investment Corp. said in an e-mailed statement Thursday.

The PIC, which is Africa’s biggest money manager and handles South African public workers’ pensions, holds a 9 percent stake in Anglo, according to data compiled by Bloomberg.

Anglo, the worst stock in the FTSE 100 Index last year, announced last month a turnaround plan that includes scrapping its dividend, cutting the number of mines it owns by more than half and reducing staff to 50,000 from 135,000. Still, analysts including those at Bank of America Merrill Lynch and Jefferies Group LLC have challenged the company on its refusal to tap shareholders for cash.

Schroders Plc, which owns 3.6 percent of Anglo and is Europe’s largest publicly traded fund manager, wrote to Anglo’s management last month saying that selling new shares is unlikely to be in the best interests of long-term shareholders. Anglo’s Chief Financial Officer Rene Medori said last month that the company had no plans to tap investors for money.

The PIC also said Anglo should consider the socio-economic impact of cost cutting measures as well as any impact on the economies of the countries where it operates, Chief Executive Officer Daniel Matjila said in the statement.

Anglo lost 75 percent of its value last year as commodity prices collapsed from waning Chinese demand for copper to iron ore. The company is the world’s biggest diamond and platinum miner. It also produces copper in South America and coal in countries from Australia to South Africa.

Before it's here, it's on the Bloomberg Terminal.