AngloGold recovers from revolt and losses
The company has changed its philosophy by treating equity as even dearer than cash
A couple of Septembers ago, AngloGold Ashanti faced a shareholder revolt. Management of Africa's biggest gold miner was challenged after proposing a hugely unpopular restructuring plan that involved splitting the business into international and local arms. Over the course of five days in 2014, the world's third-largest gold miner proposed and retracted the plan, the most unpopular element of which was a rights issue. Shareholders — the most vociferous being famed billionaire US investor John Paulson — rejected the deal intended to address a debt hangover from ill-conceived adventures, a common feature in the balance sheet of mining groups. Excited by the Chinese-inspired commodity super-cycle, miners had raised debt to fund expansion. AngloGold's proposed solution to its problems was eventually canned as investors expressed concern about how much equity capital would need to be raised. What was learnt from those manic few days was that "you're only down if you decide to stay down", ...
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