LONDON - The founders of the Eurasian Natural Resources Corporation and the government of Kazakhstan are preparing an offer to buy the remaining stake in the troubled mining giant they do not already own in a deal valuing the miner at £3 billion, or $4.7 billion.
The prospective deal, which must be outlined ahead of a Monday deadline for the consortium to clarify its takeover plans, comes as allegations of bribery and corruption continue to dog the company, known as ENRC.
British authorities are investigating potentially fraudulent activity at the company’s operations in Africa and Kazakhstan, while its shareholders have raised concerns about the firm’s corporate governance structures and payouts to senior executives.
Despite this uncertainty, Alexander Machkevitch, Patokh Chodiev and Alijan Ibragimov, who co-founded the London-listed miner, and the Kazakh government are planning to offer ENRC’s shareholders 234.3 pence a share in a cash-and-stock deal to buy the 45 percent stake n ENRC that they do not already own.
Under the terms of the deal, the consortium is expected to offer $2.65 and 0.230 shares in the copper producer Kazakhmys, which is part owned by the Kazakh government, for every share in ENRC.
The offer has yet to be confirmed and may still not be made for the mining company, according to a statement from the consortium on Sunday.
The proposal represents an 8 percent premium on the mining company’s closing share price on Friday, though it is well below an initial bid that ENRC’s board rejected earlier this year.
The share price of ENRC, which produces metals used to make steel, has tumbled 47 percent over the last 12 months, as investors fret about a number of ongoing investigations and a series of senior management changes that have engulfed the company.
The outstanding questions over ENRC’s activities also represent the latest black mark against London as a major global financial center after other international companies that! have listed here also have faced allegations of fraud and corruption.
Bumi, the Indonesian coal miner that is traded in London and is part-owned by the British financier Nathaniel Rothschild, is similarly under investigation by British regulators over potential corruption at one of its Indonesian subsidiaries.
For ENRC’s shareholders, the potential offer from the company’s founders would represent a major loss on their investment since the company’s initial public offering in 2007.
ENRC first sold shares on the London Stock Exchange that gave the miner a market value of £6.8 billion, or $10.5billion. The shares are now worth less than half that initial valuation.
