Comalco Sells Us Subsidiary
The Age
Saturday March 11, 1995
Comalco yesterday put aside the distraction of the MIM-bound departure of its managing director, Mr Nick Stump, to report that the sale of its American business had gone off with less than a bang.
The CRA subsidiary reported it had sold 87.5 per cent of the Kentucky-based Commonwealth Aluminum Corp for $US172.5 million ($A232.6 million) well short of initial expectations of $US260 million for a 100 per cent sale.
Comalco noted that the sale, announced in December, had been conducted in a ``highly volatile financial and market environment".
The 12.5 per cent not sold is the subject of a 30-day call option in favor of the lead manager of the public offer, Merrill Lynch. If it is exercised, the return to Comalco will increase to $US190 million, still well short of the $US260 million initially sought.
The total represents $US140 million for the full 10 million shares sold at $US14 each as well as the $US50 million borrowed by CAC and passed on to Comalco ahead of the sale.
Initial expectations were that the 10 million shares would sell at $US19-$US21 apiece. That looked to be certain when aluminium prices charged past $US2000 a tonne in January.
But the price has since come back to around $US1850 a tonne.
Comalco said that after costs associated with the sale, its net proceeds would be reduced to $US180 million compared with the book value for the CAC interest of $US207 million.
The exit from CAC ends Comalco's unhappy adventure in the United States. Acquired from Martin Marietta for $US400 million in 1985, CAC was part of a plan to integrate Comalco into the world's biggest market.
But it took years of painful restructuring much of it under Mr Stump's eye before CAC could begin to offer a worthwhile return.
However, by then Comalco had decided to quit its upstream assets of aluminium rolling and fabrication in preference to growing its bauxite mining, alumina refinery and aluminium smelting interests.
© 1995 The Age