ENRC Buys Out Israeli Billionaire Gertler in $550m Congo Deal

on Dec 10, 2012

**ENRC Offers $550m for 49.5% Stake in Camrose Resources**

Eurasian Natural Resources Corp. (LON:ENRC) has agreed to pay $550 million (£342 million) to buy out Israeli billionaire Dan Gertler from a company holding interests in copper and cobalt licenses in the Democratic Republic of Congo (DRC), The Sunday Times reported on 9 December 2012. According to The Financial Times’ further report on the news, today, the London-listed miner confirmed the all-cash deal to buy up the remaining 49.5 per cent stake in Camrose Resources, the holding company which owns the concessions in the Central African country.

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Further details on the transaction reveal that ENRC’s board was advised by Morgan Stanley, while its independent directors were advised by financial advisory firm Lazard Ltd. (NYSE:LAZ). According to ENRC’s statement, the offer, which is also for minority shareholdings in some Camrose units, is expected to close by December 28th.
Following the announcement, ENRC’s share price fell 0.1 per cent to 283 pence, while during early trading today, the stock declined further to 279.8 pence. Since the beginning of the year, the miner has lost 55 per cent of its market value.

**Deal Marks Corporate Divorce**
ENRC’s agreement to buy the remaining stake in the group of Congo mines marks an important corporate divorce for the industry. The buyout brings to an end ENRC’s high-profile partnership with Mr Gertler, a controversial Israeli businessman who is close to Joseph Kabila, president of the copper-rich African country.

In fact, the settlement closes a difficult chapter in ENRC’s history tied to the miner’s partnership with Mr Gertler. The company bought a controlling stake in the Congolese mines from the tycoon in 2010 for $175 million (£108 million). It then faced a $2 billion (£1.2 billon) lawsuit from rival First Quantum Minerals Ltd. (LON:FQM), which had owned the rights until they were expropriated by Kabila’s government. The case led to a boardroom coup at ENRC and also a tightening of corporate governance regulations for foreign firms that list in London.

!m[Eurasian Natural Resources Corp. Takes Full Control of African Copper Venture as Part of “Company Structure Optimisation”](/uploads/story/1002/thumbs/pic1_inline.png)Some critics have been claiming that Mr Gertler has a practice of using his close relationship with the government of Congo to secure preferential treatment and the UK Serious Fraud Office (SFO) has been called on to investigate. Last week the International Monetary Fund (IMF) even froze a $532 million (£330 million) loan to the African country after Kabila’s government refused to publish details of the sale of a mine stake to a Gertler-controlled company. Yet the billionaire claims none of the mines he bought has been undervalued and that he invested in Congo when few others would.
**ENRC’s Structure Optimisation**
The purchase of Camrose is also seen as an attempt by ENRC’s chairman Mehmet Dalman to clean up the image of the group’s Congo interests, which have come under pressure from diplomats, politicians and lobbyists who have suggested that the country has several times expropriated the impoverished country’s vast resources and sold them on at a discount.
“This transaction is an integral part of the corporate governance and company structure optimisation that I set as a key priority when I assumed chairmanship,” said Mr Dalman, adding that “the transaction creates one of the largest copper producers in the African copper belt, targeting in excess of 200,000 tonnes per annum of copper over the next five years.”


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