Exxaro sells bulk of Tronox stake

The proposed transaction is in line with Exxaro’s strategy to monetise its stake in Tronox.

Exxaro Resources is preparing to sell off 17 million Tronox ordinary shares in a public offering in the US. The deal will reduce Exxaro’s stake in Tronox to about 1.6 percent from about 14.6 percent.

In addition, Tronox has exercised its “flip-in” call option over Exxaro’s 26 percent shareholdings in Tronox’s South African subsidiaries, for which Tronox is delivering to Exxaro approximately 7.2 million newly-issued Tronox ordinary shares. Once the transaction is completed, Exxaro’s ownership in Tronox will be reduced to approximately five million shares or an estimated 3.3 percent of Tronox’s total outstanding voting shares.

Tronox is the world’s leading integrated manufacturer of titanium dioxide pigment. Exxaro, which in the past held more than a 40 percent stake in Tronox, has been upfront about intentions to reduce its holdings. Exxaro’s strategy was to monetise its stake in Tronox over time, taking into account prevailing market conditions.

The company is moving away from investing to focus more on its core business of coal mining, as well as paying down debt, funding project development, and providing returns to its shareholders.

JP Morgan, BofA Securities, Deutsche Bank Securities, and Morgan Stanley will act as joint book-running managers and underwriters for the offering.