Anglo American Hires Fortescue’s Debt Slashing Finance Chief

JOHANNESBURG, Capital Markets in Africa: Anglo American Plc has picked a debt-cutting specialist as the embattled miner seeks to further reduce its borrowings.

It named Fortescue Metals Group Ltd.’s Stephen Pearce its new finance director after he led the drive to slash debt at the world’s fourth-largest iron ore producer. Pearce will join Anglo in January and take up his new post on April 24, the producer said Friday in a statement. The 52-year-old has been chief financial officer of Fortescue since 2010 and was promoted to the board of the Australian company in June.

Anglo, seeking to reshape its business for an era of lower commodities pricesand to cut net debt to less than $10 billion, said in April its current finance director, Rene Medori, would retire next year after holding the position for 12 years. Pearce is credited with driving Fortescue’s debt reduction program, cutting the producer’s borrowings by $3.6 billion since July 2015.

London-based Anglo’s need to cut its debt pile has parallels to Fortescue’s position about three years ago, Peter O’Connor, a Sydney-based analyst with Shaw and Partners Ltd., said by phone. Pearce is “a guy who can methodically and systemically work through an incredibly pressured process to reduce debt. He’s just done it,” he said.

Fortescue’s shares fell 3.9 percent Friday in Sydney trading, trimming its advance this year to 165 percent. Anglo slipped 0.5 percent in London. The stock has more than tripled this year and is the best performer in the benchmark FTSE 100 Index.

Medori will continue to lead London-based Anglo’s asset divestment and restructuring processes until his retirement at the end of 2017, the company said.

Pearce’s “strong relationships with the debt and equity capital markets have proven immensely valuable in his role at Fortescue, as has his work across complex cost and other efficiency performance programs,” Anglo CEO Mark Cutifani said in the statement.

Rising commodity prices have eased the pressure on Anglo’s debt cutting program. Once the company completes the $1.5 billion sale of its niobium and phosphates business debt drop to $10.3 billion, putting it within touching distance of its goal to cut borrowings below $10 billion by year-end.

The century-old company announced a plan in February to shrink its business by more than half to weather a crisis in raw-material prices. It’s planning to exit coal and iron ore to focus on more profitable diamond, platinum and copper mines. The company has a target of $3 billion to $4 billion in asset sales this year.

Perth-based Fortescue, founded by billionaire Andrew Forrest, earlier confirmed the executive will step down at the end of this year and said it will study internal and external candidates to replace Pearce. Former Rio Tinto Group executive Greg Lilleyman will be appointed as operations director in January, Fortescue said.

Source: Bloomberg Business News