Gencor eyes Shell mining interests: Conglomerate plans share structure changes

GENCOR, the South African conglomorate, is talking to Royal Dutch Shell about acquiring the oil group's portfolio of metal mining interests, worth an estimated dollars 2bn.

The group is also planning to simplify its complex shareholding structure. It will shed its energy, packaging, industrial and investment interests and be left as a mining and minerals house with dollars 2.3bn of assets.

Colin Officer, a Gencor director, said yesterday that together the 'coincidentally' simultaneous proposals would fulfil Gencor's long-standing desire to become an international mining house.

Shell confirmed Gencor had approached it about the major part of its gold, lead, zinc, copper, nickel and alumina mining and smelting interests and said it expected negotiations would take several months.

Although Gencor is cash-rich the Shell purchase, assuming a price can be agreed, will have to be achieved through balancing finance raised outside the country because of South African exchange control regulations.

Mr Officer said: 'We would probably put together a new organisation which would go outside and raise money against its assets.' With no management structure outside South Africa, Gencor would hope to acquire Shell's business as a going concern and might also add its other existing international interests.

Mr Officer said the fund-raising might be through debt or by a mixture of debt and the presence of equity partners, with a public flotation sought in the longer term.

Despite persistent rumours that Gencor and Lonrho might consider some form of co-operation, Mr Officer said there were no plans to include Tiny Rowland's conglomorate.

'Unbundling', as the process of simplifying the shareholding structure is called, aims to remove the 19 per cent discount to net assets at which Gencor has long traded.

This will probably be done by Gencor passing on to its shareholders the shares it currently holds in its Sappi, Malbak, Genbel and Engen subsidiaries.