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Discussion Starter #1
will barrick's new Africa Barrick spin-out, set to IPO in london soon, ever trade in north america, possibly as ADRs ?

every barrick shareholder is going to wind up with africa. Humungous number of funds & etfs are going to wind up with africa. Selling or trading these in london will be costly for retail investors, even through interactive brokers. Tch.
 

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will barrick's new Africa Barrick spin-out, set to IPO in london soon, ever trade in north america, possibly as ADRs ?

every barrick shareholder is going to wind up with africa. Humungous number of funds & etfs are going to wind up with africa. Selling or trading these in london will be costly for retail investors, even through interactive brokers. Tch.
I would think that the spun off company would be excluded from the index. An exception was made in the TSX Composite for Tim Hortons when it was headquartered in Delaware. I'd be surprised if an exception was made for Africa Barrick. So, a lot of ETFs might end up selling the spun off company.
 

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Discussion Starter #3
yes you are right. The etfs will not be able to own africa barrick. So they will have to sell. What i really meant, though, was the annoyance & extra cost for retail investors who will suddenly find themselves with scraps & crumbs in london whose sale will cost them a commish of $150 and up.

rarely does one see a major canadian company behaving with such overt disregard for its retail shareholders.

alas i'm not capable of carrying out spec #2, it's far too rich for my blood.

speculation #1: will the etfs have to sell immediately upon issue? or within what time delay after issue? these are not just canadian etfs, they're all north american etfs that own barrick today.

speculation #2: the arbs should be shorting africa barrick on a when-issued basis. Maybe it's to prevent this that barrick is being so close-mouthed about the details. Co does allow, however, that africa barrick will debut later this month. Terms still uncertain.
 

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every barrick shareholder is going to wind up with africa.
Is that the plan? I didn't get that impression from the articles I read about it. That is, it doesn't sound like existing Barrick shareholders will get X shares of Barrick Africa, but rather the IPO is just for new shareholders to buy into, and Barrick (parent) will hold their 75% interest directly.
 

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I don't follow Barrick but it seems to me that Potato might be right. Here's the snippet from a recent news release:

http://www.barrick.com/News/PressReleases/PressReleaseDetails/2010/BarrickReportsQ42009FinancialandOperatingResults1121572/default.aspx

Today Barrick announced the creation of African Barrick Gold (ABG), a new company whose equity it will seek to list with the United Kingdom Listing Authority and to admit to trading on the London Stock Exchange. ABG will hold Barrick's African gold mines and exploration properties. African Barrick Gold will offer approximately 25% of its equity in an initial public offering (IPO) and Barrick will retain the remaining interest.
 

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Discussion Starter #6
ah i see. Barrick is going to take the IPO proceeds into treasury. The african barrick offering must be small enough, compared to co's total capitalization, that it does not require shareholder ratification, a plan of arrangement, or any procedure to distribute new africa barrick shares to existing shareholders.

it's hard to get the brain around a company so huge that it can spin out a portion of itself that's large enough - more than a quarter of a billion dollars - to qualify as an IPO on london but small enough, as a fragment of company's assets, to be disposed of without a corporate reorg and the above-mentioned steps.

whenever there's a spin-out the existing shareholders are to be compensated for the loss of their asset. Usually this takes the form of shares in the new entity pro-rata. In this instance Barrick will keep & use the proceeds as cash.

from the feb 18/2010 news release:

" ... [African Barrick Gold] is expected to have an initial cash balance of $0.28 billion and the net offering proceeds will be paid to Barrick. This return of capital to Barrick is expected to provide increased financial capacity to fund the Company's pipeline of development projects."

interesting how carefully they've planned it. Smart guy, Regent.
 
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