Ghana’s Ashanti stake on the block

The government of Ghana may sell part of its 20% stake in gold minerAshanti Goldfields (ASL-N), plus a handful of other locally-listedcompanies, to reduce the West African nation’s domestic debt, according toYaw Osafo-Maafo, the country’s’ finance minister.

The minister rules out the sale of the government’s entire stake inAshanti. He says the share price is not very attractive. “We’ll definitelynot off-load everything in Ashanti. If for nothing else, for sentimentalreasons we’ll keep some of the shares,” he says.

In October 1999, a spike in the gold price hit Ashanti’s hedge book hardand sent its shares for a tumble. The shares have recovered from last year’slows on the New York Stock Exchange. However, they have failed to reach theUS$4 level since November 1999, when Britain’s Lonmin withdrew aUS$7-per-share offer for the company.

The deal collapsed due to opposition by the Ghanaian government, whichholds veto power over any mergers. This veto power is seen as the largestfactor weighing down Ashanti’s stock, especially now that there isincreasing pressure to consolidate in the mining industry.

Last month, Ashanti said it was making progress in talks with Ghana’s newauthorities about removing the veto power. In January, President JerryRawlings stepped down after opposition leader John Kufuor was elected.

Osafo-Maafo says the government expects to raise about US$50 millionthrough divestitures this year. He says the proceeds will be applied to thereduction of the debt-service burden, which amounts to 45% of annualgovernment receipts.

Other companies on the block include the wholly owned Ghana CommercialBank and Produce Buying Co. (the country’s largest cocoa buyer), in whichthe government has a 51% interest. The government also holds a 0.13% stakein Standard Chartered Bank. Other non-listed companies up for sale includeWestel, Ghana Telecom and Ecobank.