Sherritt proposes a major restructuring

A prospectus for a rights offering that would bisect Sherritt (TSE) into fertilizer and metals companies has been filed with securities regulators.

Under the proposed restructuring, Sherritt would remain in the fertilizer and oil and gas businesses, while a new subsidiary company would absorb the company’s Cuban nickel and cobalt operations, international oil and gas interests, and engineering and metallurgical business.

The new company, Sherritt International Corp., would also diversify its Cuban interests, investing in transportation, communications, real estate, finance and agriculture. The Cuban government has already indicated its willingness to see Sherritt develop private-sector business in the country.

Under the offering, each Sherritt share entitles its owner to one transferable right to subscribe for an “exchange certificate,” which, in turn, can be exchanged for one restricted voting share of the new company. Sherritt management will retain multiple-voting shares that will preserve the board’s effective voting control over the new company.

Sherritt expects to receive regulatory approval for the offering in several weeks, at which time it will announce terms of the offering in detail.

Sherritt’s earnings for the first nine months of 1995 were $130.6 million, or $1.93 per share, on revenue of $895.5 million. For the same period in 1994, earnings amounted to $50.1 million, or 84 cents per share, on revenue of $628.6 million. The fertilizer division was the principal contributor, with the commodity metals group also performing strongly. Higher prices for nickel and cobalt accounted for strength in the metals division. The oil and gas group broke even, surviving a weak market for hydrocarbons.