Tomahawk, WI 08/18/2014 (Basicsmedia) – BHP Billiton Limited (ADR)(NYSE:BHP) has announced plans to spin-off its aluminum and Nickel Assets, a move that has got the approval of Chairman and CEO of CEF Holdings, Warren Gilman, in an interview on CNBC. The disposal of the assets is expected to benefit the management as well as bringing incremental value to shareholders. Despite the positive remarks, Gilman maintains a ‘neutral’ rating on the company’s stock as the spin out represents less than 10% of BHP’s total assets.
After the spinoff BHP Billiton Limited (ADR)(NYSE:BHP) will be left with four main core assets with Australia producing iron Ore in the west coast and met-coal in the east coast. America, on the other hand, will continue producing oil and natural gas for the company with Copper coming in from Chile.
“I am neutral for the bigger picture you know this spin out represents less than 10% of the assets base of BHP Billiton. So what amount of value are we going to create, while if you are really bullish, perhaps 50% of that value is perhaps lost in the other $180 billion of assets within BHP,” said Mr. Gilman.
Gilman raised concerns that despite the upcoming spinoff, there are a number of underlying challenges that the company will continue to face in the long run with some of its other core business that continue to perform dismally in the industry. BHP Billiton Limited (ADR)(NYSE:BHP)P, according to Gilman will be left with four main core business of which three are currently facing a huge challenge of oversupply in the industry.
“[…] those are four main commodities three of which are suffering from significant of oversupply over the next few years. Iron ore coal and arguably energy oil and gas. The only commodity there that has any medium term excitement is probably copper. So for me it’s hard to get overly excited about the remaining assets within BHP Billiton Limited (ADR)(NYSE:BHP), when it’s focused on three of those, when three of those four commodities are in rather difficult supply situation for the next several years, “said Mr. Gilman.