Shares of Hochschild Mining Plc (LON: HOC) plunged 18.75% today after the company revealed that its Chairman Eduardo Hochschild had sold a 12% stake worth £123 million ($164.7 mln)in the miner through his holding vehicle Pelham Investment.
Hochschild who is the chairman of the silver and gold mining company still owns 197 million shares, or approximately 38% of the company, which is still a sizeable chunk. Investors apprehension about the sale was reflected in the massive price drop experienced today, which is understandable.
Company executives have been known to sell their shares when a business is in trouble given that they usually know more about the company’s operations than public shareholders most of whom have little knowledge of the day to day operations of a company.
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JP Morgan, which was the sole book-runner for the divestment said: “The sale is subject to demand, price and market conditions, and, in particular, the number of placing shares may be changed,”
Adding: “The price at which the placing shares are to be placed and the final number of placing shares will be agreed by the Seller and JPMorgan Cazenove at the close of the book-building process.”
The investment bank clarified that Eduardo Hochschild was still committed to the family business, which was founded over 100 years ago, but that he needed the capital to fund investments in his other businesses and in new opportunities.
Hochschild Mining share price
Hochschild Mining shares plunged 18.75% today to trade at 192.4p having fallen from Wednesday’s closing price of 236.8p.
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