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Glencore offers $2.5bn for Rio Tinto's C&A arm

12 June 2017 07:13

Glencore has submitted a proposal to acquire Rio Tinto's 100% interest in Coal & Allied Industries Limited for $2.55bn in cash plus a coal price linked royalty.

Glencore said the cash would comprise $2,050m on completion and $500m in aggregate deferred cash payments, payable as annual instalments of $100m.

The company said the proposed acquisition would be funded from existing cash resources and committed facilities and was subject only to regulatory conditions.

It added that said a subsidiary of Mitsubishi Corporation had a tag-along right to sell its 32.4% interest in the Hunter Valley Operations joint venture.

Glencore said it has agreed to purchase Mitsubishi's 32.4% interest in the HVO JV and 28.898% interest in the Warkworth joint venture for $920m cash conditional on completion of Glencore's acquisition of C&A from Rio Tinto,

It said that $520m would be payable on completion and $100m on the first four anniversaries of completion.

Glencore said there was no certainty that any transaction would be concluded and it would only be bound once a binding share purchase agreement was concluded with Rio Tinto.

Glencore said that if a transaction were concluded, it intended to mitigate its overall financial commitment via a sale/monetisation of assets (prioritising its coal portfolio) of no less than $1.5bn, including exploring the option of selling down up to 50% of its interest in the C&A mines.

It added: "In any event, as part of our overall group financial policy, in addition to targeting maximum 2x net debt/adjusted EBITDA through the cycle, Glencore's balance sheet will be managed to prevent net debt increasing above December 2016's level of $15.5bn, thereby ensuring that our leverage target is comfortably met and financial conservatism maintained." Story provided by

Related Company: GLEN

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