Rio Tinto has reached a binding agreement for the sale of its wholly-owned Australian subsidiary Coal & Allied Industries Limited to Yancoal Australia Limited for up to US$2.45 billion including:
An initial US$1.95 billion cash payment, payable at completion; and US$500 million in aggregate deferred cash payments, payable as annual of US$100 million over five years following completion.
Before 24 February 2017, Yancoal Australia is entitled to elect an alternative purchase price structure of a single cash payment at completion of US$2.35 billion.
After the sale is completed, Rio Tinto will also be entitled to potential royalties.
Rio Tinto Executive J-S Jacques said:
“This sale delivers outstanding value for our shareholders and is consistent with our strategy of reshaping our portfolio to ensure the most effective use of our capital.”
Meanwhile, Yancoal Chairman Xiyoung Li said:
“This is a transformative and exciting acquisition for Yancoal shareholders and will form the basis for the future growth and success as Australia’s largest pure-play coal company.
“Via the acquisition of Coal & Allied’s high-quality asset portfolio, we will be delivering substantial cash flow to the company, quality coal products and long-term relationships with end-uses in key global markets.
In addition to the sale consideration and potential royalties linked to the coal price, Rio Tinto will continue to benefit from earnings and cashflow generated by Coal& Allied until completion of the transaction. The Coal & Allied operations will also continue to use Rio Tinto freight survives following completion of the transaction.
Subject to all approvals and other conditions precedent being satisfied, it is expected that the transaction will complete in the second half of 2017.
Read the article online at: https://www.worldcoal.com/coal/24012017/rio-tinto-announces-sale-of-coal-allied/