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(Alliance News) - Glencore PLC on Tuesday said its subsidiary, Carlisa Investments Corp, has agreed to sell its 90% interest in Mopani Copper Mines PLC To ZCCM Investments Holding PLC for a nominal sum of USD1, as well as transaction debt of USD1.5 billion.
The Swiss commodities trader owns an 81% stake in Carlisa, which in turn holds a 90% interest in Mopani, which operates the Mopani copper mine in Zambia. ZCCM - a mining and energy investment holding company - holds the remaining 10% interest in Mopani.
This means that Glencore will be selling an underlying stake of 73% in Mopani.
As Mopani has been funded by borrowings from Carlisa and Glencore as a whole, once the deal is completed USD1.5 billion of debt will remain owed by Mopani to Glencore creditor.
The terms of the debt is that interest will be capitalised for the first three years after completion, after which will be payable quarterly at LIBOR +3.
The second term is that the principal outstanding under the transaction debt will be repayable under a dual mechanism, whereby 3% of gross revenue of Mopani from 2021 to 2023, 10% to 18% of revenue after the period, and 33% of earnings before interest, tax, depreciation and amortisation will be paid at the end of each quarter.
The completion of the sale is conditional on gaining regulatory approval in Zambia, and shareholder approval from ZCCM, and is expected to take place in the next three months.
Once the deal is completed, Glencore will retain its offtake rights for Mopani's copper output until the debt has been repaid in full.
Shares in Glencore were up 1.4% at 280.65 pence on Tuesday in London, while its Johannesburg shares were 0.9% higher at ZAR57.47.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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