Glencore has submitted a proposal to acquire Rio Tinto’s 100% interest in Coal & Allied Industries Ltd. (C&A) for $2.55 billion in cash plus a coal price-linked royalty. The cash is comprised $2.05 billion in cash payable on completion and $500 million in aggregate deferred cash payments, payable in annual installments of $100 million over five years following completion.
A subsidiary of Mitsubishi Corp. has a tagalong right to sell its 32.4% interest in the Hunter Valley Operations joint venture. Glencore has agreed to purchase Mitsubishi’s 32.4% interest in the joint venture and 28.898% interest in the Warkworth joint venture for $920 million cash conditional on completion of Glencore’s acquisition of C&A from Rio Tinto, with $520 million being payable on completion and $100 million payable on the first four anniversaries of completion. If a transaction is concluded, Glencore intends to mitigate its overall financial commitment via a sale/monetization of assets of no less than $1.5 billion, including exploring the option of selling up to 50% of its interest in the C&A mines.