6th Nov 2019 06:23
(Alliance News) - South32 Ltd on Wednesday said it has entered into an agreement to sell its South African coal subsidiary for an upfront payment of ZAR100 million.
The miner's 92% holding in SA Coal Holdings Proprietary Ltd will be bought by a subsidiary of South African coal miners Seriti Resources Holdings Proprietary Ltd, a local community trust, and an employee trust.
The trusts will take a 5% stake each, with Seriti holding 82%. The remaining 8% interest, not included in the deal, is held by industrial investors Phembani Group Proprietary Ltd.
The consideration also includes a deferred payment which will see South32 receive a portion of the cash flow generated from by the unit, capped at ZAR1.5 billion. The London, Sydney and Johannesburg listed company will earn 49% of cash generated between the completion of the transaction and March 2024.
South32 Chief Executive Graham Kerr said "I am pleased to announce we have entered into an agreement with Seriti, a black-owned and operated South African mining company. We ran an exhaustive and competitive process and we believe Seriti as an established operator is ideally positioned to unlock the potential of South Africa Energy Coal's existing domestic and export operations, including its significant untapped resource base.
"The sale of our interest in South Africa Energy Coal will enable the business to continue to operate safely and sustainably into the future for the benefit of its employees, customers and local communities, consistent with South Africa's transformation agenda. For South32, this marks an important milestone as we continue to reshape our portfolio. Completion of this transaction will substantially reduce our capital intensity, strengthen our balance sheet and will improve the group's operating margin."
South32 shares closed up 2.7% in Sydney on Wednesday at AUD2.65.
By Eric Cunha; [email protected]
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