South32 exits South Africa thermal coal business
2019-11-07 12:02:13 [Print]
Australia's South32 Ltd. said on Wednesday it would sell its South Africa thermal coal business to Seriti Resources and two trusts for 100 million rand ($6.78 million) upfront and deferred payments of up to 1.5 billion rand per annum.
Under the deal, South32 will receive 49% of the cash flow generated by South32 SA Coal Holdings Proprietary Ltd. (SAEC), with payments capped at 1.5 billion rand per year, starting from the completion of the deal to March 2024.
South32 does not expect to report a taxable profit on the deal, from either the upfront or deferred consideration, the company said in a statement.
"The transaction will substantially reduce our capital intensity, strengthen our balance sheet and will improve the Group's operating margin," South32 Chief Executive Officer Graham Kerr said.
Johannesburg-based Seriti Resources and the two trusts will acquire South32's 91.84% stake in SAEC with the upfront cash payment, based on an enterprise value of 1.25 billion rand.
Under the deal, South32 will receive 49% of the cash flow generated by South32 SA Coal Holdings Proprietary Ltd. (SAEC), with payments capped at 1.5 billion rand per year, starting from the completion of the deal to March 2024.
South32 does not expect to report a taxable profit on the deal, from either the upfront or deferred consideration, the company said in a statement.
"The transaction will substantially reduce our capital intensity, strengthen our balance sheet and will improve the Group's operating margin," South32 Chief Executive Officer Graham Kerr said.
Johannesburg-based Seriti Resources and the two trusts will acquire South32's 91.84% stake in SAEC with the upfront cash payment, based on an enterprise value of 1.25 billion rand.
