Thursday, August 23, 2012

Anglo American, Chile's Codelco settle dispute

Anglo American and copper giant Codelco ended a bruising ten-month long dispute on Thursday, with the global miner agreeing to sell its Chilean rival a stake in its coveted south-central Chile properties at a discount to the market price.

The cash deal, worth more than $2.8-billion excluding land, will see Anglo reduce its ownership of its Anglo American Sur properties to 50.1%, as the miner and fellow shareholder Mitsubishi sell a combined 29.5% to Codelco and its financing partner, Japan's Mitsui & Co.

Codelco will also get unspecified land adjacent to its flagship Andina mine. A source familiar with the deal said on Wednesday the land was worth around $400-million.

Under the agreement, reached a day before the agreed deadline, Anglo will sell 24.5% to a Codelco-controlled joint venture between the Chilean powerhouse and trading house Mitsui for $1.7-billion in cash.

The Codelco-Mitsui partnership will buy an additional 5% shareholding for another $1.1-billion, with shares made up 0.9% from Anglo and 4.1% from Mitsubishi. The 4.1% will be bought by Anglo from Mitsubishi for $890-million, and subsequently sold on.

The deal has been done at a discount to a previous valuation of the option, which suggested a price for the 24.5% at around $2.8-billion, reduced from an earlier $3-billion after copper prices fell.

Last October, Codelco said it would exercise its option to buy a 49% stake in the Anglo Sur mining complex when the option window opened in January 2012.

It secured a $6.75-billion bridge loan from Mitsui to exercise its option, with the right, but not the obligation, to pay off part of the loan through the sale of an indirect stake of half the shares acquired.

Weeks later, Anglo dented Codelco's ambitions and surprised the market with a pre-emptive sale of a 24.5% stake in Anglo Sur to Mitsubishi. Anglo said the $5.4 billion deal secured better value for investors.

Since then, the companies have been tussling for the properties.

Source: Reuters