Under the option agreement, Glencore will pay Xstrata $2.25bn in cash upon completion of the sale pursuant to the exercise of the option, plus any profits accrued but not distributed to Xstrata during the period January 1, 2009 to the completion date, and the net balance of any cash invested by Xstrata.
The Prodeco business comprises the Calenturitas and La Jagua open pit thermal coal operations, export port facilities and a 39.8% share in a railway in Colombia.
Mick Davis, chief executive of Xstrata, said: “The acquisition of the Prodeco operations last year facilitated an orderly rights issue process during very challenging market conditions.
“Glencore’s decision to exercise its option provides Xstrata’s shareholders with a robust cash return on the initial purchase price and provides additional financial flexibility as Xstrata’s capital expenditure programme ramps up to deliver 50% volume growth by 2014, including a 50% increase in coal and copper production and a doubling of current nickel volumes.”
In the 12 months to December 31, 2009, the Prodeco operations produced 10.5 million tonnes of coal, generated $259m of EBITDA and $159m of operating profit (before depreciation on the fair value uplift adjustment of $52m).
