Glencore’s subsidiary Carlisa Investments has signed an agreement to conclude the sale of Mopani Copper Mines in Zambia to ZCCM Investments Holdings for US$1.5 billion.
Carlisa Investments, in which Glencore holds 81.2% of the shares, has signed an agreement with ZCCM to transfer its 90% interest in Mopani to ZCCM. The sale is expected to be completed within the next three months, once ZCCM shareholders and the board of directors approve and after certain regulatory approvals in Zambia are received.
On completion, US$1.5 billion of debt will remain owed by Mopani to Glencore group creditors on the following terms:
- interest under the debt will be capitalised for the first three years after completion, and thereafter will be payable quarterly at LIBOR + 3% (subject to a switch to an equivalent interest rate based on SOFR); and
- principal outstanding under the debt will be repayable under a dual mechanism whereby:
- 3% of gross revenue of the Mopani group from 2021-2023 (inclusive), and 10-17.5% of gross revenue of the Mopani group thereafter; and
- 33.3% of EBITDA less tax, changes in working capital, capital expenditure, royalty payments and interest and principal (calculated under the first mechanism) payments in respect of debt, is at the end of each quarter required to be paid. Repayment of principal (together with accrued interest) may additionally be required in the event of an occurrence of certain other early prepayment events, including certain change of control events in respect of Mopani.
Once the sale is completed, Glencore will retain offtake rights in respect of Mopani’s copper production until the debt has been repaid in full.