South32 Ltd (LON: S32) have agreed to sell a major South African coal unit, as highlighted in a shareholder update on Wednesday morning.
South32’s South African subsidiary coal unit will be sold for ZAR100 million in an upfront payment deal, as the report outlined.
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.
Each trust will take a five percent stake each, with Seriti holding 82%.
The remaining eight per cent not included in the deal, is held by industrial investors Phembani Group Proprietary Ltd.
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.”
Seriti will make an up-front cash payment of about 100 million rand ($6.8 million), based on an enterprise value of 1.25 billion rand, to acquire South32 SA Coal Holdings Proprietary Ltd, South32 said in a statement.
This is an interesting move for the London based metal extractor where rivals have seen mixed updates.
Shares of South32 were 1.92% to the good, to trade at 142p per share. 6/11/19 11:38BST.