JOHANNESBURG – Australia’s South32 said yesterday that it would sell its South African thermal coal business to Seriti Resources and two trusts for R100 million up-front and deferred payments of up to R1.5 billion-a-year.
Under the deal, South32 will receive 49 percent of the cash flow generated by South32 SA Coal Holdings Proprietary (SAEC), with payments capped at R1.5bn-a-year, starting from the completion of the deal to March 2024.
South32 did not anticipate to report a taxable profit on the deal, from either the up-front or deferred consideration, the company said in a statement.
The transaction would “substantially reduce our capital intensity, strengthen our balance sheet and will improve the group’s operating margin”, South32 chief executive Graham Kerr said. He said: “We ran an exhaustive and competitive process and we believe Seriti as an established operator is ideally positioned to unlock the potential of SAEC’s existing domestic and export operations, including its significant untapped resource base.
“The sale of our interest in SAEC 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,” he said.