JOHANNESBURG - Katanga Mining, a subsidiary of diversified natural resource group Glencore, said it had settled a legal dispute with the Democratic Republic of Congo's Gécamines over joint venture Kamoto Copper Company (KCC), averting its dissolution.
In a statement released on Tuesday, Katanga said it agreed with state-owned Gécamines to terminate legal proceedings brought by Gécamines and resolve KCC’s capital deficiency.
"Gécamines, Katanga and KCC have agreed on a recapitalization plan that will allow the reconstruction of the net equity of KCC and satisfy the requirements provided for by DRC corporate law, subject to the satisfaction of certain conditions precedent.," it said.
The deal entails a US$150 million one-time settlement payment by Katanga to Gécamines, payable on June 14, 2018 "in settlement of certain historical commercial disputes".
The terms also include the resolution of KCC's capital deficiency via the restructuring of all long-term debt and commercial offtake prepayment obligations owed by KCC and the reduction of KCC’s total debt to a maximum of US$3.45 billion.
“We are pleased to have reached an agreement to resolve the KCC capitalization issues and preserve and revitalize the partnership between KCC and Gécamines,” Katanga non-executive chairman Hugh Stoyell said.
"We look forward to the next phase of development at KCC, which we believe will provide significant benefits to Katanga and its stakeholders, as well as Gécamines and all stakeholders in the DRC."
The dispute arose from KCC's obligation to address a capital deficiency that first arose in 2014 when, as a result of historical losses incurred during the rehabilitation of its assets, shareholders' equity fell below half of its share capital.
In accordance with the law, the capital deficiency should have been rectified by December 31, 2017, and, as a result of this not having been done, Gécamines was entitled to commence legal action for the dissolution of KCC.
- African News Agency (ANA)