Anglo American to sell its Brazilian business for $1.5bn

Mining giant Anglo American plc stated that it had agreed to sell its niobium and phosphates businesses in Brazil to China Molybdenum Co. Ltd for $1.5bn.

Proceeds from the sale would be utilized towards reducing its debt, which Anglo plans to reduce to c.$10bn by the end of 2016 from its FY 2015 debt of $12.9bn. Previously, Anglo had conducted a $1.3bn debt-repurchase offering as part of its turnaround and debt reduction plan.

The company plans of a further $3-4bn of asset sales in 2016. Anglo American plans to focus its mining operations on diamonds, copper and platinum.

Source: WSJ

Anglo American to buy back $1.3bn debt

Mining firm Anglo American’s subsidiary Anglo American Capital plc plans to re-purchase upto $1.3bn of its bonds from investors as part of its turnaround plan aimed at reducing debt and divesting certain assets.

The company published a tender offer on 18 February 2016 to purchase debt which ends on 16 March 2016.

The plan to puchase debt comes on the news of Moodys’ downgrading the company’s credit ratings to Ba3 from Baa3 on 15 February 2016, ahead of its FY 2015 results announced a day later. S&P also downgraded the company’s credit rating to BB from BBB-.

Key takeaways from the FY 2015 earnings release:

  • Revenue of $23bn vs. $30.9bn a year ago
  • Net loss before tax of $5.5bn vs. loss of $259m a year ago
  • EBIT at $2.2bn vs. $4.9bn a year ago
  • EBITDA at $4.8bn vs. $7.8bn a year ago

Targets for 2016:

  • $3-4bn of asset disposals targeted
  • pro-forma net debt to decline below $10bn by 2016 and to touch $6bn in the medium-term
  • Net Leverage to be less than 2.5x in the medium-term
  • Suspension of dividend payments
  • Capex for 2016 of less than $3bn

Bonds to be purchased include EUR, GBP and USD -denominated bonds with the following maturities:

  • 4.375% bonds due December 2016
  • 1.75% bonds due November 2017
  • 1.75% bonds due May 2018
  • 6.875% bonds due April 2018
  • 2.5% bonds due September 2018
  • 2.625% USD bonds due 2017

Sources: Company Press Releases, PR Newswire, Bloomberg & FT