UPDATE 2-Anglo American agrees $1.5 bln sale of Brazilian niobium, phosphates units

  • Reuters
  • Stock Market News
UPDATE 2-Anglo American agrees $1.5 bln sale of Brazilian niobium, phosphates units
Credit: © Reuters.

* Sale price exceeds market expectations
* Deal is subject to approvals, expected to be sealed by
year-end
* Share price climbs 3 percent then pares gains

(Adds comments, share price, context)
By Barbara Lewis
LONDON, April 28 (Reuters) - Anglo American AAL.L has
agreed to sell its niobium and phosphates businesses in Brazil
to China Molybdenum for $1.5 billion in cash, it said on
Thursday, as it seeks to cut debt in a radical restructuring of
the global mining group.
Anglo American shares rose more than 3 percent in early
trade as analysts said the price was higher than expected and
boded well for further deals.
"The proceeds from this transaction ... will enable us to
continue to reduce our net debt towards our targeted level of
less than $10 billion at the end of 2016," said Anglo's chief
executive, Mark Cutifani.
The niobium and phosphates businesses consist of mines,
plants, processing facilities, chemical complexes and deposits,
with niobium a key ingredient of specialist high-strength steels
while phosphate production serves Brazil's domestic market for
fertilisers.
Analysts said the sale was around $500 million above
expectations following reports of interest from other firms,
including Apollo Global Management LLC APO.N and Vale.
VALE5.SA
Bernstein said in a note the deal should give investors
confidence that Anglo can realise good value for its assets and
marked a shift in strategy.
"Anglo American is dressing itself up as an attractive
takeover target," it said.
The group is selling parts of its business after a
commodities rout that has triggered a fight for survival even
among heavyweight miners.
As it aims to cut its net debt to less than $10 billion by
the end of the year from $12.9 billion at the end of December,
the ratio under scrutiny is net debt to earnings before
interest, tax, depreciation and amortisation.
BMO Capital Markets that ratio should shrink to less than
three from a previous projection of 3.3.
On first analysis it said the deal could reduce Anglo
Amercian's debt sufficiently for it to regain an investment
grade credit rating following its downgrade to junk by credit
ratings agencies.
The deal is subject to certain approvals and is expected to
close in the second half of the year.
Anglo American shares were up 2 percent at 711.8 pence by
0915 GMT, when the FTSE 350 mining sector index 0#.FTNMX1770
was up 0.7 percent.

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