ENP Newswire - 30 April 2014
Release date- 29042014 - TORONTO, ONTARIO - Sherritt International Corporation (TSX: S) today announced it completed the divestiture of its Coal business.
'This transaction benefits Sherritt by rationalizing our asset base, significantly enhancing liquidity and providing the opportunity to strengthen our balance sheet,' said David Pathe, Chief Executive Officer. 'We are continuing to execute on our strategy to build positive momentum and create sustainable shareholder value.'
A significant portion of the cash proceeds will be used to strengthen the Corporation's balance sheet through debt reduction. Sherritt has begun debt-reduction discussions with advisors and debtholders. Proceeds from the transaction that are not used for debt reduction will be used for general corporate purposes, including the funding of the Ambatovy ramp-up.
Sherritt sold the assets for total consideration of $946 million, including $793 million of cash received on closing. The operating assets, described as the Prairie and Mountain Operations, were sold to Westmoreland Coal Company ('Westmoreland') for total consideration of $465 million, comprised of $312 million in cash at closing and the assumption of capital leases valued at $153 million.
The Corporation's royalty portfolio and interest in coal development assets were sold to a group led by Altius Minerals Corp., for cash consideration of $481 million. Post-closing adjustments, for among other things, changes to capital leases, working capital and coal inventories, are expected to be finalized in second-quarter 2014.
Sherritt had a $525 million revolving credit facility used primarily for letters of credit and short-term funding for the Coal business. The $300 million drawn on this facility was repaid from Sherritt's existing cash balances immediately prior to closing of the Coal transaction. The facility was subsequently terminated.
Sherritt will continue to work with Westmoreland on the Obed Mountain Mine remediation plan, and will continue to meet all financial obligations resulting from the October 2013Obed Mountain Mine containment pond breach.
Sherritt is a world leader in the mining and refining of nickel from lateritic ores with operations in Canada, Cuba and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations across the island. Sherritt licenses its proprietary technologies and provides metallurgical services to commercial metals operations worldwide.
The Corporation's common shares are listed on the Toronto Stock Exchange under the symbol 'S'. Further information on Sherritt can be found on the Corporation's website: www.sherritt.com.
This press release contains certain forward-looking statements. Forward-looking statements can generally be identified by the use of statements that include such words as 'believe', 'expect', 'anticipate', 'intend', 'plan', 'forecast', 'likely', 'may', 'will', 'could', 'should', 'suspect', 'outlook', 'projected', 'continue' or other similar words or phrases. Forward-looking statements in this document include, but are not limited to, anticipated timing of post-closing adjustments, and certain corporate objectives, goals and plans. Forward-looking statements are not based on historic facts, but rather on current expectations, assumptions and projections about future events.
They are based on information available to management and/or assumptions management believes are reasonable. Many factors could cause results to differ materially from the results discussed in the forward-looking statements. Although the forward-looking statements are based on what management believes to be reasonable assumptions, Sherritt cannot assure investors that actual results will be consistent with such forward-looking statements and such forward-looking statements should not be unduly relied upon. All forward-looking statements in this press release are made as of the date of this press release.
Except as required by applicable securities laws, Sherritt does not intend and does not assume any obligations to update or revise the forward-looking statements. The Corporation's risk factors are discussed in disclosure documents filed by Sherritt with Canadian securities regulators. Reference should be made to the management discussion and analysis in Sherritt's annual and interim financial statements and its annual information form for the year ended December 31, 2013 and dated March 26, 2014, all of which are available on SEDAR at www.sedar.com.