Xstrata details Glencore coal deal
The commodities group, Xstrata, has seen earnings hammered by weak global demand. The group has also detailed its acquisition of Glencore's coal interests.
The company’s results, released on Thursday, showed net profit slump to $11.3 million (SFr19.2 million) last year from $170 million in 2000.
The Swiss-based company also released details on Thursday of its planned purchase of Australian and South African coal businesses from its majority owner Glencore International for cash and stock in a deal worth $2.5 billion.
The deal could catapult the Xstrata into the big league of mineral groups at a time when the global industry is undergoing a shake out.
Glencore, also based in Switzerland, has a 38.5 per cent stake in Xstrata, while Deutsche Bank owns almost five per cent.
Xstrata, which is refocusing on the ferro-alloys, coal and zinc markets, said turnover rose to $613.6 million from $597.9 million, despite weak profits.
To help pay for the Australian and South African coal acquisitions, which includes the businesses’ debts, Xstrata plans to raise around £650 million (SFr1.57 billion) in an share offering on the London Stock Exchange.
The company is also expected to use a $2 billion debt facility to raise cash.
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