LONDON, UK: Glencore plc confirmed the submission of a proposal to the Board of Directors of Teck Resources Limited (Teck) to acquire Teck’s steelmaking coal business, known as EVR, in a cash deal.
This alternative proposal, termed the “Proposed EVR Acquisition,” comes as Glencore explores options for its Proposed Merger Demerger with Teck.
Glencore’s offer to acquire EVR is expected to facilitate a value accretive demerger of the combined coal and carbon steel materials business, referred to as CoalCo, to Glencore’s shareholders. The proposal aligns with the continued support expressed by shareholders for a transaction between Glencore and Teck.
Should the transaction proceed, Glencore plans to demerge CoalCo after achieving a sufficient reduction in leverage, estimated to occur within 12 to 24 months from the deal’s closure. Glencore intends to manage its post-demerger balance sheet, prioritizing servicing its base distribution formula, while targeting a revised net debt cap of approximately $5 billion. This represents a significant decrease from the current level of approximately $10 billion. Glencore reaffirms its commitment to maintaining minimum strong BBB/Baa ratings.
Glencore is dedicated to ensuring that the Proposed EVR Acquisition would bring benefits to Canada. The company is open to collaborating with Teck to establish a comprehensive set of commitments that would serve the interests of all relevant stakeholders. These commitments may include preserving and enhancing EVR’s existing presence and capital investments in Canada, as well as upholding its community, social, labor, and environmental programs.
It is important to note that the transaction is subject to various conditions and there is no certainty that it will ultimately take place. Glencore will provide further updates as necessary regarding the progress of the Proposed EVR Acquisition.