BHP, an Australian mining company, announced on Monday to sell its 80 percent stake in BHP Mitsui Coal, a metallurgical coal joint venture, to Stanmore Resources Ltd for up to $1.35 billion.
In a deal, Stanmore agreed to acquire BHP’s stake in BHP Mitsui Coal, which operates two metallurgical coal mines in the Bowen Basin, Australia.
Japan’s Mitsui & Co Ltd owns the remaining stake in BHP Mitsui Coal.
Analyst Peter O’Connor of Shaw & Partners said it is a fair to good price from the perspective of BHP, a diversified resources company that extracts, processes and sells metals, minerals, coal, iron ore and petroleum products to global markets.
Experts at RBC predict that BHP may distribute proceeds from the divestment among shareholders via special dividends on completion in mid next year.
Owned by Singapore-listed Golden Energy and Resources Ltd, Stanmore said it will pay $1.1 billion on completion of the sale and an additional $100 million after six months.
Stanmore said it plans to fund the acquisition with a $625 million debt facility and a $600 million equity raising.
Golden Energy, which runs a thermal coal mine in Indonesia and a gold mine in Queensland, will guarantee Stanmore’s obligations and any break fee to up to $600 million.
However, Australia’s Foreign Investment Review Board is yet to review the deal for final approval.
After the deal, Stanmore’s shares witnessed their best session in five years and gained 23.7 percent to A$1.280 ($0.9469), while BHP’s shares also increased 1.2 percent.