Glencore Sells Australia Rail Unit in Latest Deal to Cut Debt
October 20 2016 - 4:20AM
Dow Jones News
SYDNEY—Glencore PLC has agreed to sell its coal-haulage business
in Australia's New South Wales state to U.S. railroad operator
Genesee & Wyoming Inc. for 1.14 billion Australian dollars
(US$874 million), the latest deal by the company aimed at reducing
its debt load.
Glencore last year had promised to sell operations to cut
borrowings after a mounting debt pile and sagging commodities
prices sent its shares tumbling. The company has since agreed to
carve off parts of its operation including a 40% stake in its
agricultural business, which it sold to Canada's largest pension
fund, Canada Pension Plan Investment Board, for US$2.5 billion in
cash.
"The sale of the GRail business forms another significant part
of Glencore's debt-reduction program," the Swiss commodities trader
and mining company said in a statement Thursday.
Glencore said that after the deal is completed Genesee &
Wyoming, based in Darien, Conn., would manage much of Glencore's
coal-transport in Australia's Hunter Valley region under a 20-year
contract.
GRail, also known as Glencore Rail, currently hauls about 40
million metric tons of its parent company's coal output from mines
in the Hunter Valley to the Port of Newcastle, the world's biggest
coal-export hub, each year.
"We established GRail in 2010 and have steadily grown it to
become the third largest coal haulage business in the country,"
said Peter Freyberg, head of Glencore's global coal assets. "It has
played a very important role in reducing costs and improving the
overall efficiency of Australia's largest coal chain in the Hunter
Valley."
The deal will need approval by Australia's foreign-investment
regulator, the company said.
Genesee & Wyoming already has operations in Australia,
including running more than 3,000 miles of track in South Australia
state and the Northern Territory, according to its website.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
October 20, 2016 04:05 ET (08:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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