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szdaily -> Markets -> 
Tianqi plans sale of lithium mine
    2020-12-10  08:53    Shenzhen Daily

TIANQI Lithium Corp. plans to sell a minority stake in the world’s biggest lithium mine, giving the producer access to the cash it needs to repay the major loan behind its ballooning financial troubles.

Australian miner IGO Ltd. will pay US$1.4 billion in cash for a 49 percent stake in Tianqi Lithium Energy Australia Pty, the majority shareholder in the Greenbushes mine in the country’s west, according to a statement to the Shenzhen Stock Exchange on Tuesday. The deal also includes a minority stake in Tianqi’s lithium hydroxide plant at Kwinana once a restructuring of units is completed.

Tianqi will use the proceeds to repay US$1.2 billion in principal on an existing acquisition loan, as well as for working capital for the Kwinana project, it said. The company plans to sign an amended loan agreement with lenders to extend a US$1.88 billion payment to November 2021. After the equity investment and a repayment of no less than US$1.2 billion, the due date of the facility will be further deferred to 2022.

The deal expands IGO’s push into battery materials as it seeks to tap into an expected surge in demand as the world’s clean energy transition gathers pace. At the same time, it gives Tianqi a possible way out from under the massive loan repayment that it’s been struggling to repay after buying a stake in a Chilean producer in 2018 at the height of the lithium-price boom.

IGO will fund the deal with A$1.1 billion (US$815 million) in new debt and an equity raising of up to A$766 million priced at A$4.60 per share — a 9.7 percent discount to IGO’s last traded price Dec. 7. The remainder will come from existing cash. Completion is expected in the June quarter of 2021.

While Tianqi said there’s still uncertainty around whether the transaction with IGO can be completed, it would effectively lower its asset-liability ratio and optimize capital structure without losing control of its core assets.

Tianqi previously said it was weighing options including asset sales or seeking strategic investors to ease its liquidity stress, and the deal with IGO comes after lenders granted a last-minute extension of a month on its jumbo loan payment.

Tianqi had held a 51 percent stake in Greenbushes mine in Western Australia through a joint venture with Albemarle Corp., which held the rest.

(SD-Agencies)

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