Apr 1 2013
OM Group, Inc. today announced that it has completed the previously-announced divestiture of its Advanced Materials business, including the sale of its downstream business, to a joint venture held by Freeport-McMoRan Copper & Gold Inc., Lundin Mining Corporation (TSX: LUN) and La Generale des Carrieres et des Mines (Gecamines).
OM Group received cash consideration of $325 million, plus approximately $30 million for cash retained in the business, upon the closing of the transaction. OM Group expects to use these proceeds, along with cash on-hand, to repay a substantial portion of its debt. The sale agreements also provide for potential future cash consideration of up to an additional $110 million based on the business achieving certain revenue targets over a period of three years.
In connection with the sale, OM Group also transferred its equity interests in its DRC-based joint venture known as GTL to its joint venture partners, subject to a security interest in favor of OM Group with respect to the joint venture's performance of certain supply arrangements.
Following the sale, to assist the buyer of the downstream business with the ownership transition, the Company will act as an intermediary of cobalt supply between GTL and the Freeport joint venture under a two-year agreement subject to delivery of 7,000 MT of feed. Also, OM Group will continue to serve as the U.S. distributor for refined cobalt products for a period of one year. Both of these transition service agreements are back-to-back arrangements with minimal profit or cash flow impact anticipated for OM Group.
Source: http://www.omgi.com/