Synopsis: BHP and Mitsubishi Development have signed Asset Sale Agreements to divest the Blackwater and Daunia mines, part of the BHP Mitsubishi Alliance metallurgical coal joint venture in Queensland, to Whitehaven Coal subsidiaries for up to $4.1 billion. The divestment is subject to certain conditions and is expected to be completed in the June 2024 quarter.Article: In a significant move, BHP and Mitsubishi Development Pty Ltd (MDP) have sealed Asset Sale Agreements for the divestment of the Blackwater and Daunia mines. These mines, integral to the BHP Mitsubishi Alliance (BMA) metallurgical coal joint venture in Queensland, are set to transition into new ownership.Each of BHP and MDP holds a 50% interest in BMA, making this divestment a notable development in the coal industry. Two wholly owned subsidiaries of Whitehaven Coal have stepped forward as buyers, agreeing to acquire the Blackwater mine and Daunia mine for a cash consideration of up to $4.1 billion. Whitehaven Coal has also taken on the responsibility of guaranteeing the obligations of each buyer.The purchase price includes $2.1 billion in cash upon completion, an additional $1.1 billion in cash to be paid over three years post-completion, and the potential for up to $0.9 billion in a price-linked earnout payable over three years. Excluding the price-linked earnout, this translates to an Enterprise Value/Reserves multiple of 12.8/t.However, this sale is contingent on the fulfillment of specific conditions, including obtaining competition and regulatory approvals. To underscore their commitment, the buyers have consented to a $100 million deposit upon signing, which BHP and MDP may retain in certain limited circumstances if the divestment doesn't proceed as planned.The transition of economic and operational control of the Daunia and Blackwater mines to the buyers will take place upon completion, including the management of all current and future environmental liabilities and rehabilitation obligations.Until completion, BMA will continue to operate the assets, working closely with the buyers and Whitehaven Coal to ensure a seamless change of ownership. Additionally, BHP will provide transitional services to the buyers for a brief period post-completion.Geraldine Slattery, President Minerals Australia at BHP, commented on the transaction, saying, "This transaction has delivered a good outcome for the BHP Mitsubishi Alliance, our workforce, and the communities around the Blackwater and Daunia operations. Whitehaven Coal has a strong track record as a responsible and reliable operator, and we will work closely with them to achieve a smooth change of ownership focused on maintaining safe and productive operations and supporting people and communities through the transition. In line with our long-term strategy, we will continue to develop our high-quality metallurgical coal assets in Queensland, which are sought after by global steelmakers and needed to support the energy transition."The net proceeds from this divestment will be utilized to reduce the Group's net debt, marking a strategic move for BHP's financial management.Conclusion: BHP's announcement of the divestment of the Blackwater and Daunia mines signifies a significant shift in the coal industry landscape. The agreement with Whitehaven Coal subsidiaries for up to $4.1 billion comes with various financial considerations and conditions. This move aligns with BHP's long-term strategy, emphasizing high-quality metallurgical coal assets to support global steelmakers and the energy transition. The divestment is expected to be finalized in the June 2024 quarter and will have financial implications for BHP, including debt reduction.
Synopsis: BHP and Mitsubishi Development have signed Asset Sale Agreements to divest the Blackwater and Daunia mines, part of the BHP Mitsubishi Alliance metallurgical coal joint venture in Queensland, to Whitehaven Coal subsidiaries for up to $4.1 billion. The divestment is subject to certain conditions and is expected to be completed in the June 2024 quarter.Article: In a significant move, BHP and Mitsubishi Development Pty Ltd (MDP) have sealed Asset Sale Agreements for the divestment of the Blackwater and Daunia mines. These mines, integral to the BHP Mitsubishi Alliance (BMA) metallurgical coal joint venture in Queensland, are set to transition into new ownership.Each of BHP and MDP holds a 50% interest in BMA, making this divestment a notable development in the coal industry. Two wholly owned subsidiaries of Whitehaven Coal have stepped forward as buyers, agreeing to acquire the Blackwater mine and Daunia mine for a cash consideration of up to $4.1 billion. Whitehaven Coal has also taken on the responsibility of guaranteeing the obligations of each buyer.The purchase price includes $2.1 billion in cash upon completion, an additional $1.1 billion in cash to be paid over three years post-completion, and the potential for up to $0.9 billion in a price-linked earnout payable over three years. Excluding the price-linked earnout, this translates to an Enterprise Value/Reserves multiple of 12.8/t.However, this sale is contingent on the fulfillment of specific conditions, including obtaining competition and regulatory approvals. To underscore their commitment, the buyers have consented to a $100 million deposit upon signing, which BHP and MDP may retain in certain limited circumstances if the divestment doesn't proceed as planned.The transition of economic and operational control of the Daunia and Blackwater mines to the buyers will take place upon completion, including the management of all current and future environmental liabilities and rehabilitation obligations.Until completion, BMA will continue to operate the assets, working closely with the buyers and Whitehaven Coal to ensure a seamless change of ownership. Additionally, BHP will provide transitional services to the buyers for a brief period post-completion.Geraldine Slattery, President Minerals Australia at BHP, commented on the transaction, saying, "This transaction has delivered a good outcome for the BHP Mitsubishi Alliance, our workforce, and the communities around the Blackwater and Daunia operations. Whitehaven Coal has a strong track record as a responsible and reliable operator, and we will work closely with them to achieve a smooth change of ownership focused on maintaining safe and productive operations and supporting people and communities through the transition. In line with our long-term strategy, we will continue to develop our high-quality metallurgical coal assets in Queensland, which are sought after by global steelmakers and needed to support the energy transition."The net proceeds from this divestment will be utilized to reduce the Group's net debt, marking a strategic move for BHP's financial management.Conclusion: BHP's announcement of the divestment of the Blackwater and Daunia mines signifies a significant shift in the coal industry landscape. The agreement with Whitehaven Coal subsidiaries for up to $4.1 billion comes with various financial considerations and conditions. This move aligns with BHP's long-term strategy, emphasizing high-quality metallurgical coal assets to support global steelmakers and the energy transition. The divestment is expected to be finalized in the June 2024 quarter and will have financial implications for BHP, including debt reduction.
