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Glencore Increases Its Shareholdings in Katanga Following Completion of Rights Offering

BAAR, Switzerland, Dec. 20, 2019 (GLOBE NEWSWIRE) -- On December 19, 2019, Katanga Mining Limited (“Katanga”) completed an offering (the “Rights Offering”) of rights (“Rights”) exchangeable into Common Shares. Glencore International AG (“Glencore”) had entered into a standby purchase agreement (the “Standby Purchase Agreement”) with Katanga in connection with the Rights Offering.

Pursuant to the Standby Purchase Agreement, Glencore, subject to certain terms, conditions and limitations, agreed to exercise its basic subscription privilege in full and to purchase at the Subscription Price, that number of Common Shares equal to the difference, if any, between: (x) the total number of Common Shares authorized to be issued on the record date for the Rights Offering pursuant to the exercise of Rights issued under the Rights Offering; and (y) the number of Common Shares subscribed for and taken up under Rights Offering by holders of Rights pursuant to the basic subscription privilege and the additional subscription privilege (the “Standby Commitment”).  

Glencore exercised its basic subscription privilege in full for all of the Rights issued to Glencore and Glencore thereby acquired beneficial ownership of 51,186,419,486 Common Shares (at a subscription price of C$0.1295 per Common Share (the “Subscription Price”) for an aggregate subscription price of C$6,628,641,323).

Additionally, Glencore acquired 8,037,405,829 Common Shares (at the Subscription Price for an aggregate subscription price of C$1,040,844,055) pursuant to the Standby Commitment.

Accordingly, Glencore acquired an aggregate total of 59,223,825,315 Common Shares at an aggregate subscription price of C$7,669,485,378.

The Common Shares were issued to Glencore under the Rights Offering from Katanga’s treasury.

Summary of Glencore’s Holdings in Katanga

Prior to the completion of the Rights Offering, Glencore held 1,646,613,928 Common Shares, representing approximately 86.3% of the issued and outstanding Common Shares.

Following completion of the Rights Offering, Glencore holds 60,870,439,243 Common Shares, representing approximately 99.5% of the issued and outstanding Common Shares.

For the purposes of this news release, the number and percentages of outstanding Common Shares held by Glencore are based on 61,199,951,841 outstanding Common Shares following the completion of the Rights Offering.

Investment Intent

Glencore entered into the Standby Purchase Agreement in the context of discussions and negotiations between: (i) Katanga; (ii) a special committee (the “Special Committee”) of independent directors of Katanga which was formed to assess whether a proposal made by Glencore to the Company to address Katanga’s overall indebtedness to Glencore under the Glencore Loan Facilities (as defined below) (or an alternative thereto) should proceed; and (iii) Glencore, and their respective advisors which occurred through-out 2019.

For further background information, reference is made to the prospectus filed on SEDAR in connection with the rights offering.

The entirety of the proceeds of the Rights Offering were used to repay US$5.8 billion of debt owed to an affiliate of Glencore under the existing loan facilities (the “Glencore Loan Facilities”), with approximately US$1.5 billion of debt owed to Glencore ("Glencore Debt") being retained by Katanga. Accordingly, Glencore has not committed any new monies to Katanga as a result of the Rights Offering. The Offering has led to a reduction of the debt due to Glencore of US$5.8 billion and a corresponding increase of 59,223,825,315 Common Shares held by Glencore and repayment of C$8,902,622 to Glencore in respect of the US$5.8 billion amount of Glencore Debt (which C$ amount is based on a five day average C$/US$ exchange rate as of November 15, 2019 of 1.32386).

Glencore has no current intention to take Katanga private. Any decision by Glencore to take Katanga private and the timing of any such take private transaction or other action will depend on various factors including Glencore’s ongoing assessment of material capital investment required to deliver on Kamoto Copper Company’s mine plan over the near-term and its evolving understanding of material country risks including  those arising from the fiscal regime in the Democratic Republic of the Congo (the “DRC”), the ability to effectively repatriate cash from the DRC in the future as well as political conditions and the ongoing efficacy of publicly listed shares as a channel for financing Katanga’s activities. Glencore will weigh these factors from time to time to assess whether Katanga’s ability to obtain financing from outside sources justifies the ongoing costs of maintaining its status as a listed public company.

The head office of Katanga is located at Suite 300, 204 Black Street, Whitehorse, Yukon, Y1A 2M9, Canada.

The head office of Glencore is located at Baarermattstrasse 3, CH-6340 Baar, Switzerland.

This news release is being issued in accordance with National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues in connection with the filing of an early warning report. The early warning report in respect of this transaction will be filed on SEDAR (www.sedar.com) under Katanga’s profile. To obtain a copy of the early warning report filed by the Corporation, please contact the person name below or refer to SEDAR (www.sedar.com).

For further information, please contact:

Paul Smith

T: +41 41 709 24 87
C: +41 79 947 13 48