BHP Group Limited (BHP.AX,BLT.L,BBL,BHP) and its joint venture partner Mitsubishi Development Pty Ltd or MDP, a unit of Japan’s Mitsubishi Corp. (MBC.L,MSBHY.PK), announced Wednesday their agreement to divest the Blackwater and Daunia mines to Whitehaven Coal for cash consideration of up to $4.1 billion.<\/p>\n
These mines are part of Queensland-based metallurgical coal joint venture BHP Mitsubishi Alliance or BMA, in which both BHP and MDP hold 50% interest each.<\/p>\n
The purchase price comprises $2.1 billion cash on completion, $1.1 billion in cash over 3 years after completion and the potential for up to $0.9 billion in a price-linked earnout payable over 3 years.<\/p>\n
Completion is expected to occur in the June 2024 quarter. The sale is subject to the satisfaction of certain conditions, including competition and regulatory approvals.<\/p>\n
Under the deal, Whitehaven Coal’s two subsidiaries will buy Blackwater mine and Daunia mine, respectively. Whitehaven Coal has guaranteed the obligations of each buyer.<\/p>\n
The companies noted that BMA will continue to operate the assets until completion, following which it will work closely with Whitehaven Coal and its units to ensure a successful transition of ownership.<\/p>\n
For a short period of time after completion, BHP will support certain transitional services to the buyers.<\/p>\n
The companies noted that the buyers have agreed to pay a $100 million deposit on signing. BHP and MDP are entitled to retain this amount if the proposed divestment is terminated in certain limited circumstances.<\/p>\n
BHP said the net proceeds from the deal will be used to reduce its net debt. <\/p>\n