Banks back Glencore mine sale
Creditors of Glencore’s Optimum Coal mine have approved a plan to sell it to a firm controlled by Duduzane Zuma and the Gupta family.
|||Johannesburg - Creditors of Glencore’s Optimum Coal mine approved a plan to sell it to a company controlled by South African President Jacob Zuma’s son and the Gupta family on Friday, according to an administrator of the business-rescue team.
The approval sealed the R2.15 billion ($143 million) sale of loss-making Optimum to Tegeta Exploration & Resources, a company in which both Duduzane Zuma and members of the Gupta family have indirect interests.
Read: Optimum, Tegeta deal to be scrutinised
Investec, FirstRand’s Rand Merchant Bank unit and Nedbank collectively hold about R2.7 billion in Optimum debt, according to a person with knowledge of the matter. The three voted for the sale through an agent.
“The creditors got the requisite majority,” Piers Marsden, who has been managing the so-called business-rescue process since Glencore sought bankruptcy protection for Optimum in August, said on Friday. Marsden drew up the March 31 plan.
Glencore put Optimum into business rescue after state power utility Eskom refused to amend an unprofitable coal-supply contract and reduce a R2-billion fine. While the holding company will be released, the mine itself will remain in business rescue until Tegeta can show that it can run it profitably, Marsden said on Thursday.
“That is the million-dollar question,” Marsden said. “It’s not for today.”
Eskom requirements
Eskom said that it will not amend Optimum’s supply contract or penalty.
“Whatever happens, we don’t want to be put in a situation when we’re not going to get our money and the coal,” Khulu Phasiwe, a spokesman for Eskom, said by phone on Thursday. Marsden confirmed that the contract and penalty would remain in place.
Tegeta issued shares to Duduzane Zuma’s Mabengela Investments three weeks before the sale was announced. The ruling African National Congress is investigating the Gupta family - friends of President Zuma - after Deputy Finance Minister Mcebisi Jonas last month claimed the three brothers had offered to promote him to the finance minister’s job. They deny the allegation.
Mineral Resources Minister Mosebenzi Zwane has been criticised by opposition politicians saying that he told Glencore Chief Executive Officer Ivan Glasenberg to do the deal with Tegeta. Tegeta says the minister had no influence over the deal and wasn’t involved in negotiations.
The Mineral Resources Department has approved the sale, clearing the final regulatory hurdle, Marsden said. Ministry spokesman Martin Madlala wasn’t immediately available to comment. A spokesman for Glencore declined to comment.
It will take about 10 days after the vote to close the deal, Marsden said.
BLOOMBERG