Debt Arrangements Around Mopani Deal
ZCCM-Investment Holdings Plc

The following is an extract from the “Acquisition of 90% Shareholding in Mopani Circular” available on the ZCCM IH investor pages that explains how the investment house structured the $1.5 billion remaining Debt in Mopani from the GIAG Facility and Carlisa Facility.

 

Sections 8.6 and 8.7 reads….

On completion of the Transaction, the Remaining Debt in Mopani from the GIAG Facility and Carlisa Facility will be US$1.5 billion, with the excess being waived as part of this Transaction.

Interest under the Remaining Debt will be capitalised for the first three years after completion, and thereafter will be payable quarterly at LIBOR + 3% (subject to a switch to an equivalent interest rate based on SOFR). The principal outstanding under the Remaining Debt will be repayable under a dual mechanism whereby:

(i) 3% of gross revenue of the Mopani group from 2021-2023 (inclusive), and 10-17.5% of gross revenue of the Mopani group thereafter; and
(ii) 33.3% of EBITDA less taxes (limited to taxes in line with previous year’s), changes in working capital, capital expenditure, royalty payments to GRZ and interest and principal (calculated under the first mechanism) payments in respect of the Remaining Debt, is at the end of each quarter required to be paid. Repayment of principal (together with accrued interest) may additionally be required in the event of an occurrence of certain other early prepayment events. These include certain change of control events in respect of Mopani, proceeds from capital raising or disposals and sales of product other than those pursuant to the Offtake Agreements, amongst others.

If ZCCM-IH ceases to control Mopani or the GRZ ceases to control ZCCM-IH, the Lenders may, at any time thereafter cancel the facilities and declare all loans, together with accrued interest, immediately due and payable. Control is specified as GRZ maintaining 50% shareholding in ZCCM-IH and ZCCM-IH maintaining 75% shareholding in Mopani, with control of operations and appointment of directors.

ZCCM-IH shall guarantee the obligations of Mopani under the GIAG Facility and the Carlisa Facility.

After completion of the Transaction, Glencore will retain offtake rights in respect of a portion of Mopani’s copper production until the Remaining Debt has been repaid in full.

Offtake and Marketing Agreements
On completion, Mopani and Glencore International AG will enter into Offtake Agreements relating to the supply by Mopani to a member of the Seller’s Group of up to 100 per cent. of Mopani’s production of copper cathode and copper anode slimes materials for the duration of the Loan Facilities (priced based on London Metal Exchange/London Bullion Market Association market pricing for the relevant metals).

The Offtake Agreements will allow, subject to certain restrictions, for up to 20 per cent. of Mopani’s production of copper cathode to be allocated for sale by Mopani to domestic Zambian value-adding consumers. This percentage may be increased from time to time to reflect increases in domestic demand, by agreement of the parties.

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