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Rockwood Holdings, Inc. (NYSE:ROC) announced today that it entered into a joint venture (“JV”) with Chengdu Tianqi Industry Group (“Tianqi”) giving Rockwood a 49% ownership interest and Tianqi a 51% interest in Talison Lithium Pty Ltd. This transaction is expected to close during the first quarter of 2014, following receipt of regulatory approvals.
At close, it is expected that Rockwood and Tianqi will contribute equity of $196 million and $204 million, respectively. In addition, Rockwood will also provide to the joint venture a two-year secured loan of up to $670 million at 8% interest. Rockwood will grant Tianqi a three-year call option to invest from 20% to 30% in the equity of Rockwood Lithium GmbH, the European arm of Rockwood’s global lithium business, which will be valued at 14x the last twelve months Adjusted EBITDA.
Proceeds to the joint venture will be used to pay off existing debt and equity holders including Tianqi Group HK Co., Limited (a subsidiary of Tianqi) and Leader Investment Corporation (a subsidiary of China Investment Corporation). Rockwood is expected to fund its investment in the joint venture from cash on hand.
“With this acquisition, we have secured access to another significant lithium reserve, in addition to our current resources in the U.S. and Chile,” said Seifi Ghasemi, Chairman and Chief Executive Officer. “Further, not only does this complement our core lithium business, but it also meets with all of our prior stated financial and strategic objectives for allocation of capital in a disciplined manner to enhance economic value for shareholders.”
Lazard acted as Rockwood’s financial advisor and Clifford Chance as legal advisor.
Conference Call and Webcast
Rockwood plans to host a conference call and webcast to discuss this transaction today on Monday, December 2 at 11:00 am Eastern Time.
To access this conference call, the dial-in number in the U.S. is (800) 230-1059, and the international dial-in number is (612) 234-9960. No access code is needed for either call. A listen-only, live webcast of the conference call will also be available at
www.rocksp.com. Materials for the call, including the press release and presentation, will be available for download on the company’s website. For persons unable to listen to the live conference call or webcast, a webcast replay of the call will be available on Rockwood’s website.
Talison Lithium Pty Ltd
Talison is a leading global producer of lithium for over 25 years. Talison mines and processes lithium bearing mineral spodumene at its operations located at Greenbushes, Western Australia (the “Greenbushes Lithium Operations”), located approximately 250 kilometers from Perth, Western Australia. Greenbushes Lithium Operations is estimated to be the world’s largest known reserves of lithium spodumene minerals with a current mine life of 40 years.