(Adds details on terms of deal, share price)
RIO DE JANEIRO, Sept 29 Vale SA said
on Thursday it has agreed to new terms for the sale of stakes in
a coal mine and railway project in Mozambique to shareholder
Mitsui & Co, in a deal that will raise $768 million and
could help Vale free up to $2.7 billion in funding commitments
for both projects.
The sale of Vale's stakes in the Moatize coal mine and the
Nacala Corridor railway and port hinge on the approval of a
project finance plan, Rio de Janeiro-based Vale said in a
statement. The deal reworks terms of a prior accord over the
mine and the infrastructure project.
It is a further step in attempts by Vale Chief Executive
Murilo Ferreira to reduce the Brazilian miner's capital spending
burden and cut debt by $10 billion through asset sales over the
next couple of years.
The Moatize and Nacala transactions should help reduce
Vale's fundraising needs in coming years as the world's No. 1
iron ore producer adjusts to an era of lower commodities prices.
The deal with Mitsui was first struck in December 2014 but
had not closed due to challenges in securing long-term financing
for the project, which is one of Africa's biggest with an
estimated total cost of $4.4 billion. Vale has already poured
about $2 billion into it.
"We have concluded the reworking of these terms at a moment
when the market for coal is beginning to gain some momentum,"
Ferreira said in a video posted on Vale's website.
Common American depositary receipts of Vale
recouped part of their earlier losses following the news. The
stock fell 1.9 percent to $5.5450 at 3:45 p.m. New York time,
after falling as much as 2.9 percent earlier.
Under the new terms, Mitsui will contribute up to $450
million for 15 percent of Vale's 95 percent stake in the mine.
Of this, $255 million is guaranteed while the remaining $195
million is dependent on attaining unspecified performance goals.
Mitsui will also contribute $348 million for 50 percent of
Vale's 70 percent stake in the Nacala Corridor, through a mix of
equity and so-called hybrid instruments, which often combine
features of equity and debt securities.
Mitsui will also provide the Nacala Corridor project with
$165 million in a long-term loan.
(Reporting by Stephen Eisenhammer; Additional reporting by Jeb
Blount and Marta Nogueira in Rio de Janeiro, and Gustavo Bonato
in São Paulo; Editing by Lisa Shumaker and Leslie Adler)