By Tatiana Bautzer and Dave Sherwood
SAO PAULO/SANTIAGO, April 16 (Reuters) – Brazilian personal fairness agency IG4 Capital has delivered a $916 million bid to purchase into holding firms which have massive stakes in Chilean lithium miner Sociedad Quimica y Minera de Chile, generally known as SQM, two sources with information of the matter stated.
If SQM’s shareholder Julio Ponce agrees to the proposed deal, IG4 would turn into one of many largest shareholders of the world’s second largest lithium producer.
The group intends to appoint as much as 4 board members, in line with the proposal described by the sources.
They’d serve alongside three board members designated by China’s Tianqi Lithium Corp 002466.SZ, which owns a few quarter of SQM.
Shares within the holding firms jumped with the information on Friday. Sociedad de Inversiones Pampa Calichera CALICHERAA.SN rose 4.99%, Sociedad de Inversiones Oro Blanco OROBLANCO.SN spiked 7.88% and NORTEGRAN.SN 7.02% shortly after mid-day on the Santiago change.
The non-binding supply was delivered final Monday in Santiago to Ponce, via his monetary adviser K2 Advisors, after nearly a 12 months of talks, in line with the individuals, who requested anonymity to reveal personal discussions.
Chilean newspaper La Tercera reported afterward Friday that Ponce had already rejected the supply, however didn’t title its supply.
SQM and IG4 Capital declined to remark. K2 Advisors’ companion Cristian Araya, who represents Ponce, didn’t instantly touch upon the matter. Pas soon as’s legal professional additionally didn’t instantly reply to a request for remark.
IG4 is near hiring funding financial institution Banco BTG Pactual SA to advise on the deal and assist with the financing, the sources added.
If the bid is accepted inside 30 days, IG4 will start a due diligence to construction a binding supply which might characterize the most important single funding but for the agency, which closed its second fund, centered on particular alternatives in Latin America, final 12 months.
One of many transactions’ principal targets is to simplify SQM’s possession construction, decreasing low cost on the share’s costs and easing the corporate’s entry to capital markets.
The second largest lithium producer on the planet, SQM SQMA.SN has a $14.three billion market capitalization. It trades at a steep low cost to rivals reminiscent of Australia’s Orocobre ORE.AX, China’s Ganfeng Lithium Co Ltd 002460.SZ and Albermarle ALB.N, the business chief, whilst the corporate has one of many world’s lowest manufacturing prices.
The inclusion of a global monetary agency amongst SQM’s largest shareholders may enhance acceptance by banks and traders wanted to assist the corporate finance future enlargement and tasks, the individuals added.
In the meantime, this may be the primary mining deal for IG4, whose different investments have been in areas as various as grain port terminals, sanitation and well being care.
TENDER OFFER, RESHUFFLING AT HOLDING LEVEL
The deal would set off a fancy restructuring within the cascading holding firms that maintain a 30% stake in SQM. Ultimately, IG4 will personal 45.6% of a brand new holding firm referred to as SQYA-OB, to be majority held by Ponce.
This firm will personal 90% of one other holding, Pampa Grande, which in flip will personal 21.4% of SQM sequence A listed shares, with the voting rights. One other holding firm, Pampa Chica, may have a further 8.6% stake in SQM.
This consequence will likely be achieved after sequence of mergers, spin offs and buyouts between the present holding firms that comprise Pampa Calichera.
IG4 intends to make a young supply to purchase out minority shareholders in listed holding firms Norte Grande SA NORTEGRAN.SN, Sociedad de Inversiones Oro Blanco OROBLANCO.SN and Sociedad de Inversiones Pampa Calichera CALICHERAA.SN, in line with paperwork associated to the deal seen by Reuters.
The fund expects to spend round $610 million within the tender affords. The primary goals to purchase 70% of Oro Blanco float for 4.34 Chilean pesos per share and the second, 60% of Norte Grande float for 4.62 pesos per share.
Of the full $916 million bid, round $100 million would come within the type of a mortgage to holding firm SQYA.
Ponce, 75, former son-in-law of Chilean dictator Augusto Pinochet, purchased a stake in SQM in its privatization within the 1980s and has held energy within the firm since.
He stays a controversial determine in Chile and has been criticized by the nation’s present authorities. The corporate doesn’t have a proper shareholders settlement any extra, the results of a deal struck with Chilean growth company Corfo, though Ponce nonetheless appoints board members.
Ponce was fined by the Chilean securities business regulator in 2014 for market manipulation, however has since obtained a discount of the quantity interesting to courts.
(Reporting by Tatiana Bautzer in Sao Paulo and Dave Sherwood in Santiago; Modifying by Christian Plumb, Diane Craft and Marguerita Choy)
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