Rio Tinto Agrees To Sell Coal & Allied Industries For Around $2.45 Bln

(RTTNews) - Rio Tinto Plc (RTPPF.PK, RIO.L, RIO, RTNTF.PK) Tuesday said it signed a binding agreement for the sale of its Australian subsidiary Coal & Allied Industries Ltd. to Yancoal Australia Ltd. for up to $2.45 billion. As per the agreement, an initial $1.95 billion cash will be payable at completion; and $500 million in aggregate deferred cash payments, payable as annual installments of $100 million over five years following completion. After the sale is completed, Rio Tinto will also be entitled to potential royalties.

Further, Rio Tinto will continue to benefit from earnings and cash flow generated by Coal & Allied until completion of the transaction. The Coal & Allied operations will also continue to use Rio Tinto Marine freight services following completion of the transaction. The transaction is expected to be complete in the second half of 2017. After completion of the sale, Rio Tinto will become entitled to a quarterly coal price linked royalty calculated as $2 per tonne of attributable saleable production.