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UPDATE 1-Glencore expects as much as $1 bln for Australia coal trains

Published 2016-03-16, 08:41 p/m
© Reuters.  UPDATE 1-Glencore expects as much as $1 bln for Australia coal trains
AIO
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GLEN
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AZJ
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* GRail made A$100 mln in EBITDA last year
* Recent infrastructure sales at 11-15 times EBITDA
* Glencore aims to cut net debt to $17-18 bln in 2016

(Adds details on GRail, deal timing)
By Sonali Paul
MELBOURNE, March 17 (Reuters) - Glencore Plc GLEN.L said
on Thursday it has put its coal trains in Australia up for sale,
hoping to fetch as much as A$1.5 billion ($1.1 billion) as it
taps into a hot market for infrastructure to cut debt.
The Swiss-based mining and trading giant is looking to slash
net debt this year by around $8 billion to help it weather what
is expected to be a prolonged downturn in all its commodities
markets.
The fleet it has put up for sale, called GRail, owns nine
trains and hauls most of Glencore's 51 million tonnes a year of
coal produced in the Hunter Valley to the port of Newcastle on
the east coast.
"Glencore is confident of fetching a sale price of above A$1
billion based on recent infrastructure sales in Australia," the
company's Australian spokesman, Francis De Rosa, said.
That estimate is based on the fact that GRail made A$100
million in earnings before interest, tax, depreciation and
amortisation (EBITDA) in 2015 and recent Australian
infrastructure sales have been sealed at 11-15 times EBITDA.
Those earnings multiples are much better than any mine sale
could obtain in today's depressed market.
GRail competes with Aurizon Holdings AZJ.AX and Asciano
Ltd's AIO.AX Pacific National, which is set to be taken over
by China Investment Corp CIC.UL , Canadian Pension Plan
Investment Board and U.S. investor Global Infrastructure
Partners.
Glencore is being advised by RBC, two people familiar with
the process said.
RBC is sounding out interest from infrastructure funds and
pension funds, aiming to get the sale process moving in
mid-April. Glencore hopes to close a deal by September.
The final sale price will hinge on the charge Glencore
negotiates for hauling its coal on GRail after it is sold. The
higher the charge, the higher the price tag Glencore will seek.
The planned sale of GRail was first reported by the
Australian Financial Review.

($1 = 1.3263 Australian dollars)

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