In an ongoing effort to pare down its assets and concentrate on its core business,
The latest transaction brings Cyprus another step closer to becoming a pure copper company.
In 1998, the Denver-based company sold its lithium subsidiary for US$305 million and spun off its gold subsidiary in a merger with
From RAG, Cyprus will will receive US$1.1 billion in cash and assumption of debt. Tax payments as a result of the transaction will be partially mitigated, so the company expects to see no material gain or loss from the deal.
While RAG will assume US$300 million in reclamation and employee benefits plus related assets, Cyprus will receive production payments on the Willow Creek mine in Utah.
At the end of 1998, Cyprus had a long-term debt of US$1.68 billion, down from US$2.1 billion in 1997. Debt payments totalled US$117 million in 1998, down considerably from US$939 million in 1997. The company acquired the debt largely through the construction of the US$1-billion El Abra copper project in Chile.
In August 1998, the company approved a plan to repurchase up to 10 million shares, or 11%, of the outstanding shares on the open market.
Cyprus Amax Coal has operations in Pennsylvania and the Powder River Basin of Wyoming, as well as in Utah, Colorado and Illinois. Revenue in 1998 was US$800 million, and the company earned US$19 million on shipments of 68 million tons of coal. Cyprus’s Australian coal assets, including the Oakbridge and Springvale operations, were not included in the sale.
RAG International, formerly Ruhr Kohle, is a large, private conglomerate based in Essen, Germany. Its coal division, which represents half of company sales, operates mines in Venezuela, Australia and the U.S.
While the boards of both RAG and Cyprus have approved the transaction, it has yet to be approved by regulators.
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