MMX executes MOU with Trafigura and Mubadala
MMX executes Memorandum of Understanding with Trafigura and Mubadala
Rio de Janeiro, 10 September 2013 - MMX Mineração e Metálicos S.A. (“MMX” or “Company”), the only Brazilian iron ore mining company with integrated logistics listed on the New Market segment of BM&FBovespa, in compliance with the provision established in Art. 157 of Law No. 6,404/76 and in Brazilian Securities and Exchange Commission (CVM) Instruction No. 358/02, hereby notifies its shareholders and the market in general that the Company and its controlling shareholder Eike Fuhrken Batista (“Batista”), announce today that they have entered into preliminary agreements (the “Agreements”) with Trafigura Pte. Ltd. (“Trafigura”) and EAV Lux SarL, a wholly owned subsidiary of Mubadala Development Company PJSC (“Mubadala”), pursuant to which MMX has agreed to negotiate exclusively with Trafigura and Mubadala for the next 4 weeks to execute definitive agreements pursuant to which they would become the controlling shareholders and operators of an iron ore port terminal located in the State of Rio de Janeiro, Brazil, with an initial capacity to handle 50 million tons of iron ore per year, known as the Sudeste Superport (the “Potential Transaction”). The Sudeste Superport began construction in July 2010, designed to handle cape-size vessels, and is expected to begin commercial operation mid-2014, and has development plans to increase its capacity to 100 million tons per year.
On the closing date, Trafigura and Mubadala shall subscribe for newly issued quotas/shares in MMX Porto Sudeste Ltda. (“MMX Porto Sudeste”) for a consideration of US$400m in cash. MMX Porto Sudeste would also assume all of the bank indebtedness of MMX Sudeste Mineração S.A. and all payment obligations relating to MMXM11 royalties. In exchange, Trafigura and Mubadala will become the holders of a 65% shareholding in MMX Porto Sudeste. As a result, MMX Porto Sudeste will have the necessary funds to complete the Sudeste Superport and MMX's mining business will be essentially debt-free.
As per the Potential Transaction terms, MMX Porto Sudeste shall make available to MMX a port volume of 7Mtpa. In addition, MMX shall be granted an option to extend its port volumes from 7Mtpa to 13Mtpa. This option shall be exercisable at any time until June 30th, 2015. If Sudeste Superport is expanded, MMX shall have the right to increase its port volumes proportionally. After successfully completing this transaction, MMX shall enhance its mining activities.
MMX Porto Sudeste will benefit significantly from Trafigura's unique trading platform. All trading profit related to domestic inland trading within Brazil's Southeast Region will accrue to the benefit of MMX Porto Sudeste.
MMX shall have an option to acquire an interest in MMX Porto Sudeste of up to 7.5%.
The Agreement sets out a list of matters to be negotiated as part of the Potential Transaction.
Claude Dauphin, Chairman of Trafigura said: “We are pleased to be exploring Trafigura's participation in the Sudeste Superport development together with Eike Batista and Mubadala Development Company, and contribute our worldwide trading experience and global logistics infrastructure and expertise to the Brazilian mining industry.”
Eike Batista, Chairman and controlling shareholder of MMX said: “we are pleased to announce an alliance with a team of world-class players committing to explore participating in the development of an EBX Group project. We firmly believe in Trafigura's unparalleled capacity to extract the full value of the Sudeste Superport”.
Mubadala said “Completion of the proposed transaction would be another positive step in our ongoing discussions with EBX regarding the restructuring of its businesses so as to realize maximum value for EBX and its stakeholders. Together with our partners at Trafigura, we look forward to working with all interested parties in satisfying all transaction conditions and proceeding to closing.”
Closing of the Potential Transaction is subject to, among other conditions, in the first instance, the parties mutually agreeing and executing definitive agreements to implement the Potential Transaction and, if definitive agreements are executed, other conditions such as, corporate and regulatory approvals and a debt restructuring shall be fulfilled. There can be no assurance the Agreement will result in the execution of definitive agreements for the Potential Transaction or the closing of the Potential Transaction.
The Company will arrange a conference call with its shareholders and the market in general to clarify this transaction which will be timely convened by MMX as soon as possible.
Trafigura's Global Press Office: +44 207 009 1708 or Email: firstname.lastname@example.org
Adriana Marques: +55 21 2163 6197 or Email: email@example.com
Rachel Porfirio: +55 31 3516 7512
Juliana Campos: +55 31 3516 7542
Notes to Editors
MMX, the iron ore company in entrepreneur Eike Batista's EBX Group, was established in 2005. With two systems in operation - the Sudeste System, in Minas Gerais, and the Corumbá System, in Mato Grosso do Sul - MMX has installed capacity capable of producing 10.8 million tons of iron ore per year. MMX is also present in Rio de Janeiro, with the Sudeste Superport, which is being built in Sepetiba Bay. The company also has iron ore extraction rights in Bom Sucesso (MG). The company's goal is to expand the installed capacity of the Serra Azul Unit (MG) to 29 million tons of iron ore per year. For more information visit: ri.mmx.com.br.