Glencore PLC's Katanga Mining Ltd. unit ended a legal dispute with Democratic Republic of the Congo state miner Gecamines SA covering their Kamoto Copper Co. SARL joint venture in the country, according to a June 12 release.
The parties also agreed to resolve the capital deficiency at Kamoto by converting US$5.60 billion of its total debt of about US$9 billion into new shares, effective Jan. 1. Most of the debt is owed to Glencore.
The move will see Kamoto's debt falling to US$3.45 billion, and the new intercompany loans will bear interest at the U.S. dollar six-month London Interbank Offered Rate plus 3% or 6%.
Katanga and Gecamines' interests in Kamoto will remain unchanged at 75% and 25%, respectively.
Meanwhile, Katanga will make a one-time settlement payment of US$150 million to Gecamines on June 14 to settle certain historical commercial disputes under the joint venture deal. The dividend payment and free cash flow provisions of Kamoto will be revised.
Katanga also agreed to pay around US$41 million in relation to outstanding expenses incurred as part of a replacement reserves exploration program.
Additionally, Gecamines will be freed of obligations to provide compensation for reserves valued at US$285 million and repay US$57 million in associated contractor costs.
The agreement will see the creation of new protocols for the involvement of Gecamines in certain commercial affairs of Kamoto.
In April, Gecamines brought a legal action against Katanga, seeking to dissolve Kamoto, for its failure to resolve the capital deficiency. It agreed to withdraw such action on closing of the proceedings, which is expected to occur within the next two weeks.
The settlement frees Glencore from one of the legal disputes the company is facing in the DRC, including a US$1.14 billion compensation claim from Congolese-American businessman Charles Brown, and US$2.98 billion in damages sought by Ventora Development SASU, a company affiliated with Israeli billionaire Dan Gertler.
