Xstrata Plc, the world’s largest exporter of thermal coal, is seeking a waiver on terms of a $6 billion loan to allow it to remain in place for the duration of its proposed merger with Glencore International Plc.
The company has asked banks to waive a so-called change of control provision that would have mandated the revolving credit facility be refinanced if Glencore’s bid was successful, according to Claire Divver, a spokeswoman for the Zug, Switzerland-based coal producer. If the waiver is approved Xstrata will be allowed to retain the loan until the deal is completed and refinance debt as a larger entity with Glencore.
The revolving credit will also function as a backstop to demonstrate the company has sufficient liquidity and working capital for the next 18 months, according to two people with knowledge of the matter, who declined to be identified because the terms are private. Xstrata has asked lenders to agree to the waiver by Feb. 23 in return for a fee, the people said.
Glencore is working with Citigroup Inc. and Morgan Stanley as financial advisers on the merger, while Xstrata has hired Goldman Sachs Group Inc., JPMorgan Chase & Co., Deutsche Bank AG and Nomura Bank International Plc.
Reuters reported the request earlier today.