rockwood signs jv for 49% of tianqi / talison

12/2/2013 4:18 AM ET
Specialty chemicals firm Rockwood Holdings, Inc. (ROC: Quote) has signed a joint venture or JV with Chengdu Tianqi Industry Group, giving Rockwood a 49% ownership stake and Tianqi a 51% interest in Talison Lithium Pty Ltd. The transaction may close during the first quarter of 2014, following receipt of regulatory approvals.

At the time of completion, it is anticipated that Rockwood and Tianqi would contribute equity of $196 million and $204 million, respectively. Furthermore, Rockwood would provide a two-year secured loan of up to $670 million at 8% interest to the JV. Rockwood would grant Tianqi a 3-year call option to invest from 20% to 30% in the equity of Rockwood Lithium GmbH, the European arm of Rockwood's global lithium business, which would be worth 14x the last twelve months adjusted EBITDA.

The joint venture proceeds would be used to pay off existing debt and equity holders, including Tianqi Group HK Co., Ltd, an unit of Tianqi, and Leader Investment Corp., a subsidiary of China Investment Corp. Rockwood is likely to fund its investment in the venture from cash on hand.