Trade Resources Industry Views European Commission Assessing Possible Trafigura 'de Facto' Control of Nyrstar

European Commission Assessing Possible Trafigura 'de Facto' Control of Nyrstar

The European Commission is seeking comments on whether the shareholding of Netherlands-based commodities trading group Trafigura in Belgium-based zinc and lead producer Nyrstar amounts to the company taking "de facto sole control" of Nyrstar, the EC said at the weekend.

Through its subsidiary Urion Holdings (Malta) Ltd., Trafigura currently holds a 20.2% stake in Nyrstar.

On October 26, Trafigura filed a Notification of a Concentration pursuant to Council Regulation (EC) No. 139/2004 (the EU Merger Regulation) in respect of its minority shareholding in Nyrstar.

"The Notification follows discussions which Trafigura has had with the European Commission pursuant to Article 7 of the EU Merger Regulation as Trafigura recognized that the European Commission could consider that Urion Holdings (Malta) Ltd's minority stake could give Trafigura de facto sole control of Nyrstar within the meaning of the EU Merger Regulation," the company said in a statement.

"On preliminary examination, the Commission finds that the notified transaction could fall within the scope of the [EU] Merger Regulation. However, the final decision on this point is reserved," the EC said.

It invited interested third parties to submit their possible observations on the proposed deal, to reach the EC not later than 10 days following the October 31 publication of the notice in the EU Official journal.

"Trafigura is one of the world's leading international commodity traders. Trafigura's primary trading businesses are the supply and transport of crude oil, petroleum products, natural gas, liquefied natural gas, metals (including copper, lead, zinc and aluminium) and metal ores and concentrate," the EC said in the notice.

Nyrstar "is an integrated mining and metals company with established positions in zinc and lead and growing positions in other base and precious metals. Nyrstar has mining, smelting, and other operations located around the world," it added.

Nyrstar delivered underlying EBITDA for the first nine months of 2015 of Eur215 million ($237 million), representing a 38% increase against the same period in 2014. The increase was primarily the result of strong metals processing performance combined with a weakening of the euro against the dollar, which was partially offset by lower zinc prices over the same period.

The company produced 835,000 mt of zinc in the first nine months of the year, at the high end of its guidance.

Last month, Nyrstar said it was "in advanced stages of reviewing its capital structure" and "actively evaluating both debt and equity capital market alternatives."

The company said it was seeking not only to address an upcoming bond maturity in May 2016 but also to "provide increased financial strength and operational flexibility."

For the first six months of its 2014-15 financial year, ended March 31, 2015, Trafigura reported a net profit of $654 million, an increase of 39% over the same period of 2014.

Group revenue was 24% down on the year-earlier period at $48.238 billion, due entirely to lower commodity prices.

In early October the company announced the closure of a $2.2 billion syndicated revolving credit facility and term loan facility, to be used for general corporate purposes.

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Topics: Metallurgy