Ferroglobe PLC announces it has completed and closed the previously announced sale of its 100% interest in subsidiary FerroAtlantica, S.A.U. to investment vehicles affiliated with TPG Sixth Street Partners.
The FerroAtlantica assets transferred include 10 hydroelectric power plants with a combined capacity of about 167 MW and the Cee-Dumbria ferroalloys factory, all located in the province of A Coruna, Spain. Simultaneously, the company signed a long-term tolling agreement with FerroAtlantica under which it is the exclusive off-taker of the Cee-Dumbria factory’s finished goods. In return for this exclusivity, Ferroglobe commits to supplying FerroAtlantica with key raw materials over the long term.
The transaction, valued at €170 million (US$187.5 million), provides gross proceeds of €156.4 million (US$172.5 million) to the company, after agreed adjustments (cash flow from the operations in 2019, working capital and net debt). The proceeds will be used to repay €57 million (US$62.9 million) of existing indebtedness at FerroAtlantica and related transaction fees, with the remaining €100 million (USS$110.3 million) to be held in cash and used for general corporate purposes.
“The divestiture of FerroAtlántica marks a significant accomplishment and the expeditious delivery of a very complex transaction,” said Javier Lopez Madrid, executive chairman of Ferroglobe. “With a valuation multiple of approximately 13 times based on cycle average EBITDA, the transaction is value enhancing for Ferroglobe, and represents an important milestone in the Company’s efforts to strengthen its balance sheet, particularly as we work to complete the refinancing of our revolving credit facility.”
London-based Ferroglobe supplies silicon metal, silicon-based and manganese-based specialty alloys and other ferroalloys for the solar, automotive, consumer products, construction and energy industries.
TPG Sixth Street Partners is a global finance and investment business with more than $31 billion in assets under management. The firm focuses on partnering with businesses and management teams to create fully committed financing solutions.