Treasury capitalizes Codelco U.S. $ 1,000 million to maintain its investment grade
Minister Felipe Larrain explained that the amount will retained earnings held by the operating company to Anglo American, which generated revenues of more than U.S. $ 3 billion last year
The Ministry of Finance (Treasury) gave a strong signal of support to Codelco after announcing a capitalization of earnings of U.S. $ 1,000 million for 2013.
Minister Felipe Larrain said that for this year the IRS made the decision to authorize the state mining board company to use part of the money from retained earnings that Codelco obtained by joining the Anglo American Sur property in 2012.
“We thought it prudent and reasonable, and showing support to Codelco, was capitalized U.S. $ 1,000 million of retained earnings that are within the more than U.S. $ 3 billion obtained after the operation with Anglo” explained the economic authority .
According to the company, surplus last year reached U.S. $ 7,518 million, of which more than U.S. $ 3.032 million resulted from the proceeds of the transaction to purchase a percentage of ownership of Anglo American Sur (AAS), which was completed in August of last year.
In turn, Larraín Minister said the amount determined has as one of its main objectives to maintain Codelco’s investment grade. This, so as not to impair its credit terms when raising financing in international markets.
“We are committed to Codelco maintains investment grade so it can have access to credit in good shape,” said Larrain.
Last year, Codelco managed to place in the U.S. two lines of bonds for U.S. $ 2 billion in total to the lower interest rate of a Latin American issuer in history.
Fiscal Support
In addition, the head of public finance added that U.S. $ 1,000 million is a clear sign of support the government is giving to the company in respect of its investment plan of over U.S. $ 4,500 million for 2013, which is running this year.
“We felt that this option is reasonable as a sign of strong support to Codelco by way of capitalizing retained earnings. We are saying that as we have the right to remove retained earnings, this part are not going to withdraw and passes to capital, “Larrain said.
Codelco already capitalized profits in 2009, 2011 and 2012.
State copper Company is implementing an ambitious investment plan of over U.S. $ 25 billion for the next five years.
In that period the firm’s main objective realize their five structural projects: Chuquicamata Underground, Ministro Hales, Radomiro Tomic Sulfides Phase II, New Andina Phase II, and the new level of the El Teniente mine.
After learning the Government’s Decision, Codelco’s board said “they value this capitalization”, which allows them to get a higher quality in the balance sheet of the corporation, notwithstanding that Codelco had requested the capitalization of all those utilities.
“On the other hand, Codelco also requested the capitalization of other utilities from 2012, with 2013’s cash flows to obtain necessary financial resources to finance its investment program, which was not accepted”.
Despite the support, within the Board of Directors exists some degree of discomfort for the authorized amount, which could lead to future investments. “We will proceed to review and prioritize those investments to date are not committed, within the framework of financial prudence which characterized the management of the corporation”, was the phrase that ended the statement delivered yesterday by Codelco.
Source: El Mercurio
