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free-carry on 34 percent of Oyu Tolgoi?From Australian Financial Review: Reuters reported on Friday that the review panel has recommended revisiting the 2009 agreement, which among many things establishes an ownership structure that delivers Mongolia with a free-carry on 34 per cent of Oyu Tolgoi. Is OT LLC not on the hook for its 1/3rd share of financing? I quite surprised by that comment, and I just scanned the 2009 IA and there is no "carry-free" provision as far as I can tell. The IA does have this somewhat cryptic provision: "The Parties agree that the terms of any finance provided to the Investor under the Shareholders’ Agreement, prior to the expiry of the 7 (seven) year period referred to in Clause 16.10.1 [starting from effective date of agreement], and any costs related to financial guarantees in respect of project finance,are made as if they are carried out between unrelated parties, each acting in his own best interest, for the purposes of Article 11.1 of the Corporate Income Tax Law and the Government shall meet any obligation of SHC incurred under clause 17 of the Shareholders’ Agreement." But then the 2015 Dubai Agreement states: "Approval of UG Project Finance is a decision for the Boards of Rio Tinto, TRQ and OT LLC and the Shareholders of OT LLC. Oyu Tolgoi Board approval of UG Project Finance is required by the lenders under the Project Finance to be unanimous. 5.3." "All proceeds of UG Project Finance (less amounts paid in financing and commitment fees and applicable taxes) and cash flow from operations shall be applied first to repay the Existing Shareholder Loans, then interest accrued on Shareholder Debt (each as defined in the ARSHA) and thereafter applied in repayment of the outstanding principal on the Shareholder Debt. These funds may subsequently be reborrowed by OT LLC for the construction of the Underground Stage, in accordance with Section 5.5." That doesn't look "free-carry" to me. |
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Msg # | Subject | Author | Recs | Date Posted |
12153 | Re: free-carry on 34 percent of Oyu Tolgoi? | mrpancake | 1 | 4/9/2019 2:11:45 PM |