SMM June 22nd: on the evening of June 21, Tianqi Lithium Industry issued a progress announcement on the increase of capital and shares of wholly-owned subsidiaries and the introduction of strategic investors, which showed that considering that the tax impact of the Canadian Inland Revenue Bureau may take a long time to review and evaluate, Tianqi Lithium Industry negotiated with IGO in order to complete the transaction as soon as possible. The parties agree to complete the delivery of the project by June 30, 2021 in accordance with the time agreed in their Investment Agreement signed on December 8, 2020.
According to the previous "Investment Agreement", TLEA, a subsidiary of Tianqi Lithium Industry, planned to introduce strategic investors, Australian listed company IGO Limited,IGO, to subscribe for a total of US $1.4 billion in cash at that time when TLEA increased its registered capital by 304 million yuan.
After the capital increase, the company holds 51% of the registered capital of TLEA, and IGO Lithium Holdings Pty Ltd, a wholly owned subsidiary of IGO, holds 49% of the registered capital of TLEA.
It is worth mentioning that according to the company's previous plan, the financing worth US $1.4 billion will be used to repay the principal and interest generated by Tianqi Lithium Industry from the syndicated merger and acquisition loan of Chile's SQM, which is expected to be no less than US $1.2 billion.
If the plan is implemented smoothly and after the debt is paid off, Tianqi Lithium, which has always been mentioned repeatedly for its high debt ratio, the asset-liability ratio is expected to drop to about 63%.
At present, in the whole process of the transaction, only the work of "obtaining confirmation from the Australian tax Office" has not yet been completed, and Tianqi Lithium Industry estimates that the Australian tax Bureau may not be able to complete the tax risk review and assessment of the transaction structure and provide written confirmation before the transaction deadline, so Tianqi Lithium and IGO have agreed to complete the delivery of the project by June 30, 2021 as previously agreed in the Investment Agreement.
To this end, Tianqi Lithium signed a tax sharing Agreement with IGO and investors, agreeing that if, after review and evaluation by the Australian Inland Revenue Bureau, it is confirmed that the implementation steps of the internal restructuring will result in capital gains tax, IGO and investors will share the tax liability with TLH based on its 49 per cent equity stake in the joint venture based on the maximum amount agreed in the tax sharing Agreement.
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