Yancoal aims to raise $ A3.1b for Coal and Allied buy
YANCOAL is seeking $ US2.5 billion ($ A3.1 billion) from investors to fund its “strategically compelling” purchase of Coal & Allied from mining giant Rio Tinto.
Yancoal won a bidding war with Glencore in June to secure Coal & Allied and yesterday announced details of a 23.6 for 1 renounceable rights offer and a share placement to stra- tegic investors to fund the deal.
Rio Tinto knocked back a $ US2.5 billion ($ A3.1 billion) offer from Glencore for the NSW Hunter Valley- based coal assets and recommended the Yancoal bid that will ensure Rio at least five years of $ US240 million in royalty payments. Yancoal chairman Xiyong Li said yesterday that the acquisition, totalling $ US2.69 billion, will redefine the company’s position in the global coal marketplace and transform Yancoal into Australia’s largest pure- play coal producer.
“The strategic acquisition of Coal & Allied will redefine our position within the global coal marketplace,” Mr Li said.
The rights offer is priced at US10c per new share – a steep discount from the A39c Yancoal shares last traded at before going into a trading halt on July 27.
The deal could give Yancoal, controlled by the New York, Hong Kong and Shanghai- listed coal giant Yanzhou, majority interests in three of the ten largest low- cost thermal coal mining operations in Australia.
If the amount raised falls below US$ 2.45 billion, the shortfall – up to US$ 1 billion – will be made available via a new loan facility from Yankuang, in terms approved by an independent board committee that includes a former Australian ambassador to China, Geoff Raby.
Yanzhou has committed to take up US$ 1 billion of its entitlements with the balance underwritten to the combined value of US$ 1.3 billion, with Swiss company Glencore providing US$ 300 million. Two Chinese- state connected investment vehicles will underwrite the rest.