Yan­coal aims to raise $ A3.1b for Coal and Al­lied buy

Townsville Bulletin - - NEWS - CHRIS­TIAN ED­WARDS

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.

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