Yan­coal to raise US$2.5b in eq­uity for Rio Tinto as­set pur­chase

New Straits Times - - Business -

SYD­NEY: China-backed Yan­coal Australia Ltd will raise US$2.5 bil­lion (RM10.7 bil­lion) in eq­uity to fund the pur­chase of Rio Tinto Group’s Aus­tralian coal assets, with its par­ent Yanzhou Coal Min­ing Co tip­ping in US$1 bil­lion.

Glen­core Plc, which will jointly op­er­ate some of Rio’s Coal & Al­lied op­er­a­tions in the Hunter Val­ley with Yan­coal, will con­trib­ute US$300 mil­lion. Two Chi­nese in­vest­ment groups, China Cinda As­set Man­age­ment Co and Shan­dong Lu­cion In­vest­ment Hold­ings Group Co, com­mit­ted to a fur­ther US$1 bil­lion in the en­ti­tle­ment offer.

“The strate­gic ac­qui­si­tion of Coal & Al­lied will re­de­fine our po­si­tion within the global coal mar­ket­place and strengthen Yan­coal Australia for the fu­ture,” Yan­coal chair­man Xiy­ong Li said in a state­ment yes­ter­day.

The deal will cat­a­pult Yan­coal into Australia’s largest pure-play coal pro­ducer and give it a stake in the owner of two ter­mi­nals at the port of New­cas­tle, the coun­try’s main con­duit for ther­mal coal. It comes at a time when ma­jor con­sumers, in­clud­ing China, plan to curb use pri­mar­ily due to en­vi­ron­men­tal con­cerns.

Rio agreed to sell its Aus­tralian coal mines for US$2.69 bil­lion to Yan­coal, a unit of China’s staterun Yanzhou, in June af­ter a pro­tracted bat­tle with Glen­core. Rio chose Yan­coal be­cause its offer was seen as hav­ing less reg­u­la­tory hur­dles de­spite some un­cer­tainty over its fi­nanc­ing of the deal. On July 27, Glen­core an­nounced a sur­prise US$1.1 bil­lion deal with Yan­coal for a stake in the coal assets in Australia’s Hunter Val­ley.

Yan­coal gained 2.6 per cent to 40 Aus­tralian cents at 11.45am here, af­ter its shares were halted the pre­vi­ous four ses­sions. Bloomberg


Rio Tinto is sell­ing its Aus­tralian coal mines for US$2.69 bil­lion to Yan­coal.

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