Yanzhou Coal may raise A$1b
Updated: 2011-05-25 07:19
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Miners return to the surface after finishing their shift at a coal mine in Australia. Yanzhou Coal may raise more than A$1 billion in an share sale for at least a third of its Australian unit. Ian Waldie / Bloomberg |
Firm in talks with banks and advisers ahead of share sale
Yanzhou Coal Mining Co, China's fourth-largest producer, may raise more than A$1 billion ($1.1 billion) in an initial share sale for at least a third of its Australian unit by the end of the year.
The company is in talks to prepare for the sale with banks and advisers, Ian McAleese, investor relations manager of Brisbane-based Yancoal Australia Ltd, said on Tuesday in an e-mailed response to questions. It has a "strategy to be IPO ready by the end of 2011," he said.
Yanzhou bought Felix Resources Ltd for A$3.1 billion in 2009, China's biggest takeover of an Australian company. An IPO of these assets may be Australia's biggest since the sale of coal transport company QR National Ltd raised A$3.97 billion in October last year.
"If things were to remain as they are now, then you'd expect a coal float of a mid-tier miner to be reasonably well supported," Ben Potter, a market analyst at IG Markets in Melbourne, said by phone on Tuesday.
Coal demand is increasing in China and India as the countries look to fuel economies that are outpacing the rest of the world. China's purchases may rise 7.8 percent in 2011, while India's may climb 28 percent, Societe Generale SA said in March.
"We would like to have our prospectus ready to be able to take advantage of market conditions," McAleese said.
Yanzhou Coal rose 3.3 percent to close at HK$29.90 per share in Hong Kong trading on Tuesday, compared with a 0.1 percent rise in the benchmark Hang Seng Index.
Japan, the world's biggest coal importer, may use as much as 1 million extra metric tons this year as the country turns to coal-fired plants to make up for nuclear power capacity lost after the March earthquake, according to Deutsche Bank AG. Yancoal produces types of coal used by both steel mills and power stations.
Share sales on the Australian stock exchange so far this year have raised a total of A$344 million, down 40 percent on the same period last year, according to data compiled by Bloomberg.
Australia's foreign takeovers regulator, the Foreign Investment Review Board (FIRB), ruled at the time of the Felix takeover that Shandong-based Yanzhou must list a minimum of 30 percent of its Australian assets by the end of 2012.
The regulator also required Yanzhou, which trades in Hong Kong and has a market value of $22 billion, to reduce its economic interest to less than 50 percent of the value of the Felix assets at the time of the deal.
"The preferred way to do this is to sell more stock than 30 percent of the total value," McAleese said.
Yancoal, which operates four mines in Australia, the world's biggest coal exporter, had net income of A$415 million last year, according to a notice on its website.
The company is looking for a higher valuation in the IPO than the A$3.1 billion sale price because Felix's Moorlarben mine has begun production of 7 million metric tons a year of thermal coal. Yancoal already owned the Austar mine, bought in 2004, which produces about 1.7 million tons of coking coal annually.
Yanzhou "expects a higher valuation now because the Austar mine will be included in the listing, while Moorlarben is now up and running," McAleese said. "FIRB has been receptive to the changing business environment affecting Yancoal."
Yancoal also owns a 15.4 percent interest in the Newcastle Coal Infrastructure Group export terminal at Newcastle in the state of New South Wales, entitling the company to 8.3 million tons export capacity under ship or pay contracts.
Bloomberg
(HK Edition 05/25/2011 page3)