UPDATE: Noble's Gloucester To Raise A$410 Million, Buy Middlemount Stake
04 August 2010 - 5:04AM
Dow Jones News
Singapore-based commodity trader Noble Group Ltd. (N21.SG) will
release capital from its majority-owned subsidiary Gloucester Coal
Ltd. (GCL.AU) through a deal to transfer its stake in Queensland's
Middlemount coal mine to the Australian company.
The deal should reduce Noble's stake in Gloucester to around
61%-63% from its current 87.7%, while simultaneously significantly
raising Gloucester's profile as an Australian coal miner.
"Noble's interest is not to be an owner of coal mines, it's to
have a strong market for its products," said a Gloucester
spokesman.
"This will dilute Noble very, very significantly and make
Gloucester into the leading metallurgical coal company in
Australia."
Under the deal, Gloucester will raise at least A$410 million of
new equity at A$9.25 a share and issue A$100 million of stock to
Noble, while receiving Noble's 30% equity and royalty interests in
Middlemount, a coking coal mine in Queensland's Bowen Basin.
The mine is tipped to produce 1.8 million metric tons of
unprocessed coal per year after production begins later this
year.
The combination of Middlemount and Gloucester's existing assets
should raise saleable coal production to around 5 million tons a
year by 2014, the company said in a presentation, making it one of
Australia's leading coking coal producers.
The deal would also allow Noble to release capital by diluting
its stake in Gloucester, a move that fits the trader's long-term
strategy in spite of its outstanding A$12.60-a-share offer to
acquire the 12.3% of the company it doesn't already own.
Noble has consistently said that it wants only strategic
minority stakes in Australian coal companies, viewing itself as a
trader which can benefit from a seat at the table rather than a
miner seeking control of its assets.
"You can't go down from nearly 90% to nearly 50% without looking
like you're deserting the company," said one person with knowledge
of the companies' strategy. "By vending other assets Noble can
gradually dilute themselves out."
Noble, Gloucester and Middlemount's 70% majority owner Macarthur
Coal Ltd. (MCC.AU) have been involved in a complex tussle over
their Australian coal assets for months.
Earlier in the year, Macarthur attempted to take over Gloucester
and acquire Noble's stake in Middlemount, in return for offering
Noble a portion of its own equity.
After the collapse of that deal, Noble made an offer for the
remaining 12.3% of Gloucester, which the person with knowledge of
the company characterised as a defensive move designed to underpin
Gloucester's market price.
Macarthur also was the subject of abortive takeover bids earlier
this year from New Hope Corp. Ltd. (NHC.AU) and Peabody Energy
Corp. (BTU).
Australia is the world's largest coal exporter and a key
supplier of Asian steelmakers and power stations, and its coal
companies have been the subject of vigorous acquisitive interest of
late.
Banpu PCL (BANPU.TH) last month launched a takeover of
Centennial Coal Co. Ltd. (CEY.AU) and Linc Energy Ltd. (LNC.AU)
yesterday sold its Galilee thermal coal operation to India's Adani
Enterprises Ltd. (512599.BY), while Anglo American PLC (AAL.LN)
last month sold its local coal assets to a consortium led by major
Korean consumers.
The Middlemount interests Gloucester will acquire from Noble are
valued at A$437.5 million, consisting of a 27.52% direct
stake--valued at A$269.5 million--plus Noble's right to royalties
from Middlemount's coal sales, which is set to 4% of the sale value
of loaded coal at Australian ports.
Gloucester is separately acquiring Noble's option to buy 2.48%
of Middlemount from Macarthur for A$8 million, and an option to
spend A$100 million in the next 18 months to buy a further 20%
stake from Macarthur.
Those options would bring Gloucester's overall holding in
Middlemount to 50%.
Gloucester will fund the spending through A$337.5 million from
the capital raising and A$100 million in stock issued to Noble.
Gloucester said that around A$410 million of its capital raising
was already underwritten by institutions and that retail investors
may subscribe for a further A$45 million.
It may also raise a further A$90 million through an additional
institutional placement, the company said.
Noble, which is not participating in the equity raising, would
likely see its stake reduced to 57%-59% if the additional placement
went ahead, Gloucester said.
-By David Fickling, Dow Jones Newswires; +61 2 8272 4689;
david.fickling@dowjones.com
(Gaurav Raghuvanshi in Singapore contributed to this
article)
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