The global sub-prime crisis and this week's recessionary fears have rehashed concerns about Wesfarmers' (WES) ability to refinance almost $4 billion in debt by October, with the Perth-based mining giant falling 14 cents yesterday and a further 76 cents this morning.
In late 2007, Wesfarmers borrowed $10 billion to buy Coles Group after its private equity partners abandoned the takeover as funding dried up: the flipside is that the deadline for refinancing $4 billion of that figure is slowly and inexorably approaching.
Of the remainder, $5 billion will be repaid through a three-year loan, and $1 billion is part of a one-year revolving loan.
Coles shareholders approved the sale to Wesfarmers two months ago, prompting warnings by international credit ratings agency Fitch Ratings that debt market volatility could be a problem for supermarket newcomer.
There has been speculation that Wesfarmers may need to offload its coalmines to raise cash, rumours which the company has constantly denied.
According to The Age, this speculation arose once again yesterday when Credit Suisse analyst, Andrew McLennan said in a note to clients that Wesfarmers might be forced to reconsider its funding.
"If credit markets remain in turmoil Wesfarmers may be compelled to consider the divestment of one of its assets," said Mr McLennan.
Mr McLennan suggested that Wesfarmers' Curragh Mine in central Queensland, Premier Mine south of Perth and a minority share of the Bengalla mine in the Hunter Valley could fetch $6 billion.
Wesfarmers CFO Gene Tilbrook shrugged off such concerns yesterday saying there was no need to sell assets.
"Our current plan is to [refinance before the deadline] but we anticipate there will be a bit of market turbulence along the way," he said.
"So we will be working hard to get the best opportunities. The way to do that is to be well advanced with a capacity to move in any of the markets quite quickly and then be ready to go into the ones that work best for us."
By the same token, Mr Tilbrook did not rule out the sale of some assets.
"If someone was looking to pay us more than we thought some of our assets were worth, then we would consider that."
According to Mr Tilbrook, a team of Wesfarmers finance staff have already begun preparing to refinance, but that job would begin after the company reported its first half results.
By 12:00PM AEST Wesfarmers shares were down by 64 cents at $38.28.
