Bad news in two statements to the ASX yesterday for New Hope Corporation, the southeast Queensland coal group and investor controlled by the Soul Pattinson group.
In the first New Hope said it had been forced to declare force majeure on some export coal contracts, as it negotiates with the Queensland government for alternative ways of getting product to port from its Acland mine site on Queensland’s Darling Downs.
The problems could cost New Hope up to 20% of its coal exports.
New Hope said it was negotiating with the Queensland Department of Transport for permission to truck up to 50,000 tonnes a week of coal from Acland to port at West Moreton, pending the reopening of the Western Rail System.
The company said the latest information suggested that the line between Acland and Ipswich, south-west of Brisbane, may begin to reopen in mid-April, although Queensland Rail was yet to provide an official update.
"The latest indicative information suggests that rail capacity on the Western Rail System may start to become available from mid-April 2011," New Hope said in the statement.
"QR National has declared force majeure for the provision of rail services to New Acland Coal Pty Ltd."
New Hope said the continued lack of certainty around the Western Rail System "has necessitated New Hope declaring force majeure on a number of its export coal contracts".
The company said it would update the market on the financial impact of the disruption when it had "reliable information regarding the duration of the infrastructure repairs and the quantum of coal which can be delivered via alternative transport options".
New Hope said it expected a decision "imminently" from the Department of Transport on road haulage.
And in the second bit of news, New Hope’s latest takeover target, Northern Energy, has rejected the new, higher offer.
In a separate statement to the ASX, Northern said its board "has considered the revised takeover Offer from New Hope Corporation and has unanimously rejected the revised Offer of $1.75 per NEC share".
"Dr Chris Rawlings, Chairman of Northern Energy, recommended that Northern Energy shareholders retain their shareholding in their Company at this price rather than allow New Hope to benefit from the acquisition of NEC at a price that continues to represent a substantial discount to the underlying value of NEC’s coal assets and their earnings potential," NEC’s statement read.
"Dr Rawlings stated that the Board had assessed the terms of the revised Offer and concluded that the reasons given by New Hope for NEC shareholders to accept the revised Offer are unpersuasive. Our response will be fully articulated in NEC’s second Supplementary Target’s Statement to be issued in due course.
"New Hope’s original and revised Offers both failed to take into account the growth potential that was recognised by both the Technical Expert and Independent Expert. The mid-point of the Independent Expert’s valuation range (from $2.70 to $3.99 per NEC share), is 91 per cent higher than the revised Offer price.
"The Directors of NEC are disappointed that the Board and Management of New Hope are suggesting that they are in a better position to assess the value of NEC’s coal assets than the NEC directors or the Independent Experts. An NEC data room has been open for a number of months, and while several other parties have taken advantage of this facility, NHC has not requested access. As a result their original and revised Offers appear uninformed," Dr Rawlings said.
Dr Rawlings said that "each of the Northern Energy Directors, who together with major shareholder Xinyang own or control "24% of the shares outstanding, intends to reject NHC’s revised Offer for their Northern Energy shares".
The market took the news in its stride, New Hope shares up 1c to $4.93 yesterday.
