There still is a bit of goodwill towards coal miners, despite the weak demand and price outlook, judging by the positive reception to Whitehaven Coal’s (WHC) refinancing, announced yesterday.
The shares rose 2.5% to $1.595 in yesterday’s solid market rise in the wake of the announcement of the $1.4 billion revamp of the company’s debt.
The shares were up 8% at one stage.
WHC 1Y – Light at the end of the coal tunnel for Whitehaven?
The package was struck with a syndicate of Australian and international banks, and has better interest terms than Whitehaven’s existing loan.
Whitehaven had told investors previously it had wanted to reach agreement on a refinancing by June, and was expected to tap the US high-yield bond markets to refinance at least some of its existing debt.
The $1.4 billion in senior secured debt includes a $1.2 billion in drawable credit for general corporate purposes and has a maturity date of July 2019. The interest rate is around 1% cheaper and the relaxed covenant period has been extended from this year to 2017.
Terms for the new debt are less onerous than the old package because the company’s $767 million Maules Creek mine in NSW is approaching start up.
First coal was railed from the mine in December (three months ahead of schedule) and is expected to be running at annualised rate of production of 6 million tonnes this month, rising to 13 million tonnes.
The high quality thermal coal from the mine will be used for electricity, while the metallurgical coal will be sold to Asian steel makers.
Whitehaven chief Paul Flynn said in yesterday’s statement refinancing the deal “demonstrates Whitehaven’s improved creditworthiness and the increased confidence that lenders have in our growth plans and in our capacity to execute them ahead of expectations”.
