Gloucester Coal has finally confirmed that it is going to have another go at a reshuffle of assets involving its major shareholder, Noble Group, the big pan Asian commodities trading house based in Singapore and Hong Kong.
Since 2007 Gloucester Coal has been something of a takeover target (rejected Xstrata’s offer, and failing to do a deal with Whitehaven Coal and been involved in an attempted asset shuffle with Macarthur Coal and Donaldson that went nowhere).
Co-incidentally, Whitehaven Coal yesterday revealed that an attempt to sell itself to the highest bidder had failed (see below).
Now there’s another attempt at a shuffle involving Donaldson.
Gloucester said yesterday it has agreed to buy Donaldson Coal Holdings and Monash Group for $390 million, and will sell new shares to help fund the takeovers.
The coal miner will buy Donaldson from Noble Group Ltd, which is also Gloucester’s majority shareholder (owning around 65%) for $360 million in Gloucester shares.
Gloucester will also take on $225 million in debt as part of the takeover.
Donaldson owns one open cut and two underground mines producing thermal coal and semi-soft coking coal in the Hunter Valley.
Gloucester will also buy Monash Group (which has two coal prospects in the Hunter Valley) from Ellemby Holdings (based in the Hunter Valley) for $30 million in cash, as well as a nominal number of converting shares, subject to key milestones.
Subject to those milestones being met, the documents yesterday say the vendors of Monash could get an extra $120 million from Gloucester in coming years.
The Monash takeover is inter-conditional with the Donaldson takeover and is subject to shareholder approval at a meeting on July 8.
Additionally, Gloucester will conduct a $230 million equity raising to partly fund the takeovers and repay debt.
The company will raise $210 million from institutional shareholders and $20 million from retail shareholders.
The offer price will be $9 a share, a skinny 9.1% discount to the last trading price of $9.90.
Trading in the shares is expected to resume today.
Gloucester said that the transaction proceeds and after the provision of the additional Gloucester shares to Noble; Noble’s shareholding in Gloucester will reduce from 65.3% from around 63.4%.
Meanwhile, Whitehaven’s shares tumbled yesterday after it revealed the failed sales attempt.
The Sydney-based company said its board had determined that no proposal made to it during the bidding process – launched on October 29 – was "sufficiently attractive" to warrant a recommendation to shareholders.
"The process has therefore been terminated,” the company said in a statement to the Australian Securities Exchange.
That saw the shares sink like a stone, dropping 99c at one stage, or more than 15%.
They ended at $5.63, for a loss of 80c, or 12.4%, on the day.
Whitehaven directors said in yesterday’s statement that, "With the conclusion of this process, the Whitehaven board and management will continue to focus on developing the company’s existing high quality coal assets and seeking new growth opportunities".
Whitehaven said, "On 7 February, Whitehaven advised that it had received a number of non-binding indicative proposals and a selected short-list of parties had been invited to complete detailed due diligence and submit binding proposals.
"On 13 April, Whitehaven advised that the formal process was reaching a conclusion with shortlisted parties having completed due diligence and submitted formal proposals.
"Following further negotiation of these proposals, the Whitehaven Board has now determined that no proposal is sufficiently attractive to warrant recommendation to shareholders.
"The process has therefore been terminated."
But the market had been speculating that the front runners in the auction -China’s Yanzhou Coal and India’s Aditya Birla Group – had both dropped out of the bidding.
Whitehaven said on April 21 that Yanzhou was still on the short list.
