Coal price cloud over terminal

There’s growing concern about the impact of the shippers in the latest decline in the coal price. Picture: AFP

The future of the Wiggins Island Coal Export Terminal has again come under scrutiny with its preference shareholders winning a $77m settlement and as its coalmining owners come under greater pressure.

One of the owners that remains under the spotlight is Coronado Global Resources, which has a market value of $797m and net debt of $303m at December.

Its value is a far cry from the $3.87bn Coronado was worth when it listed about two years ago and some say that it remains in talks with its lenders.

The coalminer was listed by its private equity owners in 2018, shortly after acquiring coking coalmines from Wesfarmers for a value far less than what they were worth when listed.

Around the time of the listing, WICET underwent a major refinancing which saw the senior lenders refinance $US3bn worth of debt. The holders of the mezzanine debt, which is known as the Gladstone Long Term Securities or the GiLTs, later refinanced about $500m owing.

The plan was to defer the payment to the junior lenders, known as the Wiggins Island Preference Shareholders, or WIPs.

This was after the asset, which was built during a boom, faced hardship due to a lower coal price. However, the court action has forced the hand of the company to outlay the WIPs $77m.

The face value of the WIPs’ loans was about $550m.

With coal prices at an all-time low, due to lower demand from China and many energy users switching to oil at a time it is affordable, the concern of some is that the payment to the WIPs could place WICET further on the back foot.

The WIPs launched a court case against WICET around 2018, arguing they were owed dividend payments from several years ago.

The payment is thought to equate to about 30c in the dollar for the money they were owed and many view the outcome of the court case as a positive result for them.

The WIPs include SSG Capital Management, Nomura and Glencore, although Glencore, which is also a shipper of coal from the Queensland terminal, did not take part in the litigation.

Working for the WIPs was law firm Atanaskovic Hartnell.

Compounding matters has been growing concern about the impact of the shippers in the latest decline in the coal price.

Coking coal is currently worth about $US110.50 per tonne and thermal coal $US52.45 per tonne.

WICET is owned by miners that ship coal from the terminal and pay down its mammoth $US4bn debt pile through take-and-pay contracts. The parties that own WICET and ship coal from the terminal are Glencore, Aquila Resources, New Hope and Coronado Global Resources after Wesfarmers sold its mine linked to the terminal to the US-based group.

Cockatoo Coal and Bandanna Energy were owners before they also collapsed on the back of the resources industry downturn and their WIPs have since been sold.