Coronado blocks suitors’ due diligence as director quits

The Queensland Curragh mining complex, which mines thermal and metallurgical coal, is Coronado’s major source of income. Picture: News Regional Media

Coronado Global Resources is understood to be playing hardball with suitors that have made numerous offers for the business.

DataRoom sources say that Coronado Global is consistently denying due diligence access to suitors, which is why it can say that it has received “no binding offers”.

Parties are unable to put forward binding offers without carrying out due diligence on the business.

Sources say there have been several offers put forward to the group that have come from reputable parties.

Director Bill Koeck resigned in April, with suggestions he did not see eye-to-eye with Coronado’s 51 per cent shareholder Energy and Minerals Group.

Sources say that the non-binding indicative offers are at a significant premium to the current Coronado share price.

It comes as Coronado’s top-level executives and directors are this week in the United States negotiating with bondholders ahead of plans to sell a stake in the Curragh coal mine in Queensland, with sources suggesting India’s JSW is well placed.

The group needs permission from the bondholders to sell assets and not return all the proceeds to them, but some believe that they would prefer a buyout offer that would see them paid out in full.

As earlier reported, it is understood that the US meetings will be followed by a management site visit to the company’s flagship Curragh coal mine in Queensland next week.

Coronado last month confirmed it had engaged in talks with counterparties about a potential sale of a minority interest in certain assets.

A number of miners have been in talks with Coronado, including groups such as New Hope Coal, Whitehaven, and Indonesian miners BUMA, Sinar Mas and Golden Energy Resources.

Coronado’s future continues to hang in the balance.

Its market value is $268m and its share price is at 16.5c, with the coking coal price at $US178 a tonne – it needs to be over $US200 a tonne to profitably mine coal from Curragh.

It has refinanced a $US150m asset-based loan with Oaktree Capital Management and had reached a deal with the Queensland government-owned coal-fired power station operator Stanwell, in which Stanwell would provide a $US150m upfront payment for 800,000 tonnes of thermal coal for five years from 2027.

But sources believe that in about three months Coronado would breach its debt covenants on the Oaktree loan, paving the way for the opportunistic private equity fund to gain control over the group’s future.

Parties have been buying some of Coronado’s $US400m worth of bonds trading at 70c in the dollar, including EMG itself.

EMG floated Coronado in 2018 with a $3.5bn market value and agreed to sell its holding to Sev.en last year, with Oaktree helping to finance the transaction, but the deal collapsed.

The Queensland Curragh mining complex, which mines thermal and metallurgical coal, is Coronado’s major source of income.

The business was founded in 2011 and grew through a series of acquisitions in the US and Australia – including the purchase of the Curragh mine in 2017 for $700m.