Coronado Global Resources’ $250m raising ‘improves the company’s balance sheet’: Credit Suisse

Coronado ‘now in a good position to wait out the current depressed coal price’, says CS.

Credit Suisse analysts have praised coal miner Coronado Global Resources’ $250m equity raising, saying it improves the company’s balance sheet and lifts the free float of the stock, increasing its attractiveness for investors.

On Tuesday Dataroom reported that Coronado will raise $250m via an institutional placement and entitlement at 60c per chess depositary interest in order to pay down debt. .

Coronado will secure $145m through the placement and $105m through a non-renounceable entitlement offer, where shareholders will secure two new chess depositary interests for every 11 held.

The price of 60c per chess depositary interest was a 27.3 per cent discount to the last closing price of 82.5c.

It closed on Wednesday at 68c.

In an research note, Credit Suisse analysts said that although the raising was being conducted at the bottom of the coal price cycle, it was a positive as it removed immediate balance sheet risk.

This was with the proceeds being used to repay drawn debt from its syndicated financing facility.

It also increased the free float of Coronado shares to 44 per cent from 20 per cent, making the stock more attractive for investors - but Energy and Minerals Group, who own almost 80 per cent of the stock, did not take part in the raise.

The raising combined with a recent waiving of debt covenants by lenders meant that Coronado was now in a good position to wait out the current depressed coal price, which Credit Suisse believed would not recover until the first half of 2021.

“The leverage inherent in the asset base remains and now the breathing room is also there to give Coronado the chance to work through the current market malaise,” the analysts said.

They added that the company now had “plenty of runway” until traditional lenders once again were prepared to fund coal-related investments.

However, they add that Coronado would potentially take greater caution towards capital management decisions in the future.