Coronado moves to refinance after tough market conditions force debt breach

Analysts say that hurting Coronado has been that its coal mines have not been of high enough quality to withstand the difficult market conditions. Picture: iStock

Coronado Global Resources is believed to be moving closer to a refinancing with non-bank lenders after flagging to the market in April that it had breached its debt covenants following the falling coal price.

DataRoom understands that likely standing in the gap for the group will be non-bank financiers that have previously provided funding to coal miners like Whitehaven Coal, such as Ares Management, Canyon Partners and Farallon Capital.

Coronado has flagged it had been moving to find a bridging loan and had been in negotiations to replace its asset-based lending facility.

Analysts say that hurting Coronado has been that its coal mines have not been of high enough quality to withstand the difficult market conditions, and it was now extending its Queensland mine Curragh, where it secures most of its coal, with a lower-cost underground mining aspect, a move that some analysts had been calling for it to do earlier.

Since December, the metallurgical coal price has fallen about 10 per cent to $US185 a tonne and is down substantially from 2022 highs.

Prices are expected to decline in real terms through to 2030 but remain steady in nominal terms.

Falling Chinese demand is offset by increasing steel making activity in India and Southeast Asia, according to the Department of Industry, Science and Resources.

Coronado said in its quarterly report that for the three months to March 31, it incurred $US96.2m ($149.9m) of losses and generated negative cash flows from operating activities of $US37.3m, on the back of lower prices. The group had $US325.1m of liquidity.

Its asset backed lenders agreed a waiver of its covenants at December for a temporary time, subject to the company maintaining more than $US100m as part of the terms of the deal.

The covenant test period has been pushed back to May 31.

Coronado says it expects to keep generating losses this year, but performance is expected to improve on the back of the extension of its Curragh mining complex and a major capital program in the US. However, its financial statements raise doubts as to whether it meets its obligations.

Coronado said it had agreed non-binding term sheets with third-party lenders that may provide an asset-backed lending facility or an alternative facility with borrowing of up to $150m.

It has $US194.9m of net debt with $US424.4m of interest-bearing liabilities, including $US400m of senior secured notes with a 9.25 per cent interest rate.

Also hurting its Curragh mine complex has been wet weather from Cyclone Alfred.

Coronado said it had realised a met coal price per tonne in the March quarter that was 7.3 per cent lower than 2024, at $151.3m a tonne. Compounding matters have been tariff pressures.

The company’s market value is now $293m, down 80 per cent since the start of this year.

Other coal companies are feeling impacts of the falling price of the commodity, with Peabody Energy moving to extract itself from its $5.8bn purchase of Anglo American coal mines in Queensland, notifying Anglo of a Material Adverse Change due to the fire at the Moranbah North Mine since the deal was first agreed.

“If the MAC is not resolved to Peabody’s satisfaction in the limited time frame specified under the companies’ acquisition agreements, Peabody may elect to terminate the agreements,” Peabody said in a statement.

But Anglo American said it did not believe the stoppage at Moranbah North constituted a Material Adverse Change in accordance with the definitive agreements with Peabody.

The largest shareholder of Coronado Global Resources is Energy and Minerals Group, and a deal to sell its 51 per cent stake in the Australian-listed company to Sev.en Global Investments was on the table in 2024, but collapsed.

At the time the deal was reached, Coronado’s shares were trading between $1.50 and $2 and it was worth more than $3bn, but the investor walked away last year after they almost halved.

Coronado was founded in 2011 by EMG, Garold Spindler and James Campbell. It grew through acquisitions in Australia and the US. Coronado floated the following year, but on the first day of trade its share price finished down 10 per cent with its market value at $3.5bn. It produces about 16 million tonnes annually of coal.