Suitors vying for Anglo American’s $US2bn-plus steelmaking coal assets face an anxious wait, with final bids for the portfolio due on Wednesday.
The understanding is that three firm offers are likely in the final hour. The talk is that Swiss trader Glencore is out of the race but had tried to get back in the mix with a bid for some mines.
This leaves China’s Yancoal in the race, along with a consortium led by Stanmore Coal and Peabody Energy.
Yancoal is the favourite on price, but does not have the final sign-off from the Chinese government, which could pose a major risk for Anglo American.
Peabody is apparently motivated to do deals again after recovering from Chapter 11 bankruptcy some time ago, but the question is whether it has the financial firepower.
And then there’s the Stanmore Coal consortium backed by Indonesian investor Golden Energy Resources. It takes a conservative approach on price and has already purchased South32’s Illawarra Coal for $2.5bn this year.
The understanding is that plenty of calls have been made to suitors in the past week from Anglo American’s advisers – tying up any loose ends over share purchase agreements that may exist so that it can get a swift result.
This suggests that Anglo American, advised by Goldman Sachs and Morgan Stanley, may favour a quicker and more certain outcome as it faces the prospect of BHP returning to the negotiating table in coming weeks with another buyout proposal for the whole company.
Selling the coal assets has been a defensive move by Anglo American which may see its share price re-rate and make a deal for BHP more difficult without paying a high price.
Already, Brisbane billionaire Sam Chong exercised his option to buy the remaining stake in two coal mines ahead of other suitors in the portfolio, outlaying $1.6bn for the 33.3 per cent stake he did not already own in the Jellinbah East and Lake Vermont metallurgical coal mines.
Other assets include Capcoal and Dawson.
The prizes are Grosvenor – which has been closed since a fire and has been discounted in price – and the Moranbah North mine.
Yancoal is 62 per cent-owned by China state-owned Yankuang Energy and would need Foreign Investment Review Board approval.
For 2023, Anglo American’s steelmaking coal operations generated 15 million tonnes of coal, equating to $1.3bn of earnings before interest, tax, depreciation and amortisation.
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