The sale of Rio Tinto’s Australian coal mines might have struck a snag after a minority investor in Yancoal, the purchaser of the operation, stated its opposition to the offer.
Senrigan Capital, a hedge fund based in Hong Kong, has grumbled to the Australian Takeover Panel that Yancoal’s strategies to money the $2.69 bn (₤ 2bn) purchase by raising $2.35 bn in a rights issue was “prejudicial” to the interests of minority investors, who might find their stakes watered down from presence if they hesitate to subscribe for more shares.
The equity raises, which will include the providing of 23.6 brand-new shares for every single one presently held, was “needlessly extremely dilutive and ‘value moving'”, Senrigan informed the Takeover Panel, including:” [It] does not enable existing minority investors an affordable and equal chance to take part.”
Yancoal’s parent company Yanzhou– which is backed by the Chinese state– has accepted use up $1bn of the brand-new shares available, with the rest being financed by 2 other Chinese companies and Glencore, which will purchase up to $350m.
Senrigan argued that the other Chinese financiers were partners of Yanzhou, and for that reason, the Chinese group would see its ballot power increase from 78pc to 89.15 pc as an outcome.
Recently it was reported that Noble Group, the having a hard time Singapore-based product trader that owns 13pc of Yancoal, was likewise opposed to the equity raise.
Both investors effectively interested the Takeover Panel in 2014 versus an earlier fundraising by Yancoal. The size of Senrigan’s stake in Yancoal, though little, includes shares and “money settled equity swaps”, according to the Panel.
The Takeover Panel stated it had not yet chosen whether to examine the matter.
Yancoal very first quotes for Rio’s coal mines in New South Wales in January, after the FTSE 100 giant stated its intent to revoke non-renewable fuel sources. It stimulated a bidding war with Glencore previously this summertime, with the Switzerland-based group eager to combine the Rio properties with its own operations in the exact same valley.
Glencore lost its quote to acquire straight-out control, it consequently struck a contract to purchase a stake in the mines from Yancoal as soon as its offer with Rio finishes.
If Yancoal is not able to raise the funding for its acquisition, it might leave the door open for Glencore to bid once again, although experts anticipate it would table a significantly lower deal than the quote eventually made by Yancoal.
Rio and Glencore decreased to comment. Senrigan and Noble Group did not respond to a demand to comment.