Yancoal Australia looks to raise $2.5 billion to pay for Rio Tinto coal mines
Yancoal Australia Ltd said on Wednesday it will look to raise $2.5 billion from investors to acquire the Coal & Allied division of Rio Tinto.
Yancoal won a bidding war against commodities giant Glencore PLC by agreeing on a price of $2.69 billion for Coal & Allied. It subsequently announced a deal to sell on a major component of the business to Glencore.
The miner will conduct a rights offer priced at $0.10 per new share. Yancoal shares closed 40 percent lower at A$0.25.
The deal could give Yancoal, majority-owned by Chinese coal giant Yanzhou Coal Mining Co Ltd (600188.SS), majority interests in three of the 10 largest thermal coal collieries in Australia.
Yanzhou will subscribe to $1 billion worth of the rights offer, while Glencore will account for $300 million, according to Yancoal.
Glencore is also buying 16.6 percent of a Coal & Allied Hunter Valley Operations mine from Yancoal and 32.4 percent from Mitsubishi Corp).
Glencore coal chief Peter Freyberg told reporters on Wednesday he was confident Yancoal would raise the funds needed to complete the deal.