Takeovers Panel reviews Yancoal funding plans for Rio acquisition

Image: Rio Tinto

The Takeovers Panel has received applications requesting it intervene in Yancoal Australia’s funding proposal to acquire the Coal & Allied division from Rio Tinto.

Senrigan Capital Management has asked the Takeovers Panel to stop Yancoal’s $2.35 billion entitlement offer from proceeding in its current form without shareholder approval.

The Hong Kong hedge fund believes the Yancoal funding proposal is unfair for minority shareholders.

According to the Takeovers Panel, Senrigan has suggested the offer has been priced and structured in a manner that is “unnecessarily highly dilutive and value shifting”.

Another Yancoal shareholder, Noble Group, has also questioned the entitlement offer with the Takeovers Panel.

Noble’s application also outlines that the offer is “unacceptably dilutive” and “disproportionately affects the interest of existing minority shareholders and is highly unattractive to new investors”.

Yancoal last week announced it would launch a 23.6-for-one pro-rata renounceable entitlement offer to raise $US2.35 billion for the Hunter Valley acquisition. Yanzhou, Yancoal’s Chinese majority owner, plans to contribute $US1 billion through the offer.

Once the deal is completed, Yancoal will form a joint venture with Glencore at the Hunter Valley Operations complex.

In July, Glencore, which made two counter bids for Coal & Allied earlier in the year, secured an agreement with Yancoal to take a 49 per cent stake in HVO and form the joint venture.