Yancoal makes bid for Hong Kong listing with public offer

Yancoal acquisition of Coal & Allied was a major deal in 2017

Yancoal has announced an initial public offer (IPO) in Hong Kong that would lead to a dual listing alongside its place on Australia’s bourse.

The offer has already received around $HK313.2 million ($55.3 million) in support from Shaanxi Coal and Chemical Industry Group Co.

Yancoal expects to launch the offer at a price between $HK23.48–$25.84 ($4.09–$4.50) per share — significantly higher than its last closing price of $3.06 per share. The final price will be determined on Friday.

If the Hong Kong offer is successful, Yancoal plans to launch an entitlement offer for shareholders to subscribe for 0.054 new shares in three major Yancoal shareholders in exchange for every one existing share in Yancoal as of December 4.

These three shareholders in question — Yanzhou Coal, China Shandong and Cinda International— elected not to take up their rights in the Hong Kong offer.

A retail entitlement offer for the right to subscribe to shares not held by these three companies will follow on December 7 and close on December 18.

The company intends to use the funds from the offer to help repay debts, finance new acquisitions and to push the company’s stake in the Moolarben coal joint venture from 81 per cent to 85 per cent, which is currently undergoing a stage two expansion.

Yancoal, which is cited as Australia’s largest pure-play coal producer, has significantly bolstered its position in Australia with strong acquisitions.

The company acquired Rio Tinto’s Coal & Allied business for over $3 billion last year, a move that helped boost Yancoal’s year-on-year profit from an $18 million loss to a $539 million profit in the June 2018 quarter.