AFR: Coal price puts a rocket under Stanmore Resources equity deal
A surging coal price has helped Australian coal miner junior Stanmore Resources pull off a stunning $US506 million ($694 million) equity raising via unheralded stockbroker Petra Capital.
After a month of soundings and plenty of investor meetings, Stanmore Resources and Petra launched the audacious equity deal on Thursday and told clients it was oversubscribed soon after. It was audacious because Stanmore only had a $330 million-odd market capitalisation, and the deal would more than triple the company’s size.
While 60 per cent of the deal was covered by Stanmore Resources’ major shareholder, GEAR, it still left $283 million for Petra Capital to underwrite. And for an Australian coal deal, that’s no mean feat.
While it took a few weeks, the deal was kicked along by the coal price.
When Stanmore struck the deal to buy BHP Mitsui Coal assets in November, coal prices were around US$130 a tonne. Now they are hovering at around US$400/t.
Stanmore’s broker, Petra told fund managers it would shut the book at 5pm Thursday, instead of letting it run until Friday morning. The deal was not marketed in the United States, and so the takers were likely to have been Australian and Asian investors.
Apart from the rally in coal prices, investors may have been drawn by the fact that Golden Energy and Resources (and a couple of other major shareholders) did not take up their full entitlements.
GEAR would own a 64 per cent stake in Stanmore Resources following the raising, down from 75 per cent. The group wanted to retain control of the company, but was open to the idea of opening up the company to outside investors in a bid to ensure liquidity in the stock.
Coal prices have been ticking up since October, first as flooding at China’s coal mines stifled supply and more recently, as Asian and European countries scramble to replace their Russian coal imports.
The recent rally pushed thermal coal up 46 per cent on Thursday, while PCI coking coal (pulverised coal for injection) was up 5 per cent on Wednesday.
Stanmore’s raise launched amid day-on-day gains in coal and consequent ones at coal producers like Yancoal and Whitehaven Coal, which were both up by about 10 per cent on Thursday.
The next one to watch in listed coal companies would be Whitehaven, which is slated to kick off a buy-back on Monday. While investors know the company has nearly a year to buy back up to $400 million worth of shares, they don’t yet know the timing.
Source: The Australian Financial Review