China’s Yanzhou Coal Mining has crossed a key hurdle in the takeover of Australia’s Gloucester Coal and got an additional 12-month lifeline to bring down its stake in its Australian unit to less than 70%. Australian federal treasurerWayne Swan approved the deal between Yanzhou’s unit Yancoal and Gloucester Coal with some conditions and cited global market volatility as the reason for giving the Chinese more time to cut its stake.
The deal is yet another case of a Chinese company buying up natural resource assets in Australia, tapping its commodity base to fuel massive residential, commercial and infrastructure projects across China. A condition of Yancoal’s A$3.3-billion takeover of another Australian coal miner, Felix Resources, in 2009 required it to float at least 30% of the business on the local exchange by 2012.
The reverse takeover of Gloucester gives Yancoal, a local listing without having to risk an initial public offering in a shaky market, where coal stocks in particular have been pummelled on worries about a global economic downturn. But after the deal, Yanzhou will own a 78% stake, pushing it to dilute further to meet the conditions. Under The pesent approval, Yanzhou will need to quarantine the voting rights of any shares that it holds above 70% in the listed entity after December 2012, the treasurer said.
China’s Yanzhou Coal Mining has crossed a key hurdle in the takeover of Australia’s Gloucester Coal and got an additional 12-month lifeline to bring down its stake in its Australian unit to less than 70%. Australian federal treasurerWayne Swan approved the deal between Yanzhou’s unit Yancoal and Gloucester Coal with some conditions and cited global market volatility as the reason for giving the Chinese more time to cut its stake.