--Coalworks board recommends revised bid from Whitehaven
Coal
--Distribution of holding in Orpheus Energy lifts bid value to
A$1.025/share
--Macquarie withdraws call to replace chairman and chief
executive
(Recasts 1st paragraph, adds further comment from Coalworks from
3rd, and background throughout.)
By Robb M. Stewart
MELBOURNE--Whitehaven Coal Ltd. (WHC.AU) won support for its 142
million Australian dollar (US$142 million) bolt-on acquisition of
smaller Coalworks Ltd. (CWK.AU), even as Australia's largest
coal-only producer prepares for a possible bid from coal magnate
Nathan Tinkler.
Coalworks in a statement Friday said its board now recommends
the offer after Whitehaven removed earlier conditions and agreed to
allow Coalworks to distribute to its shareholders shares from its
33.4% stake in Orpheus Energy Ltd. (OEG.AU). That effectively
raises the A$1 a share cash bid by about 2.5 cents, or roughly
A$146 million.
The company said the higher offer represents "sufficient value
and certainty for Coalworks shareholders." The chairman, chief
executive, senior management and several shareholders together
owning a 15% interest in Coalworks have agreed to the bid, it
said.
A takeover of Coalworks would allow Whitehaven to consolidate
control of several coal projects in eastern Australia, and follows
the A$2.3 billion acquisition of Mr. Tinkler's Aston Resources Ltd.
plus his unlisted Boardwalk Resources. That deal left Whitehaven
with a 17.3% stake in Coalworks, which with Boardwalk is developing
coking and thermal coal project in New South Wales state.
Mr. Tinkler, whose Tinkler Group is Whitehaven's largest
shareholder with about a 21% stake, surprised investors this week
with a proposal to take Whitehaven private. Whitehaven rejected the
bid as incomplete and highly conditional, but has set up an
independent committee to respond should Mr. Tinkler and his backers
return with a fresh offer.
Interest in coal producers and explorers that can supply Asia's
energy and steelmaking needs has remained strong despite slumping
prices for the commodity this year. China's Yanzhou Coal Mining Co.
(YZC) is close to finalizing the acquisition of Gloucester Coal
Ltd. (GCL.AU), while U.S. producer Peabody Energy Corp. (BTU) last
year bought Australia's Macarthur Coal Ltd. for A$4.9 billion.
Coalworks Chairman Wayne Mitchell and Chief Executive Andrew
Firek have been under pressure from investor Macquarie Bank, which
had called a meeting of shareholders to oust the pair and replace
them with its own nominees. Macquarie has, following the acceptance
of Whitehaven's revised bid, withdrawn its proposal, which was due
to be voted on Friday, Coalworks said.
Macquarie had said it was concerned with Coalworks' recent share
placement that left Asian commodities trader Noble Group Ltd.
(N21.SG) as a minority shareholder with a 9% stake and a strategic
adviser to the coal explorer.
Whitehaven has plans to boost production to about 25 million
metric tons a year by 2016 from 4.7 million in the last financial
year. The acquisition will give it control of the Ferndale project
being developed with Boardwalk, plus hand it the Vickery South
project that is next to its own Vickery coal development in New
South Wales, as well as the Oaklands project in the south of the
state.
Its offer for Coalworks is due to close June 26.
Write to Robb M. Stewart at robb.stewart@wsj.com