Cockatoo Coal (ASX:COK) has today announced a A$150.8 million equity raising, with proceeds used to fund Cockatoo’s contribution to a consortium buying coal development and exploration assets.
Together with Korea Electric Power and POSCO, Cockatoo will raise funds to acquire five key Australian coal development and exploration assets for A$580 million from Anglo American.
The Cockatoo equity capital raising comprises:
- A$96.4 million 2-for-5 accelerated renounceable pro-rata entitlement offer at an issue price of $A0.40 per new share; and
- A$54.4 million institutional share placement with a price determined by bookbuild. The underwritten floor is A$0.43.
Last sale price for Cockatoo Coal was $0.54, the issues are pitched at a significant discount for investors. The shares were in a trading halt.
The consortium, comprising Cockatoo, Korea Electric Power Corporation and POSCO, announced in July 2010, have entered into various conditional agreements with Anglo American (LON: AAL) to acquire five coal development and exploration assets located in New South Wales and Queensland, for a total consideration of A$580 million.
POSCO has agreed to subscribe for $21.5 million of Cockatoo shares at $0.467 per share, which requires shareholder approval.
Upon completion of all arrangements, Cockatoo’s share of the acquired assets will be 51% of each of Collingwood and Taroom (Surat Basin), 30% of Sutton Forest and a call option over 30% of Bylong, both in the Sydney Basin.
Cockatoo will pay A$97.6 million for the Collingwood and Taroom interest, and A$21.5 million for the Sutton Forest stake, (to be funded by POSCO investment).
Cockatoo has then allocated A$53.2 million for working and development capital, and fees, bring the total use of fund to A$172.3 million.
Importantly, the acquisition would diversify Cockatoo’s development portfolio across key coal producing regions of the Sydney, Surat, and Bowen Basins and provides exposure to coking coal.
The deal would accelerate Cockatoo’s progress toward its stated goal of becoming a larger independent coal mining company, with significant potential for re-rating in line with coal company peers.