Stanmore Resources is putting the final touches on its acquisition of BHP’s 80 per cent interest in BHP Mitsui Coal (BMC) by launching an equity raise.
The $694 million accelerated renounceable entitlement offer will see Stanmore issue 631 million new shares at $1.10 a share, representing a 12 per cent discount on Stanmore’s closing price on March 2.
Golden Energy Resources’ subsidiary and majority Stanmore shareholder Golden Investments will subscribe for $409 million of its entitlements. This will result in a 64 per cent voting power in Stanmore.
Petra Capital has underwritten the remaining $283 million of the entitlement offer pursuant to an underwriting agreement with and Stanmore. The stockbroking firm is the sole lead arranger, lead manager and bookrunner of the entitlement offer.
The remaining funds required to complete the BMC purchase will be derived from a $853 million debt facility, along with Stanmore cash reserves. The entitlement offer will be followed by a retail offer on March 10.
To coincide with the entitlement offer, Stanmore has secured a $164 million secured loan facility from Virtue Investments to be used for general corporate purposes, including to fund working capital needs.
BHP divested its 80 per cent stake in BMC to Stanmore in November. As part of the deal, Stanmore would acquire 100 per cent of BHP’s shares in Dampier Coal, the subsidiary holding BHP’s interest in BMC, for a cash consideration of up to $1.84 billion.
The transaction comprised $1.5 billion on completion, $136 million six months after completion, and up to $205 million on a price-linked basis.
BMC owns and operates metallurgical coal mines in Queensland’s Bowen Basin, including the South Walker Creek mine and Poitrel mine, making up a combined production of around 10 million tonnes per annum.
BHP flagged its intentions to offload BMC in August 2020 as it looked to simplify its portfolio. At the time, BHP chief executive officer Mike Henry said the assets had not provided the company sufficient profits.