Yancoal is repaying approximately $US801 million ($1.17 billion) of debt before the end of July as coal prices continue to soar.
The prepayment will support Yancoal’s syndicated facility and unsecured related party loans, delivering a $US133 million ($195 million) reduction in total finance cost over the loan periods.
It comes after Yancoal made a $US500 million prepayment in October 2021 and a $US50 million mandatory debt repayment in July 2021.
Yancoal chief executive officer David Moult said, in combination with a $US50 million mandatory debt repayment in July 2022, these combined payments had led to Yancoal clearing more than 45 per cent of its outstanding liabilities ($3.975 billion) as of June 30 2021.
“Yancoal’s decision to undertake another early debt repayment was made possible by the ongoing record coal prices and the company’s focus on optimising its capital structure to deliver sustainable future value to shareholders,” Moult said.
“Yancoal’s scale of production provides substantial cash inflows during periods of elevated coal prices. As coal price strength persists, Yancoal will continue to evaluate how to balance the allocation of its financial resources.”
According to Trading Economics, the Newcastle coal price was trading at $US388 ($569) per tonne on Friday, which is 179 per cent higher than a year before.
This comes as the war in Ukraine continues to pressure energy markets, with European nations rallying to find alternatives to Russian supplies.
In late May, Yancoal became subject to a potential $1.8 billion takeover from Yankuang Energy Group Company to acquire its remaining stake in the coal miner.
In documents filed with the Hong Kong stock exchange, Yankuang said it was considering a $US3.60 per share bid for Yancoal, to be satisfied through the issuance of convertible bonds.
A week later, an independent review into the takeover bid deemed it unreasonable in its current form. There has been no further public update regarding the takeover attempt.