Bohai Industrial backs $950m debt deal for Yancoal Australia

The Australia-listed company said in a filing that it will sell bonds to a consortium of financiers, including Industrial Bank, BOCI Financial Products and United NSW Energy - an offshore entity controlled by Bohai Industrial. The deal will be structured in two tranches: $760 million worth of bonds with an 8.55% coupon; and $190 million with a coupon of up to 15%, depending on the commercial performance of mining projects.

The bonds will be issued by a newly-established wholly-owned subsidiary of Yancoal. The listed company's ownership in the New South Wales mining assets of Ashton, Austar and Donaldson will be transferred to the issuer. This will see Bohai Industrial gain control of the assets, although Yancoal will remain the operator.

"We have responded to the constraints of our current operating cash flow and depressed global coal prices with strong and decisive action to raise new financing," Reinhold Schmidt, CEO of Yancoal Australia, said in the statement. "Yancoal remains committed to investing within Australia, reducing costs and improving operational efficiencies across all operations."

Bohai Industrial Investment Fund was launched in 2006 and focuses on M&A and reform of China's state-owned enterprises (SOEs). It had committed capital of RMB6.08 billion ($933 million) on launch and a target size of RMB20 billion.

The Yancoal transaction is expected to close before the end of April.

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• Topics
• Greater China
• Australasia
• PIPEs
• China
• Australia
• PIPE
• Commodities
• Bohai Industrial Investment Fund Management