Yanzhou Coal Mining surprised many when it pulled off takeovers of Gloucester Coal and Felix Resources, but the Chinese giant's latest proposal will test new limits. Elsewhere, ANZ Bank and Goodman Group see strong support in separate capital raisings, and Australian fund managers consider the merits of New Zealand's Z Energy.
Yanzhou Coal Mining, Yancoal Australia
It's not only Australian regulators who are being put to the test in Yanzhou Coal Mining's proposed privatisation of its Australian-listed interest Yancoal Australia. The Chinese company is also asking Yancoal's minority shareholders to choose between an unkind market and a less-than-compelling buyout offer.
Yanzhou already owns roughly 78 per cent of Yancoal, which achieved a backdoor listing here a year ago after the Chinese giant purchased Felix Resources and Gloucester Coal. It's now attempting to sweep up the remaining 22 per cent of Yancoal, seemingly going against tough conditions imposed on the Felix and Gloucester buys by Australia's Foreign Investment Review Board.
Back then, FIRB insisted the majority of the New South Wales and Queensland coal assets remain in a listed vehicle and that Yanzhou reduce its equity stake in Yancoal to less than 70 per cent by the end of 2013.
Yanzhou's advisers are quietly confident they can get around the FIRB issues, according to The Australian.
As Australian mining investment slows, Yanzhou could make a persuasive argument that Yancoal's coal mines would be better financially supported under the ownership of the deep-pocketed Chinese group.
But Yanzhou will also need the support of Yancoal's shareholders.
Under the proposal, Yancoal investors would get 0.91 Yanzhou CHESS depositary interests for each Yancoal unit. The Chinese parent would then apply for a foreign exempt listing of those CDIs on the Australian bourse.
Yanzhou is touting an offer price of 91 cents per Yancoal share, based on both companies' 60-day volume weighted average price, ended July 5. At today's prices though, Business Spectator's Stephen Bartholomeusz calculates the offer is only worth about 74 cents – compared with Yancoal's last-traded price of 73 cents.
Yancoal's board of directors, which must unanimously support the deal for it to proceed, says it is considering the proposal. Expect them to squeeze Yanzhou hard for a better deal.
Yancoal has hired Blackstone Advisory Partners, Lazard and Minter Ellison to assist in the process. Yanzhou is being advised by Citi and Freehills.
ANZ Banking Group
The value of ANZ Banking Group's hybrid offer has ballooned to $1 billion due to strong demand, as investors continue to chase yield.
ANZ had previously been chasing $750 million from the sale of the bond-like instruments, which convert into shares down the track. But the bank increased the offer on Tuesday.
The hybrid securities will pay interest of 3.4 per cent above the benchmark bank bill swap rate, and will convert into ordinary shares after 10 years – although ANZ reserves the right to redeem them for cash or equity after eight years.
The offer, which counts ANZ Securities, Citigroup, Commonwealth Bank, JPMorgan, National Australia Bank and RBS Morgans as joint-managers, opens today.
Goodman Group has also tapped markets for funding, raising $777.5 million of new equity through its European operations.
The industrial real estate investment trust says most of the equity was raised via a rights issue to existing investors in its Goodman European Logistics Fund, with extra equity raised through demand from new investors.
Goodman also plans to sell down its holding in GELF to around 20 per cent to meet excess investor demand.
Lloyds Banking Group’s Australian arm, BOS International, has sent out a flyer advertising its latest loan book, believed to include a number of performing and distressed loans, according to The Australian Financial Review.
The newspaper reports a wide range of bidders are interested, including hedge funds Apollo Global Management, Oaktree Capital and Anchorage Capital Partners, and private equity group Blackstone.
Macquarie Group, Nomura and Deutsche bank are also mentioned.
Finally, pre-marketing research on the latest big New Zealand float, Z Energy, is also said to have arrived on fund managers' desks.
The petrol chain wants to raise about $NZ700 million ($597.3 million) in a $NZ1.5 billion listing slated next month, The Australian Financial Review says.
As much as 40 per cent of the raising, which is being run by Goldman Sachs and Deutsche Bank, could come from non-Kiwi investors, according to the newspaper.