Soul Patts' lost coal chance

New Hope Coal earnings may have beat expectations. But it is a disappointment for Soul Pattinson shareholders.

Robert Millner and Soul Pattinson certainly missed the boat when it comes to coal.

Under pressure to unlock shareholder value in the Soul Patts empire for years now, the Millner family raised the idea of selling its 61% stake in New Hope (NHC) two years ago, when coal prices were riding high.

While a price tag of $6 billion was widely speculated, the family never confirmed what it was asking but declared the process dead in the water 18 months ago as the coal market turned sour. That trend has continued with coal outlook looking depressed for years to come (see Tim Treadgold's Hot coal is cold comfort).

Net earnings this time around were down 55% to $74.1 million after non-recurring items. It was a better than expected result, as was the revenue that dropped 15% to $652 million. But that didn't ease the selling pressure on New Hope today.

The stock shed another 5% to $4.07, way below the $7 a share the family reportedly were asking during the sales process.

New Hope hasn't baulked at selling assets at the right price over the years. It sold its New Saraji mine to BHP (BHP) for $2.4 billion in 2008 after disposing another Indonesian mine for $500 million three years earlier.

Offloading the New Hope stake was seen as a key element to unwinding the cross shareholding between Soul Patts and Brickworks – put in place in 1969 to thwart takeovers – which has entrenched the Millner family's control.

In the past three decades, numerous attempts to break the links have failed. Sir Ron Brierley and Gary Weiss of GPG (GPG) had a tilt and more recently, Perpetual (PPT) and Mark Carnegie have tried.

Other investors, however, are big fans, citing the steady management and conservative gearing as major attractions.

While New Hope stock fell today, it wasn't all bad news for the Millners.  Another Soul Patts vehicle, junior telco TPG (TPM), was one of the big winners today, shooting up the bourse as it delivered a much better than expected result.

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