Yanzhou moves on Yancoal privatisation

Chinese giant proposing buy out of minority shareholders in its underperforming subsidiary, says it will 'deliver higher efficiency'.

Chinese giant Yanzhou Coal Mining Coal is proposing the privatisation of its underperforming ASX-listed subsidiary Yancoal Australia Ltd.

In a statement to the Hong Kong Stock Exchange, Yanzhou said it had sent an indicative, non-binding proposal on the privatisation to its subsidiary's independent board committee.

Yanzhou owns 78% of Yancoal Australia, which became the nation's largest listed coal company after merging with Gloucester Coal last year.

Yanzhou said the deal would put it in a better position "in managing and operating a fully integrated business and delivering higher efficiency across its portfolio of businesses" (see Brendon Lau's Mining for a ROE revival).

The deal would be run through a scheme of arrangement, which would see the company pay for the remaining 22% stake held by minority shareholders through Yanzhou CHESS depositary interests.

Australian shareholders would get 0.91 Yanzhou despositaries for each Yancoal share held.

The deal requires the unanimous endorsement of Yancoal Australia's board, approval by an independent expert and shareholder approval.

The move comes after Yancoal chief executive officer Murray Bailey stepped down in March.

In the twelve months to December 31, Yancoal posted a net profit of $404.597 million, a 34.2 per cent lift on the $301.515 million recorded in the previous corresponding period.

Revenue in the period was $1.142 billion, a year-on-year slide of three per cent compared to $1.462 billion.