Minter Ellison has advised Gloucester Coal Ltd (Gloucester) on its proposed acquisition of 100 per cent interest in Donaldson Coal Holdings Limited (Donaldson) and Ellemby Holdings Pty Limited (Monash). Both are subject to shareholder approval. This is expected to create a leading Australian coal company, with expected market capitalisation of approximately $2 billion.
The proposed Donaldson acquisition is linked with the proposed Monash acquisition, subject to conditions including shareholder approval, sourcing of new debt facilities and FIRB approval.
Gloucester has entered into the agreement with Noble Resources Australia Pty Ltd (Noble), advised by Clayton Utz, Gloucester's largest shareholder, for 100 per cent interest in Donaldson.
Donaldson owns one open cut and two underground mines producing thermal coal and semi-soft coking coal. This includes the 11.6 per cent founding shareholding in NCIG Holdings Pty Limited, a new coal export terminal at the Port of Newcastle. Gloucester will acquire Donaldson for an enterprise value of $585 million, comprising $360 million in new Gloucester shares and $225 million in debt.
The Monash acquisition is under an agreement with shareholders of Ellemby Holdings Pty Limited (Ellemby). It is a deal for 100 per cent of the Monash entities with a base purchase price of $30 million payable in cash to Ellemby shareholders. The Monash acquisition is a prospective large semi-soft coking and thermal coal development opportunity, with Monash owning two exploration licenses.
To fund the cash consideration for these acquisitions, Gloucester is in the process of completing an equity raising of approximately $230 million, through a fully underwritten 2 for 11 non-renounceable accelerated pro-rata Entitlement offer.
The Entitlement Offer comprises $218 million underwritten institutional component and $12 million underwritten retail component. The institutional component was successfully completed on 17 May 2011. The offer price for the equity raising is $9.00 per share.
The Minter Ellison team included partners John Steven, Bart Oude-Vrielink, James Hutton, Simon Scott, Simon Ball, Sam MacGibbon, Adrian Varrasso and John Riley.
"This was an extremely complex transaction requiring intensive contributions over an extended time frame from multiple Minter Ellison interstate and overseas offices. Various work streams, extending across different divisions, included corporate, capital markets, finance, resources, infrastructure and tax specialists within the firm," said Oude-Vrielink.
Freehills acted for the underwriters in the capital raising.