The Takeovers Panel has intervened to block Yancoal Australia’s (YAL) controversial recapitalisation which could see the minority 22% shareholders severely diluted if they don’t participate in a $2.3 billion share offer.
Yancoal, which is controlled by China’s Yanzhou Coal Mining Co., said last month the sale of $2.3 billion of convertible notes would strengthen its balance sheet and could fund expansion opportunities. But if the minority shareholders don’t take up their shares, they stand to be diluted to less than 2%, so they saw the offer as an attempt to get rid of them, or severely erode their influence.
That 22% stake means that the Chinese parent can’t do anything dramatic without their approval. The Takeovers Panel has agreed and yesterday said it had upheld an application from minority shareholders, ruling Yanzhou can only increase its voting power in its Australian unit through the sale of the shares with their approval.
YAL YTD – Takeovers Panel blocks Yancoal equity issue
The minorities include Asia’s biggest commodities trader in Noble Group and Hong Kong hedge fund Senrigan Capital. Collectively the minorities account for 22% of the company and have argued the huge share offer is aimed at reducing their influence in the company.
Yancoal said it’s considering its next steps after the ruling, which is a timely reminder of the rights of minority shareholders in listed companies.
Yanzho is China’s fourth-largest coal producer. In March it dropped a proposal to buy out Yancoal, saying the process would be challenging. Yancoal, which operates seven coal mines in NSW and Queensland, traded unchanged at 14c on the ASX yesterday.
