Yanzhou Coal Proposes To Privatize Australian Unit

(RTTNews) - Chinese mining company Yanzhou Coal Mining Co. Ltd. (YZC) said Monday that it has proposed a plan to privatize its Australian unit, Yancoal Australia Ltd. The company's proposal comes amid a sharp decline in coal prices.

Yanzhou Coal currently owns a 78 percent stake in Yancoal Australia, while other minority shareholders own the remaining 22 percent stake. Shares of Yancoal are gaining more than 5 percent on the Australian Securities Exchange following the announcement.

In a filing with the Hong Kong stock exchange, the Chinese company said it has sent an indicative and non-binding proposal to Yancoal Australia's independent board committee and conveyed its interest in the proposed transaction.

Yancoal Australia shares listed on the Australian Securities Exchange in June 2012 following a merger with Australia's Gloucester Coal. The company operates several coal mines across the Hunter Valley, in addition to the New South Wales' central west and Queensland's Bowen basin.

Yanzhou Coal said the proposed transaction would be implemented through a scheme of arrangement between Yancoal Australia and its shareholders. Yanzhou Coal will acquire the remaining 22 percent stake in Yancoal Australia that it does not already own from minority shareholders in consideration of depositary interests or CDIs.

Under Yanzhou's proposal, Yancoal Australia's minority shareholders will receive about 0.91 Yanzhou CDIs for every Yancoal Australia share held by them. Shares underlying the CDIs will be Yanzhou's H shares and the company will apply for a foreign exempt listing of those shares on the Australian Securities Exchange.

Yanzhoul noted that the proposed transaction, if implemented, would increase its interest in the expandable operating mines operated by Yancoal Australia and coal resources in Australia.

YZC closed Monday's trading at $6.94, down $0.03 or 0.43 percent on a volume of 364,224 shares.

In Tuesday's trading on the Australian Securities Exchange, Yancoal shares are trading at A$0.74, up A$0.04 or 5.71 percent on a volume of 115,373 shares.