Shares of Yancoal Australia Ltd. closed their Dec. 6 debut session in Hong Kong flat after opening the morning down 6.3% from the IPO price.

The unit of Chinese giant Yanzhou Coal Mining Co. Ltd. raised HK$1.18 billion to repay bank loans and fund acquisitions. Morgan Stanley International can exercise an overallotment option under which Yancoal Australia can issue up to 8,916,200 more shares at HK$23.48 apiece, the company said in a filing.

The company, which has been listed on the ASX since 2012, had priced its Hong Kong IPO at the bottom of a marketed range at HK$23.48 per share. Only 19% of shares under the retail offering were subscribed, and the unsubscribed portion has been reallocated to the international offering.

The company intends to use about half of the proceeds to repay unsecured loans maturing in 2002 and 2024 and another syndicated loan facility. It will use about 30% of the proceeds potential acquisitions, but it has not specified any targets yet.

Yancoal Australia holds an 81% interest of the Moolarben coal mine in New South Wales, Australia, and expects to raise its holding in the joint venture to 85%. It will also use proceeds to fund the additional 4% acquisition for A$84 million from Korea Resources Corp. Yancoal Australia said in a prospectus that it will pay for the transaction in four installments until December 2019.

Yancoal Australia is 65.5% owned by Yanzhou Coal Mining.