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Yancoal's ultimate parent to purchase debt on 3 coal mines for US$200M

Yankuang Group Co. Ltd., the ultimate parent of Yancoal Australia Ltd., will purchase bonds belonging to the Hunter Valley coal mines in New South Wales, Australia, for US$200 million, as part of a previous financing deal, The Australian reported Jan. 7.

In February 2016, Yancoal lost control of the Ashton, Austar and Donaldson mines after a US$950 million debt funding to a consortium of financiers, including China's Industrial Bank Co. Ltd. and Bank of China.

Yancoal's wholly owned subsidiary Watagan Mining Co. Pty. Ltd. issued the bonds, while Yancoal's ownership in the mines was transferred to Watagan.

The lenders gained the interest in the mines and held the right to nominate a majority of the mines' directors. The bond holders also had a put option enabling them to transfer issued Watagan bonds at face value to Yankuang.

Bank of China exercised its right to transfer its portion of bonds to Yankuang and the latter will become the holder of the put bonds. The ownership of the remaining bonds remains unchanged.

The mines will owe the funds to Yankuang for the face value of the put bonds, less any capitalized interest.

Yancoal does not expect any material effects from Bank of China's move.