Yancoal Australia Ltd. is looking to raise US$2.5 billion to fund the previously planned US$2.69 billion acquisition of Rio Tinto's Coal & Allied Industries Ltd. unit.
The company plans to launch a 23.6-for-1 pro rata renounceable entitlement offer for eligible shareholders to raise about US$2.35 billion, according to an Aug. 1 release.
The new shares will be issued at 10 cents each, representing a 67.9% discount to Yancoal's last close of 39 cents.
Yanzhou Coal Mining Co. Ltd., majority owner in Yancoal, has committed to subscribe for US$1 billion of the entitlements.
The remainder of the entitlement to the combined value of US$1.3 billion is also underwritten, with Glencore Plc taking up US$300 million worth of shares and China Cinda Asset Management Co. Ltd. and Shandong Lucion Investment Holdings Group Co. Ltd. stepping in for US$1 billion combined.
Additionally, Yancoal plans to place shares at 10 cents apiece with strategic investors to raise US$150 million, with proceeds earmarked to fund the upfront consideration of the deal.
Shandong Taizhong Energy Co. Ltd. and General Nice Development Ltd have agreed to subscribe for US$100 million and US$50 million, respectively, under the offer.
The offer will open Aug. 10, with closing to occur Aug. 25. The new shares will be issued Aug. 31.
Yancoal will seek shareholder approval to complete the Coal & Allied acquisition Aug. 25, with the deal targeted for completion within the third quarter.
Glencore recently agreed to acquire a 49% interest in the Hunter Valley Operations coal mine in New South Wales, Australia, from Yancoal, after the latter completes the purchase from Rio Tinto.