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Noble Group to challenge Yancoal's US$2.5B capital raising

Major Yancoal Australia Ltd. shareholder Noble Group Ltd. is planning to challenge the former's planned US$2.5 billion equity raising and will lodge an objection with Australia's Takeovers Panel as early as Aug. 3, The Australian reported Aug. 2.

Noble's 13.2% Yancoal stake could be drastically diluted if it does not participate in the latter's rights issue, as the embattled trading house is facing financial constraints and is selling assets to service impending debt obligations.

According to the report, the Takeovers Panel ruled in favor of Noble and Hong Kong-based hedge fund Senrigan Capital Management Ltd. when both objected to Yancoal's A$2.3 billion convertible notes issue.

Yancoal shares on the ASX crashed following news of the equity raising, which is intended to fund its US$2.69 billion acquisition of Rio Tinto's Coal & Allied Industries Ltd. unit.

The financing will include an entitlement offer to raise about US$2.35 billion, with Yancoal parent Yanzhou Coal Mining Co. Ltd. committing to subscribe for US$1.0 billion of the entitlements.

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.