Formerly known as Eastern Corporation before acquiring Queensland coal seam gas player Galilee Energy in June, the New Zealand coal producer subsequently adopted the name.

The spin-off company will be called Eastern Resources Group and the funds raised will advance its coal projects in the country.

The Galilee board still needs to finalise the terms of the initial public offering and sign an underwriting agreement.

But if the IPO proceeds, Galilee expects to retain a significant minority stake in ERG while existing shareholders will be entitled to a priority offer expected to account for half of the floated shares.

Galilee aims to lodge a prospectus in late October.

The New Zealand assets include the small Takitimu and Cascade open cut mines on the South Island which collectively produce more than 150,000 tonnes per annum of thermal coal for the domestic market.

The Whareatea West project near Cascade is also considered prospective for coking coal with a lot of the permit not explored.

Shares in Galilee were down 2.5c, or 12.2% to 18c this morning.