WICET wargaming

GOLDMAN Sachs is reportedly analysing the Wiggins Island Coal Export Terminal project as the coal downturn continues.
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The jetty wharf of the planned Wiggins Island Coal Export Terminal.

Blair Price

While the new Queensland coal port is on track to finally open in early 2015, with 27 million tonnes per annum of throughput capacity, hard coking coal prices in the state have sunk to a six-year low territory of $US120 a tonne over recent months.

“The big question ahead of its scheduled completion is whether the port’s shipper shareholders will be able to meet their contracted capacity and their take-or-pay contracts,” The Australian Financial Review’ Street Talk column commented yesterday.

The column said hedge funds were watching the situation closely and “testing whether it could be the next distressed situation”.

“Goldman Sachs is the latest name to emerge,” the newspaper said. “It is believed to be testing exactly how much value lenders put on their stakes.”

An ANZ-led consortium involving a reported 25 banks provided WICET with a $A4 billion financing package in late 2010. The newspaper further commented that hedge funds were expecting some pressure points to occur in WICET’s complex capital structure.

“There are already a few cracks,” the column said.

“Sources said a handful of preference shareholders – including Bandanna, Aquila and Cockatoo – have already sold out.”

The initial WICET consortium comprised Glencore, Bandanna Energy, Caledon Coal, Cockatoo Coal, Aquila Resources, Yancoal, Wesfarmers and New Hope Coal.

ICN is seeking comment from WICET.