Plan to relist Felix post takeover

YANZHOU Coal could refloat Felix Resources on the Australian Securities Exchange a couple of years after a successful takeover, a move that Patersons Securities coal analyst Andrew Harrington sees as unusual.
Plan to relist Felix post takeover Plan to relist Felix post takeover Plan to relist Felix post takeover Plan to relist Felix post takeover Plan to relist Felix post takeover

Constructing the Moolarben mine site.

Blair Price

Plans for a possible relisting were detailed in the scheme booklet on the Yanzhou offer released to Felix shareholders.

“Yanzhou Coal intends that, subject to market conditions at the time being reasonable, it will undertake an initial public offering of its combined Australian operations (being the Austar coal mine and the operations of Felix) within two to three years of the implementation of the scheme,” Felix said.

“For this purpose, a good indication of market conditions being reasonable would be the ASX 200 index and Newcastle benchmark thermal coal prices being not materially below their current levels.”

Harrington commented on the proposal to ILN.

“It seems odd that they would buy 100 per cent of it and then decide to float some of it down the track,” he said.

“It would be essentially the same organisation.”

Last week, Foreign Investment Review Board executive director Patrick Colmer publicly said the federal government preferred foreign investments in undeveloped projects to remain under 50% and at less than 15% in major producers.

But Harrington still believes the Felix takeover is likely to get FIRB approval, although he acknowledged the investment guidelines added a bit of uncertainty.

Including special dividends, the offer now works out at about $18.05 a share for Felix shareholders.

Deloitte has estimated the fair market value of Felix to be in the range of $16.70 to $18.70 per share, at an equity value of between $3.3 billion and $3.7 billion.

Looking at Aussie coal stocks, Harrington had a very conservative outlook on coal prices and said from that starting point, it was hard to find any cheap stocks out there.

Noting the impressive gains in the sector, ranging from at least 20% and in some cases up to 100% growth from the last quarter, he singled out Cockatoo Coal and Pike River Coal as the exceptions.

“Besides those two, everything else has had a good last few months,” he said.

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