Australian coal producer Yancoal will issue nine-year bonds valued at $950 million to Chinese financial entities. And private equity firm Anacacia Capital has bought iconic timber producer Big River.
Yancoal to issue nine-year old bonds worth $950m
Australian coal producer Yancoal said one of its units will issue nine-year old bonds worth $950 million to Bohai Harvest, a Chinese private equity firm that has Hunter Biden, son of US vice-president Joe Biden, on its board, and to two other banks in China.
Yancoal already has a deep Chinese connect. It is owned by Yanzhou Coal, the state-owned coal mining company.
The bondholders will collect 8.5 per cent interest yearly on A$760 million of the bonds, and 15 per cent on the remainder, said a report in The Australian. Those returns would depend on the performance of Yancoal mines, against which the bonds are secured.
Yancoal, whose market value has shrunk by more than 90 per cent in the last four years to A$61 million, will benefit from the $1 billion of cash it gets upfront as part of the deal. That would be a boost for its unproductive production, which has seen 12 consecutive quarters of negative net operating cashflow.
The second player to benefit is Noble Group, the troubled commodities trader, and Yancoal’s second-largest shareholder. Noble had controvesially valued Yancoal’s stake at 20 times its then-market value. That calculation might find more support after this bond issuance, as it would reduce the risk that Yancoal assets hold for investors.
The only thing that would not benefit is the worldwide coal market, where players are suffering since 2011 from falling prices brought about by oversupply. Yancoal’s bond deal would allow for unhindered production, putting further pressure on prices.
Anacacia Capital to buy timber producer Big River
The iconic player was sold for an amount between $50 million and $100 million.
Big River is known for its timber and formwork products, timber flooring, structural plywood and related products. It had revenue of about $150 million.
Anacacia is focussed on small and medium enterprises in the mid-market segment in Australia. It had invested in Yumi’s Quality Foods in 2014.
Anacacia is betting that this is a good time to be in the timber business, with other players like Woolworths’ Homes and Hardware Business in a state of transition. It can appeal to tradies who avoid big box retailers, by building a platform with smaller timber and hardware players.