Bangkok--14 Sep--TRIS Rating
TRIS Rating Co., Ltd. says today that the credit rating agency views no immediate impact on credit ratings of Banpu PLC (BANPU) after the company announced it would make a cash tender offer for Hunnu Coal Limited (Hunnu) in Australia.
TRIS Rating says there is no significant credit implication at present after BANPU announced
its plan to expand its coal business to Mongolia. BANPU announced on 12 September 2011 that it will purchase 100% of outstanding shares of Hunnu via its wholly-owned subsidiary, Banpu Minerals (Singapore) Pte. Ltd. Currently, BANPU owns 12.4% of Hunnu. Under the terms of the tender offer, the Banpu Group will acquire the remaining 87.6% of Hunnu’s common stock and all share options at A$1.80 per share. The transaction will cost BANPU A$423 million, equivalent to 6.5% of total assets of BANPU as of June 2011. BANPU plans to finance this transaction with its existing cash on hand (50%) and bank loans (50%). The offer will be subject to certain requirements, including the approval from the Foreign Investment Review Board of Australia, and the achievement of a relevant interest in Hunnu, indicated by BANPU’s purchase of 90% of the total shares and options outstanding.
Hunnu was incorporated in Australia and was listed on the Australian Securities Exchange (ASX) in February 2010. Hunnu has 15 prospective coking and thermal coal projects in Mongolia, which currently have a combined 691 million tonnes of coal resources, based on percentage of holding. Most of Hunnu’s coal mines are in the exploration and development phases. Hunnu recorded a net loss of A$7.2 million for the year ended December 2010 and an A$3.3 million loss for the first half of 2011. As of June 2011, Hunnu’s assets totaled A$137.1 million with no interest bearing debt. Total equity stood at A$116.9 million.
TRIS Rating says, the acquisition of Hunnu is in line with the Banpu Group’s long-term strategy to expand its coal business. This investment will diversify BANPU’s coal resources and enhance growth opportunity to BANPU in longer term although the investment and additional development cost will increase the firm’s leverage over the next several years.
TRIS Rating currently rates BANPU’s company and issue ratings at “AA-” with a “stable”
outlook.