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Cockatoo Coal puts its mines and assets on the market

Posted on 14 December 2015

Source:  The Australian

Cockatoo Coal's administrators PPB have fired the starting gun on a sales process for the company's portfolio of coalmining assets after appointing resources sector advisory specialist RFC Ambrian, which has sent out documents to prospective buyers.

The market remains awash with coalmines, which were worth hundreds of millions of dollars at the peak of the market but now can't find buyers due to the weak demand for the commodity.

On offer is up to 100 per cent of Cockatoo's Baralaba open-cut mine along with a portfolio of development and exploration projects in Queensland's Bowen, Surat and Galilee basins, with more than 1.2 billion tonnes of thermal coal resources in wholly owned Central Surat and Galilee assets.

According to the flyer document, Cockatoo has $483m in unused tax credits held within the group.

Cockatoo Coal's board placed the company into voluntary administration last month and PPB is now testing the market for buyer appetite on various sale options before it receives a proposal from the shareholders.

The company was once worth close to $500m but was suspended from trading last month with a market value of between $100m and $200m.

It is understood that PPB and advisers are still awaiting a recapitalisation proposal from the company's major shareholders.

Cockatoo is one of the coalminers that invested in the Wiggins Island Coal Export Terminal, off the Queensland coast, which is also the company's largest creditor.

But any buyer of Cockatoo Coal would not be obliged to take up its commitments to WICET, sources said.

Noble Group and Liberty Mutual Holding control at least 80 per cent of the company, which jointly owns its mining ventures with its shareholders.

Noble and minority shareholder, Korea's SK Group, guaranteed an ANZ Bank loan for the company, which the bank has indicated it will terminate next month.

Taking a hit on the bank guarantee could be the cheapest option for Noble and the SK Group, given that a collapse of the company means it will no longer require additional equity to feed coal through the WICET at a time of low coal export demand.

Meanwhile, advisers to struggling iron ore miner Atlas are believed to be working on a recapitalisation of the company that will be finalised around Christmas. Atlas Iron has hired Lazard and Houlihan Lokey was advising the hedge fund lenders, which are likely to be behind the recapitalisation deal. It has been estimated that more than 100 junior minors will need to recapitalise next year thanks to further fallout from the overall weakness in the resources industry.