Tinkler-led group offers $5.3 billion for Australia's Whitehaven

SYDNEY/MELBOURNE Fri Jul 13, 2012 8:12am EDT

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SYDNEY/MELBOURNE (Reuters) - A consortium led by Australian coal magnate Nathan Tinkler has offered $5.3 billion to take Whitehaven Coal (WHC.AX) private in a bold play on sector that has seen prices slump and the demand outlook weaken.

The offer -- at a generous 50 percent premium to Friday's close -- comes a month after Tinkler made an indicative and incomplete approach for Australia's no.2 independent coal miner. It wrong-footed investors whose doubts about a bid have mounted as global equity and commodity markets have weakened.

Shareholders owning 48.3 percent of the firm, including Tinkler with 21.4 percent, supported the bid, Whitehaven said in a statement, adding that JPMorgan (JPM.N), UBS (UBSN.VX) and Barclays (BARC.L) were providing financing. It did not name the other equity partners.

Earlier, sources had told Reuters that Tinkler had lined up bank funding but was struggling to cobble together a consortium as potential shareholders fretted over weak outlook for coal.

Australian thermal coal prices have fallen about 20 percent this year to around $90 per tonne, nearing the marginal cost of production for some Australian mines and threatening new investment plans.

Further falls in coal prices would hurt Whitehaven's profitability and the feasibility of a debt-funded takeover.

Whitehaven, which has seen its share price fall over 20 percent so far this month, said it would give the Tinkler-led consortium four weeks exclusive due diligence. The offer is conditional on the satisfactory completion of due diligence and a committed funding package.

Shares in Whitehaven closed down 2.3 percent at A$3.45 earlier on Friday, compared with the A$5.20 Tinkler's consortium was offering.

Under current plans, Whitehaven's output is expected to rise to 25 million tonnes by 2016, when about 60 percent of its output will be coking coal for steel mills, from 6 million tonnes a year in 2012.

The Tinkler-led offer joins a string of deals in the Australian coal sector, which has seen the likes of Peabody (BTU.N) and Yanzhou coal (1171.HK) mop up independent miners.

Before buying Tinkler's coal businesses, Whitehaven itself was a takeover target, running an auction last year after receiving approaches. But the process was called off after failing to reach a deal.

Bidders then included Indian conglomerate Aditya Birla, U.S. coal miner Peabody Energy which has since taken over Macarthur Coal, and China's Yanzhou Coal which bought Gloucester Coal.

($1 = 0.9894 Australian dollars)

(Editing by Lincoln Feast)

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