CITIC Resources may sell Macarthur Coal stake

HONG KONG (Reuters) - CITIC Resources Holdings Ltd (1205.HK) has not decided what to do with its 17.66 percent stake in Australia's Macarthur Coal (MCC.AX) and could equally sell or hold the stake, Chief Executive Sun Xinguo said on Monday.

Macarthur's top shareholder, Ken Talbot, has been selling down his stake of around 24 percent, opening up the possibility of a takeover bid by CITIC Resources or ArcelorMittal (ISPA.AS), which bought almost 15 percent in the firm last month for $604 million.

"We haven't made a final decision about what to do next," Sun told a news conference. "We will decide at a proper time."

Macarthur supplies steelmakers with more than one third of the world's pulverized coal, making it an attractive target at a time when steel prices are red-hot, driven up by demand from China, home of CITIC Resources's parent, state-owned CITIC Group.

Arcelor took a stake of 14.9 percent in Macarthur last month, apparently scaring off another potential bidder who had approached JP Morgan (JPM.N), the bank advising on the sale of Talbot's stake.

Under Australian takeover rules, a holding of more than 19.9 percent triggers a mandatory takeover offer.

JP Morgan has not said who has approached it but a banker at a rival investment bank said Xstrata (XTA.L), Anglo-American Plc (AAL.L), Peabody Energy Corp (BTU.N) and Vale (VALE5.SA) had all put offers on the table in the past.

Sun did not mention the possibility of taking over Macarthur and declined to comment on whether CITIC Resources had approached Australia's Foreign Investment Review Board with a proposal to bid for the whole of Macarthur.

"On the one hand, price is very important; on the other hand there is Macarthur's future," he added. "There is 50-50 percent chance in either holding and selling the stake."

He described CITIC Resources' investment in Marcarthur is "our long-term strategic investment" although he said it had cut the stake from 19.9 percent to 17.66 percent earlier this year.

Macarthur's shares closed at A$19.65 on Monday, just below Arcelor's investment price of A$20 a share.

Shares in CITIC Resources fell 4.06 percent to HK$4.25 on Monday after it said it planned to raise HK$2.5 billion ($320.4 million) through a rights issue of 788.68 million shares at HK$3.20 each, to improve its finances and working capital and to fund future investments.

After the rights issue, the net debt to equity ratio of the company fell to 88 percent from 167 percent, Sun said.

($1=7.803 Hong Kong Dollar)

(Reporting by Judy Hua, editing by Tom Miles)