June 24, 2009 / 1:53 AM / 9 years ago

UPDATE 1-Australia's Linc hires UBS for coal asset sales

* Linc appoints UBS to help with sale of three coal tenements

* Sale could be worth over a A$1 billion - analyst

* Ends talks with China’s Yanzhou on sale of coal assets (Adds details, background, Felix Resources)

PERTH, June 24 (Reuters) - Australian energy firm Linc Energy LNC.AX has appointed investment bank UBS to advise on the sale of some of the company’s coal assets after ending exclusive talks with China’s Yanzhou Coal (1171.HK), the firm said on Wednesday.

Linc plans to sell its Emerald, Galilee and Pentland coal mining tenements in Queensland state, containing total coal deposit targets in excess of five billion tonnes of coking and thermal coal. Some analysts said the assets could be worth over A$1 billion ($782.5 million).

The move comes after talks with Yanzhou on the sale of Linc’s Emerald coal tenements failed to result in a deal.

“Linc has decided that, though negotiations have been ongoing, (Yanzhou’s) timetable to complete a purchase is no longer in the best interests of Linc Energy and its shareholders,” Linc Energy said in a statement.

Linc said it believes a competitive sale process would be the best way of delivering value, considering increased interest from potential bidders and improving confidence in the coal sector.

Other companies that could be interested in Linc’s coal assets include China’s Shenhua Energy (1088.HK), China Coal Group (1898.HK)(601898.SS), U.S.-based Peabody (BTU.N) and Australia’s BHP Billiton Ltd (BHP.AX)(BLT.L), said one coal analyst, who did not wish to be identified.

Shares in Linc, which wants to sell its non-core coal assets to help fund a development of a coal-to-liquids project, tumbled 9.5 percent to A$1.56 by 0112 GMT, compared with a 0.6 percent decline in the broader S&P/ASX 200 index .

Linc first announced the sale of its Emerald deposit, which has a JORC-standard inferred coal resource of 852 million tonnes, to China’s Xinwen Mining Group for A$1.5 billion in September, but the global financial crisis and China’s regulatory approval process have delayed the sale.

Separately, the Australian newspaper reported on Wednesday that Yanzhou Coal had renewed its interest in another Australian coal miner, Felix Resources FLX.AX, after previous attempts to engage the company had failed.

However, Felix, which has a market capitalisation of about A$2.5 billion ($1.96 billion), later reiterated an earlier statement that it did not expect to conclude discussions on a change of control of the company in the near term. ($1=1.278 Australian Dollar) (Reporting by Fayen Wong; Editing by James Thornhill)

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